Dáil Éireann díospóireacht -
Tuesday, 21 Jun 1988

Vol. 382 No. 5

European Communities (Funding) Bill, 1988: Second Stage.

Minister for Finance (Mr. MacSharry)

I move: "That the Bill be now read a Second Time."

The Bill I am recommending to you for approval is a short one, required for technical reasons, to facilitate payment of part of our budget contribution to the European Communities for 1988. It arises under the terms of an undertaking given by all member states as a result of the agreement reached at the European Council last February on new funding arrangements for the EC budget. This undertaking was required to provide adequate revenue for the 1988 EC budget pending finalisation of the detailed arrangements on a permanent basis for the operation of the proposed new own resources system. The obligation to make this payment may arise shortly and accordingly it is necessary to have the appropriate legislative authority without further delay.

Under the system in operation up to now, the EC budget contribution of each member state has comprised customs duties, agricultural levies and a percentage of the VAT base. From 1986, the maximum allowable percentage was set at 1.4 per cent but this percentage was already reached in that year, clearly limiting the scope for any further expansion of community expenditure. In addition, the VAT system was not fully satisfactory as it did not represent fairly the relative wealth of member states, since the VAT base varies quite a lot between states as a proportion of GNP — from 42 per cent in Italy, to 62.5 per cent in Ireland and 70 per cent in Portugal. GNP is generally accepted as a good measure of prosperity and ability to pay and the new agreed system reflects this. It provides that the VAT contribution of 1.4 per cent will be retained, but with the important modification that the base on which it will be charged will be limited to 55 per cent of GNP. Thus Ireland will be charged 1.4 per cent on a base of 55 per cent GNP rather than on the higher full VAT base. The balance of the contributions will be raised on the basis of the share of member states' GNP in total EC GNP. As well as changing the composition of contributions under the own resources system, the European Council took a decision on the overall level of revenue which will be available to the European Communities: this will involve a new ceiling of 1.2 per cent of Community GNP for payment appropriations. In the past we have experienced a succession of crises related to the EC budget. There have been continuing shortages of funds to fulfil obligations and dire warnings of impending bankruptcy. On reasonable assumptions, the new arrangements should guarantee adequate funding for Community policies for a considerable period ahead.

While it is intended that the new system will apply for 1988, the procedure required to bring a new own resources decision into force at Community level is somewhat cumbersome and is unlikely to be completed until late in the year. In order to provide adequate revenue for the 1988 budget in advance of the completion of the procedure, it was necessary for member states to give an undertaking to provide funds in advance of the coming into effect of the new own resources decision. This was done through an intergovernmental agreement and it is necessary for me to seek specific approval for this extra payment for technical reasons. As you are aware, our normal EC contribution is made from the Central Fund under regulations made under the European Communities Act, 1972. That Act provides that the EC Treaties and all other Community laws are directly binding in Ireland. However, the undertaking given on 7 March 1988 at the ECOFIN Council is by its nature a voluntary undertaking and it is not possible to make payments under it without this new legislation. Some of you may recall that similar legislation was required in 1984 to allow payments under undertakings given in 1984 and 1985.

Section 2 (a) of the Bill covers payments to be made under the undertaking of 7 March. However, the figures included in the undertaking were provisional pending the completion of the EC budgetary process and agreement on outstanding issues on the details of the new own resources system. It is possible, therefore, that instead of seeking payments under the existing agreement of 7 March, a new agreement with the final figures will be formally agreed in the near future. Section 2 (b) is included in this Bill to provide for this possibility.

Ireland's net contribution to the EC budget in 1988 will be about £252 million. This latter figure reflects a £20 million saving as a result of the budget contribution being calculated under the new system as compared with the position if the old system had remained in place. The Bill before the House relates solely, however, to the payment of approximately £32 million out of our total contribution. This is the amount expected to be required under the intergovernmental agreement. I want to emphasise that this is not additional expenditure and that it is already taken into account in our figures for 1988.

The figure of £32 million is not finally settled yet but I have no reason to believe that there will be a significant variation on this. Concern has been expressed from the Opposition benches that this Bill does not set an upper limit on the amount which can be issued from the Exchequer in respect of this agreement. While I do not accept that it is necessary to specify a limit in this case, I am prepared, in order to allay any concern, to introduce such a limit by way of amendment on Committe Stage. I propose to set this ceiling at £40 million to allow for the possibility, however remote, of an increase in the estimated contribution.

Our contribution to the Community budget is substantial but it has to be seen in the context of the present and potential benefits of EC membership. Ireland's net receipts from the EC budget after taking account of the contribution totalled £6,000 million in the years 1973-1987 or about £10,000 million in 1987 prices. In 1986, the latest year for which comparable statistics are available, Ireland's net transfers from the Community budget represented 4.9 per cent of our gross domestic product, the highest percentage of all the member states.

Ireland will, of course, continue to benefit substantially from the Community budget. The package agreed by the European Council in Brussels on 11-12 February ensures that the Common Agricultural Policy will be broadly maintained with moderate real increases in expenditure and that the provisions for the Structural Funds will be doubled in real terms by 1993. This agreement on the Structural Funds will make a significant contribution to cohesion. I might mention that economic and social cohesion is now a Treaty obligation, to be taken into account in all Community policies. This will be particularly important to Ireland when implementing the fundamental changes that are envisaged towards completion of the internal market. While there may be a growing awareness that the deadline is 1992 and that this is no longer in the distant future, the evidence so far would suggest that there is not sufficient appreciation of this. We are by no means an exception as the same problem is being encountered in other member states. The Government will be taking steps shortly to create an adequate awareness of what the changes could mean for our economy and what is required to get the maximum benefit from the new order of things.

Completion of the internal market will offer us substantial new opportunities provided we are adequately prepared to take advantage of the situation. Some of the adjustments required of us will be difficult. In an entirely open market we will stand to lose heavily if we fail to manage our affairs properly and we should be in no doubt about the importance of this. The Government's approach to preparation for the internal market will be positive. We will press ahead as soon as we reasonably can with changes to meet our new obligations.

All Deputies will be aware of the importance of the provision of sufficient revenue for the continuation and expansion of Community expenditure programmes, not alone in terms of their financial benefits to Ireland but more generally in their contribution to the development of the European Communities.

I commend this Bill to the House.

Mr. Noonan

(Limerick East): My party have no objection to this Bill. It is necessary to provide, before the recess, that Government expenditure obligations that arise from EC contributions are met. It would be imprudent of the Government to go into recess without passing the Bill.

The legislation arises from an undertaking given by all member states as a result of an agreement reached in the European Council last February and new funding arrangements for the budget. As the Minister pointed out, the undertaking was required to provide adequate revenue for the 1988 EC budget, pending the finalisation of the detailed arrangements on a permanent basis for the operation of the proposed new own resources system.

As a major beneficiary from the EC, the Minister had no choice but to introduce the Bill. I was interested in the Minister's figures. We are all aware, in general terms, of the benefits of EC membership but it is interesting to note that the overall net contribution between 1973 and 1987 from the EC to our economy was £6.6 billion. If we update that to 1987 prices it is almost £10 billion net to the Irish Exchequer. In terms of our GNP the contribution made by transfers from the Community now represents 4.9 per cent of our gross domestic product. This is the highest percentage of all member states. Against that background, pending the implementation of the new agreement, and the details of the new own resources system, it is appropriate that this temporary facility should be provided to the Government by the Houses of the Oireachtas. I know the total amount involved is approximately £32 million out of a total annual contribution of £252 million.

I accept that the Minister had no real choice but to introduce this Bill today. The spokesman for the Progressive Democrats made a number of points about the legality and constitutionality of this legislation. There is no need for that concern, but I am pleased the Minister has moved to meet at least one of the objections by circulating an amendment to set a limit on the amount of funds that can be disbursed under the authority of this legislation. In the amendment the figure set is £40 million which I presume is sufficient against an expected expenditure of £32 million. When the leader of Fine Gael, Deputy Dukes, was Minister for Finance in 1984 similar legislation was introduced and I understand that payments were made on foot of that legislation in 1984 and 1985 and that these did not give rise to any particular difficulty. I accept that it is necessary for the Minister to get the authority of the House to pay this portion of our contribution to EC funds. I presume the Minister is using the authorisation which is necessary for non-voted expenditure rather than voted expenditure under an Estimate or a supplementary Estimate when he is bringing this Bill before the House today.

The issues which arise on the wider question of the new method of funding the EC and of the difficulties and opportunities which will arise as we approach 1992 and afterwards can be left for a more lengthy debate on another occasion. As far as I and my party are concerned, this Bill is a routine measure of a technical nature which is necessary because the ultimate provisions under which EC funding will operate are not yet in place, and it is necessary for the Government to remain in good standing as a contributor to EC funds. It would be invidious of us who are major net beneficiaries, who are constantly demanding further expenditure at EC level, particularly expenditure in peripheral economies, not to meet our obligations to the EC as they arise. This legislation will enable the Minister to meet whatever contributory obligations may arise over the summer months. I welcome the Bill and the amendments now moved by the Minister. We will not be opposing the Bill.

Mr. McDowell

When this Bill arrived through my letter box I was surprised at the terms in which it was phrased. Section 2 seemed to give rise to a right on the part of the Executive to pay out of the Central Funds in unlimited amounts, moneys not only on foot of existing guarantees made to the other member states of the European Community, but also on foot of future guarantees with no limit as to the amount of those guarantees or the circumstances in which they might be made. Although I fully appreciate that it is not intended to confine our efforts, in relation to assisting in the temporary impasse in European finances, to a sum in the order of that suggested by the Minister, it is not simply a question of lawyers' pedantry that we should establish a fundamental principle in this House, that we never give a blank cheque to the Government in any circumstances, or introduce a Bill the purport of which is to give a blank cheque to the Executive so that they can resort to the Central Fund.

I do not believe there was any bad intention on the part of the Executive because the Minister is an exemplar of fiscal rectitude and control, and parsimony perhaps, in the manner in which the public's moneys are applied. That was not in the back of my mind at all. What was in the back of my mind, and it is something upon which I place a considerable amount of importance, is the general principle that this House must be responsible for what moneys it votes and what authority it gives to the Executive from time to time. Since virtually the Middle Ages that has been the essential doctrine on which parliamentary control of the vote of supply to the State is based. It is something which we cannot wriggle out of or withdraw from or abdicate from in any way.

It would be a major mistake if we set a precedent of putting before this House measures which seem to permit the Government of the day to withdraw in unspecified unlimited amounts, money from the Central Fund without further recourse to the Dáil. It was for that reason that I made the statement which I made yesterday. I made it simply to re-establish the principle that this House is supreme in matters of voting money, and is responsible. It is not simply a matter of asserting a kind of sabre-rattling supremacy over the Government. That is not what I am worried about. I am worried about the acceptance of responsibility every time we vote money or give authority to any Minister to apply any amount of public money. We should know how much that money is and we should know how much it cannot exceed. We should accept responsibility in those circumstances for such payments. We should measure such a payment in terms of its relative importance to other possible drains on public finances.

It is all very well for the Minister to say that this sum of money seems to be about £32 million. It seems to be a figure which is hard to quantify with exactitude because the amount of money is expressed in ECUs and its exact value in terms of Irish punts can fluctuate from day to day. Be that as it may, the Minister is saying he has committed this State to an expenditure of around £32 million in support of the European budgetary process. It is, as Deputy Noonan pointed out, a small fraction of our overall contribution to the European Community. I accept that, but the Minister then says that he cannot with absolute certainty say what amount he intends to be committed to between now and the end of the year.

Section 2 (b) gives the Minister powers to make further guarantees and give further undertakings to the European Commission to help defray costs. It is implicit in the Bill that the exact extent of our obligations by reason of the undertaking already made and those to be made in the future has not been quantified and cannot, by definition, be quantified. In these circumstances a limit must be set in legislation and it is constitutionally proper, and proper in terms of the order of this House, to set in a financial measure an upper limit to which the Executive can have recourse to the Central Fund, without further authority from here.

In 1965 the House adopted the Central Fund (Permanent Provisions) Act, and its provisions permit expenditures to take place without direct authority from this House on the basis of an implied authority to spend up to 80 per cent of what was voted for the same purposes in the previous financial year. That is legislation which I would hesitate to say was unconstitutional but I would hesitate, likewise, to say it was constitutional in that some of the provisions at any rate seem to infringe on the Constitution so far as it purports to authorise expenditure on an ongoing basis outside the financial year to which the legislation in question relates. That puts a question mark over that procedure. At the very least, it must be said that it is limited by reference to some amount, that is, 80 per cent of what was voted by the House for the same purpose in the previous year.

This Bill as originally introduced by the Minister was unlimited. It was unlimited in two respects; in amount and in addition it was unlimited in terms of the basis on which the liability which it would create for the Central Fund was to be computed because it gave the State an implied authority to go to Brussels and make further undertakings which would be binding upon the Central Fund and payable out of the Central Fund and its growing produce, without limit and without further recourse to this House. I fully accept the bona fides of the Minister in this matter but I also equally and vehemently reiterate my view that this House should never contemplate a Bill which is unlimited in terms of the authority of the State to bind this House or to draw moneys out of the Central Fund without further recourse to the Dáil.

The Minister said that provision has been made in this year's budget for the £32 million in question. That was something which I must confess slipped past the keeper on this side of the House. Accepting that that is the case, why then do we have the uncertainties about the amount going up from £32 million to £40 million? Is it correct for us as a House to simply give authority for an upper limit of £40 million without thinking through whether we want to allocate an additional £8 million or give the State the authority to allocate another £8 million at its discretion for the purposes in question? Is it right that this House should effectively say: "We will vote you £32 million, but to be on the safe side we will give you authority to expend up to £40 million to save you the bother of coming back to this House again and getting the balance". There is not a huge anti-European feeling in this House, as it is confined to a very small group, if any, in this House at present. Nor is there any difficulty in getting a Bill such as this, which is enabling legislation, passed if needs be, but it seems wrong to say: "Look, here is a Bill for £32 million but to be on the safe side, give me authority to go up to £40 million". What are we doing? Why is it that we should give authority to the State to commit us further in circumstances where we do not know why they will commit us further or on what basis we are making further undertakings? I believe it is correct and proper for the Government, if they need more money, to come back to this House and to ask us for it and tell us why those £7 million or £8 million are to be expended. A sum of £7 million or £8 million, as we know from all the trenchant debate which takes place in this House, in some areas, could effect dramatic transformations. I need only mention the Ombudsman's Office and other areas to point out that money does not grow on trees and that £7 million or £8 million — although small in terms of European budgetary considerations — is substantial in terms of its political implications on some issues within this jurisdiction. A sum of £7 million or £8 million should not be simply voted by way of authority to the Government to play around with or to use as bargaining material in some process in Europe unless we are satisfied that it is proper to spend those moneys and that the Government needs to spend those moneys on our behalf. The proper thing to do in those circumstances is to come back to this House and to say: "Look, you voted £32 million or £33 million, we have had to make several further undertakings, please give us the authority to expend a further £7 million or £8 million or whatever to meet unforseen obligations which we now have". Why do we have to say: "Look, do your best but you can expend up to £40 million". That is a slipshod way of conducting public finances. It is not right in principle that an unforseen amount should be loosely calculated and a little extra thrown in on top just to save the Government the bother of spending another hour in the Dáil giving an explanation as to why these sums are due.

People can argue one way or another about what is and is not within the competence of the Dáil to do. I believe it is not within the competence of the Dáil at any stage to pass any Bill, the purport of which is to allow the Executive without any limit whatever to have recourse to the Central Fund. Bearing in mind the Government's duty under Article 17 of the Constitution to prepare annual Estimates and the right of the Dáil to consider those Estimates and the prohibition on unestimated and unvoted expenditure laid down in certain provisions of the Constitution, I believe it was entirely in breach of the general right of Parliament to supervise and to be responsible for the moneys that it authorises the Government to lay out, for a Bill in these terms to be put before us. I understand from Deputy Noonan that a similar measure was produced by Deputy Dukes when he was Minister for Finance. The fact that there is a precedent of that kind does not impress me; it worries me all the more and it makes me feel it was all the more important that somebody should stand up in this House and say: "No more blank cheques. Every time you come to this House looking for a certain sum of money, you come to this House with an explanation for it and you justify every last halfpenny of what you propose to expend. If you want to make more undertakings in Europe you come back to this House and tell us what you have done and why it was necessary to spend those extra moneys in the manner contemplated". I am not nit-picking, I am not being pedantic or obstructive but I am insisting that we take responsibility for our job which is to ensure that the taxpayers' money is applied fairly and squarely in accordance with a rational explanation and in accordance with our view of the priorities of the situation.

I believe that the European Community is of such fundamental importance to this country that we should not be niggardly in any way in our approach to it, that we should play our part fully and shoulder fairly and squarely our share of the burden of a budgetary impasse such as exists now in Europe. I fully accept all those propositions. I do not want it to be thought for one minute that I am mean-minded or petty in relation to the European Community. I believe this House would not take such a view of its moral as well as legal obligations under the Treaty of Rome. I understand from this Bill that, although these are not necessitated obligations under the 1972 Act, therefore requiring recourse to this House for authority, they are considered by the Government — and correctly so — to be moral obligations in terms of making the system work and politically being willing to take the necessary decisions to keep the European budgetary process in being and in good standing.

This teaches us yet another lesson. I was listening to Deputy Bruton talking about the European Patent Convention a few moments ago and saying it was a sad day for this House when the necessitated obligations provisions were written into the proposal to amend the Constitution and that the original wording as proposed by the then Taoiseach, Mr. Lynch, which was "obligations consequent on our membership" was taken out. Many things, such as the European Patent Convention and the need to get special authority for special measures such as this, flow from the fact that we take a very minimalist approach to our willingness to undertake our obligations as members of the European State, that we undertook, only to bring into law and to give financial support to necessitated obligations. That was a sad day and it was a mistake which this House made. If we need to have a referendum on a Patent Convention, it will show how foolish we were to have been so niggardly at the time. In the process of constitutional reform whatever shape that takes over the next ten to 15 years, I certainly hope we get to the stage that necessitated obligations cease to be the extent to which we are obliged to comply with the European treaties and that we take a more open-minded and positive constitutional view of our membership of the European Community.

The Minister has come before the House with a Bill that is unacceptable. I readily acknowledge that he has decided to amend the Bill to include an upper limit although he denies there is a necessity to do so but I do not accept the amount of the upper limit. I do not think it is right to produce out of the hat, to conjure out of thin air a figure of £40 million and ask if that will please all concerned as if the point I was making was a legalistic and technical one. It is not. My point goes to the root of the issue, we are voting to the Government authority to spend either £40 million or £32 million and we should not vote such authority to them unless there is a pressing case made for voting £40 million as opposed to £32 million. I accept that the ECU/Irish punt exchange rate may fluctuate and that it is reasonable in those circumstances to provide, perhaps on a £32 million liability as at present conceived, a £33 million liability. I have tabled an amendment for Committee Stage for that purpose but I cannot see why we should say, "let us go for a nice round figure of £40 million and give the Government authority in regard to it". That to me is irresponsible. It is an abdication of parliamentary responsibility to say, "choose any old round figure and do the best job you can for us".

That is part of the thinking that raised a question mark in the minds of the Progressive Democrats about the Bill and the manner in which it was cobbled together. I suggest that it was cobbled together, perhaps on the basis of Deputy Dukes' precedent, in a hurry without giving adequate thought to the implications of it. Although it is now limited I suggest that it should be limited more substantially and that the figure of £33 million should be inserted instead of the £40 million as suggested by the Minister. I want to make it clear that the House is not in the business of empowering the Government in nice round figures to go off and do the best they can for us in some bargaining process. If the Government want more money let them come to the House and explain why it is necessary that the House should give it. On that basis I want to indicate oppositon to the Minister's amendment and to the substance of the Bill.

Tomás Mac Giolla

We are not opposing the Bill but I shall be expressing serious reservations about the Government's attitude to the EC and developments anticipated between now and 1992. It is significant that the Bill is being put through the Dáil on the day after the Minister for Foreign Affairs withdrew the conditional reservations which Ireland had expressed about the promised level of EC support we would receive under the social, regional and farm funds, as decided by the Heads of Government in February. The Minister announced yesterday that Ireland's reservation was being withdrawn and he seemed to indicate some guarantee about a doubling of funds. However, there was no such guarantee despite the promise in the course of the Single European Act campaign.

Our decision to join the EC in 1972 brought about the most significant change in our history from an economic point of view. The changes that will occur between now and 1992 will be as important. They will be traumatic for some and, possibly, give opportunities to others. There is no doubt that those changes will have a great impact on us all. In the past the EC was described as a rich mans's club and that was a correct description at the time. However, with the addition of Spain, Portugal and Greece that description is not altogether accurate. Nevertheless, the EC is clearly based on preserving the developing capitalism in Europe and establishing the area as a power bloc.

In 1972 our party opposed the country's entry into the EC for a variety of reasons. The Community then consisted of six members, five of whom were former imperial powers. At the time we believed it would be possible to develop an independent economy based on association with EC states and non-EC countries who had association agreements with the Community. However, 15 or 16 years on our economy is so inextricably linked with the EC, financially, economically and even politically, that it would be very difficult for us to withdraw. In addition, the entry of countries like Spain, Portugal and Greece, has given a new dimension to the EC. As a result of their entry there may be further expansion in that area.

There is no doubt that the impact of EC membership here has been very mixed. Many of the predictions we made at the time of our entry proved to be true. We still have a worry about political developments and the threat to our neutrality. In social areas, and in regard to such issues as equal pay for women and so on, the Community has proved a positive force but on the economic front the traffic has been almost one-way. In other words, it was seen to be a farmers' EC. The farming community obtained great benefits but it was a siphoning-off process rather than a development of agriculture. While that was happening there was a huge loss of jobs here. When we joined the Community in 1972 we had what we thought was very high unemployment 80,000 people, and we thought the EC would help us overcome that problem and bring us to full employment. I should point out that we did not think that was likely to happen but full employment was the prediction of those who advocated membership of the EC. However, 16 years later there are 250,000 people unemployed and emigration has risen to almost 30,000 annually.

During the course of the EC referendum campaign, and at European election campaigns since, posters have drawn attention to the prospect of markets in Europe for our products and more jobs at home but, unfortunately, such statements have proved to be wrong. The forecasts of those who were opposed to our entry into the EC have been more in line with what has happened. The slogan of those who opposed entry, "into Europe; out of work", has proved to be more accurate.

Many of the claims being made about the completion of the internal market by 1992 are similar to those made by people who advocated membership of the EC in the 1972 campaign. I have no doubt that many of those claims will prove as unfounded as those made in 1972. The EC has not brought benefit to major urban areas. Dublin is just one example and no doubt there are other towns that ask, as Dublin asks, "what has the EC done for us"? All they can see is huge job losses and companies going into liquidation. There were many job losses in the clothing and footwear industries and in the car assembly industry. Thousands of jobs have disappeared and they were not replaced by the new companies who were invited to establish industries here. Many of the reasons for our high rate of unemployment are due to the terms under which we entered the EC in January 1973. Negotiations at entry took place under a Fianna Fáil Government and much of them had taken place under a previous Government but whatever Government were involved they must be faulted for the terms of entry which led to the collapse of so many traditional industries. They then failed to produce the bonanza of jobs to replace them.

Since our entry to the EC each Government have failed to confront the issue that faced us on entry, namely, the fundamental weakness of the Irish economy in this strong European industrial bloc. That is a fundamental weakness which we all saw, and I am sure the Government saw, on entry. It should have been tackled from the beginning but that has not been done. We still have the same fundamental flaws and weaknesses in technology, marketing and in every area of the industrial and commercial life of the EC and we are failing for that reason. That is what frightens me about 1992. We do not seem to have used our 18 years' membership to develop the type of economy that will be essential if we are to have harmonisation under the Single European Act and if we are to face the competition on equal terms within an EC free market both abroad and at home.

There is no sense of urgency by the Government, even half-way through 1988, to cure that fundamental ailment which we have had since we entered the EC. Are we going to continually go around with the sort of begging bowl attitude of the IFA and people like that within the EC rather than face up to the challenges? Everybody talks about what a marvellous challenge it is, but a challenge is no use unless you are able to defeat it. Unfortunately, we are not in a position to meet and defeat the challenges as we should be. That is the problem.

We have always believed that at least a doubling of the Structural Fund was necessary to protect the country from the full impact of the completion of the internal market in 1992. Given the failure of the Irish economy, capitalism and successive Governments to develop our economy and our infrastructure, particular measures are needed to ensure that Ireland does not fall even further behind the other more advanced European countries. This need has been recognised by many other people. In February last the Governor of the Central Bank, Mr. Maurice Doyle, speaking in Strasbourg, stressed the need for the Community to devote more resources to the poorer member states, warning that Ireland did not want to become the Appalachia of western Europe. He said that economic and monetary integration would not necessarily improve the lot of poorer countries. This is something we do not seem to have grasped. Irish concern about integration represented a real fear that the achievement of economic and monetary union would result in the further impoverishment of the less developed countries at the periphery. This is a possibility, more likely as each year goes by, unless counter-measures are taken.

It is for these reasons that The Workers' Party said that prior agreement on the extent of the increase in funding for the Social and Regional Funds should be a precondition for ratification of the Single European Act. During the referendum campaign, we were assured by supporters of the Act that the total allocation for the Community's Regional and Social Funds would be doubled and that Ireland would be entitled to the same percentage of the enlarged fund as it had received in previous years of the smaller fund. This was the proposal made by the President of the EC Commission, Mr. Delors, last year but since then consistent efforts have been made by the wealthier countries to water down the proposal. If the commitment contained in the Delors proposal had been honoured, Ireland would have stood to gain more than £860 million. It appears that Deputy Lenihan and Deputy Haughey have settled for less than £600 million. It can be seen that the advice of The Workers' Party during the referendum campaign on the Single European Act that a firm, unambiguous commitment on the extent of increases in Structural Funds should have been a precondition of ratification of the Single European Act was sound political sense. Supporters of the Act told the public that this was an unnecessary safeguard.

What has been holding the fort since is that the Minister for Foreign Affairs had a conditonal reservation imposed but that was withdrawn yesterday. I do not think any guarantee was asked for — certainly it was not received. It was made clear yesterday that there is no absolute guarantee that Ireland will achieve a doubling of our 1987 allocation by 1992. That was something we were all promised under the Single European Act but the Minister has now withdrawn his reservation and there is no going back. The European Communities (Funding) Bill is now going through and we will just take whatever we are given. The people who work hardest in trying to grab their share are the ones who will get it. There will be an overall doubling of the funds available but who will get those funds? No guarantee has been given that we will get them unless we scramble for them like everybody else in a rather ridiculous fashion.

We are not opposing the Bill but we are sounding a warning note that we have not heard the last of this issue. We are again going blindfold to the EC to see what we can grab.

Mr. Kelly

When reading and listening to the Minister's speech what struck me most of all was his cumulation of the benefits which we are estimated to have received from the EC over the years since we have joined. We have received £10 billion since 1973. When one thinks of a figure like that and remembers that it represents the big end of an entire year's budget, one has to ask oneself where has all the money gone. What has happened to that £10 billion? How much of it is visible in increased investment, in widely increased industrial employment or in a much improved infrastructure? I do not deny that there are visible improvements but they are almost all at, what I might call, the consumption level. I do not despise that either because even the provision of goods and services for consumption implies employment and the spreading around of wealth but I am not sure we have made the most use of that £10 billion over and above what might have been there had we not been a member of the Community at all. A great deal of it has seeped away in unproductive consumption and the fault for that must lie not with the European Community which is not in any way to blame for that, but in ourselves and in the defective leadership and irresponsible financial stewardship which Governments since that time have favoured us with.

It is a sobering thought to ask oneself what has happened to all that money. It certainly does not appear to have been roosting in the mattresses of the farming community to judge by their never ceasing complaints about this and that, and I am not so sure I can see it in any high profile around the country, if you except the very large increase in the number of prosperous one-off houses, many of them in areas which a good planning policy would have prohibited from being built. Unquestionably there are sectors, such as holiday tour operators, garden centres and so fourth, which exist in a level of prosperity which was unknown in 1972 or 1973. Leaving these things aside, I wonder if we can put our hands on our hearts and say that that £10 billion has been laid out to the best advantage, in particular for the most productive advantage so far as enabling us to take off from a higher level is concerned.

We are always lecturing the poorer nations and others about how our approach to them consists not in giving them a sack of potatoes to eat today but in training them to plant their own potatoes for tomorrow. We have not applied that lesson to ourselves in the way in which the benefits of EC membership have been consumed, and in particular the benefits of a non-financial kind that have been as good as totally ignored here.

There is some curious level of the Irish brain, connected with its history and infantile recollections of ballads and so on, a lot of words which, in the same language in other countries or in their linguistic equivalent in other languages, hold overtones of disparagement, like "illegal" or "felon" which in this country seems to mean something different and to be worth a cheer and raising a glass to. I do not want to belittle, or appear to make a small point or short work of what I read as the plight of our illegal emigrants to the United States, but presumably they went knowing their status. I know a travel agent who tells me that he has sold hundreds of tickets in the last year or so to people who tell him that they will not be using the return half of their ticket. People who go to a foreign country in such conditions cannot expect to be dealt with otherwise than as illegal immigrants. I am genuinely sorry for somebody stuck in that position through no fault of his own, but I know many people have left jobs in Ireland and travelled that way, and I know a very large number who are not in that category, but that will not save me from the imputation that I have said otherwise because I can never touch a theme like this without being misrepresented. Nevetheless that is so.

When I read about the plight of the illegals and the Government expecting gratitude for giving £250,000 to emigrant sectors in London for wretched, uninstructed, penniless people who arrive there without jobs, qualifications or a roof over their heads, what I would like to know is this: why have we not made use over the last 15 years of freedom of movement, the freedom of establishment, which membership of the EC is supposed to provide us with? We have done nothing on that level and no Government have tried to encourage anybody to do anything on that level, and no Government have planned for use of that facility, educationally, industrially or any other way.

When I say there are opportunities in Germany or Holland, people look at me as if I had two heads, as though it were in some way unreasonable to expect them to make use of an opportunity of that sort which requires, say, a linguistic capacity which no one has led them to suppose would ever be necessary. That is an area in which we have not made use of our EC membership.

All this talk about £10 billion does not impress me one bit. It would have been far more to the point had the opportunities which the EC offer us of widening our horizons to the European continent been grasped with both hands, if it had been seen as somewhere open to us to conquer, as it still is. We have a lot of work to do before that becomes a reality and there will be many a laugh at the expense of people who say these things before it is a reality. That is what we have let go in our EC membership all for the sake of £10 billion, much of which I believe has been dissipated unproductively.

I heard Deputy McDowell talk about how unhappy he was at the niggling spirit of Fine Gael in 1972. I do not want to make a personal jibe at his expense, but he may have been willing to sincerely defend the caution on the part of Fine Gael in those days. Being a fair bit older than Deputy McDowell, I remember, probably better than he does, the original expression in the Fianna Fáil draft for the extra section in Article 29 which, as he said, spoke of measures which were consequent on membership. This party, oddly enough, were as concerned about national sovereignty, repugnant though that proposition is to the national orthodoxy represented by gentlemen over there, were not anxious to give a blank cheque to whichever Government were in office and were not anxious to have it said we could do this in the sense that it was a consequence that ought to follow. We said — and I still think — that "necessitated" is the correct expression.

We also had to deal on our left with a conglomeration of parties, some of them constitutional and some of them slightly less so together with a ragtag and bobtail of every gunman and bully in the country, advising us to vote no. As it happened, they only raked up 16 per cent or 17 per cent of the vote, most of that harvested by a very decent and rational campaign conducted by the Labour Party and by one or two non-political movements outside. One of the reasons which induced many people to vote yes was when they looked at the kind of people — I do not mean the Labour Party — who were urging them to vote no. They were looking across the political field far outside the walls of this House, looking at gunmen and savages of every kind and description saying "vote no, you will be destroyed if you go into Europe". My feeling was that we would be destroyed if we did not go into Europe, if we were left at their mercy, and I still feel that way. The more integration we can have with Europe, if for that reason alone, the better because it will give every last Dane, Italian and Dutchman a vested interest in maintaining civilisation on this island, something I would not have been confident of seeing happen had the people I am speaking about got their way, or should they ever get their way.

It was, therefore, necessary politically for this party not for short-term political gain but in the longer view as it seemed to us at the time, to tighten up that expression and to make it clear that the Constitution would only cover whatever, in the way of legislation or Government activity, was clearly obligatory on our signing of the Treaty of Rome. I could not apologise for that now. I know it is a nuisance, there are all kinds of nuisances in the law. I could not apologise for having been a very small part of the machine which added that.

Deputy McDowell also spoke — and I have a lot of sympathy with his general position about this — about the need for the Dáil to have control over its expenditure. Although this is a proposition which has a very respectable and dramatic history in this part of the world and in the constitutional tradition to which we belong, going back to the 17th century and beyond, it is in very large measure something of a fiction in this country. If we are going to have a review of the Constitution — I hope I will be believed in saying that this is not another cut at Deputy McDowell — I propose that we do not merely confine it to thinking up ways of flattering pluralist cranks, the kind of people who would be offended if the Angelus is played at 6 o'clock, before the television news. It would be more important if we were to do it bit by bit as necessity dictated. If it were being proposed by any party to look at those parts of the Constitution which bear on the State's finances, that would be a holy and a wholesome exercise. We might find a lot of agreement among all sides in that regard.

It is not rational that, in this House which thinks it has control over public expenditure, we cannot ask questions about large decisions made by CIE or by the IDA. We can ask questions, but not in the same way as about direct Government expenditure, in relation to the disposal of lottery funds or things done by Telecom or An Post. Where is the sense in talking about control over State moneys when this House is foreclosed from discussing the disposal of colossal sums of State money which the public have had to provide in whole or in part or money expended by concerns against the failure of which the public are regarded as being an insurer? Even in the insurance industry, which is not in the public sphere, the public have had to step in and insure.

Either we give up the fiction about the Dáil having control over public expenditure or bring practice somewhat more into line with reality. The Dáil's control over past expenditure is very defective. By the time the Committee of Public Accounts get their teeth into some detail which has surfaced in the report of the Comptroller and Auditor General, the damage has been done and the liabilities have been run up. Somebody on the committee may get a headline or two by lambasting some official who has been drawn from the comfortable gloom of the office where he normally works and is spending an uncomfortable hour or two in Setanta Buildings with a lot of Deputies trying to make headlines out of his skin. That kind of control is extremely imperfect. The horse is gone from the stable by then. For the Dáil to flatter itself that the Committee of Public Accounts, or the Committee on Public Expenditure which existed in an uneasy relationship with it during the last Dáil, represents an effective check on expenditure is to delude itself. It may well be that a particular official will pay attention to some detail next time because he will not have forgotten the scalding he received the last time. That is, of course, very salutary but it does not get the money back again or guarantee that there will not be some further loss to the public in the future through some different chink in the armour.

This Bill apparently has a precedent in a Bill from our own side in 1984 or thereabouts. I did not know this until I heard Deputy Noonan very fairly admit it. I am sorry it has this precedent. I accept that there is nothing in any way sinister in the intent which the Bill incorporates and I naturally accept every word the Minister has said about it. In a general way it is undesirable to have the Dáil authorising an expenditure of which no detail appears in the Bill. Admittedly the Bill refers to an undertaking by the Government but it does not give any explanation of what the undertaking is about, nor is there any hint that the expenditure is of a quite exceptional kind. It is not altogether without precedent for the exceptional character of a measure enacted here to come through in the Bill's title. This Bill might have been more properly titled had the word in parenthesis in the title read not "funding" but "exceptional funding". I understand it is an exceptional measure intended only to tide the Community over the technical difficulties which this year will present. The format in general is undesirable and I should not like it to be resorted to by State draftsmen in the future in some quite different context which might have nothing to do with the Eruopean Community.

Deputies will remember the history of the Emergency (Imposition of Duties) Act of 1957 or 1958 introduced when Mr. Lemass was Taoiseach. For some reason he had charge of the Bill in the House, to the best of my recollection. I must confess my financial expertise is insufficient for me fully to understand the reason for its introduction. It was designed purely as an emergency technical measure to combat some disastrous movement in Irish currency. That measure is still on the Statute Book and can be resorted to this afternoon by the Minister if he so chooses in order to put an unlimited amount of extra taxation on people through the excise mechanism. The Act provides that the imposition of duty is valid and does not have to be authorised by this House until the end of the year next after that in which the duty is imposed. In other words, the Minister could, by the stroke of a pen, impose a duty without any need to have it authorised by this House until New Year's Eve, 1989. If I have misremembered any details of that Act, I apologise. I believe I am correct in its substance.

I remember such an imposition in the early days of Liam Cosgrave's Coalition Government when Richie Ryan as Minister for Finance put 15p on a gallon of petrol at the time of the oil crisis. At least that Government did not leave it to be said that the Dáil had no opportunity of debating it. A couple of days of Dáil business were given up to debating that measure, which instantly put tens of millions of pounds into the Government's hands. That is an example of how a legislative technique or format adopted for an emergency or exceptional purpose became normalised, part of the scenery.

The constitutionality of the Imposition of Duties Act is highly suspect. I can see that there may be a necessity for such a thing but it does not appear to me to square with what the Constitution says about the Dáil's control over finance. It might be well to look at the parts of the Constitution which deal with State finances, without causing any annoyance in this world or the next, to see if they could be brought more into line with the requirement of the present day.

The last thing I want to ask, not in any rhetorical or argumentative way, is whether there is before the Dáil a message from the Government signed by the Taoiseach recommending the purpose of this expenditure to the House. Every Deputy will have seen such messages in his pigeon hole. They are sent by the Government and signed by the Taoiseach in conformity with paragraph 2 of Article 17 of the Constitution, which states:

Dáil Éireann shall not pass any vote or resolution, and no law shall be enacted, for the appropriation of revenue or other public moneys unless the purpose of the appropriation shall have been recommended to Dáil Éireann by a message from the Government signed by the Taoiseach.

It may be the practice to allow a Bill to roll through this House and to produce this message at the last moment. I certainly have not seen such a message today in my pigeon hole. Perhaps other Deputies have. I wonder if the practice is merely to circulate this thing at a later stage and whether that conforms with Article 17. As I read it, we are not even allowed to agree the motion for a Second Reading of this Bill in its absence.

Mr. MacSharry

It was 15 June last.

Mr. Kelly

In regard to this Bill?

Mr. MacSharry

Yes.

Mr. Kelly

But this Bill is now being amended.

Mr. MacSharry

In regard to this Bill it was given.

Mr. Kelly

But this Bill is now being amended.

Mr. MacSharry

We expect it will be amended on Committee Stage.

Mr. Kelly

In that case I need not pursue that point. That is really all I wish to say about it. I do not want this format to become usual. I think that this and other procedures which we have in the financial area do not sit easily with what not only the Constitution but the general conventions and traditions of this kind of country dictate, and that a review in this area would be welcome.

Mr. D. O'Malley

I will be very brief. Deputies Noonan and Kelly have made the point that the European Communities (Supplementary Funding) Act, 1984, was a precedent for this Bill and therefore there is nothing particularly novel or unusual about it. With the greatest respect, I would disagree with them because it is not a precedent. The 1984 Act is different. At first sight it looks very much the same because the drafting of it is the same, but the Bill before us talks about making payments to the European Communities and they are outright payments. What the 1984 Act dealt with and gave permission for was the making to the Commission by the Government out of the Central Fund of what are described as reimbursable advances. In other words, in 1984 we were lending money to the Commission which the Commission were obliged to repay when they had the resources to do it, and which I hope and presume they did repay. To lend money on the basis that it is going to be repaid, particularly where it is a major public institution like the European Commission where one can expect to be repaid, is totally different to actually making outright payments in this case, again to the Commission, with no expectation of repayment. Therefore the 1984 Act is in no sense a precedent and the reservations expressed by Deputies McDowell and Kelly about the whole principle of a Bill like this allowing the Government to make unspecified payments without coming back to the Dáil is, in my view, wrong. The reservations that Deputy McDowell had about it are perfectly valid and well founded.

The Minister, entirely in response to what Deputy McDowell had to say yesterday, has partly mended his hand by putting a limit in. I am glad he did it because if this Bill were passed in its original form without the major amendment — and it is a major amendment which changes the whole nature of this Bill — it stood a grave risk of being unconstitutional. It may seem only a minor amendment because it is the insertion of only half a dozen words and a figure, but it affects the principle of the Bill enormously by putting a limit on it, and I am very glad it does. The Bill is utterly different to the Act of 1984 which was making a repayable loan and does not talk about anything other than what it describes as reimbursable advances.

This is quite different. I am concerned about the whole principle of the Dáil being expected, or the Government being allowed, to undertake obligations of this kind and to come along in a Bill like this and say that it is a pure formality, that it is a technical measure or whatever. On the other side of the same coin, we had recently, in a Bill that was guillotined through this House in a couple of hours one night, a provision which was never debated at all and that I thought was extremely dangerous. That was that in an ESB Bill it was provided that the ESB shall pay to the Minister for the Environment or to the Exchequer such sum as the Minister for the Environment may determine from time to time. That was the most open-ended taxation that one could possibly imagine and it seemed to me to be an extraordinary provision. Unfortunately, we never got a chance to debate it. This is the obverse side of the same coin. This was open-ended expenditure at the whim of the Government without any limitation. At least there is some limitation now.

What Deputy Kelly was talking about in regard to the 1958 Act was wrong in the sense that what he was talking about there was taxation and an open-ended way of imposing taxation without the consent of the Dáil. What we are talking about here in this Bill is expenditure. I assume that when the new system referred to here by the Minister is implemented by a formal instrument of the Community it will then be regarded as necessitated legislation and it will not require any renewal of this type of legislation because of the fact that it will be necessitated and not optional. I assume therefore that the opportunity to debate that particular aspect will not arise at that time and that the payments will be made under the 1972 Act as necessitated payments. So I would like to take this opportunity to say I welcome very much the change that is being made away from the VAT-related base to a GNP related base, which is fairer and more sensible and certainly beneficial to this country and, I think, unobjectionable to any of our 11 fellow member states. I would hope that the new system will in fact be agreed and implemented at the earliest possible date. The voluntary interim system we are talking about here in this Bill is very unsatisfactory, both from the European point of view and from the point of view of our own legislation, because it is wrong that this kind of Bill should be brought forward even though a major defect in it has now been cured by the proposed amendment of the Minister.

I would draw attention again to what Deputy McDowell has said in relation to the rather arbitrary way in which a round figure of £40 million is plucked out of the air allowing plenty of room for manoeuvre —"what about an extra £8 million? Hopefully we will not need it" but the Dáil is instructed to vote to allow it anyway. That is the wrong approach and I would like an assurance from the Minister that when the new system is formalised it will be covered by the necessitated obligations clause in the Constitution and in the 1972 Act——

Mr. MacSharry

The answer is yes.

Mr. D. O'Malley

——and that the necessity for these kinds of arrangements will not arise.

Mr. Desmond

I welcome the Bill. Like my colleagues on these benches I welcome the seeding down incorporated in the Bill itself. I recall the 1984 legislation. I do not particularly share the qualifications by Deputy O'Malley relating to the concepts of reimbursability because there is quite a similarity between what we went through in 1984 and 1985 and what we are currently ordaining in the House. I am going on memory but I would be more inclined to dispute the prospect of the concept of reimbursement payments as outlined. I await the Minister's response and I think he may defend previous Governments.

Mr. MacSharry

I certainly will.

Mr. Desmond

It will be of interest.

Mr. D. O'Malley

It is much easier to defend the issue of reimbursable advances than it is to defend the making of payments with no strings attached.

Mr. Desmond

I do not think it is as open-ended as that.

Mr. MacSharry

Read section 2 (b).

Mr. Desmond

I welcome the proposal to set the ceiling at £40 million as I think that is a sensible and quite necessary move. The only other comment I would make is on the change from using our VAT base as the basis for our contributions to using the GNP base. Again, I think this is a wise and necessary step. If I may sound somewhat heretical, I have a healthy degree of scepticism about how we calculate our GNP. I do not want to discuss this matter in detail now but I think our GNP is higher and larger than we have consistently reported or indeed managed to compile. Despite a substantial degree of cross-checking I still have an instinctive, almost anecdotal, reaction at times to the manner in which our GNP base is compiled. The more I look at it, the more I observe the economy, the transfer pricing system within our economy and the manner in which returns are made to the CSO from our manufacturing base and the self-employed, the more and more sceptical I get. I think there should be a good deal of political analysis of this issue; but unfortunately, due to the various pressures which many of us are under, we do not undertake that task. I believe that we can give more attention to this issue and I was very interested indeed in Deputy Bruton's questioning in relation to the manufacturing side in recent weeks. I think the points he made are entirely valid. But, be that as it may and not wishing to see Ireland pay any more than we can lawfully get away with, I welcome the Bill and I am glad that it will be enacted before the summer recess.

Mr. J. Bruton

We are paying this extra money in order that the 1992 package will work to our advantage. The most important thing we need if the 1992 package is to work is access to Europe and access to this country from Europe and the free movement of ideas, money and, above all, people. How can what the Minister has said about our contribution be rendered consistent with the report which appeared in today's newpapers which stated that the Italian Government are blocking Aer Lingus from carrying passengers between Manchester and Milan, a right that the Irish carrier obtained following the laborious negotiations of an airline deregulation package? This gave the Irish airline, Aer Lingus and the Portuguese airline, TAP, the right to carry passengers between third country destinations.

In this instance, Italy as it now boasts, has as large a GNP per capita as Britain. The Italians have got quite good at making this favourable comparison between themselves and Britain and of course this means that they have a GNP per head substantially larger than ours. While talking about the 1992 deadline they bar our airline from carrying passengers between Milan and Manchester.

An Ceann Comhairle

Surely, that is a matter for another Minister.

Mr. J. Bruton

We are contributing this money to the European Commission and one of the responsibilities of the European Commission is to vindicate our rights in matters of EC law. I contend that our rights are not being vindicated in this case. Having said that, I will not pursue this matter any further.

Let me make a few points on this Bill. I share the concern expressed by Deputy Desmond a few moments ago about anything based on our GNP. This figure is a very elastic one indeed because of the large percentage represented by exports of certain large multi-national companies. As far as I am aware, the value of Coca Cola and Pepsi Cola essence exceeds the value of our dairy exports, yet the impact on our GNP is minimal. The number of PAYE taxpayers employed in the Cola industry who will contribute the money which the Minister will hand over to Brussels is tiny when compared to the number employed in the dairy co-ops and farms and so on. The value of the Coca Cola and Pepsi Cola market — excuse me if I am advertising — is as big as the dairy market and there is nothing illegitimate, illegal or improper about any of this. There are ways in which companies decide on the value of intra company transactions in order to maximise the size of the transaction in Ireland, which is a low profit zone, and thus minimise the tax paid by the company. They pay their tax in Ireland rather than somewhere else where the tax rate on corporation might be 40 per cent or 50 per cent as against 10 per cent here.

A very detailed article on this subject appeared in the March edition of Business and Finance. I drew the attention of the Taoiseach to this article when asking a parliamentary question but he did not answer that question. He said that our figures are perfect and that we work on our figures. That is fine but the Taoiseach would say that, would he not, as a famous lady said on one occasion? For the purposes of analysis one would need to go a little deeper than that. To my mind, looking on GNP as a basis is not ideal. I am not making this point in an effort to score points vis-á-vis the Minister or the Taoiseach. This deal has been coming up the tracks for a long time and the Minister and his Government have had the good fortune to be able to set the seal on this deal. I think it probably did not make much difference which Government were in power as this probably was going to be the deal.

I agree that moving to a GNP base has some merits for a country such as ours which has a relatively low GNP, even if it is rather inflated. At the same time we should examine our GNP, given that it is going to be used as a basis for our contributions to the EC to see whether or not it contains a degree of inflation for the reasons I have mentioned. To put it at its crudest, it would pay the Minister for Finance to re-examine our GNP figure and the value of our exports in that regard.

I am a little worried that we are moving away from the VAT base, which was a non-nationalistic way of determining who should pay — there was a VAT base across the whole of Europe and you took a certain share out of that — towards shares based on the GNPs of individual countries. That is more likely to be the subject of invidious comparisons than the original, more neutral system. I see some dangers in that in the long term from the point of view of Europe acting as a unit because its people are being taxed on the basis of their individual national GNPs rather than on the basis of some neutral European measure. I ask the Minister whether he and his colleagues in the ECOFIN Council have considered that aspect as being of any long-term value.

According to the Minister, the need for this legislation arises because of an undertaking given on 7 March 1988 at the ECO-FIN Council. By its nature it is a voluntary undertaking and, therefore, the Minister cannot say he has to make those payments and that he requires legislation to pay them. If he had to pay them under an EC regulation he would already have clearance to do so. Given that the Minister faces that difficulty can I ask him why our Community partners are prepared to make a regulation for us which would put the voluntary undertakings that have been given in a legal form? That seems to be a relatively small procedure. The Community makes regulations every day so why can it not make a regulation on this? I do not raise this question purely from the point of view of this case; on the Order of Business today I raised a similar matter with the Taoiseach, it was that we, as a nation, are faced with the possibility of having to have a referendum to enable us to ratify the Community Patent Convention. If the European Community Council of Ministers would agree to make a regulation saying that all member states have to ratify the European Patent Convention we would not have to go to the bother of having a referendum. The Council is not prepared to make a regulation and this will put the Minister, or the Government of the day, whoever they may be, to the trouble of having a referendum.

Mr. McDowell

That is not exactly fair. It cannot make a regulation for something which is voluntary.

Mr. J. Bruton

I am not going to compare my knowledge of EC law with Deputy McDowell's knowledge of it. It would be a most hazardous exercise for me to engage in and I might not come out the better of it. However, with respect to the expertise of everybody here, I believe that if the Community wanted to find a way around that problem it could do so by means of a regulation. I hope the Minister will indicate why in this case, and in the other case I mentioned if he cares to refer to it, the Commission is reluctant to make a regulation which would get us out of the difficulty we are in.

There is something else which is totally contrary to the idea of a Community budget and, as such, the European Community — the famous British rebate, where one member state, because it does not like the way the rules apply, is getting cash. Could the Minister give an indication as to what is the future of the British rebate? Are we contributing towards it? Is it in line with Community practice and what is the likelihood that it will be negotiated out of existence in the future? The Minister said that, on reasonable assumptions, the new arrangements should guarantee adequate funding for Community policies for a considerable period ahead. May I ask the Minister to be a bit more specific about that: how far ahead, and what are the reasonable assumptions he is making? Is he assuming a rate of growth in Community expenditure below the rate of growth of Community GNP or above the rate of growth of Community GNP? If, for instance, Community expenditure grows at, say, 2 per cent per annum in excess of Community GNP growth, how long, under these arrangements, would we be within the limits and when would we have a new budgetary crisis? Perhaps the Minister could answer those questions as well.

There is another point I should like to refer to. The Minister said that social cohesion is now a Treaty obligation to be taken into account in all Community policies. Social cohesion means the better off countries looking after less well off countries and people within the Community. We get something in the region of £1,200 million a year from the European Community funds, of which £900 million comes from the Common Agricultural Policy. The Community, in its recent publication, The Economics of 1992, made it quite clear that it believes the reduction of agricultural prices in the Community to world market prices is inevitable. It carried out an exercise in the same document to show the effect of a 10 per cent reduction in Community agricultural prices and argued, significantly for Ireland, that the Community would be better off as a result of such an exercise. It says that consumers and taxpayers would be better off but that producers would be substantially worse off. The word “producers” reads “Ireland” because as I pointed out, three-quarters of what we get from the Community comes in under the Common Agricultural Policy. That is social cohesion for us. If the Community intends, as was clearly signalled in the document, The Economics of 1992, to try to move the prices of agricultural goods towards world prices that will mean very substantial drops in agricultural prices and in the transfers from the Community funds to Ireland, drops in both terms of support for intervention buying and in support for export rates on exports to third countries. Perhaps the Minister would indicate, drawing on the document, The Economics of 1992, what the effect would be on the Community budget and on Irish receipts from the Common Agricultural Policy and Community budget of a 10 per cent reduction in agricultural prices as set forth by the Commission as an exercise in the document to which I have referred. Would we not be substantial net losers in the Community as a result of such an exercise and, if so, by how much? What effect would that have on Irish receipts from the Common Agricultural Policy? These are questions which need to be answered on this occasion and I hope the Minister will be able to do so.

Minister for Finance (Mr. MacSharry)

Many points were raised in this debate. Many were relevant to the legislation before the House and others were in relation to the philosophy of membership of the EC, the possibilities that existed in the past which were not taken up and the potential for the future. I will not have time to deal with all the points raised because I should like to leave some time, knowing that we are finishing all Stages by agreement of the House at 6 p.m. for some discussion on Committee Stage, especially as there are some amendments.

I must start with what Deputy Mac Giolla has said, more or less condemning our membership of the EC, that it was responsible for huge unemployment, for business going bankrupt and general cost increases here. Deputies who make such accusations are completely wide of the mark and have not spent one moment considering what it would be like if we did not have, as Deputy Bruton referred to earlier, something like £1,100 million or £1,200 million on gross transfers coming in here from the EC. What would it be like in this economy under any item of Government expenditure if we were without those transfers or, even worse, if we did not have the markets for most of our produce, particularly agricultural produce — guaranteed markets and guaranteed prices? It is most unfair and untrue for Deputies to make such accusations.

I do not think that it can be said, as suggested by Deputy Mac Giolla also, that we are going into the internal single market blindfolded. This is absolutely untrue. As I said in my opening remarks, an awareness campaign will be launched by the Taoiseach and members of the Government in a matter of weeks. I said also that there needs to be this awareness of the problems which will arise and the opportunities which will be there and will present themselves to us between now and 1992 and from there on. I must condemn Deputy Mac Giolla's remarks about the Minister for Foreign Affairs on his negotiations on the question of the Structural Funds last week and again this week. The reserve he has imposed at the discussions last week, which was lifted yesterday, has in the intervening period contributed enormously to the ultimate agreement. At the Council on Monday last, we obtained amendments to both the framework regulation itself and the associated declarations which will enable us to benefit fully from the doubling of the Structural Funds. I shall not go into any more detail about that, but it was well worth the Minister's while, on behalf of the Government, to maintain that reserve until such time as he got greater guarantees, particularly in regard to the framework regulation.

Deputy Bruton asked for how long this new arrangement would apply. It is very hard to be precise on this, but I think that it will take us at least as far as 1992. He also raised the question of a directive on the question of GNP. A directive is being prepared by the EC on further harmonisation of the basis for determining GNP. It is already agreed in principle, but further discussion will take place on it. In relation to the question raised by Deputy Desmond and Deputy Bruton about making payments or doing anything based on GNP, we can all say that that arrangement is not perfect, but it is the best approach we have. In so far as it is concerned in this arrangement arising from this legislation, as I said, this new arrangement will save us £20 million alone this year. We will wait and see how harmonisation of the EC continues.

I want to thank Deputies generally for the contributions they made. I will run through, in the limited time I have, the important or central points raised. Deputy McDowell argues that there should be a limit on the amount to be paid under this agreement — I have referred to this already. I do not accept that there is a valid case being made by the Deputy. An Act in very similar terms with no ceiling on the payments authorised — the European Communities (Supplementary Funding) Act, 1984—was enacted in 1984. Payments were made under this Act in 1984 and 1985, without giving rise to any of the problems referred to by the Deputy. I shall refer to the point made by Deputy O'Malley when he talked about its not being a precedent, that these were reimbursable advances. They were, in so far as section 2 (a) of that 1984 Act is concerned, but the Deputy did not go on to read and put on the record the position in relation to section 2 (b), which was an open-ended commitment of payments to be made under that arrangement. It is just a question of having the thing right once these points were raised. As Deputies Noonan and Kelly have said, this is a precedent for this type of legislation.

Mr. McDowell

An unfortunate precedent.

Mr. MacSharry

I would have preferred to present a Bill to the House containing a specific figure to be paid to the EC in the context of our precise undertaking. This was not possible as delays in the budgetary procedure at EC level and the time taken by negotiations on the precise form of the decision on the new own resources system meant that a final figure was not available. The terms of this decision were agreed by the Council only on 14 June and the Commission has produced just today the amending letter to the EC budget which shows their proposed final figure. I understand that must go to Council and be agreed by it, before we finally know the final figure. That is the position.

I would like to put on record now the reason we are doing this and using the form we are using, even though there is a precedent there. This House will be in recess for some time and we will have to make a contribution. The undertaking agreed at EC level on 7 March 1988 was necessary in order to have a budget in place. I am sure I will not have to point out to the Deputies the benefits received under the EC budget and the advantage to Ireland of having a budget with sufficient revenue in place. Had I delayed presenting the legislation until the issue was crystal clear, this House would have been in recess and the necessary legislation would not have been introduced until the autumn. Payment of these funds is likely to be required before the autumn and such a delay would have left Ireland in the embarrassing position of not being able to meet the Commission's request for funds. We would possibly have been the only member state in this position. As a substantial net beneficiary of the EC budget expenditure, as one of the member states pressing for a substantial increase in revenue for the EC budget, it is important that Ireland be seen to be willing to pay its fair share of revenue as soon as this is required.

I wish to emphasise that funds paid under the undertaking in the legislation and by way of Ireland's normal contribution will total the same amount as if the new own resources system were in place in all of 1988. If it had been in place, payments would have been made in the normal way under the European Communities Act, 1972, which has no upper financial limit. The scope of this Bill was deliberately limited to 1988, in order that it would cover only the particular situation that arose in connection with the 1988 EC budget, rather than giving a general power in future years for any undertakings to the Commission.

I am advised that there is no constitutional problem with the Bill as drafted. However, as concern has been expressed on the procedural question of providing in legislation for this payment without a financial limit and as I am loath to see technical legislation becoming an issue for dissension I shall, as I said before, be putting forward an amendment on Committee Stage to limit the amount which can be paid under this legislation to £40 million. I hope that will meet the concern of Deputies.

Deputy Kelly thinks it is undesirable to have the Dáil authorise a Bill which does not give details about the proposed payments in question. The essential point here is that we are not talking about extra or new expenditure. We are talking about a technical means of making a residual part of our contribution to the EC budget. The money in question is already incorporated in our national budget for this year. For reasons outside our control we are required to go through a certain procedure for payment. This, and only this, is what is in question.

Deputy McDowell has, as I referred to earlier, an amendment down for £33 million which we shall deal with shortly. In reply to the point made by Deputy O'Malley, we must have some flexibility in this regard. I mentioned £32 million in my speech. If we are taking the amount to be determined in ECUs today, it would be £32.4 million. We must wait and see how the letter that has come to us from the Commission is finally agreed by the Council; until then, we will not know the exact figure. That is the reason for this upper limit of £40 million, the question of the flexibility that will be needed as between £32 million and £40 million.

Deputy McDowell stated yesterday and again today that this matter should be the subject of an Estimate or a Supplementary Estimate. The Deputy seemed to suggest that the Oireachtas cannot authorise expenditure except by Estimates or Supplementary Estimates. The Oireachtas has power to authorise expenditure — known as non-voted expenditure — to which Deputy Noonan referred for the reason that it is not required to be included in a Vote. Such expenditure is authorised by way of specific Acts of the Oireachtas and there are ample precedents for this: for example, the Acts relating to various State-sponsored bodies, the European Communities Acts, the Bretton Woods Agreement Acts, the various Land Acts, legislation providing for the payment of salaries and pensions and allowances of the President, the Judiciary and the Comptroller and Auditor General and so on.

The Deputy referred to Article 28.4 of the Constitution which requires the Government to prepare Estimates of receipts and expenditure of the State for each financial year. The document containing these Estimates — the White Paper on Receipts and Expenditure — shows estimated Government expenditure, both voted and non-voted, and the 1988 White Paper included over £2.8 billion of non-voted expenditure which included, inter alia, sufficient funds to cover the payments envisaged in the Bill being considered. Of course, all appropriations have legislative authority. For this reason, the current Bill is before the House and it is clear, contrary to what Deputy McDowell suggests, that all expenditure is not required to be included in the annual voted Estimates.

I have answered many of the points raised by the Deputies. I cannot deal with the question of Aer Lingus flying from Milan to Manchester or the overall agricultural expenditure, which are matters for another day.

Question put and agreed to.