Speeches, Interviews

Speech by State Secretary Finz, European Parliament, Committee on Regional Development (REGI)

Mr Chairman,

Honourable Members,

As you know, the Austrian Presidency attaches major importance to good cooperation in partnership with the European Parliament.  It is therefore a matter of particular concern to me to meet you here today in person and to talk about the cohesion policy issues pending before the European Union.  Our meeting is intended to be the start of the final negotiations on implementation of the cohesion policy - which I hope will be conducted constructively and in a spirit of partnership.

Cohesion policy is of particular importance in the pan-European context.  In my opinion, there are several reasons for this:

• Firstly, it is a particularly weighty policy area from a financial point of view.  It accounts, after all, for around 35% of the European Union's budget.
• Secondly, the European Parliament is particularly involved in the deliberation on the legal bases for this area.  The Regulations therefore have a particularly high degree of democratic legitimacy.
• Thirdly, the great financial weight and the heavy involvement of the Parliament convey the special political position of cohesion policy: it expresses the European Union's political conviction that economic integration also needs effective compensatory measures as a counterbalance; that the internal market only works if weaker regions and social groups do not go to the wall; that according to our principles in Europe, economic growth can only be sustainable if it is accompanied by solidarity.  This is also reflected clearly in Article 158 of the EU Treaty.

At this point, allow me to mention briefly in passing, as representative of the Austrian Ministry of Finance:  the appropriations raised by European taxpayers in this connection must be spent properly.  "Properly" means in accordance with the law, economically, efficiently and effectively.  And all those who were ever involved in the administration of cohesion policy programmes know that, in considering these budget principles, money is not the only factor in short supply. The ability of national and regional economies to use appropriations properly tends likewise to be clearly limited: on the one hand, by the limited number of persons or undertakings able and willing to initiate good projects; and, on the other hand, by the appropriate time required to plan and implement good projects.  The more innovative and ambitious the measures to be financed are, the more this applies.  If we talk about an ambitious and innovation-based cohesion policy, we should therefore always also bear in mind the limits of absorption capacity in the spending of the budget appropriations made available for this purpose.

The Austrian Presidency welcomes the fact that a political agreement has been reached on the financial perspective.  The Presidency is aware that in order for this agreement between the Member States to enter into force, an Interinstitutional Agreement needs to be concluded.  The Presidency will vigorously conduct the negotiations on the conclusion of this agreement in parallel with the negotiations on the cohesion policy issues.

Ladies and gentlemen, after these introductory remarks I come to the essence of today's discussions: the cohesion policy issues.

The requests introduced into the negotiations by the European Parliament at its first reading in mid 2005 have been studied very carefully by the Council.  In the subsequent negotiations an attempt was made to take these requests as far as possible into account in the revision of the texts of the Regulation.  Several direct personal contacts by Presidency representatives with the Parliament rapporteurs have served to gain a better understanding of the Parliament's requests and sound out the possibilities of taking them as far as possible into account.

In some issues of special political importance, the European Council on 16 December 2005 achieved agreement among the Member States, in which some central concerns of the European Parliament were partly taken into account: the Member States with particularly weak economies and a per capita GDP of less than 85% of the EU average were granted relief in the following areas:

• Eligibility of value-added tax
• Eligibility of costs of regenerating old housing estates
• Calculation of the co-financing from EU appropriations on the basis of total cost instead of public expenditure
• Increased co-financing rates
• Extension of the deadline for spending annual budget commitments in the first 3 years of the programme period (2007-2010) from n+2 to n+3.

This result by the European Council is already incorporated into the most recent compromise texts of the UK Presidency.

It is true that the concessions for the economically weak Member States, which I have just itemised, lead to a kind of "two-class society".  The problems arising therefrom are evident in the programmes of the "territorial cooperation" objective.  In order to avoid complications in the management of the programme for this objective, the most recently drafted compromise texts contain the following observation: in cooperation programmes with the participation of at least one Member State for which  the favourable rule applies, the benefit applies in the case of co-financing and with regard to n+3 consistently for all Member States in the programme.

In further negotiations it will be necessary to examine whether the differential treatment of Member States in the remaining areas is feasible and can be maintained or whether standardised rules would be better to administer.

Ladies and gentlemen,

As you know, some requests from the European Parliament were not taken into account by the Council.  Allow me to examine these points briefly and justify the Council's attitude:

• The question as to whether appropriations released by automatic decommitment should be assigned to other cohesion policy programmes or should flow back into the general EU budget will be discussed in connection with the Interinstitutional Agreement.  I therefore do not wish to examine the subject in further detail here.  However, I believe that the problem of losses of appropriations will be considerably mitigated by the proposed extension of the deadline from n+2 to n+3 in the first 3 years and by the increase of the maximum rates for co-financing from EU appropriations.
• The vast majority of Member States are opposed to the performance reserve proposed by the Commission and endorsed by the Parliament.  Behind this rejection there are good objective reasons and serious methodical concerns: the quality of the implementation of complex programmes cannot be measured by code numbers alone!  However, unusable indicators are worse than none at all and certainly not a suitable basis for the distribution of reserve appropriations as a performance incentive. It is undisputed among the Member States that the quality of programmes needs to be assured.  This must however take place on a different basis.  Since the beginning of the negotiations, Austria has been in favour of the development of suitable formats for substantive monitoring of the implementation of the cohesion strategies at both national and European level.  We believe that we can already offer some practical experience in this matter.
• On some points - partnership, consideration of the urban dimension in the operational programmes - the European Parliament wanted explicit, binding rules which, from the Council's point of view, take too little account of the different geographical or institutional conditions in the Member States. Allow me to illustrate the Council's concerns with an example: what is the point of setting an obligation for taking the urban dimension into account in all programmes, if the biggest town in the only Austrian region which (to date) falls under Objective 1, and which will have the status of a "phasing-out" region in the next period, has just 10 000 inhabitants?  From the point of view of the Member States, more flexible rules are therefore needed and not rigid statements which can sometimes be unrealistic.

Ladies and gentlemen,

I should now like to direct your attention, however, to the achievements made.  As I hope you have observed, a large number of proposals by the European Parliament have been favourably received by the Council in the negotiations over the past six months.  An attempt has been made to give them the best possible consideration in the revised compromise texts - verbatim, as far as this is expedient whilst preserving the consistency of the language and content of the texts of the Regulations, or at least reflecting the general sense.

In the General Regulation, the following concerns of the Parliament  - just to mention a few examples - are taken into account:

• The principle of non-discrimination has been extended from the gender perspective to all other forms of discrimination.
• The references to the objective of sustainable development have been reinforced.
• The deliberation on the Community Strategic Guidelines on Cohesion under the procedure set out in Article 161 of the EU Treaty is maintained.
• The flexibility in the monofund programmes to take account of measures from the other structural fund has been increased from 5 to 10% per priority axis.

In the Regulation on the European Regional Development Fund and the Regulation on the European Social Fund, numerous explanatory proposals from the Parliament have partly been taken over verbatim. This applies to both the recitals and the individual articles. Furthermore, as proposed by the Parliament, interregional cooperation as a separate approach is now explicitly mentioned in several parts of the fund Regulations.

In the Regulation on the Cohesion Fund, the provisions in Article 4 on the suspension of budget commitments in accordance with the Parliament's wishes has been formulated more clearly in the light of the Council's decisions.

Following the proposal from the European Parliament, the term "European grouping of cross-border cooperation" has been changed to "European grouping of territorial cooperation" in the corresponding Regulation.  Furthermore, all three approaches to territorial cooperation   cross border, trans-national and interregional - are explicitly mentioned.  This Regulation also takes over a number of Parliament proposals, sometimes verbatim, in the revised text of the Regulation.

Ladies and gentlemen,

As I have attempted to show you in my brief survey, according to my assessment the Council and Parliament have already become very close in the negotiations over the past few months.  I am convinced that a common solution ought to be possible without great difficulties, if the Council, Parliament and Commission continue to work together with a good will, closely and efficiently.  On behalf of the Austrian Presidency, I can assure you likewise of its willingness to offer maximum cooperation.

However, you are probably also aware that there are enormous time constraints: there are still many mandatory procedural phases to be completed before the operational programmes are  ready for approval and their implementation can start:

• In the most favourable case of a very accelerated examination of the Regulations on cohesion policy in the fora of the Parliament and Council in parallel to the negotiations on the Interinstitutional Agreement - and not only after their deliberation - the new Regulations can be published and enter into force at the end of  May 2006 at the earliest.
• After the entry into force of the Regulations, the Strategic Guidelines on Cohesion must still be dealt with and decided in the fora.  A further two months will need to be allowed for this.
• Only after presentation of this basis can the Member States complete their national strategic reference frameworks and the draft operational programmes based on them, and submit them to the Commission - i.e. not before September or October 2006.
• Experience shows that, even in the most favourable cases, the negotiations between Member States and Commission on the programmes and the internal Commission procedures last almost six months.

Even under optimum conditions, the programmes are not expected to be approved by the Commission before Easter 2007.  A delayed start to the programmes is already virtually inevitable now.  We should do our utmost to avoid further delays.

I should therefore like to conclude this introductory talk with the following appeal from the Austrian Presidency to the Parliament: please do all you can too so that we can, in cooperation between the Council, Parliament and Commission, deal as rapidly and efficiently as possible with the formal negotiation phases still before us, and are able to present Europe with good and feasible legal bases for the 2007 2013 cohesion policy before the end of the Austrian Presidency.

Thank you for your attention!