Dáil Éireann díospóireacht -
Tuesday, 10 Nov 1998

Vol. 496 No. 3

Private Members' Business. - EU Structural Funds: Statements (Resumed).

Mr. M. Kitt

I would like to share my time with Deputy Keaveney.

The last speaker, Deputy De Rossa, argued strongly against having two regions, but the one-region policy he favours has not worked. There are examples of this in the western region were spending on roads has fallen by 20 per cent compared with the eastern part of the country, and there is less spending on water and sewerage schemes, airports, railways and telecommunications development. Successive Governments have failed to address this issue, particularly in the western region.

The Minister for Finance made some very important points in his speech. He said a key principle of Agenda 2000 is to concentrate Structural Funds assistance, especially at Objective One level, on the poorest regions of the Community. He also said the criterion for Objective One eligibility is for a region to have a per capita income in GDP terms below 75 per cent of the Community average, that Ireland's GDP per capita now well exceeds this figure and, accordingly, Ireland as a whole no longer qualifies for Objective One status. Later in his speech the Minister stressed that if a part of the country were to qualify for Objective One status as a result of the proposed reclassification, this would not mean the rest of the country would be treated any less favourably than it would have been anyway under the transition regime currently proposed for Ireland as a single region.

We now have these messages in clear perspective. It has been stressed by the regional authorities for the west, the Border and the midlands that the retention of Objective One status for the three regional authorities will not adversely affect the moneys available to other regions. The regions in this group meet the EU criteria for Objective One status, and the regional democratic structure is in place in the form of regional authorities. The regions in this group are the poorest in Ireland and are losing ground to the other more prosperous regions. To provide this group with Objective One status is not "subsidy shopping". It is in keeping with the EU Commission guidelines and not randomly picking counties or townlands.

Whether we adopt a one-region or a two-region approach, there will have to be a regional dimension to the next national development plan, with a clear acknowledgement of the regions lagging behind economically. If the regions in the group get full Objective One status for the period 2000-06 then, for the following period, these regions may well qualify for further funding. At best the group will get Objective One status or, at worst, Objective One status in transition.

To increase the visibility and effectiveness of the Structural Funds there are three objectives. Two of the three objectives are regionally based, and the third deals with human resources across the board.

The first objective, known as Objective One, helps those regions whose level of development is less than 75 per cent of the European Community average to close their development gap. The calculation is based on the figures for the three most recent years available to the European Union's statistical office, Eurostat, and measured in terms of GDP per head in purchasing power parities. These regions will continue to have the same priority they currently enjoy because, according to the EU, "they are faced with the most serious problems; lack of economic potential, employment infrastructure and skills levels in the workforce".

In Ireland, some regions have already benefited from Objective One status, but five of the eight regional authority areas no longer qualify for this funding as a result. However, the European Union offers reduced funding during a series of transition years for areas such as these to help them move to self-reliance, and the five regional authority areas in Ireland are eligible to apply for Objective One transition funding.

What we are debating is whether the Government should make one application for the entire country for Objective One transition funding or make a separate application for maximum Objective One funding for the west, the midlands and the Border regional authority areas. As these three regional authorities meet the criteria, they are entitled to apply for Objective One funding which will provide Ireland with extra funds. It will also allow these regions to extend the funds available after 2006 as they will then be eligible for Objective One transition funding. These regions will also qualify for the retention of the high rates of State aid to industry. It does not mean the other regions will be denied funding allocated under a different heading. In fact, the whole country will benefit.

We have eight regional authorities, and they are recognised as democratic structures with democratically elected members working to ensure that the people have a say in the funding. The three regions will also qualify for the retention of the high rates of State aid to industry. It makes sense to maximise the claim by claiming Ireland's full entitlement for Structural Funds. It is also in the national interest. It makes sense to apply for Objective One funding for the west, midlands and Border regional authority areas.

I will refer briefly to a conference which was held in Galway on 30 October where a member of the EU Commission Mr. Esben Poulsen made it clear that the European Union would sooner rather than later phase out all funding to Ireland. He told delegates that Ireland would not qualify for Cohesion Funds after 2003, and advised bodies like the area aid partnerships, county enterprise boards and the Western Development Commission to come together and present a joint programme of development to the European Union to maximise the amount of funding. At that conference, the Galway Chamber of Commerce stated that the benefit to the region would be more than the £100 million mentioned because there was no examination of the benefits of Objective One status after 2006, and Objective One in transition status for the period 2007 to 2013 was not looked at.

It is important that we retain Objective One status for these three regions, particularly to allow the high rates of industrial grants to be paid by the State to that region. The rest of the country will go into transitional status with lower rates of allowable regional aid. However, the differential rates within a country could prove a powerful incentive to investors to consider the west. Traditional industries are in decline in the west and do not offer any opportunity for economic progress, so we certainly need the infrastructural development of road, rail, airports and telecommunications to support the location of industry in the region. At the conference MEP Mr. Mark Killilea said that regionalisation would allow Ireland to draw down grant aid at a continual rate of 75 per cent over a six-year period from 2000 to 2006, funding at the maximum amount for the first three years of the period. Only then would funding taper off over the following four years. We are talking here about half the country below the 75 per cent GDP figure, half the country with only one quarter of the population. I hope we will get support tonight for what we are seeking.

There are various schemes in the three regions, particularly in the Border region. These include the cross-Border funds and the Ireland funds. We need to have these funds in place so that we can direct funding to the less well off regions. We have Roinn na Gaeltachta and Údarás na Gaeltachta which benefit many parts of my county. Those schemes are important. Nobody would suggest that those very necessary schemes should be abolished. Incentives and assistance must be in place for the people who live in the western, midland and Border regions if GDP in those regions is under 75 per cent and they have not done as well out of the Structural Funds under different Governments in recent years. I would make the same point about urban renewal. Tuam is the only town in County Galway recommended by Galway County Council for urban renewal. It is most important that we get a decision from Europe to give the go-ahead to urban renewal. It should not be said that because we have Objective One status we do not need urban renewal. Urban renewal is most important as is rural renewal. Approval for these schemes, including the Dublin docklands development, must be secured in Europe. We must ensure that they benefit the people who live in the towns and rural areas involved.

Objective One status must be fought for and won for the people of the western, Border and midlands regions. There has always been agreement in the House to secure funding for regions. Developments in Dublin, such as the Irish Financial Services Centre and ring and toll roads, have been supported. It is only right now, given that there are three regions under the 75 per cent GDP figure, that the House should support what Deputies from those regions are seeking. I am glad the Minister spelled out how benefits can be given. I hope, as the Minister indicated, that a Government decision is taken soon to give Objective One status to the three regions in question.

Cecilia Keaveney

I thank Deputy Kitt for sharing his valuable and limited time on this most important topic.

Mr. Kenny

He is a very generous man.

Cecilia Keaveney

I welcome the debate on Structural Funds and the Minister's contribution. Coming as I do from County Donegal, a Border county, I have a particular interest in the progress of EU funds post-1999 on two different fronts. The first is the history of how Objective One has not assisted areas such as Donegal in the past and the second is how we can progress in Border areas if we do not receive special status.

County Donegal is one of the counties which, on the basis of the EU criteria, will be eligible for Objective One status in the future. The calculation, which is based on the figures for the three most recent years available to the European Union's statistical office, Eurostat, and measured in terms of GDP per head in purchasing power parities, shows that our level of development is under 75 per cent of the European Union average. One must ask the obvious question: why are we still below 75 per cent when other regions are well over 100 per cent or 110 per cent? The statistics on job creation and unemployment in Donegal do not match the national trends. This contributes to the feeling that the Celtic tiger is, as it has been called in the House, a Celtic leopard because it only happens in spots.

It is time to deal with inequality and develop the Border, western and midlands regions. They have much to offer the country and assisting the regions can only improve the lot of all the people. We constantly talk about the overcrowding of the city of Dublin, the traffic chaos in the major cities, the regional imbalances in tourism and the associated strain. Much has been said about regionalisation and the fact that it would take money from counties which are not included. However, this premise does not stand up to scrutiny.

I understand the entire country as a unit can only achieve Objective One in transition status, but regionalisation would ensure partial Objective One status for part of the country and full Objective One status for the qualifying region with the possibility of an extension of the funding period at a different level beyond 2006. This makes sense. Is there any justification for begrudging those of us who qualify what we deserve?

Few people outside the Border area realise the daily issues created by the fact that different supports are contributed to agencies and businesses only a few miles away. Some may argue that we are trying to create new borders. However, the fact remains that for years we were not given support. The facts and independent statistics prove what we in the Border region have felt for years. We are not trying to overtake our neighbours in other counties. We are only playing catch up. Grant aid for new industries is given as a reason by those outside the regions concerned for rallying against regionalisation. However, if people took a look at the situation on the ground in counties such as Donegal, they could not say honestly that we are not entitled to our share of industry. What is the alternative to the reality which exists?

It is strange but the issue of regionalisation is creating a similar argument in the Six Counties. I am a member of the north-west regional cross-Border group and we have often felt the divide on an east-west rather than a north-south dimension. As a group we have moved forward in a regional manner to improve our area. We see the similar needs and difficulties. We see how structures can work on a regional basis and how true benefits can derive for places with common back-grounds or geographic locations. Our successes cross various lines and I look forward to the infrastructural development of a car ferry from Magilligan to Greencastle in the near future. The development of the A5 road from Derry to Dublin is an example of how united a region can be in its stated aim. Many Ministers, British and Irish, have wondered how we manage to sing from the same hymn sheet.

An important point is that EU funding should not be allowed to replace national or other finance, otherwise we will be back in the same position in which we find ourselves in terms of lack of additionality. Deputy McDowell mentioned the need to put away the begging bowl and take a new look at Europe. The Deputy's attitude was that we should not ask what Europe can do for us, but what we can do for Europe. However, this issue is beyond the goodwill of Europe.

As other speakers said, Ireland is in a better economic position than before and this makes it impossible to retain previous supports. However, parts of the country are not doing as well as others and qualify as of right to EU funding. The only aspect with which I agree is the need for continued national support above and beyond other supports to ensure that the infrastructural needs of our underdeveloped regions are met and that they become the tigers they aspire to be.

I agree with the conclusions of the Minister for Finance, Deputy McCreevy. He said that regionalisation would not adversely affect the region in transition by comparison with the single region in transition option or adversely affect the Government's discretion to deal with the problem of urban blackspots, which everybody recognises. The Minister continued that the Government cannot unilaterally define regional boundaries or incorporate elements as regards eligibility for Objective One status.

I agree with the Minister that, on the positive side, regionalisation would guarantee full Objective One status and more funding as opposed to transitional arrangements for the region that qualifies. As the Minister said, regionalisation would enable that region to enjoy a more favourable State aids regime than if it was part of a region in transition. This is much needed in County Donegal. The Minister continued that regionalisation will leave open the potential for the region to qualify for transition under Objective One in the years after 2006. The negotiations ahead at European level will be tough and complex. However, I trust that the Minister, Deputy McCreevy, will battle on our behalf and get us the best deal. This is what the people want. The national interest is to develop the entire country and the way to do this is to focus the money where it is needed most. The money should not be replacement funds and there is a need for additionality. I wish the Minister and the Government well in achieving that aim.

Mr. Deenihan

I wish to share my time with Deputies Kenny, McCormack and Ulick Burke.

It is a matter of great concern to Deputies on all sides that, while Ireland's economic performance is a matter of national pride, the performance of some parts of the country is very poor. While enormous economic growth has been enjoyed, many parts of Ireland are in recession. The island has developed a dual economy.

It is decision time for the Government. It must decide sooner rather than later on its bargaining position at the negotiations for the next round of Structural Funds. The Government parties have declared themselves, so why is there indecision now? The programme for Government states that, as a key priority, Objective One status will be sought for the west, the Border region and all other rural areas suffering from population decline for the post-1999 period. Undoubtedly, this would include a county such as Kerry. In June 1997 the Government made a solid commitment to the retention of Objective One status for the underperforming parts of the country. In March 1997 the Taoiseach, then Leader of the Opposition, stated with regard to Structural Funds post-1999 but more probably post-2000 given the time lag in issuing EU payments that we would have to look seriously at regional structures if we were to continue to benefit. He said that the new Government would have to take the issue seriously if we were not to suffer a major reduction in Structural Funds, particularly in areas where they were much needed and the work of improving infrastructure had to continue. He also said that more regional responsibility would improve the dynamism of the economy as a whole.

On 11 September 1997 the Progressive Democrats stated that they were committed to the concept of balanced regional development and that they were examining various policy options for the best way of achieving this. They strongly supported the retention of Objective One status for the west and other underdeveloped regions.

It is obvious that the Taoiseach and members of the Cabinet from the east are trying to stall the process. There have been commitments from the Department of Finance and the European Commission that there will be regionalisation. It is up to the Government to declare its policy. Reading between the lines, it is clear where the Minister stands, he favours regionalisation.

The most revealing information on the issue is set out in a report by Daragh Doyle based on a highly confidential Department of Finance discussion paper leaked to Business and Finance. This suggests that splitting the country into two distinct regions would increase Ireland's share of the next round of EU funding by almost £120 million. The discussion paper, which outlines the shape of a possible regionalisation approach, was submitted by the Department of Finance to all other Government Departments for observations in late July. It is believed that it forms the basis for the Minister's recommendation that we should opt for regionalisation in the next funding round covering the period 2000-6. It focuses specifically on the impact of the new tactics on the industrial aid regime. The suggestion is that regionalisation would allow the Exchequer to offer significant grants to industry in the mooted Objective One region. This was confirmed in a recent article in The Irish Times in which it was stated that the Tánaiste had declared that there would be enhanced grants for investment in industry. This is significant from the point of view of the regions excluded.

The discussion paper states that the new region would still meet the criterion for Objective One status, a GDP rate per head of 75 per cent, if Kerry and Clare were included. I hope my colleague, Deputy Healy-Rae, will declare that Kerry should be included. A study conducted by Tralee Institute of Technology shows that the rate of GDP for Cork and Kerry combined is high but that the rate for Kerry on its own is considerably lower, although still slightly above the rate of 75 per cent.

Mr. Kenny

The Taoiseach is cautious. He does not lead from the front. He is inclined to size things up for a long time before making any comment. The Government, which has made its decision, has no option but to opt for the concept of regionalisation. It has to honour its commitments in the programme for Government. This is not about 13 counties qualifying for a certain status, about rich and poor or the urban-rural divide; it is about three distinctive regions meeting the criteria for Objective One status based on GDP.

The Taoiseach said that if nothing was done, there would be no funds available after 2006. By opting for the concept of regionalisation there would be an opportunity to draw down Objective One funds. The Government deliberately leaked information on what had happened at the meeting with Commissioner Wulf-Mathies in Cork. To ask what the position will be post-2006 is like asking me who will win the All-Ireland football final in that year and which party or parties will be in office.

The reason the information was leaked was that the Government wanted to soften the impact for Fianna Fáil backbench Members along the east coast when the decision was made. The IDA has highlighted the value of Objective One status. By stating that the decision would be in the country's favour the Minister for Finance kicked for touch. He has, however, confused the issue by stating that a decision will not be made until the end of March. Two weeks ago in reply to a question from me the Taoiseach said that he would like to see the matter concluded by that date rather than wait until the June summit.

The Cabinet must opt for the concept of regionalisation for the reasons mentioned. This would allow major investment in infrastructure in the three regions concerned, making them more attractive from the point of view of industry, enabling rural families to continue to live in those regions thus easing the pressure in Dublin which is gridlocked.

Mr. McCormack

I am puzzled as to why the Government is sending out contradictory signals about Objective One status. It appears it has made its decision but for some reason wishes to muddy the waters before announcing it. There is no longer any reason, after the Cork by-election, it should not be announced. At the weekend, the Taoiseach seemed to contradict his previous statements. I was heartened by his reply during Question Time in the House recently where he stressed: "If part of the country were to qualify for Objective One status as a result of the proposed reclassification, it would not mean that the rest of the country would be treated any less favourably in EU transfer terms than it would have been under the transition regime currently proposed for Ireland as a single region." He further stated that "the Government will insist that the non-Objective One part of the country would qualify for the transition regime", with which everyone agrees. He also stated consequently that if one region in Ireland qualified for full Objective One assistance, the other regions that benefit from the transition regime will be no worse off. He said that any extra benefits for a region qualifying for Objective One status cannot and would not be at the expense of the other regions.

I was also heartened by the Minister for Finance's comments earlier when he stated:

This proposition, if decided upon by the Government and accepted by EUROSTAT, would mean that a region comprising the west, Border and midlands regional authority areas would qualify for full Objective One status and thereby obtain a higher level of Structural Funds than if it were part of a single region in transition.

Such a region would also potentially qualify for Structural Funds transition arrangements after the year 2006. It should also qualify for a better State aids regime for attracting new industry for the years 2000-6 than it would if it were in transition.

That is as strong a case as I could make for the Government to bite the bullet and apply for Objective One status.

I took this debate up on behalf of the 13 west, midland and Border counties because this region qualifies under the EU criteria for Objective One status and there is no reason why we should not proceed with it. It would redress the imbalance in spending under the current Structural Funds where £3.6 billion was spent in the 13 southern and eastern counties compared to £1.6 billion in the 13 west, midland and Border counties. This is reflected by comparing the infrastructure in both areas. I counted 26 flyovers between Naas and Dublin as I returned to the city following the Cork South-Central by-election, while on the approach to my home city of Galway, which is the major city in the west, there is one miserable flyover between Oranmore and the city.

Mr. Deenihan

The area has done much better than Kerry.

Mr. McCormack

The area has qualified for Objective One status and while Galway city is doing well compared to other parts, the obtaining of this status would balance spending. I see no reason the Government should not press ahead and bite the bullet. While this debate is useful, it is one of many that has taken place on the subject. We are repeating ourselves, with constant reference to the commitment in the programme for Government to apply for Objective One status. I urge those involved to get on with it and we will support them fully.

Mr. U. Burke

It is a misnomer to say this debate is timely. It should have opened several months ago in order to alert the Government that time was running out. It is totally unprepared to make a meaningful case to achieve the best result for Ireland as a whole, and particularly for the west, midland and Border counties. Regionalisation has benefits for the entire country. Commentators and Members have carelessly stated, depending on which group they were pandering to, that if Objective One stated is accredited to this region, other areas will lose. The Commissioner indicated clearly that there is an exclusive fund for regions that qualify for Objective One status which will not impinge on funding available to other areas. It is sad to think that such commentators are putting out misinformation about the claim to Objective One status in this region.

It is not the case that these areas take all. I represent a western constituency and hope this debate will reflect the concern expressed on many occasions by public representatives and organisations on the ground in these areas to initiate a debate. I am shocked at the hesitancy and dithering of the Government to openly express its intentions on the matter. I do not know why it wants to keep its cards close to its chest, as the Taoiseach said previously. It seems it is just a case of pandering on the one hand to a bewildered urban population and feeding it with a diet of misinformation while at the same time indicating, as it did in the programme for Government, that it will include the west in its application for Objective One status.

The Minister and Government have for too long allowed this misinformation to become the basis of a supposed policy. The Government has not made a formal or informal application to the Commission for regionalisation and Objective One status for the west, midland and Border counties. It is a pity, if not a scandal, that mixed up in this misinformation are trade union leaders. They opposed our legitimate claim to Objective One status. Lately, Members have joined in the chorus saying that if people in Dublin cannot have access to these funds, the west cannot have them either. It is time to stop this negative debate. Nothing the Minister said earlier will help to resolve the situation.

Objective One status will be obtained for the west, midland and Border counties if the Government applies for it because the GDP requirement of 75 per cent is already established. The region is currently only at approximately 67 or 68 per cent of the EU GDP average. It is a pity that the statistics upon which this figure is based are three years old because current figures show that the gap between the western regions and more prosperous areas has widened over the past three years, as opposed to what other commentators would have us believe.

The Government, therefore, must make sure that we get what we are entitled to and clearly state its intention. There is no case for it to wait or postpone a decision any longer. We are not part of the begging bowl syndrome, often referred to by economic commentators looking for a headline to justify their existence, or Members looking for media attention. Bigger grants will be made available, through Objective One status, to these areas. However, it also means the west can make up for previous neglect. It did not get its fair share from Government in the past. Its infrastructure is inadequate to provide equal opportunities in areas such as employment, roads, water and sewerage facilities. A programme of capital investment is required to develop the area in line with more prosperous parts of the country.

Social exclusion in the region must be eliminated. It a sad day for the rural population when it is told by the Minister for Finance that there is no hope for 30,000 rural dwellers. Government spokespersons have attempted to row back from this statement. What game is the Minister playing? Is he indulging in the practice of pandering to one group to set it against another? It is too bad the Government should indulge in such games. The Minister must unequivocally and urgently state that it is the Government's intention to claim and further the case for Objective One status for the west, the midlands and the Border counties.

A delegation of western Deputies who visited the Commissioner was told that an application for Objective One status for these areas does not exist. The Minister and the Taoiseach must stop equivocating and pandering to certain interest groups outside these regions and state that they are seeking Objective One status for them. The areas need the money to proceed with the many projects which have been put in train to upgrade the regions' infrastructure. The money is also needed to give them the chance to retain their population. People from these regions are emigrating and migrating in increasing numbers. The population in the regions must be stabilised and, to do that, the regions must receive financial assistance. Other, more prosperous areas received the lion's share of such assistance in previous years.

I hope the Taoiseach and the Minister will quickly declare their intentions on this matter.

Mr. Boylan

I am grateful for the opportunity to make a brief contribution to this important debate. I thank my colleagues for sharing their time with me.

The Border region can make a particularly strong case for Objective One status. I am disappointed at the Government's waffling on this matter and that it has not yet made the application on behalf of the Border region, the midlands and the west. A survey conducted by Fitzpatrick and Associates for the Border Regional Authority shows that the Border region easily qualifies for Objective One status with a GDP per capita of 68 per cent. The threshold is 75 per cent. In addition, the region had to endure extra problems during the past 30 years as a result of its proximity to Northern Ireland.

At the invitation of Joe McCartin MEP, I travelled to Brussels with seven of my colleagues. When I made the case for Objective One status for the Border region to Commissioner Wulf-Mathies, she described the region as the necklace of counties surrounding the six counties of Northern Ireland. She said particular support would have to be given to the region and that it was entitled to such support. However, she also told me that an application for Objective One status had not been made so she could not entertain our representations.

I was embarrassed and annoyed that I was making a case for a region that has been deprived for the past 30 years but on whose behalf the Government had not seen fit to apply for extra funding. If any other part of the country were involved, the Government would have made such a case. Why is the Border region being deprived of the funding to which it is entitled to enable it to catch up with developments in the rest of the country? We are seeking nothing more and will accept nothing less.

Dr. O'Hanlon

I wish to share my time with Deputy Batt O'Keeffe and Deputy Doherty.

An Ceann Comhairle

Is that agreed? Agreed.

Dr. O'Hanlon

This country has benefited from European funding and has targeted it extremely well. In addition, Ireland has made a major contribution to Europe. It has contributed in many ways since joining the Union and Irish people have been good Europeans since the 6th century.

Ideally, one would like the entire island to be accorded Objective One status but that is not possible. On the other hand, we should be pleased with the economic progress Ireland has made in the past ten years. EU funding and the tight rein on spending by successive Governments created an environment in which the economy could rapidly grow.

A number of regions now exceed the 75 per cent per capita of European Union GDP and do not qualify for Objective One status. However, three regions in Ireland qualify under the present criteria and the Minister today outlined the differences between those regions and other parts of the country. GDP in Ireland, he said, increased by 21 per cent but in the Border, west and midlands regions it only increased by between 13 per cent to 15 per cent. Only 23 per cent of the jobs created were in those regions. The population in Dublin and the east increased from 34 per cent to 39 per cent while in the west, midlands and Border region the population decreased from 30 per cent to 27 per cent.

The case for these regions is well made. The Border Regional Authority commissioned a worthwhile study from Fitzpatrick and Associates which highlights the difficulties in the six southern Border counties. Objective One status would result in a higher level of Structural Funds for these counties. It would also facilitate better State aids, particularly IDA grants. That is most important for development. While 400 new American industries located in Ireland in the past 25 years, only 14 of them located in the six southern Border counties. Objective One status would hopefully also facilitate a period of transition after 2006.

If these three regions are given Objective One status, it will not be a case of robbing Peter to pay Paul. It will not make any difference to the rest of the country. There are two choices, Objective One status and transition for the entire country or Objective One status for the three regions and Objective One status and transition for the rest of the country. It is not a question of one status causing disadvantage for the other.

Every Member acknowledges that there are blackspots in every region. They are in the regions seeking Objective One status and in Dublin which has the highest per capita percentage GDP in the country. These blackspots should be a matter of concern for all Members, who must seek to ensure that something is done about them. High unemployment, educational disadvantage and the problems of early school leavers and drug abuse are prevalent in these blackspots. It is incumbent on Government to address these issues, regardless of the region in which they are located. One point is worth mentioning in this regard. While more money is necessary to deal with these problems, it is not simply a question of finance. There is a great deal of bureaucracy and if there was more flexibility, it might be easier to address some of them.

It is important to recognise that, no matter what happens, Ireland will probably receive less funding from the European Union after the current negotiations. That is due to our economic success. It is also important to recognise the investment of the national Government in social areas, particularly in health and education, and in the capital programme. I am confident we will be able to make up for any loss of funding.

The Border region lags behind the rest of the country not only because of its peripherality but also because of the troubles. I would like the 12 Border counties to be given Objective One status. There has been co-operation among these counties in the past and, as a result of the British-Irish Agreement, there is a great opportunity for development, North and South. If the 12 Border counties are given Objective One status, the region's economy will develop and regain parity with those in other areas.

The Minister clearly indicated that, in the event of regionalisation, the inclusion of some regions would not affect other regions, which is extremely important. He also stated that this would not effect the Government's discretion to deal with problems such as urban blackspots and everyone supports him in that. He further stated that regions cannot be unilaterally defined. Everyone would like to believe that blackspots, regardless of their location, could be included for Objective One status but the Minister pointed out that this is not possible under European Commission rules. The Minister indicated that regionalisation would guarantee full Objective One status and more funding, as opposed to transitional arrangements, for the region that qualifies; it should enable that region to enjoy a more favourable State aids regime than if it were part of a region in transition and will leave open the potential for the region to qualify for transition under Objective One in the years after 2006.

The Government's decision on this issue will be made in the national interest, which is vitally important. Whatever decision it makes, the Government should maximise the amount of funding Ireland receives from the Commission. It is important for the Government to recognise that blackspots exist in every region and to take action to address the problems faced by those living in those blackspots, regardless of their location. If such blackspots are not situated in areas which qualify for Objective One funding, moneys should be made available to them from the Exchequer or other sources.

Mr. Doherty

One must wonder what proofs are necessary to fully establish in the minds of the people who make decisions the legitimacy and the justifiability of Objective One status being granted to Border, western and midland counties. There is little doubt, particularly to those who live in these areas, that the prevailing economic and social conditions clearly highlight a situation which cannot be allowed to continue and which is totally at variance with that which obtains in many other parts of the country.

As other Members stated, while we acknowledge the existence of social and economic blackspots in other areas, there are few regions — particularly on the southern part of the island — with problems as pressing as those in the 13 counties to which I refer. There are a few exceptions but their progress is impacted upon and diminished because the entire region falls well below the threshold.

It is obvious that a massive investment in infrastructure is required. The level of development needed cannot be achieved in isolation from support from Europe. My county and the surrounding area have been given designation by the Minister for Finance and the Government in the context of the rural renewal scheme, part of which is before Europe at present for approval. That approval will have a massive impact on the possibility of private sector interests taking on the development of infrastructure. Roscommon, Longford, west Cavan, Leitrim and south Sligo are situated in the designated area to which I referred and they require major investment. In my county, an immediate investment of £30 million would be required to clear the backlog of water and sewerage scheme developments.

My region will not be able to take advantage of designation or the potential opportunities it offers unless we can ensure that the basic infrastructure is put in place. Investors in the residential, tourism, commercial or industrial sectors will not be in a position to develop viable projects there unless the basic infrastructural services are in place. These are heavily dependent on our region being granted Objective One status.

There is little doubt that many people are leaving the west, the Border counties and the midlands to travel to the east coast. When they come within 30 minutes drive of this city, they are obliged to spend two and a half to three hours in traffic. That cannot continue. Infrastructure includes roads and rail services. The authorities can invest as much as they like in the city of Dublin and attract more people as a result, but it will only result in the destruction of a beautiful city. Physical planning is as essential to the protection of Dublin as is investment to the survival of the west. Such planning must be supported by economic investment.

The city of Dublin, its native population, its corporate sector and its social life have suffered while criminals and others have gained by virtue of the fact that it is currently overpopulated to the tune of 300,000 people. Many people could live in other parts of the country, particularly in the 13 counties to which I referred earlier, if proper infrastructure, roads and rail services were put in place. My region cannot hope to put such services in place without the additional investment Objective One status would provide in the coming years.

In considering this issue, we must take account of our ageing population. The presumption is that a person living in the west who reaches old age should be placed in a welfare home or geriatric hospital and consigned to obscurity. That is not good enough. The facilities that are available and taken for granted in other parts of the country must be provided in my region. I refer to recreational and sporting facilities which can ensure that those who have retired or reached old age will have an opportunity to participate in whatever physical, sporting or recreational activity they wish to pursue or enjoy.

We must also ensure that the technology is made available to the counties to which I referred. This will only happen if people can use road, rail and other infrastructural services. Technology ensures that people can live and work outside Dublin, that they can purchase houses at a lower cost, that their children can have quality educational opportunities in school and that they can avail of all the services and facilities associated with a good social setting. However, they must be in a position to do their work efficiently and effectively.

For a long period I have been of the opinion that there is more than one area in this country and that there are more justifiable reasons than ever for investment in the west, the midlands and the Border counties. Dublin's traffic problem, which I am currently examining as Chairman of the Joint Committee on Public Enterprise and Transport, cannot be solved in isolation from the problems faced in other areas. It will only be solved by ensuring that the west, the midlands and the Border counties are given the same opportunities as the eastern region to develop, promote and attract industry and commercial activity.

Mr. B. O'Keeffe

If Ireland loses its Objective One status it will automatically be classified as Objective One in transition. If some regions do not exceed 75 per cent of GDP, the Government faces a stark choice. Should it allow the entire country to lose that status or should it consider those regions which have fared particularly badly where per capita income is down and GDP has not attained the relative status?

I come from a Cork region which will lose its Objective One status. People believe I am opposed to regionalisation but I am not because it is not the end of the world if places such as Cork, Kerry, Limerick and Dublin lose Objective One status. We have spoken for years about decentralisation and the number of people leaving rural Ireland. The time has come when regions such as Dublin, Cork and Limerick must face the fact that they have fared particularly well and that the proper balance in terms of regionalisation is no longer a luxury but an essential.

The EU Commission is of the view that if we change our regional structure certain difficulties will arise. We have been accused of adopting a "subsidy shopping" approach. It is extraordinary that the Commissioner looked at Ireland in that way and did not pinpoint other countries where regionalisation has occurred. She did not, for example, refer to the fact that three regions in France have been chosen for Objective One status or that the same thing has happened in Belgium.

Regionalisation is a fact in European terms. Europe wants these regions to be administered directly. The regions in France and Belgium are administered by a particular Department. There is a Department in Ireland which could administer the regions effectively.

It is important to tell people that funding will not be affected during the first three years of transition but in the latter three years up to the year 2006. It will be important for the Government of the day to ensure that programmes of support match what is gained from Objective One. The Government's objective must be to set up a national programme for those regions which do not retain Objective One status so that they do not lose out.

Ms Clune

I wish to share my time with Deputies Finucane, Belton, Naughten, Neville and Sheehan.

An Ceann Comhairle

Is that agreed? Agreed.

Ms Clune

As a Deputy from Cork I am glad to have the opportunity to contribute to this debate. While I do not want to take away from the west or from Border and midland counties, it is dangerous to try to divide the country into two economic regions. The best approach would be for the entire country to be classified as Objective One in transition. It would then be up to the Government to secure as much funding and investment as possible under this heading.

The Government knows the problems of high unemployment in urban regions and that is where we must target funding. It is difficult to say this country has poor regions. We must recognise that it does not have poor regions, but poor areas within regions.

The objective of the European Union is economic and social cohesion. Agenda 2000 recognised the progress made by the member states towards convergence. The criterion used by the Union to measure convergence is GDP, which is a measure of the total value of goods and services produced in a state or its regions. Gross national product is a measure of the production for the final demand and is therefore a measure of the income of a state.

In most European countries the ratio of GNP to GDP is much higher than in Ireland. The reason is that there are more multinationals operating in Ireland than in any other European country. The inflated GDP of the south-west region can be attributed to this multinational output. As the percentage of Irish firms operating in foreign regions is less than in other countries, the return of foreign earnings to the economy is also less.

Figures from the south-west region illustrate this point. In 1994 the profits from the region were estimated at £1.129 million, which is 35 per cent of the profits in the State. Of that figure, 74 per cent was earned in the chemical and electronic sectors. The remaining sectors account for 26 per cent of the profits in the region, although they provide 70 per cent of the employment. Three-quarters of the profit outflows from the region come from the chemical and electronic sectors, which are made up of foreign owned multinationals. This underlines the fact that GDP, which is a measure of output, does not reflect the true position in the region.

The regions seeking to retain Objective One status on the basis that their GDP is lower than the European average are making an argument which must be recognised. However, if one looks at the figures published by the Department of Finance on disposable family incomes as a measure of the standard of living, it is clear that two regions, the west and the midlands, are well above the south-west region. The ESRI conducted research into poverty which showed that between 1987 and 1994 the risk of poverty fell for people in rural areas but rose for city based households, with Dublin showing the worst growth in poverty statistics.

These figures underline the fact that a single measure cannot reflect the economy of a region or state. There is a difference between choosing GDP or GNP as a measure of the well being of the State. The two figures for this country give a completely different picture. I have no doubt there are poor regions in the west, the midlands and the Border areas. However, there are also poor areas in the south west, such as those in Cork city, in Dublin's inner city and in our large urban areas.

I want an assurance that if we divide the country into two regions the needs of areas of high unemployment and social exclusion will be addressed and will not be forgotten by the Government. We should not create borders at a time when we are attempting to break them down. We should maintain the status quo which will assist the Government in having a countrywide distribution of new investment funding for manufacturing.

Mr. Finucane

Much of the discussion has been generated by Members from the 13 counties which want to retain Objective One status. The criteria for determining that status, which is based on GDP, should be examined. An artificial measure in terms of GDP is probably given for the strength of the economy in my area, the mid-west, due to the large electronic multinationals which have large outputs. Outside Limerick city, many of the difficulties encountered in the western counties and the midlands are likely to be found, such as inadequate infrastructure in terms of water and sewerage schemes, poverty and 20 per cent of the rural community being composed of small farmers. If people were asked the level of GDP, they probably would not be able to answer. However, if they were asked the weekly family income, they would probably answer immediately. GDP is an artificial measure. The average family income in the mid-west is probably about £18 a week less than in western and midland counties which form part of the 13 seeking to retain Objective One status. In that regard, there has been distortion in the debate.

It would be remiss of me as a representative of the mid-west region if I did not focus on and articulate its concerns. County Limerick is finding it difficult to attract industrial development. Industry is not attracted to greenfield areas which exist in small rural communities. They require industrial premises and gravitate towards large urban areas which probably have a technical college and industrial premises. Were I to agree to the approach being adopted for the negotiation of the next round of Structural Funds for 2000-6, there is a distinct possibility that the amount of industrial development in the area I represent would diminish.

Communities are being polarised. Deputy Clune was right in one respect when referring to poorer counties. There are poor regions in every county, so how can specific regions in the country be isolated and be described as poorer, thus ignoring other poor regions which exist in other counties and certainly in my area? I am concerned about the direction being taken. I bid good luck to the Deputies from the western, midlands and Border counties who fight their corners. The rest of us are also here to articulate the concerns of the areas we represent. I am concerned the mid-west, the region I represent, will suffer if Ireland is divided for the purposes of retaining Objective One status for certain areas.

Mr. Belton

I was disappointed with the contribution of the Minister for Finance. He and the Government have maintained the same position for the past two to three months. They have given no indication other than to say they support every position. That is not the manner in which a Government should operate. It should be seen to be solid, constructive and to make a decision. When we visited Brussels, we met Commissioner Wulf-Mathies who explained in no uncertain terms that it was up to the Government to put forward the case on behalf of the country. That was a number of weeks ago and nothing has happened since. Having listened to the Minister for Finance, it seems nothing will change.

We were led to believe by a spin put on the story and relayed through local radio and newspapers that a decision would be made next Tuesday. The Government, however, has not made a decision and it is obvious it will not make one. It will wait until the last minute——

Mr. Cullen

It will make the right decision.

Mr. Belton

It will wait until the last minute and blame Europe. If the situation is examined, the only logical conclusion which can be drawn is that the Government cannot make a decision.

Many months ago, the Council of the West asked me as a Deputy representing the constituency of Longford-Roscommon, which is both in the west and the midlands, to attend a meeting in the Shelbourne Hotel. I explained at the meeting that one could talk to the Deputies representing the area until the cows came home but that they were all in favour of the obvious. It is so obvious it is hard to believe the Government is stalling on it. That is the most surprising aspect. It says it supports the position but it has done nothing about it. What it has done over the past months is to stall. Had it adopted a proper approach to the issue, there would be no problem with negotiations with the EU. What has happened is that the Government has done nothing and the chances are the proposal will be ruled out of order because no structure has been put in place.

The people of Longford-Roscommon need all the support they can get. The Government may yet deny Objective One status to the constituency, the west and Border counties because it has done nothing constructive — Commissioner Wulf-Mathies was the first to say that to us in Brussels.

Mr. Naughten

I will focus on two issues; the alleged partition of the country and the benefit of Objective One status not only to the three regions but to the country as a whole. Repartition has already occurred on an economic basis and no one should forget that. The spending pattern for the current round of Structural Funds is contributing to the increasing disparity. For example, under the Operational Programme for Transport, the west received 7 per cent of total spending between 1994 and 1996. This is a much lower percentage than is required given the infrastructure deficit, the length of roads and railways requiring upgrading and the need to reduce peripherality costs for industry and services. The region has 10 per cent of the State's population but 20 per cent of the land mass. The position is similar with other operational programmes. This must be deliberately corrected if the position of the west is to be reversed and the elimination of regional disparity within Ireland is to be promoted. A policy of targeting Structural and Cohesion Funds to those regions lagging behind must be in place for the years 2000-6.

Objective One status for the west, midlands and Border counties would not only be of benefit to those regions but also to the rest of the country. There are major problems in the east with housing, traffic, sewerage and other services. Objective One status would help encourage industry to move from the east to the less developed regions of the west, midlands and Border where such problems do not exist and will not exist for the foreseeable future. This would reduce the pressure on services in the greater Dublin area which would require less transitional EU and Exchequer funding. Without Objective One status, all State grants and tax designation would be severely restricted in the three regions. These grants and tax breaks are now being questioned as regards the Dublin docklands development. Can we allow the EU to object to such support in under-developed regions? The loss of State aid would jeopardise further inward investment by multinational companies and the expansion of indigenous industry in the regions.

Some Dublin Deputies spoke of the disaster which would unfold if the country is split for EU funding. I warn those Deputies that everyone accepts that the regions need priority EU funding and that without regionalisation of these funds, urban blackspots will pale into insignificance compared to the disadvantaged regions which I represent. Objective One status will not only benefit the west, the midlands and the Border regions but the whole country. It has been made clear that the rest of the country will not lose a penny as a result of regionalisation. However, the attitude of some politicians is that if they cannot have Objective One status for their region, no one should.

The population in the west has been declining for years. They have been coming to Dublin and other major population centres. We want our young people back and the only way we can do so is through Objective One status and the targeting of Government funds towards these regions. I urge the Government to initiate Objective One status for these regions immediately.

Mr. Neville

The situation is unfortunate in that a division is arising between different areas. The Government will have to counteract this by initiating a positive plan towards areas within regions which will not be designated. There are poor regions in areas which will not retain Objective One status. For example, County Limerick is part of the mid-west but it is not a homogeneous area. Those parts of the county not serviced by main roads have higher levels of unemployment and population decline than most areas, particularly in the west of the county. A major concern is the population decline in towns and villages.

Agriculture and the processing of agricultural products account for 62 per cent of employment in the region and we know what is happening with agriculture. Large areas of County Limerick are receiving the pittance which the Minister for Agriculture and Food is paying out because of the fodder crisis. This indicates the difficulties being experienced. County Limerick is more dependent on farming for employment than County Longford which is designated as a rural area for tax purposes. The Government will have to ensure that special programmes are introduced to counteract the situation which will arise as a result of the changes which will inevitably occur.

Mr. Sheehan

South-west Cork comprises three peninsulas — Mizen Head, Sheep's Head and the Beara peninsula. I do not have to remind the Minister of the serious disadvantages which the inhabitants of this region are labouring under, trying to eke out a frugal livelihood in a job starved area which embraces the towns of Bantry, Castletownbere, Dunmanway, Schull and Skibbereen. What other region has a mountain range known as "Hungry Hill"?

This area has suffered from emigration for the past 50 years. The majority of its youth has emigrated to make a living in England, the US, Canada and Australia. It is not blessed with large tracts of fertile farmland. It only has thin layers of soil nudged between rocks. The region has poor infrastructure, no airport, no railway network and not one mile of national primary road. The pier in Bantry cannot cater for the mariculture industry in the area.

The south-west and north-west of County Cork, like the neighbouring region of south Kerry, are neglected and starved of their rightful share of industrial and infrastructural development. We have only received the crumbs which fell from the table of EU funding.

The area from Malin Head to Mizen Head was always identified as the real disadvantaged area of the country. What genius advised the Minister to designate south-west Cork and south Kerry for Objective One status in transition while the 13 counties of the west, the midlands and the Border region are classified for Objective One status?

An Ceann Comhairle

I must call the next speaker.

Mr. Sheehan

The Minister has thrown in the towel. There should have been serious negotiation to ensure that deprived areas are not precluded from Objective One status. We are an island nation; we are the only island nation in the EU.

Caoimhghín Ó Caoláin

I wish to share my time with Deputy Moynihan.

An Ceann Comhairle

Is that agreed? Agreed.

Caoimhghín Ó Caoláin

A columnist in The Irish Times recently argued that rural Ireland no longer exists. This view is testimony to the huge gap between many political and media commentators and the reality of life for tens of thousands of citizens who live outside the large towns and cities. I would invite that commentator to travel the deplorable roads of Cavan with me, as I have done extensively in recent months, and assert that rural Ireland and rural disadvantage do not exist. The comment is indicative of a narrow and negative view which is widening the divisions in society. This narrow view has been on display in the debate on Structural Funds. This has been a heated debate, inside and outside the House. As a result, a clear choice has been made unnecessarily complicated.

Because of their misunderstanding of the question or a narrow vested political interest, some commentators have muddied the waters and made the debate baffling to many citizens. I wish to record my support for the regionalisation of the State and the retention of full Objective One status for the west, the midlands and the Border regions.

The core argument in favour of regionalisation is the need to recognise the disadvantage born of historic experience in the three regions which have enjoyed the least economic development. No amount of obfuscation can get away from the reality of the disparity between regions. The concentration of the best infrastructure and the bulk of industry and commerce in the east and south is a reality. A two track system already operates whereby those regions which were disadvantaged before Objective One status was ever heard of, are still disadvantaged in comparison with other regions. They are running to stand still while other regions speed ahead.

Thankfully, emigration has declined in most of the country and net immigration is being experienced. However, for many communities in the predominantly rural areas of the three disadvantaged regions, the loss of young people, aging populations and high old age dependency ratios are real social problems. The landmark NESC report published last year showed that the four worst affected counties of Cavan, Leitrim, Mayo and Roscommon have lost about one-fifth of their people in the past 45 years and require special regionally and locally based measures.

There has been criticism of the measurement of disadvantage for the purpose of Objective One status. The average per capita GDP of a region is not a totally satisfactory way of measuring poverty and disadvantage. It is true the income of individuals, families and local communities, rather than big regions, is the best measure, but it surely tells us something is amiss when there is a disparity of more than 50 per cent in the per capita GDP between the three disadvantaged regions and the Dublin region. In any case, the reality is that this is the method of measurement chosen by the EU and it is not about to be changed in advance of decision time on the regionalisation issue by the Irish Government.

The choice before the Government, therefore, is clear. It may seek Objective One in transition for the entire State, or regionalisation, with the west, Border region and midlands retaining Objective One status while the rest of the State would be designated for Objective One in transition. It cannot be emphasised enough that under the regionalisation proposal, those regions not designated with Objective One status will not lose out. Whether or not regionalisation is adopted, they will have Objective One in transition. Once this reality is recognised, the argument of those opposed to regionalisation falls.

Some Deputies may misunderstand the regionalisation proposal and genuinely fear their region or the disadvantaged sections of society in general will lose out. I share that concern but believe the fear is a groundless one in this instance. Others may understand the regionalisation proposal quite well but may not be above using a bit of scaremongering for short-term electoral advantage. The latter category, if there are any such people, are doing their constituents and the country as a whole a disservice. From the tenor of the speech of the Minister for Finance, it seems the Government is leaning heavily towards the regionalisation proposal. I urge it to take that approach. I commend the efforts of the many campaigning groups and individuals throughout the disadvantaged regions which have taken up this issue.

I will briefly address two other key aspects of the regionalisation issue. The first relates to the need for an all-Ireland approach. Speaking on the Western Development Commission Bill, I urged that we consider the establishment of a cross-Border development commission which would focus on the disadvantaged areas west of the Bann which, in economic terms, are really at one with the Border counties, the west and the midlands. We need to recognise the reality of this east-west division on this island in economic terms and seek to redress it in a co-ordinated manner. The second matter relates to the need for decentralised democracy. The meaning of decentralisation in this State has been reduced to the relocation of Government Departments to towns outside Dublin. This is not true decentralisation. The disempowerment of local government continues and the proposals of the Minister for the Environment and Local Government for local government reform fall far short of what is required. We need to restore local power as a democratic right.

Truly democratic local and regional structures, in conjunction with central Government, are the best agencies to plan for the use of EU and State funding for the regions and their communities. We have a plethora of agencies, authorities, development boards and partnerships, some of them overlapping in purpose and territory and most of them doing very good work but testifying, through their very existence, to the lack of long-term planning by successive Governments and to the failure to streamline bureaucracy. Truly empowered local and regional government, properly funded and with genuine community participation is the proper vehicle to lead local and regional development. I reaffirm my wholehearted support for the proposal — and hopefully for the intent — of this Government to establish a regionalised approach to the need for Objective One status for the Border counties, the west and the midlands. Go raibh maith agat.

Mr. Sheehan

The Deputy is writing off the south and south-west.

Caoimhghín Ó Caoláin

I am not doing that at all.

Mr. Sheehan

Joe Sherlock would not think much of his comments.

Caoimhghín Ó Caoláin

He does not think much of me anyway.

Mr. M. Moynihan

I welcome the opportunity to contribute to the debate on the merits and demerits of regionalising the country for the purpose of Objective One funding. Despite the entire country having had Objective One status in recent years, some areas did not benefit to the same extent as others. When we entered the last round of Structural Fund negotiations, the entire country qualified. The large urban areas and others which benefited from Structural Funds were granted Objective One status on the backs of urban and rural black spots. There are many areas outside of the 13 counties currently included for the purposes of regionalisation which require and deserve special attention. I refer particularly to my own area, Cork north-west and in particular, Duhallow, which has not seen any inward investment from the IDA over the past 25 years. I appreciate the difficulties in regard to attracting employment into rural areas but a concerted effort must be made, perhaps through Exchequer funding, to ensure these black spots in rural Ireland do not suffer further. It has been asserted by some that if Objective One status is retained for some regions, it will be the salvation of those regions in terms of population increase and the provision of services. Some areas suffered even when the entire country had Objective One Status and a targeted approach must be adopted towards those areas.

While discussion and debate on Objective One is welcome and encouraging, it is important to state that nothing has yet been finalised and the details of any areas which may not retain Objective One status have not been provided. It is my understanding that none of the agricultural price supports will be affected by the withdrawal of Objective One funding. Price supports, including suckler cow and beef premia, come from the guaranteed side of European funding. These will continue as they are at present and from the end of the current tranche of European funding, I understand headage payments will also come from the guaranteed fund although they are currently administered under Structural Funds.

REPS payments come from Structural Funds and are 75 per cent funded by the EU. My understanding from officials in the Departments of Finance, Agriculture and Food and EU offices is that these payments will continue at the current rate of £50 per acre. It is a legal entitlement that such payments be made at the same rate in both Objective One and Objective One in transition areas.

The basis of regionalisation is to secure as much funding as possible from Europe in the next round. It is a foregone conclusion that Ireland as a whole will not qualify for Objective One status. If we insist on entering the next round as a a single entity, it will be as Objective One in transition. This will not serve us well as we would lose out on much of the funding which could be secured by regionalising the country. By accepting Objective One in transition status for some areas, those areas will maintain the same level of funding for the first few years.

Mr. Sheehan

Two years.

Mr. M. Moynihan

Periods of three and four years have been mentioned. There is a perception that funding will cease if we lose Objective One status. Looking ahead, once the next round of funding ceases in 2006, agricultural payments, although they will be subjected to change under Agenda 2000, are set to remain the same and will not be affected by areas being included or excluded from Objective One status.

Benefits which do not accrue to Objective One in transition areas include funding for industrial development, forestry payments and payments for research and development in agriculture. As most research and development payments are currently made to Teagasc, such funding will continue as in Objective One areas. The majority of funding for IDA and Enterprise Ireland comes from the Exchequer. One of the most serious issues which will affect areas moving into Objective One in transition status is the cap which will be put on the amount of funding paid by the Exchequer to groups such as IDA Ireland and Enterprise Ireland to attract industry. It is essential that employment is encouraged in rural and black spot areas to secure their future. For far too long we have seen too many people leaving the countryside and moving to towns and cities. We have lost population and are now losing services which cannot be maintained due to the loss in population. The decision to bring industries to the regions is a welcome development and must continue. I understand ESF grants paid to students attending college will not be affected by moving to Objective One in transition status.

I know there are difficult decisions ahead. People have spoken about dividing the country. Heretofore the country has been divided into disadvantaged and non-disadvantaged areas. It is logical to ask why the basis for that division was not used in the regionalisation of the country. I understand the figures used in dividing the country into disadvantaged areas for agricultural purposes were based on agricultural income while the division now is based on GDP of the entire region. I appreciate that regions like Duhallow and most of Cork north west are suffering because they are linked to the Cork-Kerry region where there are a number of very wealthy areas. I appeal to the Ministers and the Government to ensure something is put in place in these regions to stimulate economic growth.

Mr. Sheehan

I hope the Minister has some good news for the south west region.

Minister of State at the Department of Finance (Mr. Cullen)

The Deputy will be very happy on hearing what I have to say. What about the south east?

I wish to address the important points raised by many Deputies during this debate. Clearly, there are still many misconceptions about the implications of regionalisation and I hope I will be able to dispel many of them.

The issue of whether regionalisation means extra money for Ireland has been raised, particularly in reference to a leaked report of a recent discussion between the Taoiseach and Monika Wulf-Mathies. The Commissioner may have given no guarantee that regionalisation would mean a greater overall take for Ireland and, frankly, one would hardly have expected her to do so. It is not for her to encourage or discourage us in this matter and quite properly the Commissioner refrained from doing either. As she made clear the issue is an internal one.

I ask Deputies and commentators to bear in mind that we are in the middle of negotiation on the next round of funding which involves not only the Commissioner but other member states.

Mr. Noonan

Hit me now with the child in my arms.

Mr. Cullen

I would not dream of it, but the Deputy more than anybody on the Opposition benches is aware of what a negotiated process involves and its different elements.

Mr. Noonan

It is an excuse for not making a clear statement to the House.

Mr. Cullen

It is not and the Deputy knows that well.

We must be discriminating in our interpretations in the light of this and not over anticipate the end result. Nothing is absolutely guaranteed. We know from the new regulations which are still in draft form that an Objective One region does better in terms of transfers than a region which does not have such status or a region in transition. This is where the negotiations are at present. However, there is much more to the negotiations than the single issue of regionalisation and I appeal to everybody in their debates and deliberations, which are quite legitimate, not to forget this.

Whoever is responsible for leaking official reports and papers does no service to the country or our negotiating position. There is sufficient significance in the regionalisation issue, quite apart from the amount of funding gained by it, for the deep and careful consideration being given it by the Government. Far from being some ploy to gain extra funding, how much or how little is received is not for debate at this point. It is a serious attempt to apply the existing ideas and policies on regional development and concentration which are arising in the context of the next round of Structural Funding.

A number of Deputies made the case for urban and rural black spots. Learned studies and analyses have been produced and quoted which show high levels of deprivation, unemployment and income shortfalls in certain areas. I do not intend to cast aspersions on these studies which are perfectly valid in their own right and have a legitimate part to play in the setting of our priorities for the next national plan. However, those who use these studies as an argument against regionalisation are extremely wide off the mark. They are mixing, for example, oranges and apples in a manner which I am sure the learned authors of the studies could not support.

We have no choice as to the criteria used for the designation of regions for Objective One status or any other purpose. GDP is the measure accepted across Europe and there is no way we would gain acceptance for a range of other statistics however compelling in their own way.

Mr. Sheehan

Not even as an island nation?

Mr. Cullen

Deputy De Rossa quoted more than 100 such black spots. Does anybody seriously believe we could gain acceptance for regional classification changes to give all of these areas Objective One status? If we have 100, there will be 1,000 across Europe as the authors of the Drudy, Punch and Ross report readily accept.

There is a valid case, and one readily accepted by the Government, for addressing the needs of urban black spots and nobody need be in doubt as to the Government's determination to do so. The important point is that irrespective of regionalisation, the difficulties which exist in urban black spots will and must be addressed in the national plan and the Government is centrally and publicly committed to that process. These black spots exist whether the country is treated as a single region or more than one region. Regionalisation is not in any sense counter-productive in relation to these problem areas. They will have to be addressed irrespective of whether regionalisation takes place and the Government intends doing this.

I wish to briefly examine Objective One status for Northern Ireland. The same comments I have made on share out equally apply here. Here again comments attributed to Commissioner Wulf-Mathies are ascribed some kind of conclusive character relative to the eventual outcome of the negotiations. Of course we support Objective One status for the North. Commissioner Wulf-Mathies must speak against the background of ongoing negotiations. Regionalisation in the South would raise the question of the cross-Border county status and, if granted, could only support the efforts being made to secure a more generous deal on that side of the Border.

There is nothing contradictory in an approach which aims to ensure that no region on this island, North or South, which deserves a better deal from Brussels in the next round than the current transition proposals give it should be sold short.

I will address some of the interesting questions Deputy McDowell raised. I am glad he sees the validity in State aid. My officials will try to supply answers tomorrow to the specific questions relating to State aid grant levels. Obtaining a more favourable State aid regime for a region will allow us, if we choose, to offer higher levels of assistance in the promotion of job creation and industrial development. The Minister for Finance outlined clearly the reason the game is worth the candle, the phrase used by Deputy McDowell.

There was reference to possible assistance from the EU after 2006. It is undoubtedly true that the Commission will have changed by then but it is likely that the precedent set this round for transition treatments will be retained in the future for regions graduating from Objective One status. It is understandable that Commissioner Wulf-Mathies will not give a commitment on this. No Commissioner would wish to commit a future Commissioner to a particular view. This is the normal convention.

I assure the Deputy, and Deputy De Rossa who made the same point, that the regionalisation proposal is a genuine effort to address the problem of the regions that are lagging behind. As the Minister explained, there is no basis for the allegations that this would be a divisive step. Regionalisation would not take one penny of EU funding away from the other region. That region will not be any worse off than if the whole country were in transition.

A number of speakers suggested changing the eligibility criteria used for selecting Objective One regions. The room for manoeuvre is almost non-existent. We have pressed our case in Europe on these aspects including the GNP-GDP differential, the infrastructural backlogs and so on. It is simply not open to us to introduce special pleading in respect of income and other statistical data that may favour this or that region. The Commission simply would not and, in fairness, could not accept such criteria for us without accepting them for a host of other regions throughout Europe.

Mr. Sheehan

Not even for an island nation?

Mr. Cullen

GDP may have drawbacks, and we have pointed to those in the negotiations, but it is the only generalised criteria of regional prosperity which stands a chance of acceptance across all member states. We must be realistic about this. Some Deputies pointed to our growing prosperity as a reason for setting aside the begging bowl approach, and the Government fully accepts this. Regionalisation is not about the begging bowl but about a wholly respectable and important part of EU policy, namely, the development of the regions that is required.

I thank all the Deputies for their contribution to this important debate. I am sure it is a subject we will revisit in the future.

Mr. Sheehan

No consideration for an island nation.

Mr. Cullen

I have looked after the Deputy.