REPORT on Council's position on Draft amending budget No 3/2012 of the European Union for the financial year 2012, Section III – Commission

25.6.2012 - (11113/2012 – C7‑0147/2012 – 2012/2071(BUD))

Committee on Budgets
Rapporteur: Francesca Balzani

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on Council's position on Draft amending budget No 3/2012 of the European Union for the financial year 2012, Section III – Commission

(11113/2012 – C7‑0147/2012 – 2012/2071(BUD))

The European Parliament,

–   having regard to the Treaty on the Functioning of the European Union and in particular Articles 310 and 314 thereof and to the Treaty establishing the European Atomic Energy Community, and in particular Article 106a thereof,

–   having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[1] ('the Financial regulation'), and in particular Articles 15, 37 and 38 thereof,

–   having regard to the general budget of the European Union for the financial year 2012, as definitively adopted on 1 December 2011[2],

–   having regard to Council's position on transfer request DEC 9/2012, adopted on 7 June 2012,

–   having regard to the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management[3],

–   having regard to Draft amending budget No 3/2012 of the European Union for the financial year 2012, which the Commission submitted on 16 April 2012 (COM(2012)0181),

–   having regard to the position adopted by the Council on 11 June 2012 on Draft amending budget No 3/2012, (11113/2012 – C7‑0147/2012),

–   having regard to Commission's proposal of 22 December 2010 for a Regulation of the European Parliament and of the Council on the financial rules applicable to the annual budget of the Union (COM(2010)0815),

–   having regard to Rule 75b of its Rules of Procedure,

–   having regard to the report of the Committee on Budgets (A7-0206/2012),

A. whereas Draft amending budget No 3/2012 aims to enter in the 2012 budget the surplus from the 2011 financial year, amounting to EUR 1 496 968 014,

B.  whereas the main components of that surplus are an under-spend in expenditure of EUR 0.73 billion, a positive outturn on income of more than EUR 0.67 billion, and a positive exchange rate difference of EUR 0.1 billion,

C. whereas the major part on the income side (EUR 0.45 billion out of EUR 0.67 billion) comes from fines and interest on late payments,

D. whereas the under-spend in expenditure, which concerns 2011 budget appropriations for EUR 0.56 billion and carry-overs from 2010 for EUR 0.17 billion, does not result from absorption difficulties or mismanagement but from the rules in force for adjusting the repartition of payments in line with the needs, particularly during the last weeks of the financial year,

E.  whereas, on the contrary, all available indicators point this year to a shortage in payments in many areas of EU intervention, notably because in 2011, for the second year in a row, the Budgetary Authority decreased the 2012 level of payment appropriations in the Union's budget by more than EUR 3 billion, including for research and cohesion policy, as compared to Commission's initial estimates,

F.  whereas, in its position on transfer request DEC 9/2012, Council drastically reduced the payment appropriations transferred to the research area, where urgent needs in payments are reported to honour previous commitments, and left the payment appropriations on budget lines where they cannot be spent,

G. whereas Article 15 of the Financial Regulation provides that any discrepancy with the estimates, to be entered in the Union's budget, shall be the sole subject of this amending budget,

1.  Takes note of Draft amending budget No 3/2012 devoted solely to the budgeting of the 2011 surplus, in accordance with Article 15 of the Financial Regulation; underlines that the latter leaves some room of discretion as to the destination of the surplus;

2.  Takes note that the main components of that surplus are an under-spend in expenditure of EUR 0.73 billion, a positive outturn on income of more than EUR 0.67 billion, and a positive exchange rate difference of EUR 0.1 billion;

3.  Stresses that the under-spend in expenditure (EUR 0.73 billion) does not result from any absorption difficulties or mismanagement but from the rules currently in force for adjusting the repartition of payments in line with the needs; considers accordingly that it requires a differentiated treatment as compared to the part of the surplus that stems from variations in revenue; underlines moreover that a large part of this under-implementation results from Council's decision not to adopt the salary and pension adjustment provided for by the Staff Regulations;

4.  Deplores that, despite the provisions of Article 310(5) TFEU on sound financial management and the Joint Statement on payment appropriations agreed by all three institutions in the framework of 2012 budgetary procedure, Council decided to reduce by two thirds the level of the EUR 485 million transfer request DEC 9/2012 from under-implemented energy projects to aid economic recovery to reinforce three budget lines under FP7 - Cooperation;

5.  Underlines that this will artificially increase under-implementation for 2012 payments and therefore increase 2012 surplus, when all available indicators already point this year to a shortage in payments in the field of research and other areas of EU intervention; stresses moreover that, being a mere redeployment, the adoption of transfer request DEC 9/2012 unamended would have had no impact on the revenue side of the Union's budget nor therefore on national contributions;

6.  While providing for a reduction by EUR 768 707 073 of Member States' contribution to the 2012 Union's budget, amends therefore Council's position on Draft amending budget No 3/2012 to secure the appropriate funding of FP7 - Cooperation programme, in view of the unfulfilled needs identified by the Commission (EUR 337 578 119), as well as to provide further payment appropriations under Cohesion Policy (EUR 390 682 822) to contribute to meeting upcoming payment claims, as estimated by Members States by the end of 2012, and limit the level of decommitments at the end of 2013;

7.  Decides therefore to amend Council's position as follows:

Revenue	Title 1 Own resources, Article 140	+ EUR 728 260 941
	Title 3 Surpluses, balances and adjustments, Article 300	no modification
Expenditure	08 02 01 - Cooperation - Health	+ EUR 67 000 000
	08 03 01 - Cooperation - Food, agriculture and fisheries, and biotechnology	+ EUR 118 000 000
	08 04 01 - Cooperation - Nanosciences, nanotechnologies, materials and new production technologies	+ EUR 152 578 119
	04 02 17 - European Social Fund (ESF) - Convergence	+ EUR 57 491 864
	04 02 19 - European Social Fund (ESF) - Regional competitiveness and employment	+ EUR 22 633 695
	13 03 16 - European Regional Development Fund (ERDF) - Convergence	+ EUR 201 138 541
	13 03 18 - European Regional Development Fund (ERDF) - Regional competitiveness and employment	+ EUR 33 202 220
	13 04 02 - Cohesion Fund	+ EUR 76 216 502

8.  Instructs its President to forward this resolution to the Council, the Commission and the national parliaments.

• [1]  OJ L 248, 16.9.2002, p. 1.
• [2]  OJ L 56, 29.2.2012.
• [3]  OJ C 139, 14.6.2006, p.1.

EXPLANATORY STATEMENT

Commission's proposal

On 16 April, the Commission presented its Draft amending budget 3/2012 on the surplus resulting from the implementation of the budget year 2011.

It was proposed that a surplus of EUR 1.49 billion be entered in the 2012 Budget, diminishing by the same amount the global contribution of Member States to the EU budget (as a reminder, a surplus of EUR 4.54 billion was entered in the 2011 Budget).

The outturn of the 2011 Budget is a sum of the outturn on income, outturn on expenditure, and exchange rates difference, with the following breakdown:

- as regards outturn on income, an amount of EUR 0.67 billion is entered, stemming mainly (EUR 0.45 billion) from extra fines and interest on late payments received in 2011 and not budgeted when 2011 Budget was adopted,

- as regards outturn on expenditure, the under implementation by EUR 0.73 billion stems notably from the non-adoption of the proposed salary adjustment for 2011,

- as regards exchange rates difference, an amount of EUR 97 million is entered in DAB 3/2012.

As per Commission's proposal, the global GNI contribution of the Member States to the EU Budget 2011 would be reduced accordingly:

Member State	Budget 2012	Draft amending budget No. 3/2012	New amount
Belgium	2 754 434 486	- 43 988 032	2 710 446 454
Bulgaria	281 064 627	- 4 488 573	276 576 054
Czech Republic	1 078 504 116	- 17 223 598	1 061 280 518
Denmark	1 815 589 984	- 28 994 783	1 786 595 201
Germany	19 297 785 791	- 308 183 629	18 989 602 162
Estonia	110 748 128	- 1 768 636	108 979 492
Ireland	920 009 203	- 14 692 451	905 316 752
Greece	1 574 518 867	- 25 144 902	1 549 373 965
Spain	7 751 025 459	- 123 783 068	7 627 242 391
France	15 098 504 384	- 241 121 542	14 857 382 842
Italy	11 597 780 897	- 185 215 352	11 412 565 545
Cyprus	132 985 701	- 2 123 767	130 861 934
Latvia	139 606 789	- 2 229 506	137 377 283
Lithuania	223 466 520	- 3 568 737	219 897 783
Luxembourg	239 147 968	- 3 819 168	235 328 800
Hungary	783 053 705	- 12 505 286	770 548 419
Malta	45 415 306	- 725 278	44 690 028
Netherlands	4 544 261 837	- 72 571 388	4 471 690 449
Austria	2 171 551 781	- 34 679 455	2 136 872 326
Poland	2 846 632 147	- 45 460 419	2 801 171 728
Portugal	1 165 478 435	- 18 612 569	1 146 865 866
Romania	1 006 329 623	- 16 070 979	990 258 644
Slovenia	269 103 124	- 4 297 549	264 805 575
Slovakia	524 320 167	- 8 373 338	515 946 829
Finland	1 446 955 676	- 23 107 732	1 423 847 944
Sweden	2 938 535 696	- 46 928 109	2 891 607 587
United Kingdom	12 980 057 650	- 207 290 168	12 772 767 482
Total	93 736 868 067	-1 496 968 014	92 239 900 053

The 2012 budgetary context

All available indicators point this year to a shortage in payments in many areas of EU intervention, notably because once more the Budgetary Authority agreed for 2012 on a lower level of payments compared to the one proposed by the EC (more than EUR 3 billion less than Commission's initial Draft Budget).

Moreover, the Council unilaterally decided to lower by more than two thirds the level of the EUR 485 million transfer (DEC 9/2012) to the research area, despite urgent needs in payments. Accordingly more than EUR 338 million payments on budget lines are left where they cannot be spent. By definition, this transfer was simply a mere redeployment, not impacting on the 2012 national contributions to the EU budget. It could be questioned whether Council's position is in line with both Art 310.5 of the TFUE, which states that 'the budget shall be implemented in accordance with the principle of sound financial management' and the joint statement on payment appropriations agreed by all three institutions in the context of 2012 budgetary procedure.

Legal framework and Rapporteur's proposal

Article 15.1 of the Financial Regulation stipulates that the surplus from each financial year, whether surplus or deficit, is entered as revenue or expenditure in the budget of the subsequent financial year through an amending budget. Article 15.3 further mentions that 'any discrepancy with the estimates shall be entered in the budget for the following financial year through an amending budget devoted solely to that discrepancy'.

In your Rapporteur's view, such provisions are incompatible with the rejection of this Draft amending budget, but not with its amendment since Article 15 of the Financial Regulation does leave some room of discretion as to the destination of the surplus. It should also be stressed that any interpretation of the Financial Regulation provisions consisting in the obligation for the Parliament to adopt this amending budget without modification may go against the budgetary prerogatives of the Parliament as provided for by the Treaty. Your Rapporteur would also like to highlight that there is no possible legal action against EP amendments on DAB 3/2012. If adopted, the EP and Council would have to enter negotiations to find a solution.

Since, on the expenditure side (EUR 0.73 billion), underimplementation did not result from absorption difficulties or mismanagement by the Commission, but from the rules in force for adjusting the repartition of payments in line with the needs in the last weeks of the financial year, your Rapporteur considers that this amount should legitimately go back to the EU budget, as some carry-over of unspent appropriations.

Bearing in mind the unfulfilled needs presented in DEC 9/2012, as well as the latest implementation figures, notably in the field of Cohesion Policy, your Rapporteur proposes that BUDG adopts the following position on this Amending Budget (payments only):

- Revenue - Title 1 - Own resources:              -0.77 billion

- Revenue - Title 3 - Surplus:                         1.50 billion

- Expenditure - research lines:             0.34 billion

- Expenditure - Cohesion policy:                     0.39 billion

This implies the following changes as compared to Council's position:

Revenue	Title 1 Own resources, Article 140	+ EUR 728 260 941
	Title 3 Surpluses, balances and adjustments, Article 300	no modification
Expenditure	08 02 01 - Cooperation - Health	+ EUR 67 000 000
	08 03 01 - Cooperation - Food, agriculture and fisheries, and biotechnology	+ EUR 118 000 000
	08 04 01 - Cooperation - Nanosciences, nanotechnologies, materials and new production technologies	+ EUR 152 578 119
	04 02 17 - European Social Fund (ESF) - Convergence	+ EUR 57 491 864
	04 02 19 - European Social Fund (ESF) - Regional competitiveness and employment	+ EUR 22 633 695
	13 03 16 - European Regional Development Fund (ERDF) - Convergence	+ EUR 201 138 541
	13 03 18 - European Regional Development Fund (ERDF) - Regional competitiveness and employment	+ EUR 33 202 220
	13 04 02 - Cohesion Fund	+ EUR 76 216 502

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	21.6.2012
Result of final vote	+: –: 0:	17 0 0
Members present for the final vote	Francesca Balzani, Zuzana Brzobohatá, Göran Färm, Eider Gardiazábal Rubial, Jens Geier, Jutta Haug, Sidonia Elżbieta Jędrzejewska, Jan Kozłowski, Giovanni La Via, Claudio Morganti, Juan Andrés Naranjo Escobar, Dominique Riquet, Alda Sousa, Helga Trüpel
Substitute(s) present for the final vote	Jürgen Klute, Jan Mulder, Paul Rübig