Reforming the budget Changing Europe Dalia Grybauskait EU

Reforming the budget, Changing Europe Dalia Grybauskaitė EU Commissioner responsible for Financial Programming and Budget Conference “Public audit: helping to manage state property wisely” January 29 th 2009, Vilnius

Different times – different budget The budget must: respond to reality, reflect EU aspirations, meet challenges Money to meet objectives: a modern budget should reflect future challenges, not past priorities; Flexibility vital in today’s changing world: only a dynamic budget can meet constantly evolving, global challenges; Discipline and transparency: only a transparent, open, financial system can ensure quality spending and concrete results; Measuring success: each Euro spent must represent an efficient investment, generate maximum benefits for the EU and each citizen; Mission and future challenge for the EU budget : Changing the budget to change Europe © European Commission 2

Today’s budget: reflecting EU ambitions? o Political objectives and the structure of spending: n n o Transparency: n o There are over 40 exceptions and corrections in place, distorting in particular the revenue system; Ability to confront new challenges: n n o EU challenges: competitiveness, energy, environmental. . . EU spending: agriculture + cohesion = 2/3 of the EU budget; Ability to react to changing needs hindered as budget is locked into a system of “headings”; Support from some funds take a year or more to reach beneficiaries; Discipline and control: n n Rigid requirements - difficulties to access funding; Efficiency of checks and controls don’t always correspond to cost. © European Commission 3

Test of the crisis: budget response/1 2009 EU budget: first reaction to the crisis Amount: moderate expenditure – minimum burden for Member States; Shift in structure: major part - 45% for competitiveness; “Emergency”: support available to alleviate crisis: European Globalisation Adjustment Fund (EUR 500 million); Food aid for poor (EUR 500 million). Objectives of crisis response: to offset threats, reduce suffering, prevent further decline © European Commission 4

Test of the crisis: budget response /2 EC economic recovery plan proposal: budget contribution • Reform of the 7 -year budget – additional financial boost For energy security and competitiveness +EUR 5 billion: New energy links to improve energy security in Member States; Investments into broadband infrastructure projects; • Cohesion funds – to boost economy, accelerate progress Increasing funding: In 2009, projects promoting economic development and cohesion +2, 5%; Funds to reach beneficiaries faster: Advance payments doubled totaling EUR 11 billion; Advance payments for EU-12 to exceed EUR 7 billion; Additional 6 months to absorb 2000 -2006 funds; Simplified funding rules. Budget can be an engine for change. Maximum efficiency requires the reform of the budget itself. © European Commission 5

What Europe expects from the EU budget? Results of the public consultation launched by the EC: EU competitiveness – priority No. 1: More investment for research, science and innovation; Environment, climate change – 2/3 of participants consider this Europe’s greatest challenge: To increase funding for R&D supporting environmental protection; Energy – a concern for Member States and 1/2 of the participants: Strengthen security, development of links, renewable sources; = Cohesion – support signaled, although internal changes inevitable; à Agriculture – Hottest topic for discussion, area with harshest criticism: à to reform taking new objectives into account; Agreement is possible: financing priorities of Member States, economic experts and the EC are in step. © European Commission 6

Objective – maximum efficiency Need to increase efficiency of spending; Possible ways to improve: More transparency and greater public access; Simpler rules for beneficiaries; Balance between stability and flexibility; Simpler structure, integrate spending for all funds in budget; Balance of responsibilities of the EC and Member States: member states are managing ~80% of funds; Wider and more proactive role of control institutions: not just supervision but helping the State. Aim of the budget: quality spending and concrete results. © European Commission 7

Time to change and to make change happen o o Budget reform is underway in extraordinary times. Current crisis an incentive for decisiveness, action, vital change; A new centre of gravity has evolved: competitiveness, energy, environmental protection are generally accepted priorities; Turbulent change has created a new requirement: greater budget flexibility has become essential; Efficiency and added-value of spending is the main criterion for taking decisions on the EU budget’s future. © European Commission 8