1978 BUDGET PROCEDURE: COUNCIL'S DRAFT

by Altiero Spinelli

SUMMARY: The Parliament considers the draft budgct presented by the Council for the financial year 1978, in preparation for the special budgetary session (24-26 October 1977) at which the Assembly will makes it's own amendments to the draft at the first reading.

This is the first of a series of budget disputes which have for a long time marked and still continue to mark relations between the European Parliament and the Council.

The matters in dispute are repeated each year with great regularity, focusing from time to time on one aspect or another of the budgct policy which involves to a greater extent than the others the power relationship between the Parliament and the Council.

The masters in dispute with respect to the 1978 budget are fundamentally connected with the revenge policy and the imbalance between expenditure intended for the support of agricultural prices and the expenditure designed to support common policies such as the regional, energy, industrial and social policies.

The conflict is focused on the Parliament's request that the Council undertake to review during 1978 the regulations on the organization of the agricultural markets to enable a ceiling to be fixed for the EAGGF Guarantee Section (amendment to the budget submitted by Spinelli) and the Council's claim (in this case the European Council) that it alone is empowered to decide upon the size of the Regional Fund.

Spinelli identifies the basic reasons for his position and that of the Communist group regarding the Council's draft. In "Speeches in European Parliament, 1976-1986", Pier Virgilio Dastoli Editor. (EP, 13 September 1977)

Mr President, the Council certainly has not been covered in praise by the speakers in this Assembly; even the group which, if I may say so, usually sides more with the Council than with the Commission has not spared its criticism of the Council on this occasion.

I have some sympathy and understanding for Mr Eyskens, because I believe that he does not merit the criticisms levelled at the Council which he chairs. But I too shall be obliged, on behalf of my group, to add further, and by no means minor, criticism to those we have already heard.

I want to draw your attention to a statement on the first page of the Council's document which indicates that 'in the context of the cooperation between the Council and the European Parliament, the Council, before establishing the draft budget, proceeded to an exchange of views with a delegation from the European Parliament' and that 'this exchange of views enabled the European Parliament's delegation to put on record the political viewpoint of that institution'.

If I am not mistake, an exchange of views entails the expression of opinions by both sides. But I and the other colleagues who were present at that meeting know that no exchange of views took place. After the Parliament had put its position, the Council simply stated that it did not yet have one. That was not strictly speaking true, because our 'dossier' also included reports by COREPER showing that the Permanent Representatives, working on the basis of the mandate given to them by their respective governments, had reached a certain consensus; in other words, the Council had to some extent established its position just as we in Parliament had done. Although Parliament had not yet taken a formal decision on the matter, its approach was already clear. The Council maintained the silence of a sphinx: it listened to our opinions without our being able in any way to ascertain the extent to which they were accepted or rejected.

I thought that Parliament should be aware of the way in which these ,exchanges of views' are conducted. The Council must realize that this manner of envisaging relations between the two institutions, which both have budgetary powers, is liable to engender conflicts.

It seems to me that in preparing its draft budget the Council has failed to realize that there is a whole section of the budget over which it no longer has exclusive powers. It should therefore tread warily when it changes certain proposals, especially when it knows that the other institution which has budgetary powers thinks rather differently.

This whole problem involves a fundamental decision on the very nature of the budget: should the Community budget simply be an accounting statement of commitments entered into or to be entered into in future, or should it reflect a forecast of the expenditure deriving from the actions which the Commission intends to propose and wishes to see approved in 1978? If the budget were to be a mere accounting instrument the Parliament need take no interest in it: it would be enough for the Court of Auditors to examine the estimates and say whether the accounts are in order and that specific expenditure corresponds to specific decisions. However, both the Treaty, which stipulates that the budget must be debated by Parliament, and the increase in the latter's controlling powers demonstrate that the budget is something different; the Council must therefore understand that it cannot continue to enter in the budget only those items wich it has already adopted or expects to adopt in the next fortnight. It is a slight to th

is Parliament to sec some items shown as token entries - or deleted altogether - simply because the Council has not yet taken a decision, because the proposals have not yet been examined or because the Council does not propose to decide in 1978, as is the case with the proposal for the Export-Import Bank, which the Council of Finance Ministers has decided not to consider in 1978. In my view the Council must try to understand that, having regard to the current evolution of the Community, the budget cannot be, and will never again be, a simple accounting record of commitments.

In a sense the Council's draft may be seen as a photograph of the Community as it is today, while the Commission attempted to put forward at least some prospects for further development.-In this connection, the Commission deserves the criticism already put forward in a previous debate, for, in submitting its own proposals, it showed a lack of courage and in effect encouraged the Council not to treat the proposals with the weight they deserved. When the Commission asserted the need for certain measures but did not have the courage to say now much they would cost the Community and simply showed a token entry, it was playing into' the Council's hands. It was all too easy for the Council to delete the token entries altogether when the Commission was not able to say exactly what the costs would be.

Another weak point is that in the introduction by the Commission we read that the Community expenditure will in large measure be substituted for national expenditure and will not be added to the latter; but there is no attempt to substantiate this claim.

In my view, if we want to have a budget for a more dynamic Community greater initiative is required on our part; Community action must progressively come to replace national action and national expenditure, otherwise it will always be only too easy for the Council to speak of austerity and savings.

When Mr Eyskens spoke of austerity or restraint, he qualified his statement with the adejective 'selective', as is done in the statements on this subject in all our countries. 'Selective austerity' implies a readiness to spend more in certain areas while pursuing a general policy of restraint. Obviously, if the economy it to be reflated and structural changes effected corresponding to a policy of austerity, it will be necessary to spend more in some sectors and less in others.

Now the sectors with which the Community should concern itself are those which, today more than ever before, it is necessary to develop not only to achieve the Community's aim of uniting our peoples but also to face up successfully to crises and to the structural changes which must be made in all our countries. Selectivity should imply the administration at Community level of a part of the funds earmarked for certain policies and the entry of these funds in the Community budget. Austerity should be viewed in these terms and not by making cuts right across the board, which simply results in the overall volume of expenditure being less than originally intended.

In this budget, agricultural price-policy is the only one not to have suffered cuts. In our Parliament and indeed throughout the Community, criticism is levelled at the gigantic scale of the agricultural policy, which is an oppressive burden on the Community; I think, however, that we should begin to be more Precise in our terminology. The Community plays only a modest role in agricultural structural policy through the Guidance Fund, whose scale is broadly similar to that of regional and social policy. At the same time, the complex and pervasive problem of the policy of agricultural price-support makes a genuine, equitable and healthy agricultural policy impossible.

On this occasion the real agricultural policy - that concerned with agricultural structures - has also been the victim of austerity and suffered cuts; agricultural prices alone have remained untouched and, what is more, there is the prospect of a rectifying budget from the Commission, increasing the figure still further. In this policy - as various speakers have pointed out - we find none of those commitments entered on the right-hand page of the budget and which are treated as an obligatory commentary within the meaning of Article 16 of the regulation; there is nothing to indicate that measures will be taken in 1978 to change certain price-support policies. I would add that, while this expenditure is clearly compulsory at present, there is no reason whatever why it should remain so and why the regulations underlying it should remain unchanged. The demand for changes is growing for reasons of justice, equity and economy and not for sectoral reasons. Changes must be made to this irrational and abnormal policy

, under which the Community has to spend more the bigger our harvests, while we export, under conditions equivalent to dumping, products which we also have in part to import and under which also we subsidize - through the compensatory amounts - the stronger economies instead of the weaker ones.

All this results in an inability to recognize and confront the exigencies of the Community's true rôle and present situation. If the Council fails to recognize the serious nature of the criticism levelled against it, that is only because it want the Community to remain ossified and make no progress. But I would warn the Council that Parliament will not be able to accept that approach.

Lord Bruce asked whether the unanimity rule must be applied to change the agricultural policy. It is true that the regulations have to be approved unanimously, but it is also possible to fight a battle which must be opened by the Commission. It is for the Commission - not the Council - to propose radical reforms to the price-support policy to ensure that it is reasonable and economic and ultimately enables agriculture to be improved.

I want to end my speech with a comment on an aspect which is never given attention, that of revenue. In the long run both the Commission and the Parliament will have to give serious thought to the fact that the Community cannot continue to be founded on a kind of indirect taxation which has the characteristic of weighing more heavily on the poorer sections of society instead of on its richer members. A better structured system is needed. This matter will have to be given thought in the not-too-distant future, because we are approaching the maximum figure of one per cent of VAT revenue and we shall soon have to look into the need for new taxes.

But I want to consider the basic problem, which is that of establishing a policy of revenue as well as expenditure. We need a revenue policy which will enable the Community, in the present economic and conjunctural circumstances, to raise its funds through specific systems of taxation available to it. Unless we manage to introduce this revenue policy it will not be possible to have a genuine policy and a genuine debate on the budget.