1978 BUDGET PROCEDURE: FIRST READING IN THE EUROPEAN PARLIAMENT

by Altiero Spinelli

SUMMARY: The Parliament discusses and amends at the first reading the draft budget presented by the Council at the previous session on 13 September 1977.

The vote at the first reading is accompanied by approval of a motion for resolution which, in a way, represents the key, from the political point of view, for interpreting the amendments made by the Parliament to the Council draft and identifying the direction which the Parliament intends following at the second reading in the December session.

On 25 October, Spinelli deals with the essential political aspects of the motion for a resolution. In "Speeches in European Parliament, 1976-1986", Pier Virgilio Dastoli Editor. (EP, 24 and 25 October 1977)

Mr President, on behalf of the majority of the Communist and Allies Group, I would like to say that our first reaction to the budget presented by the Council is a negative one.

However, since Parliament has the right not only to express its opinion but also to change many points in this budget, I would like, on behalf of my Group, to reserve judgement on the final text.

The shortcomings of this budget have already been described by other members, and 1 will therefore deal only with a number of other points where I feel I have something to add. I would like first of all to point out that so far insufficient attention has been paid to the revenue section. We have a rather strange and absurd view of Community revenue, especially now that we are on the point of having our own resources: we add up expenditure and then declare that revenue must match expenditure. But the fact expenditure is what it is, is only the result of adding up the cost of the various policies, each with its own special features.

Now I do not think that in any of our countries we would draw up a budget in this way. We always have to take into account the available funds and the priorities of the various policies. We never manage to achieve everything we would like and no-one could criticize the Community for falling to do everything that we would like to do. But in the present situation, we have to make a choice.

The Commission first of all and then the Council, in presenting the draft budget, must first provide an analysis of the amount of taxation that can be borne by the citizens of Europe, who nowadays usually have to pay so much to the State and so much in local rates, so much to the regions, to the Länder, and so much to the Community. Under present economic circumstances can we ask taxpayers to pay anymore? Would it not be better to transfer some of the resources from the State to the Community, since some problems can be more easily solved at European level than at national level. By taking this kind of view an overall idea of the available funds can be obtained and, consequently, a guide to priorities in expenditure.

It should be remembered that in the way the budget was drawn up originally, this practice was almost impossible because every budget had to have, for non-compulsory expenditure, a maximum rate to be calculated in a certain way. This maximum rate could be exceeded only in exceptional circumstances, following specific procedures. Now, according to the regulations in force, things are different; the reference to exceptional circumstances has disappeared. This means that the maximum rate is only one of the elements which the Community has to take into account. There must therefore be concertation and this must not come at the end but at the beginning of the procedure; this joint decisionmaking by Parliament, and the Council should determine the real rate of increase, and not the fictions rate which I have mentioned.

It is a question of procedure: our German colleagues know that there is considerable concertation between the Länder and the Bund to decide fairly what goes to the Länder and what goes to the Bund.

The balance of expenditure between the Community and the Member States is different from that between the Bund and the Länder, but it remains true to say that we must take concerted decisions and this we have completely failed to do. We have no specific figure to guide us and therefore all our expenditure is decided in a somewhat arbitrary manner. This must change. An initial analysis must be carried out, discussed here in Parliament, and the Council must realize that it cannot take the decision on its own but must decide together with us. I hope that this request will be included explicitly at least in the motion concluding the discussion of the budget.

This has repercussions also on the kind of taxes which the Community should adopt. But we will return to this in the debate on the adoption of the resolution. For the time being, we will concentrate on this omission in the budget, which will have to be rectified as it is a matter of fundamental importance.

I would like to go on now to discuss the other matter on which we have dealt at some lenght, expenditure policy.

There is a fundamental difference between the Council and the Commission's views of expenditure, at least as regards non-compulsory expenditure. I will speak later about compulsory expenditure, in particular the agricultural fund, which represents the main element in compulsory expenditure.

As regards non-compulsory expenditure, the Council believes that we should include only matters on which it has taken a decision or where a decision is likely within a few weeks, that is to say it considers the budget as a mere accounting instrument. The Commission on the other hand had made it clear, particularly this time, that the budget must reflect the policies it intends to pursue. We must be prepared to state clearly that the only acceptable formula is the Commission's and not the Council's, because the Council's attitude renders the whole parliamentary debate pointless as it leaves the Community, and in particular the Commission hamstrung.

This is true for that part of the budget which concerns non-compulsory expenditure. However, for compulsory expenditure, the Council and Commission are in perfect agreement. As soon as they are faced, for example, with the problem of the EAGGF, the Council and Commission behave like drug addicts; in between 'fixes' of millions of units of account they complain and rail against costs but, when it comes to the pinch, they take another 'fix' and the millions start flowing again. The Council has not seen fit to deduct a single unit of account from the Commission's proposals, and when the Commission proposed another 500 million it did not bat an eyelid.

As regards the other section, in which the Commission has presented constructive proposals, I cannot agree with Commissioner Tugendhat's statement in reply to Lord Bruce that we have to learn to live with the Council, take account of various factors and so on. We all know this! We know we have to live with them, and we have to show willing and, eventually, reach compromises!

What is actually happening is this: when the Commission sees fit to propose a certain policy, it cannot say that it believed in it in May and that in October it no longer believes in it. It is perfectly aware of the length of time the Council takes to reach a decision. The Commission has decided to table proposals which involve appropriations. It is well aware that these proposals will provoke a certain reaction in the Council, a different reaction in Parliament and that at a later stage there will be a conciliation between the Council and Parliament. Now, Parliament has learned that the Commission, off its own bat, and ignoring Parliament, has informed the Council that it intended to curtail certain entries amend others, etc., for example, the document presented to the Council contains the statement that as regards the aeronautics plan the Commission felt that this entry was no longer necessary as it was intending to present new proposals.

It is to Parliament, gentlement, that you should have come with these suggestions, not to the Council, because the draft is at present before Parliament and Parliament in this case has the last word! But if you, knowing full well that the Council is showing some reluctance, go and inform it that you are ready to back down, this means that you are completely disregarding the fact that Parliament can demand that the Council take action in certain fields.

The same thing happened for a number of entries concerning data processing and energy which involve non-compulsory expenditure and on which Parliament and not the Council has the last word. Notice that we are not talking here about the final vote on the budget as a whole but that we are voting on this section and on this basis Parliament and the Council would have come to a joint decision about whether or not to alter the rate of increase. In these circumstances, respect for the political commitments made by Mr Jenkins, should have meant that the Commission would discuss with Parliament any new idea arising from new developments in the situation. You, however, acted alone and changed the rules of the game.

It is a different matter for agricultural policy expenditure which constitutes the major part of the Community budget. The rapporteur, Mr Shaw, the committee chairman, Mr Lange, and other have said that we must avoid supplementary budgets and therefore set up a reserve. It is my view, ladies and gentlement, that this is a false problem. The occasional supplementary budget is not the end of the world! Strictly speaking, supplementary budgets can be avoided only if the Commission is allowed to contract debts because then, instead of up a supplementary budget it goes into debt; but if the Commission is obliged, as it is to keep the budget in balance, when, through any unforeseen incident, the budget is not in balance it must ask for a supplementary budget. Under the existing agricultural regulations, unforeseen incidents are the order of the day. They are implicit in the way the policy works: the forecasts are approximate and almost always mean that further expenditure is necessary at a later stage. If we there

fore include provisionally, in some heading or other in the reserve this subsequent expenditure in case it should prove necessary, the result seems to me to be identical. Suppose the budget represents 100 and the reserve 50: well, the result will be that we will have an overall budget of 150, but that it will still be uncertain and not fully explicit. If we want to have a serious budget we must pursue a coherent policy, not an open ended policy.

Mr Cointat has just said that by abolishing Community solidarity, and dismantling the market organizations, we were heading towards a crisis which risked bringing the whole structure of the Community tumbling down. But no-one is suggesting doing away with these positive features, which are the basis of any serious agricultural policy.

The problem is how to fix prices and what attitude to take to certain ridiculous price variations and this is the aspect which must be corrected.

I believe that at this time when new countries are seeking accession to the Community it is important to review the agricultural policy with some care, without calling the whole policy into question, and without attempting to demolish it but to improve it. To make this possible we have asked (and we shall whether or not this Parliament is prepared to make an effort in this direction not only with words but with actions) the Council and the Commission, during 1978, to draw up and implement those corrections, those amendments to agricultural regulations, fixing a ceiling, or a system for determining prices, for making all concerned share in the burdens, for action on food stocks, in order to guarantee this system of minimum prices in the Community and thus avoid the ludicrous situations which have developed in several sectors. It is, for example, ludicrous that we should become major exporters of wheat which is more expensive than wheat produced elsewhere in the world, and it is equally ludicrous that whereas

the level of wine consumption in the Community has remained almost static, the long term trends, not just over one year, are towards an increase in wine production.

I hope that Parliament, using all the means at its disposal, will get these necessary changes under way.

I am encouraged in these remarks by the knowledge that the Commission in particular Mr Gundelach - seriously believes that this policy must be reviewed and that new ideas must be put forward. If we, as a parliament, can support the Commission in these efforts, in this rethinking, with firm guide-lines, we will undoubtedly help this plan to succeed.

Another crucial matter for Parliament is the question of compensatory amounts about with we are still unhappy. All the existing compensatory amounts must have fixed time limits and must be gradually reduced.

We cannot say: abolish compensatory amounts. As long as there is a policy of market organizations and as long as there are currency fluctuation situations will arise in which positive or negative compensatory amounts have to be introduced, depending on whether there is a revalutation or a devaluation. But this measure must be temporary and must be phased out over 2 or 3 years.

This way we can avoid certain artificial and anomalous situations such as the disproportionate growth of some farms in certain countries, due not to the fact that they have a greater production potential than others but to the fact that they are permanently receiving compensatory amounts.

I will quote one detail which is, however , indicative of the need to review the agricultural policy and to improve its structures: the Commission included in the preliminary draft 3 500 000 European units of account for improving glasshouse production. We know that these producers receive a special subsidy for purchasing oil, which consists of intervention to ensure that the price of oil is not subject to market increases.

I am not attempting to defend Italian horticultural production. The Italian market unfortunately - and I mean unfortunately - has protected itself in another manner from the start: it has discovered, for example, that for tomatoes we, in Italy do not have a certain parasite which damages production in other countries and therefore it does not import tomatoes from the rest of the Community!

This absurd situation in Italy is matched by absurd situations in other countries. The Commission, wisely - because in these cases it is responsible for helping the processing industry - has provided appropriations for the retraining of staff employed in glasshouse horticulture, appropriations which have been deleted by the Council and which we propose to reinsert.

Similarly, with japan, we complain that we cannot break into Japanese markets. But when the Commission proposes practical measures to increase Community exports to Japan they are rejected. Each state wishes to act its own: the richer states will succeed better, the poorer ones will be less successful.

And when the Commission proposes aid to all the Community industries to help them compete on Japanese markets, it is told that this is not possible.

These are details, however significant. The main thing is to maintain and strengthen the direction which the Commission has tried to give to this budget. In order to show that the budget is an instrument for progress and not for maintaining the status we must reestablish the expenditure proposed by the Commission. And the Commission, for its part, unless it wishes to abandon the proposals it has made over the last 6 months, should accept our support.

I will not dwell on every detail of the section on agriculture because amendments will be tabled on various aspects of the Guidance and Guarantee Funds but I think that the Commission and the Council should remember the need for a change of policy, preserving what deserves to be preserved but making changes where they are needed.

Lastly, I would like to appeal to all members both present and absent. There are those who wish to exert pressure and those who are content merely to express their own displeasure without wishing to change anything. If we really want to make a contribution to improving the quality of our Parliament, we must ensure that the vote reflects the divergences - which exist in all the groups - between the reformers and those who wish to preserve the status quo. Otherwise , if we vote artificially, by groups, we will be on the way to transforming this Parliament into a number of little parliaments.

None of us knows whether the composition of the groups will be the same in 10 years time as it is now. However, at present it is of vital importance to discover who is in the majority, the reformers or those who favour the status quo - I do not use the word conservatives for there are many in the Conservative Group who favour reform. I would like to recommend that all the groups bear in mind in tomorrow's debate the need for this political clarification.

25 Octobre 1977

Mr President, in transmitting to the Council the budget as revised at the first reading, Parliament prefaces the document with a resolution - still in the form of a motion - tabled by Mr Shaw. Though much has already been said about it, I think it would be useful to dwell on it a little longer, because the resolution expresses Parliament's overall political view of the budget.

The resolution consists of a series of important points which I think will be adopted. However, it also contains some gaps, and serious ones at that, which I would suggest Parliament fills by means of a few amendments. We should be careful in fact, when faced with crucial problems, not to create the impression of hesistancy and vagueness. Since Mr Shaw has put considerable effort which I greatly appreciate - in to dealing with this difficult document and has managed to improve it substantially as compared with the Council's text, I hope that he will, together with the rest of the House, note very carefully the amendments that I propose.

I shall review them very briefly, beginning with a point that seems to me important, that is paragraph 9 of the motion for a resolution which stresses the need for the budget to be decided in the light of Community goals and not merely on the basis of a maximum rate. Yesterday I explained, and so will not repeat myself how, the reasons why it is important that this point should be absolutely clear. Let me, therefore, just read you the text that I propose should be substituted for paragraph 9: 'stress once again that the budget should be decided on the basis of the comparison between the overall financial possibilities of the Community and the distribution between the Community, national and local resources on the one hand, and the needs and goals of the Community on the other; the determination of the maximum rate as required by Article 203 (9) can therefore be no more than one, and not the only, point of reference'. This amendment, I believe, will eliminate any misunderstanding as to what we want to state a

nd emphasize.

Further on, in paragraph 12, inter-institutional dialogue is mentioned. Mr Shaw, very tactfully, had written that on the basis of the new inter-institutional balance the Council should be prepared to enter into a real dialogue. I remember having said in this House, at the last part-session, but on what the dialogue in which I took part was really like. I do not want to return to the subject now. I believe, however, that instead of saying simply 'enter into a real dialogue', which is a rather abstruse way of putting it, one which no ordinary European citizen will understand, we should say clearly that it is Parliament's view that Council should develop a genuine dialogue with the European Parliament on budgetary policy and that the guidelines and preliminary alternatives defined by each of the two institutions should be put forward, explained and discussed jointly. I recall that at a meeting with the Council at which we had before us the preliminary guidelines which the Council had drawn up at the Coreper sta

ge, the Council had refused to discuss these guidelines or to explain to us the reasons behind them. That is certainly not what we understand by 'dialogue'! And this is why in the resolution we must have something more than a mere invitation to real dialogue.

In paragraph 30, in addition to my earlier proposal which has been incorporated in Mr Bangemann's text, I suggest that we add another point which I have made on various occasions in my speeches and which is now contained in the following amendment: 'calls on the Commission to bear in ions set out mind that, having regard to the considerate in paragraph 1 above, the 1 % rate of VAT revenue will be reached within the next few years and that the Commission should therefore take steps to prepare without delay, pursuant to Article 201 (EEC), Article 173 (EAEC) and Article 2 of the Treaty of 22 April 1970, the introduction of new Community proposals aimed at correcting, by appropriate methods of progressive taxation, the inequitable nature of present Community taxation'.

Mr Notenboom has reminded us that it took us four years to achieve finally the introduction of a common basis of assessment for VAT, and establish, perhaps, at last a new Community tax. Probably in another few years we shall have to think what we should do beyond this 1 % and so we ought to start thinking about it now and considering how we can attain a more socially fair type of taxation.

Finally, I am glad that Mr Shaw's motion for a resolution explicitly refers to the Council's and Commission's commitment, contained in the commentary on the agricultural policy chapters, to modify the agricultural regulations. I stress that to 'modify the agricultural regulations does not mean that there is to be a ceiling'.

In our last amendment the intention is to obtain from the Council an undertaking that during 1978 it will adopt regulations altering all the existing or future monetary compensatory amounts into amounts which are both limited in duration and of a degressive nature. This is hinted at in some of the amendments, in the text of the draft budget and in the resolution itself, but only as the expression of a wish. 1, on the other hand, would like to add: 'in 1978'. In the course of a year the Council and Commission should be able to gradually diminish and limit in duration the present compensatory amounts.

While expressing our dissatisfaction with the overall balance of the budget in the points we have already made or shall be making, we can nevertheless say that it will at least provide the Commission with starting point for more forceful and more dynamic action to promote the progress of Europe. Had these points not been made, and the corresponding amendments not been tabled, I think we should still have before us a day-to-day management budget, a budget not only defective but altogether inadequate to the problems which the Community and our countries have to face.