Bruton calls for EU members to reduce state aid


A SIGNIFICANT reduction in state aid would help countries such as Ireland to greatly lower taxes and reduce the budget deficits, according to the Minister for Enterprise and Employment, Mr Bruton.

The Minister will tell the European Parliament today that the volume of state aid among member countries is of concern. The central imperative of growth, competitiveness and employment requires fresh thinking and approaches on the control of state aid," he says.

Assistance to industry from EU governments is understood to be running at £25 billion per annum. Recent examples of assistance to companies which have run into difficulties include Aer France, Iberia airlines and Irish Steel.

It is understood that the Minister believes that some countries are providing their industries with far too much state aid and that tighter control and clearer rules on such aid would benefit all EU countries. The Minister will tell the Economic and Monetary Affairs and Industrial Policy Committee of the European Parliament today that there should be more transparency regarding state aid and clarity of the rules governing such aid.

"These actions would have positive benefits for the development of the EU in terms of enhancing growth, competitiveness and employment," he says.

"As legislators for the European Union we must seek to ensure that there is a level playing field throughout the community and that artificial distortions are avoided," he will say.

Ireland will host an Industry Council meeting in Brussels next month. Mr Bruton will outline today what the Irish Government hopes the EU, under its presidency, will achieve in this area.

One of the controversial issues which will be under discussion is the next EU budget for small and medium firms, running from 1997-2000. Clearly we would like to see the maximum amount included, but a number of member states are pressing for lower amounts to be agreed," says Mr Bruton. He wants the budget to, be raised to 180 million ECUs. "If the programme is to achieve its new objectives it must receive additional funding," he says.

The Minister will also tell the committee that the EU is still not competitive enough. However he says the nature of competitiveness must be recognised. It is no longer merely a case of a company's costs and prices."

Mr Bruton says being competitive includes several factors: the efficiency of public services; infrastructure; education and training systems; and the level of research and development.

"An economy can lose competitive advantage if it is deficient in one or a number of these key attributes of competitiveness," he says.

Mr Bruton will tell the committee that Ireland will be pressing for the adoption of a policy and programme of Benchmarking. He says this means practising continuous improvement and identifying areas of competitive weakness and identifying how others have overcome such weakness.

Benchmarking has been used successfully by individual enterprises, usually large enterprises, for many years as a tool for enhancing competitiveness.

"If companies can use this tool then why cannot national authorities also adopt it as a tool or improving national competitiveness, he says.

A number of governments are already successfully doing it in relation to particular aspects of their economy, says Mr Bruton. Countries include the Netherlands, Britain and Australia.

The Irish Government will be asking the Council to support calls to examine benchmarking programmes in member states and carry out a number of pilot programmes in certain countries.