Special committee on the policy challenges and budgetary resources for a sustainable European Union after 2013 REFLECTION PAPER

Transcription

1 EUROPEAN PARLIAMENT Special committee on the policy challenges and budgetary resources for a sustainable European Union after REFLECTION PAPER on the Structure of the MFF post 2013 Rapporteur: Salvador GARRIGA POLLEDO 1

2 Introduction: Each adoption of a multi-annual financial framework since 1992 has been combined with a modification of the structure of the MFF. 1 The most radical reshuffling of the MFF structure took place in 2006: In order to follow a thematic approach reflecting the Union s priorities defined by the Lisbon Strategy, the former Heading 1 (Agriculture) was merged into Heading 2 (Preservation and Management of Natural resources) and the former Heading 2 (Structural operations) was mainly transformed into the Heading Sustainable Growth. In addition, the former Heading 6 (Reserves) was abolished and partly integrated in Heading 4 (EU as global player). The Pre-Accession Heading created in 1999 was merged into Heading 4 as well. These structural changes were undertaken in order to increase the transparency of the Union s budgetary system and, above all, to ensure increased visibility of the political priorities defined by the Union in the context of the Lisbon strategy. 2 Options for the Structure of the MFF post 2013: Against this historical context, it is not surprising that the Commission s recent reflections about the possible structure of the MFF post 2013 are based on the broad objectives of the EU 2020 strategy. In its Budget Review document 3, the Commission states: "The structure of the budget is itself an important tool for communicating and delivering on the purpose of the spending and the objectives to be reached. There is an obvious benefit in a budget which in structure, as well as balance, reflects the EU's political priorities. The current structure made some progress in that direction, but a further step would be to either reduce the number of headings to the minimum or organise the budget around the Europe 2020 strategy". 1 An overview about the former multi-annual financial frameworks is given in Annex 2. 2 It could also be argued that the structure of the MFF reflects the principle of Activity-Based Budgeting (ABB) put in place in the context of the reform of the Commission (see COM (2000) 200) 3 COM (2010) 700 2

3 The Commission proposes two alternative structures: Option 1 would provide only three Headings: (1) Internal expenditure, (2) External expenditure and (3) Administrative expenditure. Option 2 would use the same three Headings but 4 subheadings under Heading 1 Internal policies 4 : 1a. Smart growth 1b. Sustainable growth 1c. Inclusive growth 1d. Citizenship At least under the assumption that no subheadings or other measures for ring-fencing internal expenditure would be added, Option 1 would provide a strong increase in flexibility for all internal policies, that is, around 89% of the current MFF. On the other hand, political visibility and transparency would be reduced. Option 2 provides less flexibility but reflects the EU 2020 political priorities. It would be a step in reducing the number of Headings (or ring-fenced expenditure areas) as it would comprise 3 Headings plus 4 subheadings compared to the current 6 Headings with 4 subheadings. However, this simplification would only be achieved if: "covering policies where the centre of gravity falls under the three strands of EU 2020" CAP is not subdivided (as is the case in the current MFF) into two (ring-fenced) pillars of market related expenditures and direct payments, and rural development; "Freedom, security and justice" is included in citizenship (and not a separate subheading as in the current MFF). The Commission's review paper does not provide details on how the different policies would be allocated to the different EU 2020 subheadings or whether current horizontal policies (CAP, cohesion) would be split between objectives 5. The flexibility of the MFF will depend largely on how this allocation is done. Structuring the MFF post 2013 along the format of EU 2020 would not resolve the problems of allocation of the current policies to the new structure. Even under the assumption of a continued validity of the current rule one fund-one policy, it could be advocated that a fund be financed out of different headings or subheadings. E.g., the Commission argues that today, 44,1 % of the rural development funds contribute to Sustainable growth, while 32,9 % could be attributed to Smart Growth. Consequently, the EARDF could be fuelled from both headings. Similarly, the direct payments and market related expenditure of the CAP could be financed through heading Sustainable growth as well as through heading Inclusive growth. The crucial question would however remain to be 4 The reflections presented in this paper are based on the assumption that "Headings" and "subheadings" are categories of expenditure which are similar in substance, as, in both cases, a modification requires a revision of the IIA. On the other hand, the current provisions of the IIA (Paragraph 23) make reallocations between subheadings (within the same heading) easier than reallocations between headings. Which conditions for revision should apply in the future MFF, is discussed in a separate Reflection Paper on Flexibility. 3

4 solved: Which changes in policy design would be needed in order to align the policies to the agreed objectives? A similar reflection would be appropriate for Cohesion policy, which is currently included in Heading 1b of the MFF. However, it could be argued that the Structural Funds and Cohesion Funds contribute significantly to all three objectives of the EU 2020 strategy and could accordingly be fuelled from all three headings: Analysis of the Commission based on the figures from DB comes to the conclusion that expenditure from Heading 1b contributes substantially to Smart Growth (22,5 % of Heading 1b expenditure), to Sustainable Growth (24,5 %) as well as to Inclusive Growth (20,5%). Nevertheless, the Commission seemingly prefers to maintain all cohesion expenditure in the same heading. In addition to the reflections of the Commission's Budget Review Communication, a third option to be discussed would be to maintain the current structure of the MFF for the period post This Option 3 would provide for increased stability and predictability, but it would not resolve the current structural shortcomings, notably with regard to flexibility. An overview of the Budget configurations under the three options above is given in Annex 1. Questions The following questions could be the starting point for the committee s discussion: Should the current structure of the MFF be maintained (Option 3)? Should it be consolidated or optimized without changing its basic architecture? Would Option 1 be more desirable as it provides for increased flexibility, at least within the internal policy expenditure? Should the subheadings proposed in Option 2 be maintained as separate headings? Is it correct to assume increased flexibility through the use of subheadings? Will the subheadings be ringfenced in a similarly rigid way than the current headings? Given the experiences with the current lack of flexibility, should a separate heading for reserves be reintroduced (following its abolition in 2006)? Should some elements of the Community spending which are now externalised be included in the future MFF (EDF etc)? Or should, on the contrary, external structures (Funds hors budget) be used in a more offensive way (e.g. a Funds for Energy investments)? Should such external dedicated funds be used only for infrastructure investments? 6 Letter from Commissioner Lewandowski to EP rapporteur Mrs Jedrzejewska from 20 August

5 Should they be (co-)financed by issuing Community bonds in capital markets? 7 How can a communitarian procedure for such funds be ensured and an intergovernmental approach avoided? How should the European Financial Stabilisation Mechanism be included in the MFF? Should a different approach be chosen with regard to guarantees than actual expenditure? Should the categories of expenditure at national and EU level be aligned, in order to create better synergies between the EU budget and the national budgets? If so, should the current Eurostat methodology be used for structuring the budgets? 8 Can the European Semester be used to facilitate and coordinate this process? 7 A Iozzo, S Micossi, MT Salvemini (2008): A new budget for the European Union? CEPS Policy Brief European Parliament (2009): The Interinstitutional Agreement of 17 May 2006 and budgetary procedures. Policy Department D (Budgetary affairs) 5

6 Annex 1 Synoptical Tables of the discussed MFF Structures Based on the configuration proposed of the Budget Review Communication, the structure of Option 1 could be represented as follows: 1. INTERNAL POLICIES Cohesion policy (ERDF, ESF) CAP (including rural development) Infrastructures (transport, communication, energy) Energy and climate policies Fisheries and environment Research Innovation Education European Globalisation Adjustment Fund Solidarity Fund "Unity in Diversity" Freedom, security and justice 2. EXTERNAL POLICIES Projecting EU's values and interests globally (EEAS,...) Crisis response (IfS, Humanitarian aid,...) Poverty alleviation (DCI, EDF...) Neighbourhood policy and Pre-accession support 3. ADMINISTRATION 6

7 Based on the configuration proposed of the Budget Review Communication, the structure of Option 2 could be completed as follows: 1. INTERNAL POLICIES 1a. Smart growth Research Innovation Education Infrastructures (transport, communication, energy) 1b. Sustainable growth Energy and climate policies CAP (including rural development) Fisheries and environment 1c. Inclusive growth Cohesion policy (ERDF, ESF) European Globalisation Adjustment Fund 1d. Citizenship "Unity in Diversity" Freedom, security and justice Solidarity Fund 2. EXTERNAL POLICIES Projecting EU's values and interests globally (EEAS,...) Crisis response (IfS, Humanitarian aid,...) Poverty alleviation (DCI, EDF...) Neighbourhood policy and Pre-accession support 3. ADMINISTRATION 7

8 In a similar format, Option 3 could be presented as follows: 1. Sustainable Growth 1a. Competitiveness for Growth and Employment Research Innovation Infrastructures (transport, communication, energy) European Globalisation Adjustment Fund 1b. Cohesion for Growth and Employment Cohesion policy (ERDF, ESF) 2. Preservation and management of natural resources CAP (market related expenditure and direct payments) CAP (rural development) Fisheries and environment Energy and climate policies 3. Citizenship, Freedom, Security and Justice 3a. Freedom, security and justice 3b. Citizenship "Unity in Diversity" Solidarity Fund 4. EU as a Global Player Projecting EU's values and interests globally (EEAS,...) Crisis response (IfS, Humanitarian aid,...) Poverty alleviation (DCI, EDF...) Neighbourhood policy and Pre-accession support (IPA) 5. ADMINISTRATION 8

9 Annex 2 FORMER MULTI-ANNUAL FINANCIAL FRAMEWORKS 9

10 10

11 MFF

12 12

13 MFF

14 Annex 3 The Commission's Budget Review paper Selected quotes from the Commission's Budget Review: On infrastructures (transport, communication, energy): "As examples: until 2020, 500bn is estimated to be needed for the implementation of the TEN-T programme and between 38-58bn and bn to achieve the Commission's broadband targets. In the energy sector, 400bn is estimated as the need for distribution networks and smart grids, another 200bn on transmission networks and storage, and 500bn to upgrade existing and build new generation capacity, particularly in renewable energy, between now and 2020". On energy and climate policies: "One option would be to reshape the EU budget to create large-scale, dedicated funds devoted to the delivery of investment in such areas...this approach could be taken forward as an option based on distinct programmes. Nevertheless, mainstreaming these priorities into different programmes may be a more effective approach, recognising that the same action can and should pursue different objectives at once. The primacy of policy goals like climate change and energy would already point to a re-prioritisation inside policies like research, cohesion, agriculture and rural development with a clear political earmarking balanced by the need to avoid new rigidities. This could be accompanied with a clear cross-cutting obligation to identify where programmes had promoted such policies. The result should mean that the EU would be able to set out clearly what resources were contributing to policies like tackling climate change or supporting energy security, irrespective of the instruments through which these policies are delivered". On Cohesion policy: "Another technique to increase the quality of spending would be to introduce some form of qualitative competition among programmes for cohesion funding. This could mean setting aside a limited share of cohesion funding in a performance reserve open to all eligible Member States and regions. It would be allocated on the basis on progress made by national and regional programmes towards Europe 2020 objectives". On external policies: "on climate finance commitments...whether the role of the EU budget should be complemented by a separate instrument to bring together a stable and visible collective EU contribution". On Development and Cooperation: "The experience with respect to the different financial regimes that apply to the European Development Fund and the Development and Cooperation Instrument today has raised important issues in terms of efficiency, flexibility and democratic procedure, which require further examination". 14