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Joint Committee on the Secondary Legislation of the European Communities díospóireacht -
Wednesday, 31 Oct 1979

Financing of the Communities.

I move:

That, in view of the serious situation as regards the financing of the Communities revealed in the discussion which Members of the Joint Committee had with Commissioner Tugendhat on 4th October, 1979, the Joint Committee should ask for an urgent debate in each House on its forty-seventh report with a view to seeking urgent Government action on the matter during the currency of the Irish presidency.

I should like to make a comment on this motion. The Dáil and Seanad orders providing for debates were made on different dates but contain the same language. In relation to the Seanad the Committee will note that the period ends on 31 December 1979, but in the case of the Dáil it ends with the adjournment for the Summer Recess, 1980. In those periods a debate shall take place if the Joint Committee lays before the House a report containing a request for a debate thereon. The position with regard to the financial situation of the Community is that the Joint Committee have in fact, made a report, their forty-seventh report, on this matter. That was made in May last but, in fact, that report did not contain a request for a debate which would have already taken place under the terms of the Houses' own orders. In a sense one may say that that is spent. However, there are two ways of proceeding. The first is if Senator Robinson would prefer to have the motion stand in the form it is in it would lie outside the benefit of the orders the Dáil and Seanad made. In that case a special request would have to be made, presumably by writing to the Government Whip in the Dáil, and to the Leader of the House in the Seanad. Alternatively, to fall within and claim the benefit of the orders of the Houses, we could simply make a short separate report embodying the information we garnered on our visit to Brussels, referring back to the forty-seventh report, and in this report we could ask for a debate.

If Senator Robinson adopted the second suggestion perhaps the Joint Committee would agree and in that case there would be debates in both Houses. That is a matter for the proposer of the motion and the Committee to consider.

I would be pleased to adopt that procedure because it fits better our terms of reference. It would achieve the objective which I sought in tabling this motion. My motion responds directly to Deputy Flanagan's point. One of the important discussions we had in Brussels was a meeting with the Budget Commissioner, Mr. Tugendhat, in the course of which he referred to the question of the future financing of the Community. We have, as our Chairman said, reported on that in our forty-seventh report. We reported on the Commission's alerting the Community to the fact that the present financing is based basically on a decision in 1970 relating to own resources and that these resources come from the common customs tariff, the agricultural levies and from a yield from a rate of VAT, which comes into operation in 1980, up to a ceiling of 1 per cent.

In a debate in the European Parliament on 20 July last, Commissioner Tugendhat, referred to the fact that this was a 1970 decision up to a maximum of 1 per cent of VAT and then said:

Even so, the decision sets a limit to the amount of the Community's revenue, and in no abstract fashion. This year, the Community has a rate of VAT of 0.74%. Consequently only 14.9% of the total resources potentially available to the Community actually remain unspent: only 14.9% of what is actually remaining to the Community is not yet, in one way or another, committed. The prospect of exhaustion of Community revenue is therefore something which is now very imminent, and the timing of this exhaustion is a point to which I will shortly revert.

What is being calculated is that without any further expansion of Community expenditure this 14.9 per cent will be exhausted by 1981 by the natural increase, for example, in agricultural expenditure. The effect of this will be that the agricultural spending will hit the ceiling and there will be less than there has been in the past for the regional and social funds and other things. That is the nature of the financial crisis.

In a sense the Committee when compiling its forty-seventh report was aware of the problems but nobody was raising it to the level of political attention it deserved. Commissioner Tugendhat did it in the European Parliament. He did it even more forcefully in the private discussions with us because he made it clear that in order to increase the financing for 1981 one had to start next spring. In order to start next spring one has got to get a political decision to start next spring. The Commission would have to make proposals on the basis of an enlarged budget, whether it is an increase in VAT or from some other source.

At present it looks as though that political decision will not be there, the Germans and the British are not favourably disposed. The purpose of this motion was to have the Joint Committee call attention to the serious crisis and seek a debate in both Houses on the absolute necessity for an increase in the budget of the Community which can come as a result of a decision to be taken next spring for an enlarged budget in 1981. Otherwise, agricultural financing will absorb what is left of the potential resources and there will have to be less for regional and social expenditure. There is no good in our looking for a better regional policy if there is no money there to allocate and indeed if the squeeze is on at that stage.

That is why I am very happy to accept the line of procedure the Chairman proposes, that we this evening report as it were, on the financial situation arising from our own homework, which we did in the forty-seventh report, in our private discussions with Tugendhat, and now the recent statement by Commissioner Gundelach which again calls attention to the crisis. Ireland at present is in the driving seat, we hold the Presidency until the end of December. If both Houses of the Oireachtas were to debate this as an urgent Irish problem, as it is an urgent European problem, and seek that this be a political priority during the European Council Meeting in November and that a political decision be taken—a commitment to increasing the budget of the European Communities so that there can continue to be support for the common agricultural policy, possibly with movement toward reform in areas where there is a positive need for reform—that is certainly open to discussion together with the development of the regional and social policy. If things go on as they are at present the crunch will come in 1981 in no uncertain terms and this country will suffer more than any other country. I would be very happy if we could report on that and call, in our report, for an urgent debate in both Houses.

The Committee have heard Senator Robinson. If you are happy to accept the proposal she has made, that we make a fresh report, I suggest that the mode of procedure ought to be that you would authorise me as your Chairman to sign a report of this Joint Committee simply recording, in a summary way, what has been reported to this Committee by the members who went to Brussels, drawing the attention of the Houses to the forty-seventh Report and requesting that there should be debates on this matter held in accordance with orders made by both Houses. That is the only efficient way in which we can bring this matter any further. But it is a matter for the Committee to decide. That is my recommendation of what we ought to do but I cannot do any more than that.

It seems that if we go through the normal procedure our report would not be finalised for many weeks. The result would be that the Irish Presidency would be over and our opportunity of highlighting the situation at this stage would be lost. It is clear from what Senator Robinson had to say, and from what was hinted at in the forty-seventh Report, that the situation is reaching a crisis and, if it does, we will suffer. Therefore, it is in our interest to bring to bear what pressure we can and to support the Government in their efforts to ensure that that position is not reached. Accordingly, I agree with the suggestion made by Senator Robinson that we should get this report off the ground and request a debate as quickly as possible.

If I might just take Deputy O'Keeffe up on one phrase: we did more than hint at this in the forty-seventh Report, and I quote from paragraph 16:

The Committee considers that this question of the future financing of the Community should now be pursued with a degree of urgency...... In the Committee's view advantage should be taken of Ireland's presidency of the Council from 1st July, 1979 to seek an early decision on this matter.

However, we did not—and that is where the fault lies with us—request debates in both Houses on the matter.

I think in May of last year and this year we were otherwise occupied. In support of what has been said already, could I suggest that we give it a slightly sharper focus? The objective of this exercise now is a political one because we are agreed on its content. The objective surely must be to have our Government firmly committed to placing on the agenda for the November Council meeting the whole question of financing, of raising, in whatever form, the ceiling for own resources for the Community. Otherwise, the position in relation to the common agricultural policy and the two other funds will be seriously threatened. We have already had indications of what form that would take, particularly with the dairying sector.

Might I vary that slightly? I do not think that we want to press the Government to have this issue dealt with because we know it will be dealt with; we know the matter comes up, from any readings we may do of the papers. What we want to do is to be useful and to strengthen the Government's hands in these discussions which they will be having anyhow.

If I might answer that: what is clear from the media is that the British Government, in particular, and the British Prime Minister will raise the question of Britain's budgetary contribution, which is slightly different from the actual extent and future development of the budget itself. I would not like that problem to get in the way of a much more serious one. Our problem and that of Britain is one that is particular to our countries, and they have a case, but this one is of a graver nature. All three parties represented here should ensure, in so far as we can—and I would seek the guidance of the Chairman and the staff in relation to what is the quickest way to have it raised—that our Government representatives hands are strengthened by virtue of having had a debate in both Houses of this Parliament prior to the November meeting. I would imagine there will not be much political difference in terms of support for ensuring that the three funds are not endangered.

I think there is absolute agreement here that the present budget will not be able to cater for the agricultural needs and the regional and social needs of the Community, that obviously it will have to be increased and that the Government's hand should be strengthened in every way possible. Unfortunately, on the basis of the evidence available to us to date it seems that the Germans and the British are extremely reluctant to see that the budget is increased. I am somewhat suspicious that it is an indirect and rather clever way to smash the common agricultural policy and I think it should be highlighted in that way. In all the countries there are regional imbalances in the agricultural area which are politically sensitive. The Germans in particular would probably like to try out the way it is developing. I would support any move to highlight that problem. It is clear that if it is not increased we will run into a lot of problems. As we heard in our earlier discussions, the kinds of solutions proposed on the question of agricultural expenditure are ones which would have dire consequences for us because they do not take into account our difficulties. We support any action which would strengthen the Government's hand, although I am not sure if it will be successful.

That is agreed. I will circulate a draft report to members but I will not sign it or transmit it for 48 hours in case any members take exception to its contents. That is intended to save members the trouble of meeting in an urgent way when they have so many other calls on them.

Motion, by leave, withdrawn.
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