I move: "That the Bill be now read a Second Time."
The purpose of this Bill is to enable Ireland to ratify the Treaty Amending Certain Provisions of the Treaties Establishing the European Communities and of the Treaty Establishing a Single Council and a Single Commission of the European Communities. This new treaty which was signed in Brussels on behalf of Ireland by the Minister for Foreign Affairs on 22nd July, 1975, is, broadly speaking, designed to increase the powers of the European Parliament, or the Assembly, in respect of the Community budget. It also establishes a Communities' Court of Auditors which it is intended will exercise, although in a more effective manner, the powers and jurisdiction at present conferred on the Audit Board of the European Communities and on the Auditor of the European Coal and Steel Community.
The effect of the Bill, when enacted into law, will be to make this new treaty part of the domestic law of Ireland as from the date when it is ratified by all the member states. As Deputies will recall, the European Communities Act, 1972, enacted into Irish law all the existing treaties governing the Communities and it is logical that an amending treaty should be treated likewise. Accordingly, that Act has been amended by the insertion of this new treaty therein. In accordance with section 2 of the 1972 Act, this new treaty will then become part of the domestic law of the State under the conditions laid down in the treaties governing the European Communities. The Minister will have power to make regulations to give effect to the new treaty by virtue of section 3 of the 1972 Act. These will be subject to the annulment procedures contained in the European Communities (Amendment Act, 1973. These can be exercised on the recommendation of the Oireachtas Joint Committee on the Secondary Legislation of the European Communities.
The Bill will come into force on the same date as the new treaty. It is provided that the Minister for Foreign Affairs must give notice in Iris Oifigiúil when this happens.
Under the original treaties establishing the European Communities— namely, the European Coal and Steel Community, the Eurioean Economic Community and Euratom—the European Parliament had very little control over the budget of the Communities. This situation was remedied to some extent by what is known as the Budget Treaty of 22nd April, 1970, which amended certain of the articles relating to the Community budget in the original treaties so as to increase the powers of the Parliament over the budget. These provisions remain in force today, having come into operation on 1st January, 1975.
At the time of the signing of the Budget Treaty in April, 1970—and this treaty is listed incidentally at section 1 (1) (f) of the European Communities Act, 1972—the European Parliament made it clear that it was not entirely satisfied with the new powers being granted to it. For this reason it was agreed that in due course the Commission would make further proposals in the matter for consideration by the Council.
On 8th June, 1973, the Commission submitted to the Council proposals for strengthening the budgetary powers of the European Parliament. These proposals were subsequently revised in the Parliament. The Council, after lengthy discussions and consultations with the Parliament, eventually agreed on a "package" of proposals on 4th June, 1974.
After the proposals, as agreed by the Council, had been drafted in appropriate treaty form and after the Parliament had been formally consulted, the Council, acting in accordance with Article 236 of the EEC Treaty and Article 209 of Euratom Treaty, delivered an Opinion on 22nd July, 1975 in favour of calling a Conference of Representatives of the Governments of the member states. The conference was duly held on the same day and the treaty signed.
As I mentioned earlier, the two main objectives of the new treaty are to increase the powers of the European Parliament over the budget of the Communities and to establish a European Court of Auditors.
Turning first to the powers of the European Parliament, the treaty specifically recognises the right of the Parliament to reject the budget in toto. Hitherto, there have been conflicting interpretations on whether or not Parliament has this right under the existing treaties. For its part the Parliament has traditionally held that its power to adopt the budget also implied its right not to adopt the budget, that is, to reject it. The Council's position has been that Parliament has the right to adopt the budget only but not to reject it. Ambiguity over this matter is being removed under Articles 2, 12 and 20 of the new treaty which lay down that, for important reasons and acting by a majority of its members and two-thirds of the votes cast, the European Parliament may reject the draft budget and request the submission to it of a new draft. In the event of the Parliament exercising the option of rejecting the draft budget outright, and if for this or other reasons the budget has not been adopted at the start of the financial year, it will be necessary to fall back on the system known as “provisional twelfths”. Under this system, if the budget is not adopted by the beginning of the financial year, a sum equivalent to not more than one-twelfth of the budget appropriations of the preceding financial year may be spent each month.
The new treaty also provides the Parliament with increased powers over "obligatory" expenditure. As Deputies will be aware, expenditure in the Community budget is broken down into "obligatory expenditure", that is expenditure necessarily resulting from the treaties or from acts adopted in accordance therewith, and other, expenditure known as "non-obligatory expenditure". The basic difference between these two forms of expenditure is that the Council has the final say over obligatory expenditure, which accounts for about three-quarters of the current budget of the Communities and includes such matters as the funds available under the CAP, while the Parliament has the final say over non-obligatory expenditure which includes moneys available for such matters as the social fund, staff and so on.
Under the existing treaties, the Parliament has a right to propose changes, known technically as modifications, to the figures for obligatory expenditure as established by the Council but unless these modifications are accepted by the Council acting by a qualified majority, that is 41 votes in favour, they are rejected. I might mention that in qualified majority voting, votes are weighted in accordance with the provisions of the treaties.
The new treaty will make the rejection of modifications by the Council more difficult where modifications do not increase the overall expenditure of an institution, that is in cases where a proposed increase in expenditure would be offset by a reduction elsewhere. In such cases modifications proposed by the Parliament will in future have to be rejected by a qualified majority, that is 41 votes out of 58, otherwise they will stand accepted. In all other cases, the existing arrangements whereby modifications proposed by the Parliament stand rejected unless adopted by a qualified majority, will continue.
In addition, the new treaty provides that the European Parliament alone, acting on the recommendation of the Council, will be able to give a discharge to the commission in respect of the implementation of the budget. This power of discharge which in effect amounts to a power to declare the accounts for the previous year finally and duly closed, is at present exercised jointly by the Council and the Parliament.
The treaty also obliges the Council to consult the Parliament, and obtain the opinion of the new Court of Auditors, before making financial regulations relating to the management of the budget. The financial regulations lay down the detailed rules for the implementation of the budget and of particular funds. At present the Council may make financial regulations without reference to either the Parliament or the Audit Board.
The provisions of the treaty that I have dealt with so far relate to the strengthening of the budgetary powers of the European Parliament. The treaty has also the aim of ensuring a more effective management of Community finances and to this end provides for the establishment of a new body aimed at reinforcing the financial audit of Community revenue and expenditure.
It is generally felt that the existing Audit Board of the European Communities has not been able to operate as effectively as might have been desired and this has prompted the Community to decide on the establishment of a new Court of Auditors. The deficiencies of the Audit Board in no way reflect on the members of the board who are all highly qualified and expert in their field, but are due rather to the fact that members do not have available to them the conditions in which to operate effectively. There are four basic reasons for this. First, the members of the Audit Board are part-time and their duties in their home countries as members of national audit authorities. Ministries of Finance and so on may not allow them all the time they might wish to carry out their functions effectively. With the proposed new Court of Auditors, the members will be full-time and indeed, under Articles 7, 15 and 23 of the new treaty, members of the court are specifically forbidden, during their term of office, from engaging in any other occupation, whether gainful or not.
The second difficulty for the existing Audit Board is that although they have the right to conduct an audit on the spot under Article 206 EEC, their right to do so in member states is not laid down specifically in the treaties. For a number of years, there was a marked reluctance by some of the member states—not, however, including Ireland—to allow the Audit Board to carry out audits in their territories and because of this divergence of view the Audit Board did not until 1975 succeed in arranging any audits of its own inside the member states. Prior to 1975 on-the-spot audits were confined to the institutions of the Communities.
Although there has been a marked improvement in the position since then, the present situation is regarded as unsatisfactory because the Audit Board cannot be expected to function effectively without being able freely to extend their operations, where appropriate, to the member states. This situation will be remedied under the new treaty where articles 8, 16 and 24 specifically provide that "The audit shall be based on records and if necessary performed on the spot in the institutions of the Communities and in member states". This provision, it is hoped, will bring about a significant improvement in the effectiveness of the Court of Auditors over the Audit Board.
A third difficulty is that although the Audit Board have, in practice, begun audits of accounts before the accounts for a particular year have been closed this power of the Audit Board was not specifically spelled out in the treaties. The new treaty will rectify this position and Articles 8, 16 and 24 explicitly provide that the "Auditing of expenditure shall be carried out before the closure of accounts for the financial year in question".
The fourth difficulty is that the existing Audit Board may not, in practice, have been able to obtain access to all the information they need. At a national level, as for example in the case of the Comptroller and Auditor General in Ireland, the office in charge of audit can ask for any information it needs and is given that information as a matter of right. The powers of the Audit Board in this regard were not spelled out in any detail in the existing treaties, the only reference being to the fact that the audit "shall be based on records". The new treaty, however, will change this situation. Articles 8, 16 and 24 state clearly that "That institutions of the Communities and the national audit offices or, if these do not have the necessary powers, the competent national departments shall forward to the Court of Auditors, at its request, any document or information necessary to carry out its task."
Finally, the creation of a single Court of Auditors will mean that from now on there will be only one audit authority in the European Communities and that the present duality in auditing procedures will be abolished. Under the existing treaties the Audit Board are responsible for auditing the accounts of all revenue and expenditure in the Community budget except for the non-administrative expenditure and revenue of the European Coal and Steel Community. The audit of this latter non-administrative expenditure and revenue is carried out by the Auditor of the ECSC. Under the new treaty all audits will be carried out by the new Court of Auditors.
Although the changes provided for in the new treaty are, we realise, somewhat technical they will, we believe, lead to some real improvement in the Community not only in terms of ensuring stricter controls over finance but also in recognising the growing importance of the role of the European Parliament in Community affairs. These are objectives which we feel sure the whole House can share. Indeed, the Joint Oireachtas Committee on the Secondary Legislation of the European Communities have already welcomed the terms of the treaty in a report of 7th May, 1975.
The Government, for their part, are in full agreement with the terms of the new treaty which they welcome as a positive contribution to the development of a more democratic and efficient Community. For this reason the Government consider it desirable that the present Bill should become part of our domestic law at the earliest opportunity so that this country may proceed to take the necessary steps towards ratifying the new treaty and thus help to bring it into operation as soon as possible.
I commend the Bill to the House.