The debate about the optimum strategy to maximise the national take from the next round of structural Funds is diverting attention from the fundamental task of setting national strategic priorities regardless of the amount of EU funding we get next time round.
The rules of the game have changed. The Agenda 2000 proposals, which are designed to deal with enlargement of the EU, spell the end for the structural funds bonanza in Ireland. The Minister for Finance told the Dail last week that the "combination of drastically-reduced structural fund transfers and increased Exchequer contributions will mean the gap between our receipts and contributions will have narrowed sharply by 2006".
What this means in practice is that Ireland will end up as a net contributor to the Community budget within 10 years. This is not a sign of failure on our part, but of success.
According to the Commission's forecasts, Ireland's GDP per capita will be 116 per cent of the EU average in the year 2000, the first year of the next round of structural funds. The Government's balance in the same year could be in the region of £3.35 billion, or around 5 per cent of GDP.
This is nearly double the Department of Finance's estimate of Ireland's entire receipts from the structural and Cohesion Funds for the seven-year period to 2006. By contrast, the amount at issue in the debate about optimising our take via regionalisation may come to a mere £88 million in additional EU funding over seven years.
Ireland has the lowest rate of corporate tax in the EU. The excellent agreement which the Government negotiated with the Commission last July on the transitional arrangements to a 12.5 per cent corporate tax rate has not gone unnoticed in Europe's chancelleries.
The main priority at EU level, once the euro is launched, is to facilitate the accession of countries from eastern and central Europe to the EU. In time, the EU's structural and Cohesion Funds will help these new member-states to develop in the same way as Ireland has in the past decade.
The rules of the game have also changed on a number of other counts. The Commission is now insisting that grant-aid to the enterprise sector in Ireland be radically reduced. A number of other State incentives are to be phased out. This is the background to the ongoing discussions about the status of the urban and rural renewal schemes, the National Conference Centre and the designation of Dublin's docklands.
More importantly, in the context of the regionalisation debate, the European Commission's new Regional Aid Guidelines, as they are called, effectively require that the country be divided.
In practice, this means that the western region will get grant-aid at twice the level of the eastern (40 per cent as against 20 per cent). If the country was not divided, grant-aid to the enterprise sector would be limited at national level to 20 per cent, compared to the current rate of around 55 per cent. This is the real imperative behind the regionalisation option.
Ireland still has enormous investment and development needs. Our increased level of income is relatively recent. Our growth was from a low base. There is also now a very significant gap between the real indicator of national wealth (GNP) and the GDP basis which is the EU norm (the Commission's forecast GNP for Ireland in 2000 is 91 per cent of the EU average).
Our partners are somewhat sensitive to these arguments, but they need to understand the practical differences of these measurements for Ireland. Thus the outcome of Agenda 2000 should reflect a reasonable and equitable transitional arrangement which will wean us off EU funding in a manner that will not damage the economy.
There is a need for balanced regional development in Ireland. The regionalisation debate has brought into sharp focus the fact that we have been less than good at practising regional policy within Ireland while at the same time being a principal proponent of regional development within Europe.
The relatively poorer regions in Ireland (including areas of urban deprivation) have genuine requirements. Thus investment should be skewed until these areas approach the national average.
It may be naive, but I would suggest that all concerned forget about the structural funds for a moment and ask the following questions:
What are my region's top five priorities?
What are the strategic investment requirements of the country?
What broader economic and social goals can we achieve by promoting sustainable growth?
In other words, we should focus on the needs of these deprived areas in the first instance and assume that cash will be much less of a problem in future if priority productive investments are identified.
The private sector is actively promoting public-private partnerships whereby additional public infrastructure and services could, where appropriate, be undertaken. A long-overdue reshaping of the role of local and regional authorities and the financing of local and community services will also have to be factored into the equation.
The Government recognises that Ireland must manage the process of moving into a new and more complex relationship with Europe. Exchequer resources will be used as EU funding declines. Ireland will need to have an increasingly mature perception of its interests in an enlarged Union. This will bring about new responsibilities and should raise the debate on our role in Europe in every corner of the island.
The bottom line is that, provided we continue to manage our affairs effectively, there will be sufficient EU, public and private investment to meet our core investment requirements for the foreseeable future.
Ireland should be concentrating on the identification of strategic investment priorities for the future. A National Strategic Plan for the benefit of all sections of Irish society, North and South, is needed. This would help to position Ireland within Europe as one of the world's most competitive economies. Can we afford to ignore such a challenge?
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