Reforming the Budget, Changing Europe Dr. Dalia Grybauskaitė Commissioner for Financial Programming and Budget Brussels, 12 September 2007

Why budget reform? Todays dynamic world presents new challenges – an effective response is promptly needed; Internal - economic, social, demographic – EU developments demand a fresh look; The EU is substantially reforming its political and institutional shape; Lessons from former enlargements should be taken into account when assessing the EUs integration capacity – political, economic and financial; The EU budget needs to better reflect new realities and become an efficient instrument in implementing new decisions. The changing EU in a changing world needs a reformed budget

Reform has already started The EU dared to acknowledge the need for change (Council, 2005); The decision on a Review agreed between the Institutions (2006); A strong determination signalled – Commission was invited to undertake a comprehensive review covering all aspects of: EU spending, including the Common Agriculture Policy, EU resources, including all correction mechanisms. The Commission - a strong advocate of modernisation - without any delay undertook piloting an exercise by: launching all preparatory work (studies, collection of data, analysis); presenting the Discussion Paper as an invitation for a debate.

Reform is about Europe, not just about money The Budget Review IS… … a policy-driven exercise; … a fresh look at a wider picture of Europe in the World; … a reassessment of new risks and challenges; … an analysis of the value added by EU spending in tackling challenges; … a long term strategic vision of EU finances; … a shift towards a new quality of EU spending.

Discussion paper: a call for a fresh look Aim: to clearly define the aims of the reform To launch a frank debate on future policy challenges and EU finances; To encourage participation of all actors at all levels. Principles: fairness, responsibility, ambition No pre-conditions, no taboos – a fresh look at everything; Innovative ideas are welcome; All voices should be heard and considered. Content: we are not imposing answers, we are inviting for debate Pointing to key issues up for discussion; Presenting state-of-play, exposing problematic aspects; Posing basic questions to be answered before decisions are taken.

Issues to discuss 1.The budget as a tool - to reflect changing reality, to promote changing political goals; 2.The EUs top policy priorities, responding to new challenges; 3.The EUs spending priorities, fully matching policy agenda, providing maximum added-value in meeting new challenges; 4.Delivery of EU policies - towards a maximum efficiency; 5.The financing of the EU Budget – focus on efficiency, simplicity and transparency, ensuring that resources fully mach ambitions. All aspects and all their interconnections should be re-examined:

Budget: meeting tomorrows challenges Issues to discuss: Challenges and risks for the EU and the world in the 21 st century; The EUs ability to respond to and proactively shape change; Long-term policy agenda for the next decade and beyond; Optimisation of spending ensuring maximum added value for the common European interest; Role and potential of the EU and of MS to manage agreed priorities. Questions to be answered: ? Has the EU budget proved to be sufficiently responsive to changing needs? ? What are Europes policy priorities for the decades ahead? ? How can added value be maximised to make the best use of resources? ? How should policy goals be reflected in spending? What shifts are needed?

Delivering: striving for maximum efficiency Issues to discuss: The focus of EU funding – wide spread or greater concentration; Variety of management – centralised, decentralised, shared, joint; Co-financing – experiences, advantages, problems; A balance between stability and flexibility, discipline and simplicity; Transparency and accountability. Questions to be answered: ? How could effectiveness and efficiency of budget delivery be improved? ? Over what period of time should reorientations be made? ? How could transparency and accountability of the budget be enhanced? ? Could enhanced flexibility help maximise the return on EU spending?

Resources: to mach political ambitions Issues to discuss: 1.The current system: in theory – a simple scheme of three major sources; in practice – each of the sources is affected by corrections; 2.Basic methods of contributing to the budget, helping to identify both: stable and sufficient sources of funding the budget; fair contributions to the budget. Questions to be answered: ? What principles should underpin the revenue side of the budget? ? Is there any justification for maintaining corrections? ? What should relations between citizens and the EU budget be?

Next steps towards a result Nov 2007 EU Presidency initiative: Debate of the Budgetary Committees of the European and National Parliaments; Political Conference in association with the European Parliament: initial analysis of the results of the debate; Spring 2008 Commission starts preparing its proposal for the Reform Spring 2008 Public consultation: collection of opinions Now – April /09 - Commission presents the Budget Reform proposal Commissions initiatives to encourage discussion: In-depth exchange of views with MS and the EP at all stages; Meetings, debates with all interested parties. Ongoing 2009/10 - discussion and endorsement by the EU Institutions 2010/11 – proposal for the next Financial Framework

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