I move:
"That leave be given by the Dáil to introduce the following Supplementary Estimate for the service of the year ending on the 31st day of December, 2002: – Vote 31 – Agriculture and Food (Supplementary Estimate).”
I wish to present for the approval of the House a Supplementary Estimate of €15 million for the Department of Agriculture and Food. Actual gross expenditure and appropriations-in-aid for the Department for 2002 are below the Estimates but were, until last week, projected to balance out within the original net Estimate. The shortfall which has now emerged relates to the final balancing payment of €34.2 million, due from the EU in respect of 1994-99 round of Structural Funds. It had been anticipated that this payment would be received before the end of this year. However, it has now been confirmed by the European Commission that this will not be possible.
My Department has examined options to try to minimise the effect of this on the Vote. While offsetting measures to compensate for part of the shortfall had been identified it has not proven possible to make up the full €34.2 million. In the circumstances, to avoid an excess Vote, I propose to introduce a Supplementary Estimate of €15 million.
The Supplementary Estimate is due to an expected shortfall in the receipts rather than an increase in expenditure in my Department. In fact, gross expenditure by my Department in 2002 is expected to be €65 million lower than the Revised Book of Estimates, although there will be increased expenditure under a number of subheads, in particular, A1, C3, J1 and L2. The increased expenditure on subhead A1 results from additional travel and overtime costs resulting from the outbreak of foot and mouth disease in 2001 and also additional BSE sampling. With regard to subhead C3, the original Estimate of €136 million has proven to be insufficient and in additional expenditure has been incurred in compensation for BSE herd depopulation, BSE testing and the scrapie eradication programme. The latter scheme is now expected to cost €12 million this year. The original Estimate only provided a €1.6 million for subhead J1, which covers legal fees expenses, but additional expenditure has been incurred as a result of the settlement of a number of court cases.
This additional expenditure is more than counter-balanced by lower than estimated spending on some of the subheads, most notably subhead L1 which covers market intervention, subhead L4, which covers REPS, L5 which covers the early retirement scheme and M2, the on-farm investment schemes. The savings on L1 reflect the significant improvement in the beef market this year compared to 2001, largely because of a strong recovery in consumer confidence in beef arising from the various safeguards for consumers which were introduced at EU level following the BSE crisis of 200 and 2001. In particular, very little beef was sold into the special purchase scheme which was co-funded by the EU and the national Exchequer, or indeed into intervention.
With regard to subheads L4, L5 and M2, applications for these schemes have been lower than expected with a result that expenditure on these measures is likely to fall short of earlier projections. Nevertheless, the level of REPS applications continues to compare favourably with any corresponding period during the first REPS scheme from 1994-99. Notwithstanding this, I have made some administrative changes to the scheme to address the complexity of the application procedures and these changes, which will come into effect in January 2003, will make the application process easier for farmers and producers. Lower expenditure on these schemes, which are co-financed by the EU, has resulted in lower receipts from the EU. Some, but not all, of this has been offset by additional drawdowns in other areas such as compensatory allowances and from the veterinary fund.
Despite these variations in expenditure and receipts, my Department had expected until last week to bring in net expenditure within the provision on the Book of Estimates. However, within the past week my Department has been made aware by the Commission that the final payment for the OPARDF and food programme under the 1994-99 round of the Structural Funds, amounting to €34.2, will not be paid before the end of the year. Ireland is not alone in this situation and I believe that most of the programmes from the other member states have not yet been closed. We are not faced with a refusal to pay the outstanding sum, merely a delay in payment until the internal Commission procedures have been completed.
My Department has examined various options to minimise the effect on the outturn of the non-receipt of the outstanding €34 million. On the expenditure side, for example, I indicated earlier that I expect savings on intervention, REPS, the early retirement scheme and the NDP on-farm investment schemes.
Turning to the table in section two (II) of the Supplementary Estimate it can be seen that overall it shows above-Estimate expenditure on subheads A1, C3, J1 and L2 totalling €58.284 million, appropriations-in-aid which are below Estimates, totalling €80.121 million and below-Estimate expenditure on subheads L1, L4, L5 and M2 totalling €123.405 million.
The net effect of this is that we are €15 million short of what is required this year. I again stress that this would not have arisen if we had, as expected, received the final EU co-funding for the 1994-99 round of Structural Funds. The need for this Supplementary Estimate stems from non-receipt of these EU funds. The adoption of a Supplementary Estimate is the most appropriate way to deal with the situation.