1980 BUDGET PROCEDURE: COMMISSION'S DRAFT

by Altiero Spinelli

SUMMARY: This is one of the first debates of the European Parliament elected on 10 June 1979. This debate marks an important moment for the new members, in view of the importance of the budget being prepared and the political and institutional consequences of the conflict between the Parliament and the Council. The draft submitted by the Commission and the attitude adopted by the Council appear unacceptable to the great majority of the Parliament, which already hints at the possibility (which became a reality on 13 December 1979) of a

traumatic rejection of the budget approved by the Council in November. "Speeches in European Parliament, 1976-1986", Pier Virgilio Dastoli Editor. (EP, 20 July 1979)

Mr President, I think the first Parliament elected directly by the European people deserves to be presented with a better and rather different budget. A budget which really sets out to tackle the problems of the Community must reflect both expenditure policy and revenue policy, instead of confining itself to listing the measures which it is intended to take to obtain the necessary revenue. In a Community in which the citizens pay their taxes to local and regional authorities, to the Member States and to the Community, the Commission should have felt duty bound to submit a budget taking account of the total fiscal burden on citizens, the way in which it is distributed, and the reasons justifying any differences in distribution according to the policies to be pursued. If this information is not given, if it is not stipulated that certain increases in Community taxation must be balanced by certain reductions - preferably in national, regional or other taxes - it means that the Community has reached a point beyo

nd which it cannot develop furhter.

This is the third consecutive year that we have drawn the Commission's attention to the need to begin to tackle the problem in these terms, but it has been consistently deaf to our requests. Following the conflict which has arisen in the last few months between Parliament and the Council over the maximum increase, I have once more pointed out to the Commission the need for it to indicate why it is necessary to increase the total revenue of the Community by a certain amount. Failing that, the Council will continue to be no more than the sum of national viewpoints and will fail to achieve a European perspective. Mr Tugendhat assured me that he would give this indication, stipulating only that he would do so orally rather than in writing. At all events, I note that this has not been done either in writing or orally.

I think that we are in very difficult situation, all the more so since we are approaching the point at which the VAT 'ceiling' will be reached - as all the speakers have pointed out. There is already talk of a possible return to contributions from Members States or to special appropriations outside the budget intended for specific measures.

I must say that we are standing by rather passively while the most central and important of the structures of the Community - the financial structure - is being attacked.

The Commission has really delayed too long, since it has not yet submitted proposals on what the new taxes or the new percentages of taxes should be. I must say that the Green Paper which has been published and which has not been debated here does not really tackle the issue. It says that, from now on, new taxes must not be designed to penalize progressively the richer citizens, but to penalize progressively the richer countries. I must point out that, in a fair taxation system, the rich citizen of country 'A' and the equally rich citizen of country 'B' should pay the same tax, regardless of whether country 'A' is richer or poorer than country 'B'. There will merely be more rich citizens in country 'A' who will pay more tax. But we must impose a greater tax burden on those who are more well-off in the various countries, so as to avoid creating tensions within our Community which would be impossible to control.

To deal with this issue, the Green Paper proposes taxes on cigarettes. This is not the way to tackle the problem. On the contrary, it is necessary to distribute taxes fairly according to the incomes of citizens, and establish the principles of company taxation, of which a proportion should go to the Community, if we want to get a serious revenue policy going. Another problem to be tackled and which shows no sign of being tackled as yet - is that every budget of a public body draws its revenue partly from taxation and partly from credit. The principle is beginning to be accepted that the Community can take up loans, but it is hedged about with so many qualifications that it is virtually ineffective, and indeed the Commission even refuses to give a precise description of it in the budget.

All the things that I have mentioned are missing from the submission of the budget for 1980. The Commission and the Council must therefore realize that the chances of Parliament rejecting the budget are great if this defect is not remedied.

But this is not the only defect. The irresponsibility continues, indeed worsens, with regard to expenditure. With special reference to the agricultural policy proper, that is the policy of aids for agricultural restructuring, the Commission itself has reduced expenditure - I do not know what the Council will do with it. The expenditure for price support has been disproportionately increased, so much so that we are debating a draft budget in the full knowledge that an amending letter is on it way asking for 1 300 million units of account extra to meet the needs of the Guarantee Fund.

I think that this fact should be enough to justify rejection of this budget, since it is an irresponsible budget. The only remedy for this would be the very clear and 'fixed' insertion of a commitment to modify the agricultural regulations by the end of the year so as to eliminate the irresponsibility at present characterizing the prices policy. We could then say 'Good, if we are still tied to the existing regulations for a year, they are at least about to be changed'. The Commission's promise to change its plans for next year - it will perhaps propose lower prices, freezes, etc. - is not enough, because we know that it means nothing. When the Commission has made its proposals, the agricultural lobby, through the Ministers of Agriculture will re-establish high prices and irresponsible expenditure. This, then, is the most negative aspect of the draft.

I would like to deal briefly with the other expenditure. First and foremost, we should consider the problem of the obligatory expenditure. The Council - and the Commission pretends not to notice this - has in a sense taken advantage of the fact that the old Parliament, being near the end of its term, did not have the authority on this subject that it had previously, and of the fact that the new Parliament was not yet elected, to include an item of expenditure - 200 million units of account for credits to investment in the context of the EMS agreements - on the content of which Parliament had already agreed. Such expenditure is not envisaged in the Treaty, not is it envisaged by commitments deriving from the Treaty, but is a new act of policy which was in fact included in the budget even before there was any corresponding regulation. The Council decided that it should be regarded as obligatory expenditure, i.e. as expenditure on which the Council would have the last word. And it is somewhat shameful that the

Commission should have acquiesced in this ploy. Instead of maintaining that this could only be non-obligatory expenditure, the Commission - which meant to be the guardian of the Treaties - itself proposed that it should be obligatory expenditure. Parliament therefore asked that there should be consultation. The Council, taking advantage of the situation of 'vacatio' between old and new Parliament, decided that it was a special case and not a measure of a general nature - I fail to see what could be more general than promoting investments! - and that it could therefore be decided without consultation. The only reason why the decision has not yet been taken is that there is another form of consultation which the Community is obliged to carry out - consultation with the ex-associated country - no longer associated and not yet a member Greece, which must obligatorily be consulted.

Well, the Council understood that it must respect the commitment to Greece, and we have no objection to this. As for the commitment to Parliament, it thought it could ignore it. I think that on this point Parliament must firmly maintain that we are dealing with a question of principle and that it will forcefully reject any budget in which the expenditure for new policies is regarded - against any formal or substantial logic - as obligatory expenditure, when it is obviously non-obligatory expenditure, for which the procedures laid down must be followed, involving more real and substantial control by Parliament.

Another serious problem is that I think Parliament has been saying for too long that the present situation is unsatisfactory and that we must put a stop to it. We should instead threaten to stop approving items of this kind.

We are waging the Commission's battle against the will of the Commission itself, for we say the Treaty lays down that the affairs of the Community should be administered by the Commission. Yet, whenever there is a problem or a new regulation on expenditure to be drawn up, the Commission insert a clause setting up a so-called advisory committee, whose advisory capacity is such that it can block the decisions of the Commission and transfer the decision-making power of the Commission to the Council. This is inadmissible and must not be allowed in future.

Ladies and gentlemen of the new Parliament, I maintain that if our bark continues to be worse than our bite, as was the case in the old Parliament, in which we protested and annulled that clause but then always accepted the opposite decision, we would be wronging ourselves. But we shall have only ourselves to blame.

The policies of the Community as a whole should have an overall aim to be identified. What are the central problems of Community policies at the moment? Obviously the policy for use of resources, and the problem of reviving investments to get the economy going again, because these are the bases for the subsequent fight against unemployment of young people and so on. If the economy is not reviving, all the rest will merely amount to fine - or not so fine - words or corporatism. Aids will be given to this or that industry, so that a collection of sickly industries will be maintained.

On the contrary, investment policies require a basic choice. Above all there must be organic planning of policies and investments directed towards the developing countries and the backward regions, since they must constitute the driving force whose planned development gets the whole economy moving again.

What, on the other hand, have we got? The Commission has proposed that the regional policy fund - i.e. the modest fund required for an investment policy in this sense - be increased from I 000 to 1 200 million units of account. The Committee of Permanent Representatives - take note of this - disregarding every-thing that look place last year between us and the Council, is now deciding to bring the Regional Fund back to 600 million, that is to halve it. This is the way in which the Council is preparing to take account of the European Parliament - let us bear it in mind.

What is the extent of the other expenditure to promote development in regions outside the Community? Development aid for the non-associated countries is reduced from 60 to 27 million. Next year about 200 million - a derisory sum - will be allocated to the Regional Development Fund. Any real policy of development is lacking, and all the rest is therefore weak and insubstantial. One final point: no attention has been given to a problem which was considered serious five or six years ago, but is now completely neglected - that of the environment, ecology. Every year we pay dearly for this neglect, for every year new ecological disastres take place, but in spite of this there has been no substantial increase in appropriations. In particular, I see no substantial increase in funds for research to develop 'clean' forms of energy, that is forms of energy which do not create the same problems as nuclear energy. I think nuclear energy should not be abandoned, but I think it will remain a marginal form, mainly experime

ntal, until the problems arising from the danger of contamination have been solved. This means that research efforts on other forms of energy must be increased, but there is no trace of this in your report.

I can assure all the new Members of Parliament that there was consultation with the Council, and that the Council was already working out its opinions within COREPER, although it wants to give the impression of having no ideas and claims not to be aware of our ideas, with which in fact it is familiar because it is physically present here as an institution and because all our proceedings are public. I maintain that this this way of governing must change.