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BUDG European Parliament
Follow its sittingsThank you very much, Carlo. Then I would like to give the floor to Ms. Ivana Maletić as our first panel speaker in the first panel.
Ivana Maletić
Thank you very much, honorable chair, dear Monica, honorable members and dear participants. I am pleased to participate today on today's public hearing on the lessons from the Recovery and Resilience Fund and what is actually important for the national and regional partnership plans delivery model. When discussing conditionalities, one of the most important question is what do we gain from them and do we really need conditionalities and which ones? Every conditionality comes with a cost and this is something what we need to have in mind. It creates additional requirements, additional reporting and additional administrative burden.
Therefore, before introducing new conditionality, we should ask ourselves does it improve performance and accountability and what do we gain with conditionalities which we are introducing. If the answer is no, then it is simply like adding complexity without improving policies and their results. And this is probably the most important lessons which we have from the RRF. Based on our audit work and on the proposed NRPP framework, I would like to highlight six lessons. And the content of the presentation will cover each of the lessons.
So initially, conditionalities were primarily aimed at protecting the EU budget. And they focused on legality and regularity of expenditure and on protecting the financial interest of the European Union. We all know that in the traditional policies, these conditionalities included public procurement, state aid, eligibility of expenditures and beneficiaries, prevention of double funding, conflict of interest and more recently respect for the rule of law. Over time, additional conditionalities were introduced. In cohesion policy, we saw the emergence of enabling conditions and stronger links to broader policy objectives.
The RRF represented another significant step, introducing milestones and targets as conditions for payments and reforms and country-specific recommendations in addition to climate and digital targets and the do no significant harm principle. So as you can see, number of different conditionalities. In addition to milestones and targets, every measure is also needed to be linked to different six pillar to the six pillars and different policy areas within the six pillars. The proposed NRPP models goes even further.
In addition to these existing requirements, it introduces intervention fields, output and result indicators, and again different horizontal requirements, as you can see, climate, biodiversity, social policy, gender equality, Charter of Fundamental Rights, and then earmarking requirements in different fields. And now the tendency is to add even more, which is of course, as I said at the beginning, like adding complexity and making the policy more expensive. So we have to be very sure when we are adding more, what we are adding and why. So when you look the evolution, the direction of journey is clear, conditionalities are no longer only instruments for protecting the budget, but increasingly they are also instruments for steering Member States' investments, implementation and policy priorities. The important question is therefore not whether conditionalities are good or bad, but whether every additional conditionality brings sufficient added value to justify the additional complexity it creates.
The second lesson is that more conditionalities do not automatically create better performance. And this is what we can clearly see from the RRF. RRF is very good example of that. What we said as ECA is that RRF is not performance instrument and that we can see more performance in the cohesion policy than in the RRF. Now through these examples which you can see on the screen, this is more than clear because for some measures which are very similar in all national recovery and resilience plans, like training, you can see that some Member States had as a final target just developing a training course.
So you develop a training course, you get money. Some of them had number of participants enrolled or some certified participants. This number of participants enrolled, what does it mean? You can have enrolled one million and then at the end educated people with new skills and new knowledge just ten. So it is very difficult really to see something, you know, did you really achieve something?
And then common indicator is also number of participants in education or training. So common indicator is something what we see overall at the level of the EU, what was done with the trainings, and then we see like millions of participants in education or training. It means nothing. It means that we just force all the Member States to report on this, but at the end, when you get the figure, you know nothing. And this is the problem.
This is exactly the example why conditions are, you know, administrative burden, but if we will not get at the end from them something reasonable and something what is with concrete sense and message, then it's better not to have them. We also compared then proposal for the NRPPs with this and you can see very similar situation with the NRPPs because examples in the performance regulation are very similar. You also can see for example here in tourism financial support. So we have in the performance regulation intervention fields, each and every measure from the national plans have to be connected with the intervention fields which are defined very broadly. And then for each intervention field, you have output indicators which are final milestones and targets of the measures in the plans.
And they are also they are actually saying in which direction member states should go or with this result indicators they are also defining how European policies at the level of the member states should be defined and in which direction they should go. And then with this tourism financial support you have situation that again as output output indicators we will see number of hospitality tourism sector businesses supported, number of organizations supported, number of tourism staff and students supported for upskilling and and reskilling. And what what will this mean? So everybody will report on this and at the end we will not be able to conclude on anything. What what is the change?
What really which challenges and problems we actually solve with all these efforts? It will not be visible from the information we are now putting as a conditions for payments. And then with the result indicators and this is very important because with the result indicators you are steering the whole Europe all the member states you are telling them in which direction they have to go with their investments with their policies. And here for tourism we have number of visitors. In the context of sustainable tourism which we are all promoting is number of visitors something what we have advocate for and what we have to actually tell member states that they should achieve this like high bigger number of visitors.
So this these examples just show how sensitive is to define conditions for payments and to to to to find the way how to really with this performance framework set proper conditions which will really guide member states in in in a proper direction. Third lesson is about linking funding to reforms which is very attractive and you all know that it was all the time like very important element of the RRF like we will have now all over the the Europe reforms finally implemented. But now the reality is little bit different. So even though the logic behind was very simple link money to reforms and reforms will happen because of that but now what we see in reality is that with RRF only one third of country specific recommendations were largely addressed. One third were not addressed at all and one third were addressed only in a limited way.
So actually we spent hundreds of billions of euros in order to promote reforms in order to make them happening in order to implement country specific recommendation and result is only one third is largely addressed nothing more. So this is now we also have to ask ourselves is this something is this now the best way to continue. Fourth lesson is about complexity which I already mentioned. So we we always with all these conditions have to have in mind that complexity always has a cost and that conditions conditions create more complexity. For example with do no significant harm we have all this taxonomy regulation everything what is set at the European level and then on top of that we ask for do no significant harm.
I don't have anything against that but the fact is that each and every final beneficiary for the projects they are preparing they have to prepare also one document saying that project is not doing significant harm to the environment. And for that they are paying different consultants you know they are spending money for different paper papers just to serve the purpose of the condition.
Is this our aim? Is this our goal? How we are actually framing our policy and what do we want? Do we want for final beneficiaries more complexity, more different consultants to be paid to prepare some papers to prove gender balance, for example? I'm really fighting for that, but you know when you come to the fishery, to one of the fishermen at their boat and then asking them as auditors, where is gender balance there, you know they are looking at you, are you crazy?
And this is, yeah, you know, and this is something what we really with all the conditions which we are putting, we need to think about that because the tendency is to even put more of them. But no, we cannot go into that direction because nobody will want anymore to use this European money with all these conditions. And this is what really, these are really important lessons I have to say. And okay, this is this perspective of the beneficiaries which I already mentioned and we always lose that from when we are framing our policies instead of thinking about them and what does this mean for them, we are thinking about us, you know, how to make it less complex for the Commission, how to make it less complex for the administrations in the member states. And this is not the goal.
It can be more complex for the administration, but the most important is that it's less complex for the final beneficiaries, for farmers, NGOs, universities, municipalities. They are the ones who need something simple and not more complex. And we really with the conditions and all these conditionality have to think about that because at this moment beneficiaries they already have to demonstrate eligibility, procurement compliance, state aid compliance, double funding, conflict of interest, achievement of project objectives and now on top of that they will have to now show how they contribute to milestones and targets, output indicators, result indicators, climate targets, social targets, gender equality and other horizontal requirements. So it's a bit too much. It's really a bit too much.
And this brings me to last, sixth, very important lesson. Now when we think about all of this together, will we at the end be able with all these conditions and everything, will we be able to answer like the basic questions? What was fulfilled, which objectives were reached at the level of the EU, at the level of the member states, at the level of the regions, which results were delivered, what was financed, how much did it cost, was it value for money? And the answer is no, because at the end with the RRF we are not collecting actual cost, we don't know how much we really invested in different measures, we don't know how much we really invested in different six pillars. The same is in this NRPP proposal.
So at the end we will have all these conditions, all the complication and we will not exactly know what we succeeded and what we did, which change we really did in the practice. And this is what what this Annex 1 of performance regulation is clearly showing. And we really have to ask ourselves then all this administrative burden which we will put now on all the administration, is this something what is worth for?
So, now at the end just to conclude, after all the experience you have with the RRF, we can say that this strategic planning is something what was introduced, but okay, RRF was temporary instrument done in a short time period and for real strategic planning it takes more time. So, but the the the way of thinking we can actually use. Monitoring implementation, accountability for delivery, which was a trial to establish in the RRF, this is all what we need, but of course for that we need improved milestones and targets, outputs and results. Now the problem is can we improve it in a in a good manner? Common assessment and methodologies are needed, transparency on the use of funding, and definitely what we have to avoid is this multiplying conditionality.
So we have to be very cautious in setting different conditions, excessive centralization, reporting driven implementation, replacing place-based priorities with policy tagging and earmarking requirements, losing information on actual cost, this is definitely something. And as a final message, we do not need more conditions. Every condition should improve performance, accountability or value for money, otherwise it increases complexity without improving results. Thank you very much.
Monika Hohlmeier
This was more precise than some of us wanted to hear it. So I said this is even worse than I thought, but we will, we are the European Parliament and we will ameliorate the things as it is necessary. That's it. I'm very confident in our Parliament that we are doing our job. So, now I would like to give the floor to Lívia Vašáková, a very appreciated former Slovakian Deputy Prime Minister.
You have the floor.
Lívia Vašáková
Good afternoon and many thanks for inviting me. I will start maybe by introducing myself as I'm probably much less known than the previous speaker from the European Court of Auditors. I'm a former Commission official. I have spent eight years working for DG Energy and then eight years working on the country-specific recommendations for a particular country, Slovakia. I was then asked to be seconded to the Slovak government to work on the Recovery and Resilience Plan, where I became a Director General.
I was responsible in putting in place the structure, in coordinating the the content of the plan, and to develop also the whole methodological thing and to take care also of the controls, of audits, so basically managing the whole RRP in Slovakia for three years and a half. The government then fell in 2023 and I was asked by the President of the Slovak Republic to join the technocratic government as a Deputy Prime Minister, not only in charge of the Recovery and Resilience Plan, where Slovakia was doing pretty well, we were among the top five countries for all various indicators, submission of the plan, submitting the first, second request for payment, but to take care also of the classical structural EU funds where Slovakia was lagging behind and there were still two, three billions of euros that were needed to be spent by the end of the year in order not to be decommitted. I was then dismissed in December 2023 once Fico's government took place and I'm currently working in the energy sector in the in the top management. The company I'm working for is also one of the beneficiaries of the Recovery and Resilience Facility, so I see also the administrative burden that is coming on beneficiaries from from the different side.
I will not have the same EU-wide perspective as the previous speaker, but I will present a hands-on experience from the RRF Recovery and Resilience Plan in Slovakia and also the management of structural funds in Slovakia. When you look at the slide that I prepared on the right, you basically how much see how much money has been disbursed in the framework of the RRP and in the framework of the classical structural funds, and the difference is striking. Of course, it's not exactly the same thing because for the RRP you claim the money that is not necessarily now in the real economy, while for the structural funds, the invoices are being sent with a time lag compared to when the work was completed. But anyhow, the difference is really striking and I think that the crisis instrument that Recovery and Resilience Facility was presented to be has shown its benefits in really being much quicker, more dynamic than the structural EU funds and in my view has also helped the economy. It was also linked in particular in Slovakia with much stronger central coordination and project management compared to the decentralized management and weaker enforcement in terms of structural funds.
It became a Prime Minister agenda, so meaning really the link to the reforms led to the higher political prominence of the Recovery and Resilience Plan compared to structural funds that are normally sitting somewhere in a line ministry and then they are decentralized to other line ministries, but nobody is taking care of the central coordination, enforcement, stronger project management. And this is what we did for the Recovery and Resilience Plan and which might make made the difference that you see on the right part of the screen. Also milestones and targets were, I would say, the triggers for some reforms and investments happening quicker. We also combined it with a strong communication tool, really using various traffic light systems internally but also externally to put pressure on ministers but also on other stakeholders involved in order to speed up implementation of the plan. I will present some of the reforms that we had there and also how do I see it now after having this experience of three years and a half working on the Recovery and Resilience Plan.
I have seen it for a decade that CSRs were redrafted and drafted every single year and they were not at all implemented. Then came the Recovery and Resilience Facility and things started to happen. They might not have been perfect, I will speak about it later, but things started to happen. And the illusion that Member States would have undertaken all these reforms even without RRP for me is just an illusion because they could have done it over the decade when the Commission was putting these things as recommendations to their attention and it has not happened in many cases. In my view, too much focus was put on legislation in terms of reforms.
So milestones were drafted normally that you have legislation approved or the legislation needs to be amended, but there were no, I would say, particular milestones and target on the implementation of the reform.
In Slovakia, there were many reforms like this, to be honest, but I would like to also show you a very positive example of the curriculum reform that was a complex reform, very tough reform in terms of political capital, but also in terms of money. And there were several milestones and targets in the Slovak Recovery and Resilience Plan, starting with the change of the legislation, but then also creation of the training centers for teachers, then enrollment of pupils in this new curricula. And really, the reform is on track even now with the change of the government, so it has survived several governments and the reform is ongoing. And I would say that even the public mood is very positive regarding the reform. So I would say that this is one of the positive examples that RRP has brought along.
Then continuity across government, in my view, it's only partial because each revision has reduced the level of ambition of the reform. So what Member States drafted at the beginning as their Recovery and Resilience Plan is no longer the same that you can observe now in the version that they have after several revisions. And I think that here there's a lot of discretion at the level of the European Commission because it was also up to them to be on the other side and to see whether the level of ambition of reform is being kept or is being, I would say, diminished to the minimum. And in my personal experience, I'm just speaking really for my own country, not for the other Member States as I do not have the knowledge, there was a very strong pressure from the Commission regarding green reforms, that the Commission was defending a lot all these green reforms and was not willing to make exceptions or to loosen the language that was there. It was a bit different on the rule of law and on fiscal rules, where I would see that in 2023, 2024, pardon, there were a lot of, I would say, negative changes and these were, I would say, given an easy ride by the Commission, which in my view has put a bit of a question mark on the continuity of reforms across governance and whether the Commission should have maybe kept a more tougher eye on this one.
Coming to my last slide, okay, this time it works. What are the lessons learned from the particular case of the Slovak Recovery and Resilience Plan for NRPP? That the link to reforms is not only bringing financial resources, but it's also the institutional pressure because many of these reforms, they do not cost much, but there is a lot of political capital. And if you have somebody behind you telling you it's a good thing, then it's easier to sell it at home. So these are, I would say, the two triggers that are making the reforms possible and that's why also when it was just recommendations by the Commission in the framework of the European Semester, it was not working.
Combining reforms with investment, that's another point where I see that even small adjustments, small improvement in the processes can improve then the investment outcomes. I will name here two examples. The first one is that before investing in the emergency centers in the healthcare, we developed a plan how it should be redesigned in order that every city or 90% of Slovak citizens can get an emergency car coming in 15 minutes, within 15 minutes. And based on this reform, we put money into investments into these emergency centers. And there I think that it makes sense even to do these small adjustments, these small improvements, even though it cannot be considered as a big or major structural reforms.
And the second was that prior to investing in trams and trains in Slovakia, we slightly changed the legislation regarding the commissioning of services in public interest, which was really fragmented and involved various players and was not very efficient. So in my view, this is something that goes hand in hand with investment, these small adjustments, small improvements. The question is whether structural reforms, major structural reforms should be included and how many structural reforms should be included. Because as mentioned, they are not that much costly in terms of money, but they are really costly in terms of political capital. And that's where subsidiarity should play a role, but also using this institutional pressure is something that should be put into the into the consideration because we are we are living in a very difficult times, facts are no longer in fashion, so meaning that if the higher level, so the European level is not standing for good things, they might never happen at the national level.
So in my view, including a couple of structural reforms in in the new NRPP can definitely help improve the competitiveness of Europe. Then regarding processes and the governance structure, what happened with the RRP that the rules were not set and kept for the whole period of the RRP. At the beginning in 2020, the rules were really relatively loose, having it done really quickly to fuel the money into economies after the crisis. Then came the period when the rules were very restrictive, there were a lot of conditionalities coming and we were going in the direction of the classical structural EU funds. And then after a certain period again, the rules were loosened.
And this does not give a good signal when you are changing the rules several times. I know it's very difficult to know from the start how to set up the rules. And this is something that only experienced people know how it happened before and what's the right balance between the flexibility and between transparency and accountability. But if you change the rules too often, you are decreasing the positive and negative signals that are coming, you might even delay implementation, so it's something definitely that should remain quite limited. I already mentioned that revisions lower the ambition and extended implementation timelines for reforms, so meaning backloading reforms.
There was too much discretion sometimes in the hand of the Commission creating uncertainty. And sometimes we were really spending time on minor things like clerical errors that required the whole procedure to be amended, even though both parties agreed that these are minor things that could have been handled, I would say, in a more flexible procedure. What I think and what was also the difference in the numbers that I showed in my first slide, that RRP in Slovakia became a Prime Minister agenda. And there was a strong push from the Prime Minister really for reforms, but also for investments.
This has never, never been the case. Then the strong coordination body and project management, in particular when you are combining different funds, you have scope to do some savings, economies of scale, but you need to have a good coordination. You need to proceed in the same manner, basically to spread certainty and to have a strong project management to see how it is happening, to repeat things when they are not happening and repeat them again and again. And then, I would say it was mentioned also by the previous speaker, administrative burden versus transparency. What is really needed and what's on top and could be excluded while not impacting the outcome.
So thank you very much for your attention. That's it.
Monika Hohlmeier
Thank you very much for your dedicated approach. I would like to give the floor first to Karlo Ressler.
Karlo Ressler
Thank you very much for the presentations. I found them quite useful. I have practically one question per each speaker. So first for Ms. Maletić, in this context of what you've just described, the RRF was intended to address key country-specific challenges, but implementation has varied quite significantly between Member States. And from the ECA's perspective, how do you think that the future NRPP framework can ensure a more consistent link between the EU funding, but also country-specific recommendations and real reform implementation across Member States so that there is a level playing field for everyone?
For Ms. Vašáková, also based on your experience working on the RRF in Slovakia, but also before that working in the Commission on the country-specific recommendations, what would you say that proved the most difficult in practice? Was it really the first step of establishing the meaningful milestones, defining them, later this coordination between different national bodies, different ministries, but also with the regional level, or ensuring that in the end the final beneficiaries really had enough predictability and clarity during the implementation? Thank you.
Jean-Marc Germain
Thank you very much, Jean-Marc Germain.
Thank you Chair and thank you for the presentation. I have to say that I was skeptical by the first one. Maybe the fact that half of the hemicycle applaud and the rest was silent, even if we are not numerous, is significant. But if you say to us, okay, forget the conditionalities, then more or less you say forget to have a budget that deliver for people and that is protecting nature. So the thing with this budget is we decided to give more money for companies, but then we want to use this levy to protect natures and with social conditionality to improve the situation of people.
So when you speak of fishery, for example, how can you say that there is no type of fishery that do harm to natures and that can be avoided like deep sea trawling? So that's the whole point. I mean, it's like you say that you have the right to protect yourself when you're attacked. You don't ask to have hundreds of pages defining the principle. And I'm sure that the Commission, but maybe we will have an answer for that, will deliver smart guidance that still keeps the principle and tries to avoid the complexity that you ask.
But maybe if you wish, develop a little bit on what is for me the good question is how to keep the conditionalities but still make it simple for final beneficiary.
Julien Sanchez
Merci Madame la Présidente. Donc nous prévenons depuis des mois des risques donc de la généralisation du modèle tiré de la FRR et ce n'est pas juste une obsession des patriotes, c'est du bon sens. Et ça a été rappelé à l'instant par Madame Maletić que je remercie pour son intervention parce que c'était très clair et ça doit nous dissuader de faire ce que certains ici veulent faire parce qu'on nous prévient à l'avance de ce qui va se passer. On a le recul sur le modèle de la FRR. Donc le nouveau modèle proposé, il reprend largement cette logique de la FRR.
Or donc la Cour souligne que l'expérience FRR a révélé des faiblesses en matière de transparence, de contrôle, de traçabilité, de vérification des résultats. Il indique également que les États membres continueraient à déclarer eux-mêmes l'atteinte des jalons et des objectifs sans vérification systématique ex ante de la Commission. Donc dans ces conditions, comment la Cour peut-elle donner une assurance raisonnable que les intérêts financiers de l'Union seraient correctement protégés ? Je pense qu'elle ne peut pas et elle est d'accord pour le dire. Plus fondamentalement, ne sommes-nous pas en train de reproduire les mêmes faiblesses que celles déjà identifiées dans la FRR tout en étendant ce modèle à près de 865 milliards d'euros de dépenses européennes quand même ?
Enfin, sous couvert de protection de l'État de droit, la Commission européenne s'arroge un pouvoir toujours plus important pour conditionner, bloquer ou réorienter les financements européens. Là on est sur du chantage émotionnel, on n'est pas sur de la logique financière ou de la logique d'investissement. Donc comment accepter que des décisions pouvant priver des États membres de milliards d'euros reposent sur des appréciations souvent contestées sans véritable contrôle démocratique ? Est-ce qu'on n'assiste pas, ce sera ma conclusion, à une instrumentalisation politique du budget européen utilisé pour sanctionner certains gouvernements plutôt que pour répondre aux besoins réels des citoyens européens ?
Mais dans ce cas-là, attention à celui qui tiendra le manche un jour parce que la politique ça va, ça vient et donc ceux qui veulent aujourd'hui manipuler ou essayer de conditionner des choses, demain ils pourraient en être aussi les victimes.
Bogdan Rzońca
Bardzo dziękuję. Bardzo dziękuję za prezentację i także dziękuję za to, że jak dostałem informację, że my te prezentacje wszyscy jako europosłowie dostaliśmy na swoje skrzynki, czyli będziemy mogli się z nimi zapoznać. To naprawdę ważne dla nas, bo chętnie przeglądnę sobie jeszcze wszystkie te slajdy, które zostały zaprezentowane moim zdaniem po raz pierwszy w sposób tak prosty i oczywisty dla posłów tutaj na posiedzeniu Komisji Budżetowej. W zasadzie nie mam do tych slajdów i do tych informacji pytań poza tym, że podziękowanie, że państwo, panie tutaj w tym wypadku poruszyły te tematy, które absolutnie są wrażliwe dla sukcesu Unii Europejskiej. Wszyscy jesteśmy jak tu jesteśmy na sali za dobrym projektem pod nazwą Unia Europejska.
Ja również pochodzę z Polski i wiem, że są duże korzyści z finansów Unii Europejskiej. Ale tak naprawdę mamy od lat ten sam problem. Kiedy był plan Junckera, nikt nie sprawdził na co zostały wydane pieniądze. Był tylko wielki plan Junckera i Juncker i tyle. Teraz mamy RRF i mamy ogrom opowieści jak fantastycznie, jak dużo pieniędzy zostało wydanych, no i bardzo mizerne efekty tych rozdanych pieniędzy, o czym zresztą systematycznie informuje nas świetna praca Europejskiego Trybunału Obrachunkowego, za co również dziękuję.
I mamy problem z tym, jak przygotować następny budżet, bo wszyscy mówią: jeden procent to za mało tego budżetu, powinno być dużo więcej pieniędzy, a mało kto mówi, jak sprawdzamy wydatkowane pieniądze. Mówimy tylko o tym, że coś zrobiono, ale czy było to potrzebne, czy kto ile zarobił na kursach, czy ktoś się nad tym zastanawia? Ten przykład jest naprawdę dobry: czy było tysiąc osób na kursie, czy dziesięć, wpisano, że kursy zrealizowano, a jaki jest efekt, nikt się o to nie pyta. Nie chcę wykluczyć całkowicie oczywiście problemu kursów, bo to jest ważne. Więc dobra prezentacja, dobry początek dyskusji, uważam, że fajna podstawa do tego, żeby dalej rozmawiać o urealnieniu wydawania pieniędzy w Unii Europejskiej.
Lucia Yar
Thank you, Monika. Thank you for the presentations. It's going to be very useful, as you've heard, we will definitely utilize it. I have two questions, one for each panelist. Ms. Maletić, as former member of the European Parliament, very familiar with the environment here, also from the EPP side, it was interesting to hear from you, but I have to underline what my colleague Jean-Marc Germain said, that if we are using the examples that are making caricatures almost of the conditionalities, for example the example that you used on the fisherman and the gender equality, of course it is absurd, of course it is bizarre, but it also only underlines the rhetoric that we afterwards hear from the far right.
So I think it's not a very smart way to fix the issue of which you said of multiplying conditionalities. So my question here will be whether the ECA actually has an analysis which of the conditionalities are multiplying, which could be merged, and in which way do you think should be the recommendation on that level addressed? And to Ms. Vašáková, thank you very much for coming. It is really great pleasure to have you here, to host you in the budgetary committee, because she didn't say that, but she is some of the best brain that we have on the European money in my country, so we're very proud of having her working on all those successes that you've heard about. My question for you would be regarding the smart conditionality, which is one of the priorities of the Renew Europe group, which Commission has already introduced in the NRRPs, and they are saying that they are expecting if some issues occur with the money, in order to kind of let the money flow, the suspension of money might be in a way that the countries are still fulfilling their obligation, the member state still has to fulfill the obligation to pay the final beneficiaries.
However, this is very difficult to enforce. Renew Europe is much more pushing on the way to kind of bring the money towards the direct management to the Commission. So in order if countries like in the past Hungary had suspended fund, we are able to deliver certain beneficiaries the money. There is a question mark about how efficient is this tool and whether it is really doing what it is supposed to do, also sometimes to show a finger to warn the countries. Nevertheless, my question is what type of fundings do you think might be, if suspended, coming back to the Commission under the direct management, what type of fundings could be managed in this way in order to, I'm finishing, in order to not to lose this enforceability and the understanding that the money that are coming from the EU are going to not only be beneficial but also have some political leverage.
You spoke more than two times of the given time. So sorry. Now Thomas Geisel.
Thomas Geisel
Vielen Dank, ich möchte mich zunächst auch bedanken für diese zwei sehr aufschlussreichen Präsentationen. Wenn ich es richtig sehe, gibt's wohl vor allem zwei Probleme mit dem, was gegenwärtig geplant ist. Es liegt ja auf der Hand, dass die Aufbau- und Resilienzfazilität gewissermaßen die Blaupause für die nationalen und regionalen Partnerschaftspläne sind. Ich sehe das eine Problem vor allem bei der Frage der Effizienz, bei der effizienten Mittelverwendung. Sie haben sehr eindrücklich dargestellt, wie völlig überreguliert diese Dinge sind.
Ich kann als ehemaliger Oberbürgermeister aus eigener Erfahrung sagen, dass wir nicht selten auf Fördermittel der EU verzichtet haben, weil einfach die Anforderungen, die Verwendungsanlässe, es war häufig ein Beschäftigungsprogramm für Berater, die fast die Hälfte der Fördermittel dann verschlungen haben, sodass wir sagten, dann machen wir's lieber gar nicht. Das zweite Thema ist, glaube ich, ein noch drängenderes Thema, das ist die Frage der Einhaltung der Zuständigkeiten. Ich sehe bei der Aufbau- und Resilienzfazilität, jetzt bei den nationalen regionalen Entwicklungsplänen, es geht sehr häufig um den weit gefassten Begriff der sozialen Reformen, der gesellschaftlichen Reformen, Bildungsreformen, Themen, die hier aufgegriffen werden, die jedenfalls nach meiner Lesart der Verträge nicht in die Zuständigkeit der Europäischen Union fallen. Und ich glaube, das Problem ist natürlich, wenn man diese Pläne macht, die ja bilaterale Deals, möchte ich mal sagen, zwischen Mitgliedstaaten und der Kommission sind, da achtet nicht jemand darauf, ob diese Kompetenzen eingehalten werden, wenn der goldene Zügel des Geldes lockt. Und ich denke, gerade wir als Parlamentarier sollten sehr sorgfältig darauf achten, dass die Kommission sich an die Zuständigkeiten hält, die ihr gegeben sind und nicht gewissermaßen dadurch, dass wir ihr einen Sack Geld geben, der praktisch nicht kontrolliert werden kann, letztlich hereinregiert auch in Bereiche, in denen die Kommission überhaupt keine Zuständigkeit hat.
Vielen Dank, ich wollte da, wollte Ihre Stellungnahme natürlich dazu haben, das war meine Frage. Vielen Dank.
Monika Hohlmeier
Ganz herzlichen Dank, ich darf dann gleich die Frage für den Co-Vorsitzenden mit anschließen. Zunächst an Ivana Maletić. Ich habe momentan in unserer politischen Diskussion ein bisschen den Eindruck, dass manche glauben, dass Regulierungen, die von Haus aus Unternehmen erfüllen müssen, Organisationen erfüllen müssen, wir haben eine Fülle von Regulierungen, Verordnungen. Die werden jetzt sozusagen durch die Konditionalität bzw. durch die Performance plötzlich an NRRPs, an Pläne und Ziele, das heißt, wir haben doppelte Regulierungen. Die müssen normalerweise von Haus aus schon die Regulierungen einhalten, wie sie im Original da stehen, ob das die Haushaltsregulierung ist oder ob die im Rahmen des Green Deal formuliert sind, ist völlig egal, welche Form der Regulierung.
Jetzt kommt die Konditionalität mit einem zusätzlichen Layer, der das Ganze nach meinem Dafürhalten, und das wäre meine Frage, in der Rechtssicherheit tangiert. Weil, wie sehen Sie die Frage der Rechtssicherheit und die Doppelung der Regelungen, die letztendlich auf alle Betroffenen zukommen? Und glauben Sie, dass eben die Empfänger tatsächlich entlastet werden können bei der Menge an Layers von Regulierungen? Zweite Frage an die Vertreterin der Slowakei. Ich musste feststellen, dass bei der Slowakei auch die Berichterstattung an den Haushaltskontrollausschuss in Bezug auf die Listen, wie die Gelder verwendet wurden, relativ großzügig waren, um mich höflich auszudrücken.
Großzügig in dem Sinn, dass wir Berichte bekamen, es wurde eine dreistellige Summe für Klima und für Biodiversität in einem Ministerium ausgegeben. Wir haben keinen Einblick bekommen über konkrete Projekte, über Realisierung der Projekte, über die... Das heißt, das war etwas, was uns ernsthaft als Parlament, und ich nehme nicht nur die Slowakei, ich könnte viele andere Länder nehmen, die uns dreistellige Millionensummen, zum Teil Milliardensummen in einem spanischen Verkehrsministerium oder bei uns in Deutschland, die Berichte waren ziemlich unpräzis zu dem, was eigentlich mit dem Geld tatsächlich passiert. Ich bin überzeugt, dass wir eine IT-Rückverfolgbarkeit haben müssen bis hin zurück zu dem, wer tatsächlich Empfänger ist und was mit dem Geld gemacht worden ist. Wie stehen Sie dazu, dass wir tatsächlich eine solche Rückverfolgbarkeit bekommen?
Und ich schließe mich an die Frage von Thomas Geisel an. Ich habe schon Bedenken, dass jetzt die Kommission die Lehrpläne festlegt für die Mitgliedstaaten. Ich bin da jetzt ganz ehrlich und empfindlich aus bayerischer Sicht. Ich möchte nicht, dass die Kommission in irgendeiner Weise einen Meilenstein für den Lehrplan in Bayern legt. Da bin ich jetzt ganz offen.
Wir haben Rechtsstaatlichkeitsfragen, die müssen vielleicht geklärt werden, aber ob jetzt die Kommission mit Geld sozusagen einen Meilenstein für Lehrpläne legt, puh, da bin ich jetzt, da habe ich jetzt ernsthaft Bedenken. Ich wollte aber einfach mal wissen, wie Sie das sehen, weil vielleicht hat mir hat sich mir der Blickwinkel einfach noch nicht erschlossen. Dann würde ich zuerst an Ivana Maletić geben und dann noch mal an Frau Waschakova.
Ivana Maletić
Thank you very much and thank you for all your questions. I will start with the questions coming from Mr. Ressler about reforms and linking reforms to funding. Some of you also talked about this and asked about this element, which is like very important novelty in the RRF, now again introduced in the new proposal on NRPPs. And what we saw with the reforms, which I didn't have time now to explain in details during the presentation, was already with our first audit on Commission assessment of the national recovery and resilience plans, where we actually realized that even though requirement in the regulation is to address all or significant subset of the country-specific recommendation, we found that in some member states already in the planning stage, in the very first plans, some of the country-specific recommendations were addressed. So some member states, very few of them, addressed almost all or significant subset, while in others you could actually see that only some of the CSRs were addressed in this design.
And then of course that later on during implementation, when we did different audit on labor market, business environment, now the one which is approaching the end on public administration, we realized that regarding implementation, only one third were largely addressed. Now your question, so this clearly showed that reforms are very differently spread among the member states, that we cannot talk about level playing field. So it's in some of them all or significant subset were addressed, in some of them just a few.
So it's again immediately huge difference. In some of the meetings with the member states, they asked me, but maybe this is normal because some member states are getting just small amount from the RRF and some are getting bigger amount from the RRF. Now, this is valid point, but the problem is, if we are going to do that type of distinction, then what is the really purpose and the aim? Do we want to have country-specific recommendation implemented through the instruments or not? Then even if you get smaller amount, you have to address everything.
But another element which Mr. Gisel actually asked is, are we, is European Union money there to finance reforms which are national responsibility of the national politics? And then with implementation of certain reforms, you can gain or not support of the voters and you know, many other elements are involved in the design and implementation of the reforms. And this is actually the real question to which member states have to answer and then decide in which direction they would like to go and is this something what can be done with the European budget, with the European money or not? And definitely, now you asked me what is the solution, how we can ensure level playing field. So first, then we don't look at the amounts, but if significant or all subset should be addressed, then it should be addressed in each and every member states, not just in those where the envelope is bigger.
And then also the payout value of the each milestone related to the reforms. How to define payout value? This methodology has to be defined in advance, already in the regulation. Because if you change, if you will change that all the time, if the rules will not be clear from the beginning, you will have situation which we now heard from Ms. Vašáková with example from Slovakia where actually then many reforms were later on weakened during revision of the plans. And this is what we also see and we will have and we just started very devoted audit on the revision of the plans and what happened with the ambition of the plans during these revisions.
So this is like big problem which you have to solve immediately now in the regulation if you really want to go into this direction. But the key problem is can we and should we finance and which type of reforms from the European budget. ECA, we in ECA were very clear in our opinion on future of cohesion and our opinion on NRRPs that actually reforms, if taken into account in the plans, should be linked, should be actually those which are linked to the implementation of the investments. And only these could be in a reasonable way included for financing with a clear set of the methodology and clear rules. So this is regarding the reforms.
Other questions were related a lot about to the conditionalities and here I said very clearly and I didn't actually try to give some examples which are maybe more caricatured than real examples because this when I mentioned fishery at the boat this was really example in one of the member states when auditors told us when we came actually that for them is very difficult to do the audit job with all these questions which they have in their checking list and they have to ask they really have to ask this. And this is why I said we have to think I'm not against conditionalities but we have to think how and where we are actually imposing them and how we implementing them. So in a way that it is reasonable that is that it is cautious that it is possible to be implemented. And now in my presentation of course I was talking about all set of conditionalities starting with the legality and regularity which we all know we need to have this is in the financial regulation we have to respect and follow double double funding conflict of interest public procurement state aid everything what is like the basic. Now on top of that of course if we go with the performance framework we are adding additional conditionalities which are related to milestones and targets now intervention fields output indicators result indicators so we are adding additional conditionalities.
Now, other questions were related a lot to the conditionalities.
With these conditionalities if we are really preparing like good performance framework then you are steering with the good performance framework already member states into direction in which you would like them to go with the investments coming from the regions and member states. So if you want more green you defined your intervention fields and objectives in that way social also in that way that it's very clear what are the basic results and objectives you would like to achieve in the member state at the level of the EU. But here we have like combination of different output and result indicators which when we analyze are very vague like in the RRF so and in many cases you don't really see the results and I gave some examples and this tourism is not only one example if you go through many other output and result indicators you will see the same always just number of of person people organization businesses nothing else and this is really difficulty of this of this legislative package which is proposed. And then on top of that you have also this tagging which belongs to the old thinking. So this tagging you have when when you actually finance cost and spending and then you tag your budget per different priorities like this climate change mitigation adaptation and resilience environment social.
But this is we have to decide in which direction are we going are we going to the performance or we are sticking to the cost. So we just have to be clear and decide it's not good to just top up everything and build one on another one on another. This will create really difficulties in the implementation because you asked me also if we did in the in ECA this analysis of the conditionalities and what what will this mean. In our opinion on the NRPPs we said very clearly that conditionalities that we already from all our audits on the cohesion we see all the difficulties in the implementation at the level of the final beneficiaries and that this now again topping up different conditionalities will really create huge administrative burden and complexity and difficulties for the implementation.
Lívia Vašáková
There was a question what was the most difficult in setting up the recovery and resilience plan up and running in Slovakia and at the beginning it was that everything came at the same time, the content, the processes and coordination, governance. Okay. But then at the end there was a very good question how to make it work while keeping it simple. And that was the biggest I would say challenge, how to prepare the methodological guidance, how to put all the processes in place that they are still following milestones and targets and protecting financial interest of the EU while not putting an extra burden, be it on line ministries, being on agencies that were implementing the programs and then on final beneficiaries. This is definitely the most bit difficult where to keep the right balance between the two.
And there is no upfront reply to this because in every situation it might slightly vary and you need to design it in this big piece of legislation for the EU where not all countries function according to the same pattern. So I would say that this is this was the biggest difficulty for us to set up at the national level, but I think that this is something that is coming repetitively here, how to strike this right balance between the two. Then there was the question about the smart conditionality and so what to do if one of the I would say fundamental conditionalities like rule of law is not fulfilled and whether to stop the money and leave farmers or people relying on European Social Fund not receiving anything or whether to shift it to the Commission under the direct management. So it's also a very very difficult decision. In my view to go for a direct management by the Commission is probably much better than to skip it all together.
It will give a signal that something is wrong with the with the government, not with the country, that something needs to be remedied, that they are losing some of their competencies that normally are reserved for national governments. So there will be this stick. On the other hand, the EU is showing a human face towards final beneficiaries giving them the carrot that we are managing, we can do it under the direct management so we don't leave you leave you alone. And then there was the big question regarding reforms, whether they should or should not be included, whether it's a matter for national governments, whether it's something for the EU to take care of. In my view when speaking about European competitiveness, we are speaking about competitiveness of various national economies.
And this the competitiveness of national economies are no longer guaranteed by agricultural money and by cohesion money. So meaning if we would like really to look forward and to propose something for Europe that is linking us to the future not to the past, the way how it was done in the past, it's no longer the way forward, which is logical. So meaning that the reforms they are specific to certain member states. That's why the Commission is doing a tedious work identifying these reforms in their country specific recommendations and that's why I would say that it should be part of the EU money that is being spent on member states that they contribute to the European competitiveness and not just to the priorities that were very relevant in the past, they are still relevant, but they cannot guarantee alone the competitiveness of the EU in the future. Thank you.
Monika Hohlmeier
So, thank you very much. Now we are going to the next panel and may I warmly thank our speakers for the first panel. Thank you very much and for the patience that you gave us in the first panel and those waiting for the next panel. So I would like to give the floor to Ms. Odilia van der Valk and then Mr. Guntram Wolff for their speeches. First, Ms. van der Valk.
Odilia van der Valk
Good afternoon and thank you for the invitation. This short presentation is based on two different studies that my colleagues and I have conducted in the last few months. I will focus on three elements: what is changing, the main trade-offs we have observed, views from some of the program authorities that we interviewed, and some policy recommendations. So, what we are seeing is a significant shift towards a more flexible but also a more centralized system. First, there's a larger flexibility amount of around 25% which would give much more room for reallocating funds during the program period.
Second, the mid-term review becomes earlier and more significant, effectively turning it into the main moment to reshape programs. And third, there is a stronger link between reprogramming performance and conditionality, meaning funding decisions may increasingly depend on results and compliance. And the last observation is a new EU facility that sits alongside the plans would allow the Commission to mobilize additional funding centrally in response to crises or new priorities. Overall, these changes increase adaptability but also shift decision-making power and introduce new uncertainties for long-term planning. And apologies.
The new design brings benefits but also important trade-offs. On the positive side, greater flexibility improves responsiveness to crises and evolving priorities. However, it also may reduce predictability, which is critical for long-term territorial investment. The earlier mid-term review is intended to improve responsiveness, but it may come too early to base decisions on solid evidence and could add administrative burden. And the stronger link to performance and conditionality may improve accountability, but they also increase uncertainty in payment flows and strengthen the Commission leverage.
And finally, the EU facility could enhance speed and coordination at EU level, but it raises concerns about transparency, legal clarity, and national ownership. So overall, an increase in flexibility comes with other challenges attached to it.
Looking at our research with the program authorities, we see generally positive attitude toward the flexibility in principle. Authorities appreciate the opportunity to move away from rigid quotas, allowing more strategic and higher impact investment. And flexibility can also improve alignment with regional needs, especially as priorities evolve over time. Leaving part of the allocation unprogrammed is seen as useful when it enables new actions during the program period. And flexibility is valued where it supports adaptation while maintaining some predictability.
However, there are significant concerns about how flexibility is implemented, especially the 25% flexibility percentage. The 25% flexibility is seen as too rigid. It's weakening upfront planning, delaying implementation, and reducing certainty, in contrast with lower level flexibility, which is seen as less disruptive for planning. Many authorities strongly oppose treating unallocated funds as cost upfront, as this ties up with resources without a clear policy purpose. There's also a clear view that programmed funding and reserves should be separate.
Another key issue or main concern is predictability. Shifting decisions to later stages creates uncertainty for planning and implementation. And there is also a concern that flexibility may not even materialize if other regulatory constraints remain rigid. And this is connected to a general concern about the feasibility of the flexibility among program authorities. The effectiveness of flexibility is questioned given the complex regulatory environment of specifically cohesion policy.
Moving to a single plan may increase coordination challenges at national level with different ministries involved. And there's also a paradox: introducing more priorities can actually reduce the flexibility within each priority, especially when the budget is small. And including a large number of specific objectives into a single framework might make planning more complex than flexible. So, based on the trade-offs we have observed, there are several recommendations. First, there's a need for clearer legal boundaries around what the EU facility can finance.
And second, there should be more clarity on how funds are allocated, triggered, and mobilized to avoid uncertainty. Third, a stronger scrutiny mechanism are essential, especially for strategic reports and annual work programs. And more broadly, it's important to limit excessive discretion without sufficient legislative guidance. And finally, flexibility tools should be better constrained so they do not undermine the long-term predictability. So to conclude, flexibility offers clear advantages, but it also changes how decisions are made and how risks are distributed.
The key challenge is to strike the right balance between responsiveness and predictability and between centralization and accountability. Thank you very much.
Guntram Wolff
So, thank you very much, Mr. Guntram Wolff.
Yeah, thank you so much for the invitation. It's a pleasure to be here and to talk about this very complex topic.
I would start by referring to the previous discussion we've had on conditionality and the effectiveness of CSRs, the country-specific recommendations. I have done systematic academic work on this prior to the RRF and can testify that implementation rates are actually quite low for CSRs according to the self-reporting of the European Commission. And the determinants of these of implementation rates are very much related to actual financial market pressure. So in times of high financial market pressure, CSRs, in particular those related to fiscal policy, actually have been implemented, while when market pressure is off, these kind of recommendations resonate with some parts of the national administrations, but they are not systematically implemented at the political level. And so this brings me to the question if now the mechanism is to link CSRs with significant parts of the EU budget, a bit in the line of the RRF, would we have a higher chance of implementation?
I would say yes, if there is a proper accountability and evaluation framework. Because if that framework works, then of course we can think of CSRs being issued and money being withheld in case of in case of non-compliance. And so in that sense, I am I'm fairly positive on the possibility of CSRs to have some impact if they are clearly connected with measurable goals and these measurable goals are actually measured because we have transparency and clear ways of of taking account of what is being done. So so that's the first the first point. The second point is of course what is our view of whether the RRF has worked in the past?
The national reform plans have been mentioned many times, but have they actually delivered? I mean, if we think of the promise at the end of the COVID period, there was the promise that this would not be a short-term business cycle boost but rather a program of long-term program of structural transformation driving up growth, so structurally structurally lifting the growth prospects of the European Union while at the same time facilitating the green transition and the digital transition. Now, if I look back, I mean, there are not that many systematic evaluations. I mean, one of them we heard from the European Court of Auditors, but in the case of Italy, there there has been at least one evaluation by Tito Boeri and Perotti at at Bocconi University that I have to say has been very, very critical. And you know, I I have I hold both both of these scholars in in high esteem and I do have to say, given the size of the RRF in in Italy, I mean, let's recall the numbers, it's 195 billion, 94 billion, 37% of which was in grants.
So we are talking here of 70 billion in grants. The 195 is something like 9 and a half percent of Italian GDP. So these are very significant numbers. And you know, if if the conclusion by these prominent two Italian academics is that they haven't been really that effective in really driving economic change, I do think it is important to actually pause and and think properly about how do we do this and how do we do it properly and what works and what doesn't work.
And you know, I in preparation of this meeting, I could not do my own evaluation of the RRF. I mean, that's a very complex exercise, but I would certainly encourage the European Parliament to do and perhaps commission a very serious evaluation of what works and what doesn't work in these when we talk of these very significant sums. So that was my my second point. Let me make my third point on the importance of having a clear accountability accountability framework. So I wrote already an opinion piece back in 2020 saying, look, that was at the height of this discussion, look, if we put up such a major scheme, we better have a very strong accountability framework, which includes not just the Court of Auditors, which is of course very important, but which includes really a political accountability framework, right?
I mean, this is at the end of the day, there needs to be political accountability of those taking the decisions on how to spend the money and where to spend the money. And that is for the European institutions, of course, the European Parliament. So I would very much encourage the European Parliament to think about what kind of accountability framework will there be going forward with the next MFF, which as you know, has a lot more flexibility built in than before. And that's a big change to the previous MFFs. In the previous MFFs, basically the accountability framework is given by a very strong legislative commitment of all the funds.
I mean, let me just take the example of the facility that is now proposed in the context of of the defense defense spending, defense-related funding. So previously we had a few small programs amounting to overall something like like 30 30 billion. So that is the EU space program, the European Defense Fund, military very small military mobility fund and something called called others here. So this is very small, 30 30 billion. Now it's going to increase to 130 billion, of which the most significant part is called Resilience and Security, Defense Industry and Space.
So it includes much more than just defense. It includes resilience, economic resilience factors. Now this makes a lot of sense, right, at at many levels. You can combine these things. And yes, when you think about military resilience, you have to think also about supply chain resilience, right?
I mean, if you have army production, arms production, where the supply chains are not working, you have a problem. So in that sense, I totally agree that it's good to to sort of have a larger sort of and more coherent budget line. Now where I I would sort of encourage then the Parliament to think about further further about this is yes, but but who actually decides in the end, right? I mean, who is taking decisions on how to spend this money and how will the accountability work of that spending? And to my mind, that is now much less clear than in the previous MFF.
And now you can take of course the view that previously it was too, let's say, too politicized, too bureaucratic by having a combination of the Council and the Parliament negotiate about every single individual line leading to very suboptimal spending decisions. But you can also take the view that it is better to do it this way rather than leaving it all to the discretion of the European Commission in combination with the member states. So I do think there is a role here for the Parliament and I would encourage, certainly encourage the Parliament to take a role in this. So then the last point is on transparency. And I think my, I've used my time, the clock started a little bit late actually.
So on transparency, I mean, just to say, I mean, I very much want to echo the point that was made before about our ability to digitally track where the money has been spent. I mean, this is, I mean, if when you study EU budgets, you actually realize that a lot of information is somewhere, but it's actually not easily accessible externally. And that's actually quite different to other jurisdictions. I mean, I'm studying, for example, at the moment spending, military spending in the US and you have actually an amazing set of public government datasets with extremely detailed data. When you try to find out how cohesion funding has been spent over the last decades in different countries in Europe, I mean, good luck.
It's a major, major exercise, a very difficult exercise. And so I think we need to, I mean, we owe it to citizens by now to increase the level of transparency and make that by basically providing the information digitally online. And then researchers can come up with studies and we have much bigger accountability and therefore better spending of the money at the end of the day. So transparency is good for good spending. A very final word and I'm stopping, this is just one short remark, is I do think we need to also think about the focus of the spending going forward.
I see here the overall title of the of today's event, for example, is long-term EU resilience, social cohesion and demographic challenges. Now, there's a lot, a lot in there. I personally think we are in a very difficult moment in Europe. I think we have to have a clear prioritization. The one big topic is growth, a very big accent on how do we get growth in this union back.
And then the other two topics is of course security, including energy security, which involves the green transition. And so let's focus the money of the next MFF on these key issues. Thank you very much.
So thank you very much for the very good report. I would like to give the floor first to Carlos.
Karlo Ressler
Thank you. Well, I will continue where the last speaker just ended. And my opinion is actually that the growth, but also competitiveness, also as the Draghi report, but also Letta report showed, is quite closely connected with the demographics. So I don't think that we'll be able to ignore this question at the European level for long as well.
I really like the transparency point and it is quite disturbing practically that it is so difficult to have an overview of of that kind of cohesion spending at the European level. But thank you in in general really for the high quality presentations and I think that many of the proposals are already included in the draft report. But I would like to have one practically comment or question and the other is more more real real question. So we often discuss this flexibility and predictability as if they are really completely competing objectives and I really see that now and then here in Brussels we have a new hype word and now it is definitely flexibility. But I would like to hear from our speakers how in the way it would be possible to really best reconcile the two in in these proposals because I think that in the end we need to have the predictability for the final users but also I think that is quite clear that we need to have this flexibility.
We are moving away from this 25% of non-allocated envelopes and we're trying to put it at the level of the 5% but within the programs. And then finally if there are any thoughts on this implementation rule change that we are trying to introduce where we are trying to change the N+1 rule that was proposed by the Commission to N+3 how it functions now. So any thoughts of this as well.
Thank you very much Carlos. Now Julien.
Julien Sanchez
Merci présidente. Donc merci pour vos interventions. Je crois que vous avez évoqué notamment le fait qu'auparavant les choix l'élaboration des choix budgétaires étaient trop politisés trop bureaucratiques. Mais aujourd'hui aussi ça a été évoqué tout à l'heure avec notamment les conditionnalités nouvelles c'est aussi de la bureaucratie. C'est en quelque sorte un chantage de la gauche qui n'est pas majoritaire pour essayer d'imposer sa politique et d'imposer sa vision sur l'écologie sur l'égalité et notamment sur des critères très très politiques qui vont bien au-delà de l'égalité et qui vont justement freiner l'économie lorsque ces conditionnalités sont sont imposées.
Alors le rôle du Parlement il doit être fondamental. Je crois que ça aussi je suis d'accord avec vous monsieur. Aujourd'hui le suivi de ce Parlement en matière budgétaire il est zéro puisque tout est fait volontairement pour rendre flou les dépenses. Quand on sait que nous n'avons pas accès à la liste des bénéficiaires finaux notamment sur la FRR et qu'on n'a que les 100 principaux bénéficiaires finaux par pays mais où est-ce qu'on a vu ça en fait? C'est notre argent.
C'est notre argent qui est dépensé et on ne sait pas comment est-ce qu'il est utilisé ou par qui comment. Comment est-ce qu'on peut accepter ça? Donc d'accord avec vous là-dessus c'est un scandale et je suis 100% d'accord pour que tout soit transparent accessible en ligne ce serait la moindre des choses parce que ça a été évoqué par mon collègue Geisey tout à l'heure qui a été maire comme moi quand on est maire et bien on doit justifier de chaque centime d'argent public dépensé et comment c'est dépensé. Donc pour rejoindre ce qu'a dit Carlo Ressler et je suis d'accord avec lui la flexibilité n'exclut pas la prévisibilité et il faudrait pour ça mieux affirmer les priorités de ce Parlement et qu'on puisse savoir parmi les dépenses quelles sont les moins importantes et quelles sont celles auxquelles on renoncerait si on devait supprimer des dépenses. Nous pensons que notamment pour ce qui est de notre groupe que sur l'immigration et sur un grand nombre de sujets ce ne sont pas des dépenses qui sont importantes et qu'on pourrait tailler sur ces dépenses pour aller vers des dépenses stratégiques et intéressantes pour l'économie la compétitivité et aussi l'agriculture qui est garante de notre souveraineté notre indépendance.
Merci.
Merci Julien. Bogdan.
Bogdan Rzońca
Tak, bardzo, bardzo dziękuję. Uważam, że znowu mieliśmy do czynienia z bardzo dobrymi, ciekawymi wypowiedziami. Bardzo państwu ekspertom dziękuję, że poświęcili nam czas i chcą nam pomóc ewidentnie. Tak to odbieram, że państwa sugestie są naprawdę ważne i wymagają no dużo więcej czasu. I teraz pytanie jest z mojej strony jest takie, czy nie jest tak, że Unia Europejska wychodzi z własnych butów?
Unia Europejska pozbywa się swojej roli na rzecz rządów krajowych przy tych wszystkich nowych rozwiązaniach. Spycha odpowiedzialność na rządy krajowe, bo jak te rządy krajowe otrzymają pieniądze z Unii Europejskiej, to będą sobie dzieliły te pieniądze moim zdaniem wedle własnego uznania i w dalszym ciągu nie będzie sprawdzalności wydatkowania pieniędzy. A być może będzie tak jak teraz jest w Polsce, że za pieniądze z RRF kupowane są jachty, słynne jachty, o których cała Europa słyszała, albo festiwale z balkonów, festiwale muzyczne z balkonów. No to jest kompromitacja wydatkowania pieniędzy unijnych i uważam, że debata o tym, że powinniśmy oszczędzać w Unii Europejskiej dalej powinna trwać, że powinniśmy mieć bardzo dobre instrumenty sprawdzania wydatkowania pieniędzy i przestańmy szukać wrogów Unii Europejskiej przez różnego rodzaju błędne rozwiązania, które komplikują sytuację w Unii Europejskiej od strony administracyjnej, wykorzystywania pieniędzy. Określmy jasno priorytety, jaką Unię chcemy mieć za dziesięć lat, a przy użyciu tych pieniędzy z nowego budżetu.
Jeśli tego nie zrobimy, to będziemy tkwić w mętnej wodzie i nie ruszymy z miejsca i przegramy konkurencję.
Thomas Geisel.
Thomas Geisel
Vielen Dank. Es wurde insbesondere von Herrn Wolf ja die Frage gestellt, inwieweit das Parlament überhaupt in der Lage sein wird, diesen Haushalt irgendwie zu kontrollieren. Ich befürchte, so wie die nationalen und regionalen Entwicklungspläne angelegt sind, wird dies nahezu unmöglich sein. Ich hatte heute Morgen schon gesagt, wir stehen vor einem Paradigmenwechsel, dass ein regelbasierter Haushalt ersetzt wird durch einen dealbasierten Haushalt, den die Kommission mit den Mitgliedstaaten, wo die Kommission mit den Mitgliedstaaten Vereinbarungen trifft, bei denen Haushaltsmittel, die das Parlament bewilligt hat, in erster Linie als Anreiz, als Incentive dienen, um eben bestimmte Reformen, die die Kommission für jedes Land unterschiedlich gewissermaßen mit dem Mitgliedstaat vereinbart hat, und wenn eben bestimmte Milestones, wobei es im Ermessen der Kommission liegt, ob die erreicht wurden, erreicht wurden, dann wird eben Geld ausgeschüttet. Was mit dem Geld im Einzelnen passiert, wird relativ schwer nachvollziehbar sein.
Und vor dem Hintergrund glaube ich, sollte man sich grundsätzlich die Frage stellen, ob es gerade für uns als Parlamentarier, die wir die Aufgabe haben, die Kommission zu beaufsichtigen, ob es wirklich eine gute Idee ist, den Haushalt noch größer zu gestalten, der Kommission noch mehr Geld zu geben, ob es nicht vielleicht sinnvoller ist, sich auf Regeln, an deren Formulierung wir beteiligt sind, die gleichermaßen in ganz Europa gelten, ob wir uns nicht in erster Linie auf Regeln konzentrieren sollten, um Wettbewerbsfähigkeit zu schaffen. Ein Thema bleibt natürlich, das ist die klassische Aufgabe der Kohäsionspolitik, dass wir das Reichtumsgefälle, wenn man so will, in der Kommission, in der Europa versuchen abzubauen, dass wir natürlich den bedürftigeren Staaten mehr Geld geben, aber ich glaube, es ist besser, wenn wir uns auf Regeln basieren, als wenn wir der Kommission Geld geben, mit dem sie irgendwelche Deals machen, die wir nicht kontrollieren können.
Vielen Dank.
Vielen Dank, Thomas. Nun der Kollege Köhler für die EVP für AGRI.
Stefan Köhler
Vielen Dank, Herr Vorsitzender. Ja, heute ist ein sehr wichtiger Tag in unserem Haus und heute früh, die Kollegen haben es schon erwähnt, hatten wir den Berichtsentwurf vorgestellt zu den NRP-Fonds und haben lange darüber diskutiert. Und nach dem MFR-Interimsbericht ist dieser Entwurf das zweite Werk aus unserem Haus, mit dem wir unsere Pflöcke für die anstehenden Verhandlungen in den Boden bringen wollen. Die Kritik an den Vorschlägen der Kommission reißt nicht ab und wir im EU-Parlament beschreiten ebenfalls einen anderen Weg, das ist ja heute Morgen schon öfters gesagt worden. Ich danke den beiden Rednern für ihre Ausführungen, insbesondere für Professor Wolfs echte Analyse und hätte deswegen noch kurz die Meinung der Referenten gehört, wie sie denn generell die Architektur des NRPP betrachten, die ja in der Logik des RRF fortgeführt wird.
Herr Professor Wolf hat ja schon die Evaluierung angeführt, aber natürlich ist auch gesagt worden, die Kontrollfunktion des Parlamentes etc. sind ja auch eingeschränkt und es besteht einfach die Gefahr, dass die Nationalstaaten hier Deals machen. Und die Stellungnahme des Europäischen Rechnungshofs mit ihrer deutlichen Kritik haben auch Eindruck hinterlassen. Wie bewerten Sie denn die Stellungnahme des Rechnungshofes? Und der Kommissionsentwurf stand im Zeichen der Flexibilität, das ist ja rühmlich, aber das EU-Parlament bewegt sich Richtung Vorhersehbarkeit und möchte lieber die Beibehaltung des Status quo. Und nach wie vor befürchte ich, dass die Pläne der EU-Kommission ein Zuviel an Flexibilität schaffen werden und zu wenig für die Planbarkeit und zu viel für die Entscheidungsfreiheit auf nationaler Ebene.
Und da sind bei uns halt auch in Deutschland die Bundesländer eben im Nachteil bei immer geringeren Haushaltsmitteln. Und sind Sie auch der Ansicht, dass die Pläne zum Beispiel der EU-Kommission zu einer Renationalisierung der Agrarpolitik führen würden? Und wenn man einmal weiterdenkt, wie kann man denn eigentlich beides zusammenbringen, nämlich Flexibilität und Vorhersehbarkeit, das miteinander verbinden, ohne zusätzliche Bürokratie und Belastung zu schaffen? Vielen Dank.
Herzlichen Dank, Stefan. Kinga, you have one minute or one and a half. Thank you.
Kinga Kollár
Perfectly enough, thank you very much. So, just would like to remind us that actually we had already an interim report where we as a Parliament decided or viewed our opinion that we want more predictability in the budget and rightly so, I think, because it's an investment budget. So we need more certainty where the money will go and actually more control by the Parliament. My question to Mr. Wolf is about the transparency because I believe he has a very much a right point on that. The question is, is it actually possible because of all the way the budget is implemented, the fragmented way, is it actually possible to have more transparency towards our citizens?
Thank you.
Stefan Köhler
So, thank you very much. I give the floor to the two speakers. First, Ms. Otilia van der Falk.
Odilia van der Valk
Thank you. Two small reflections on what I've heard. So, yeah, I agree that flexibility and predictability don't have to be competing concepts. And flexibility is appreciated also by the program authorities since it improves alignment with the regional needs and especially as priorities can evolve over time. And the second reflection is about the architecture of the NRPP, which fell, sorry, no, I'm not comfortable speaking about that.
Sorry, that's outside the scope of our research. So I would like to give the floor to my colleague, Nils-Heike Wolff.
Guntram Wolff
Yeah, I mean, thank you for all these points. I mean, I would say that indeed one can have more flexibility, but when one has more flexibility, one needs a corresponding increase in accountability. And that accountability needs to be based on transparent data and it needs to be able to lead to real political consequences, right? So that's the definition of accountability. I mean, you have to have political consequences.
So yes, one can grant more flexibility and I do think that in some respects it is actually good to have more flexibility. I mean, for example, I mean, someone mentioned I think the Common Agricultural Policy. I mean, in my understanding the proposal would involve more flexibility at the Member State level to decide whether or not funds will be allocated to agricultural policy or cohesion purposes. I think that can be defended under certain circumstances, but then one needs to have a clear framework to say, okay, this is done in a proper way and these were the goals for which it was done. And the goal was perhaps to have more growth or something like that and define this very clearly, not a fluffy goal, but the more precise the goal is the better.
And then, you know, you have to have the accountability. And if there was a misspending of funds or the results weren't achieved, it has to have consequences in the next year. And I think that's where I would put sort of the role of the Parliament. Ex-ante, I mean, the current approach is very much to have this ex-ante, right? So you negotiate every little detail in the various legislative proposals around the Parliament and then the flexibility maybe missing, which can be a problem if circumstances change and so it can be a burden.
So in that sense, I'm not against the flexibility, but I think more flexibility requires a high level of accountability, higher than what we have at the moment. And then there was the question about the transparency and how much is possible. Now, I'm not sort of working in the administration, so I don't know how difficult it would be on a technical level. But in principle, I mean, I think at the level of the projects, there is extremely detailed accountability, right? I mean, for anyone, and I think many here have had experience with EU funding, be that Horizon grants or the former MEA and so on, I mean, there is very detailed information and that information is just not at the moment transparently made available to the public.
And so I think that's more a technical question of how difficult it would be. Perhaps there are also some legal limitations, so one probably has to anonymize things, etc., etc. But these things should in principle be feasible.
And yeah, I think that's that's all I wanted to say. Thank you. Thank you so much for the invitation.
Monika Hohlmeier
Thank you very much about the the transparency. The CONT committee already made a proposal in former times to say, okay, you have three layers. You have the layer of the auditors, they should have full access to every data at any time to have the possibility to react. The second layer is the budgetary authority, that's the Parliament and the committees that are related to it, that have a let's say larger insight into the data. And then the public data following the ruling of the Court of Justice because we have to clearly acknowledge what the Court of Justice has decided.
This would be and the data are available, they are already there, but we just don't have them. That's no more further bureaucracy, it's just how to present them to the different layers. So thank you very much for this very interesting debate. Now we go to the third panel to Mr. Arnstein Aassve and Mr. Benedict Wauters. I would like to ask Mr. Arnstein Aassve to start.
Arnstein Aassve
Thank you very much, thanks for the invitation. It's a great pleasure to be here and talk with you. I'm a professor of demography and you have asked me to talk about demographic challenges as an example of need for predictability. So I'm at Bocconi University, so I'm in Italy. And just following up on my colleague's comment about accountability and transparency, I'm not going to talk much about Italy, but just as an anecdote.
So three years ago I was hiring postdoctoral researchers and it was impossible to find anyone. There was no one on the market. Now today the market is flooding of postdoctoral researchers and they cannot find the job and most likely the majority is going to find a job outside Italy. So it begs the question whether that is resilient or even are we talking about recovery. Now what I'm going to start off with here, if I can get this to work.
There we have it. I'm going to follow up also on the discussion about predictability and flexibility. And but before doing that, I thought it was useful to give us a little overview of why we are in this demographic state that we are in in Europe. And when it comes to demographic trends, i.e. behind it are of course people's behavior in terms of having children, in terms of retirement and so on. And if there is anything that comes out of research that really matter for these people's decisions is predictability.
But when you think about what most people are facing these days, there is not much predictability at all.
We are facing a polycrisis, you all know it. We had the pandemic. Now we are facing war, climate change, inflation. Uncertainty is really the new normal. And I also would like to make a few words about why have we ended up there.
And demography itself is a root cause for why we are here now. And I'm talking about our demographic state of things. And the problem here, the other layer here of uncertainty and unpredictable is that we are struggling to maintain our welfare state. So of course we have different flavors of the welfare state in Europe. But if you look at the figures, if you look at the demography of Europe today, essentially the welfare state is not sustainable at all.
And it is not sustainable today, but in 10 years, 20 years, 30 years, it's going to get a lot worse. Why is that so? It is because of the distribution of the age structure of the population. And you know, if someone asked me to design a welfare state today and I was going to come up with a suggestion of how should we design a pension system, the last thing I would propose is a pay-as-you-go system. It really would not work.
Why? Well, think about it. The cohort of young people, many of them are here, and you think about my own cohort, the X generation, I'm double the size in terms of number. And I'm going to soon go into retirement as many of my colleagues here, and the ones who's going to hold it all up are the young people. Now that's just not going to work out.
And this gives another source of unpredictability and a great source of uncertainty. Now, I am also working at what's called Population Europe. This is an institution that is bridging academic research with policymaking. And we do a lot of interaction together where scientists learn from policymakers and vice versa. And when we are working on the concept of resilience, I think it is worthwhile to spend a few minutes to explain to you the way we think about it.
And it diverges and I think it also explains some of the issues that we are struggling to agree on. Now one of the most important things about resilience as a concept is that it's not about bouncing back. Actually, this was one of the bad things happening with the COVID pandemic because we always thought about going back to the way it used to be. And it's not. Resilience is very much about adaptability and being proactive for many possible futures that might happen.
And it's not about thinking about one particular target. It is not really about trying to get the fertility rate back to 2.1, which is the replacement rate. There is not a single demographer around that truly believes that we're going to get back to 2.1. So resilience is about trying to understand how are we going to design and think about the functioning of our institutions taking into account the demographic reality that we are facing.
Now, there is one other point that is important that matters here, and that is that when we look at empirical evidence and you measure resilience at the individual level, so how citizens report their ability to cope and overcome problems, and you take any measure of resilience at the national level or even at the community level, you find that there is a very strong correlation, positive correlation. Now, there is that is to say that whenever you think about how to design your resilience policies, you do need to think about these feedback mechanism. So, if you are able to help through the policies that you are providing to enhance the resilience of citizens, then eventually you're also going to get resilient institutions. So, that's that's about being effective, and if the institutions are able to be effective, it is also going to spill over to individuals. That's a virtuous cycle.
And this is this is important to think about because these demographic trends we are talking about 20, 30 year perspectives. It's not something that we can implement one policy and changes change it the year after. That is not going to give predictability and is not going to help people to be resilient. Now, it's also it also means that you need to think about policies as packages, and I'm I'm going to come back to a little bit more to that a bit later at the end. Now, what what's the implication then for the topic of the of the day here?
It's if you're going to have resilience, you do need to design complete or coherent packages. You cannot have one policy that is changed with respect to the labor market, but you don't do any changes or equivalent adaptation in the health system or in terms of education. These three hang together, and the reason I'm emphasizing them is that they are so incredibly important for individuals' decision making when it comes to demographic behavior. So, any kind of decisions about having children, for instance, which matters for the fertility rate, you do need to think about education, you do need to think about the preventive healthcare, you do need to think about the labor market as being one that really activates young people. Now, this all means that you also have to implement adaptability into the institutional architecture.
So, the one of the important principles of resilience is that you need to have institutions that are able to learn, you are need to have institutions that are able to adapt and also being able to transform. So, when we talk about these policies and what's going to come now, there is a good argument for keeping in mind the what kind of architecture are these institutions going to have, and the support and policies that are provided should take that into account. And my last one here, which is particularly important for demography, is that as I was mentioning earlier, you know, we are talking about people having children. Now, that's a very long-term investment. So, these kids are they are expensive, and they're going to stay with you for a long time.
And you cannot really come up with policies that are staying there only within the electoral cycle. That doesn't give predictability to the citizens out there that are trying to think about their life course and decisions to make. So the principle in all of this is that there needs to be certain agreement across the board, how are these the policy environment going to be in order to make it predictable. And if not, we're not going to be able to resolve much the demographic issues that we are dealing with. And okay, I'm running over, but this is also my last slide.
So when we think about demography and the demographic challenges, it's important to not ask the wrong question. And the wrong question is, how do we fix demography? That's really the wrong one. You need to think about how these institutions are going to work in order to make them thrive within the demographic reality we have. And think about it, even if we manage to increase fertility rates tomorrow back to 2.1, is that going to solve anything?
In the long run it is, but it's going to take about 25 years before these kids are becoming productive workers. So we do need to come up with solutions in the meantime. And finally here, be aware that resilience is not the same as recovery, right? You know, resilience is something bigger, it goes a bit further than simply talking about recovery. And individual and institutional resilience, I repeat, they are highly correlated.
So you need to, when we think about flexibility and predictability, in my perhaps naive opinion, flexibility needs to be there in order to make things predictable, right? You know, societies, communities, countries, institutional setting differ so much. And one idea to put forward is to say, well, these places will have different needs and if you're going to make things predictable, you also need to have a certain level of flexibility. Thank you very much.
So thanks a lot for this very interesting speech. Now Benedict Wouters, you have the floor as last speaker. Last standing speaker in the room.
Benedikt WAUTERS
Yes, and so I have the challenge of keeping everybody still attentive. So I will do my best. I will introduce myself also a little bit briefly because it matters a bit for understanding what I'm going to say. So I'm the director of the AMIF and ESF funds in Flanders, so the managing authority, and we have also implemented RRF, so I have experience with just about everything for also the last 25 years. Next to that, I've been also a professor in strategic management and also focused very much on performance management in the public sector.
So all of that together is a little bit the background to my presentation, also because I'm just going to ask the question whether we can address complex challenges with simple output-based financing models, which is pretty much what the model that we have here is trying to do, and then connect that a little bit to the types of things we actually fund and do at the ground level. Because we've been talking a lot about reforms and reforms, I think, are pretty important also for making sure that what we invest in has the right environment, but we've been not much talking so much, I think, about the actual investments and what they look like. And so that's a little bit going to be my focus of today. This is a very, very simplified model of the demographic challenge. I'm only using it to situate a little bit the different things that we do today.
And I'm going to focus much more on explaining what are we funding already today and why is it at risk of disappearing. And a lot of the things that I'm going to talk about that are here are actually embedding the principles that my previous speaker was just talking about: adaptability, learning, all of these things are going to be very hard to maintain from a finance point of view if we go ahead with the existing framework as proposed by the Commission. So, I'm going to highlight a couple of projects and then move into why this is not going to happen probably anymore in the future. And this is of course the question: do we want to stop these types of things deliberately? I don't think so, but I think it will happen by accident with the new framework.
So, we have in ESF, we are funding social inclusion projects. One of them will be explained a little later also more in detail, is a multidisciplinary local partnership for persons with complex problems, including also getting them access to employment. The very, very interesting output of that in the current system, and it would be pretty much the same in the new one, is number of participants. I can tell you this does not tell you much about what we are actually funding. This is linked in this model to certain of the aspects which all have to do with the demographic challenge that I'm not going to go into depth in.
With AMIF, we are in our integration projects funding regional networks to bring newcomers and the host society together by mobilizing civil society, business and local services. Output: number of regional projects. Okay, I think the person from the ECA is probably recognizing some of the problems probably inherent in trying to understand what outputs are basically telling you or not telling you. Then we have on quality of labor, so that's well-being at work, this also has to do with aging at work and so on. We have workfloors that are sustainably addressing worker well-being and longer staying in employment.
Output: number of organizations. These are the outputs you will find also in the new regulations in the performance framework. So, let me give a little bit more examples, a little bit more explanation what we are actually funding, that we get back to the what is happening on the ground, what are we doing with the money in these types of projects. So the local partnerships, what are we doing there? Well, we are working there with a highly diverse target group.
We're doing that bottom-up with local authorities. It's different everywhere. What you find in Antwerp, in the city of Antwerp, is definitely what you find in the not the same as what you find in Brussels, and it's for sure not the same in Bommerskontom, which probably nobody knows where that is in Flanders, but we are also working there. These are groups that are suffering from multi-problems. That means their problems are crossing policy silos.
You cannot address it from one silo, which is something that national and regional governments really like to do. It's only by using EU funding that we have been able to cut across the silos, because in principle EU funding was not siloed per se. So these are people dealing with mobility issues, education issues, they have contact with justice and it's not of the nice type, I can tell you, housing problems and so on. There is abuse problems, you name it, it's there. They need a tailor-made approach.
What also is necessary is that we draw on various partners that integrate lots of different capacities from different policy domains where normally these people are not put together and they don't operate nor work together.
If you want to know more, you can look at how our king visited one of those projects, for example, and was very much impressed. Another example, now we go to the business side because also there we are active, as I said, addressing quality of labor issues in SMEs. SMEs are small and medium enterprises, right? So what do we have there? Diverse work floor issues.
We are dealing in Flanders with burnouts, high turnover, demotivation, disengagement, team conflicts, you name it, it's happening on the work floors. There are no one-size-fits-all solutions here. Again, the word tailoring comes back, so there have to be tailored solutions to this. These are integrated interventions where we draw on diverse disciplines. We have psychologists, sociologists, economists, whatever, working with these kinds of projects.
This has been evaluated, you can find more information on that as well. Similar characteristics, I could go on for the AMIF networks, but I have no time for that, so I go a bit further. But let me tell you something that is amenable, I think those things are going to disappear, let me be quite clear. We will not fund that anymore. This will be finished because there is a model out there which I think is a good model, but for different things that we can fund.
And this are the, I think this is a fantastic example of expertise which I really, really respect enormously, the work the World Bank has done on output-based aid. So funding outputs. You're probably going to say, hmm, it looked like he was critical about this, but I am not. Why not? Because it fits roads and bridges, connecting to water supply and sanitation, improving telecom access, electricity infrastructure.
It's okay for basic reproductive health service provision. It's fine for paying school tuitions. It's not fine for reforming education, I can tell you, that's not the same thing. It's okay for childcare. I'll explain why, so this is the poster child that I was involved in in the past in piloting these kinds of things.
So I'm not against output-based funding, far from it, but the limitations have to be understood when you can apply this and when not, and this is not the case in the proposed regulations. Why not? Why is there a difference? We know when to apply this and when not to apply this. Only we will not have the opportunity anymore to choose, and I think I can speak that we have the expertise to choose, but this choice is taken away from us because it is decided already in the regulation.
That I think is a really big mistake. Why? Because basic services are not the same as complex services. What is all in these, you will not find a single example in the results-based financing domain done by the World Bank that does not correspond to this. It's all based on output resembling a product.
So it's almost like a thing you can buy. In many cases, that is also what happens, there is something that is being bought. It's standardized. That means most of these things, these outputs, can be fully standardized by the supplier, by whoever gets the money and is doing the job. It's also interesting to see that once delivered, these outputs directly address pretty much identical needs for all users.
Think about childcare, honestly, childcare, there is not a lot of difference. It's highly regulated anyway everywhere, so you're pretty sure what you get if you put your children into childcare. There is not a lot of choice there or variations in how people like to have their childcare. Maybe there will be more fruit in one kindergarten and a little bit more something else in another one, but it will not make a big difference.
This has the characteristic that it makes costing easy because the range of the costs is quite narrow. So most of these places will have very similar rough costs. There is not a large divergence in cost. That means the average is close to the real cost. This matters in terms of how you structure finance and how you avoid what I will call later on perverse incentives.
It's also quite easy to measure good output. If you count the thing, it's pretty similar to we know what we buy and it's probably okay. So the nature of those things is totally different from the projects I just mentioned. Those projects are totally different in nature. They are called complex services.
Now there the output is not a product, it's a high value added interaction between users and providers. And you saw it's many providers, they have to be integrated to each other, they have to work together. That's not an easy thing to do. It's a co-production model, that means the user itself is very much also in charge of what will be the outcome. This is not fully under control of the providers.
This is not the same with putting more electricity or giving telecom access. This does not depend on the user. The user gets it, it's a fine job finished. Here this is not the case. Think about highly disadvantaged people with multiple problems.
There is work to do with these people. It's typically over longer term periods. That is very much dependent on the people themselves also. There are no recipes that will provide miracles here. There is a lot to be done.
This is the same with the work floors or with other types of target groups or entities that you work with where there are lots of people involved. It's basically a business of humans and that's what the European Social Fund has always been very good at. There are diverse needs and then we come to the adaptability and the resilience also. These diverse needs that arise are not known always in advance. You have to work with what you get with some of the target groups or the companies or the work floors or whatever where we work or the immigrants.
You find out the issues as you are working with them. So this is what happens in co-production. So you do not know in advance how intensive or how easy or how difficult the things will be. So what happens is that the costs are also highly diverse. There is no unit cost for participants.
Well, we can make one. You can always make an average, but if you know statistics, you can tell that average is not the same as the distribution. So the distribution is huge. So the average is a very poor reflection of the real cost. And that will create problems for the beneficiaries, but also for I would say audit purposes.
This is where all the perverse mechanisms come into play. It's very hard also to measure good output here. I mean, funding number of organizations doesn't tell anything about how good the things that we funded really were. So we've got a system about milestones and targets in place which does exactly that, which promotes only what I talked about, which I agree with. It can be very useful.
There is no problem with using output-based funding if you use it for the relatively simple product-based types of interventions which we also fund in Flanders. And if we fund them, we actually like to fund them also using an output-based mechanism. But we also think a lot about how to do that. This is not just handed down from Brussels. We think about these things ourselves.
So it's a little bit strange that we get a regulation like that which puts that there if what we see is that we have recommended in the past in the circles that know how to do this kind of business that you should always first think about results and what you actually want to achieve before you think about how to finance it. Here we are doing the reverse. We already know how to finance everything. We will put prices on that and this choice basically has been taken away. I don't think that's a good idea, especially, and here I will go very quickly because my time is up, but especially because you will not find I think any serious academic or academic institution that will say that this is a good idea across the board.
If you do that across the board, you will also trigger lots of problems, lots of what we call then perverse incentives and mechanisms and things that you don't want to find out or have in the news. The OECD, which to my knowledge most of these countries around here as well as the European Commission is massively funding, has been saying this forever, so it's very weird that we also disregard that at the level of the European Union. This is a nice quote, basically what we are reinstating is socialist planning. I'm making this point really for with the purpose. There has been an evaluation, a very rare one, across the ESF of performance-based systems and the conclusion also there was that for complex projects you should not do it.
There is just no evidence base for that. There is an evidence base for the contrary.
So disregarding your own evaluations as far as I know was not really a good idea when you talk about good governance. So that doesn't work if you have complex actions, you need to do the things differently, also there we are in agreement I think in most of the literature. You need more interactive systems of intelligence, you cannot do that just with indicators, that doesn't work like that. You need to do a lot of other things because learning and adaptation has to be at the core of these things. So you could say that when you run projects in the way that we do it, the examples I gave, we are at the same time strengthening the institutions because all of those actors involved there are learning how to deal with the fact that you cannot just program and plan all of these things into details, you have to go and learn and react as you go along and that is a capacity that we have to build.
I'm not the only one saying that at the level of the OECD, I was part of the senior budgeting officials committee for some time, we've been deciding these things forever, so it's very weird that we disregard best practice where you should never have incentives in a budgeting system that are triggering gaming and cheating, rather it has to emphasize learning. This is not the case if you do that in the way that the Commission wants to do that. Lots of other sources saying that, maybe also interesting, we will actually be the only entity that at this scale in the planet is going to do that. So there is no OECD country that uses direct performance budgeting for its entire budget, that doesn't happen, so it's really, really, really very interesting to see that we are going to do that anyway even though this budget is huge and is going against basically good practice at the level of the OECD. All of these documents are public knowledge, so I would say budget experts should know this because this is the framework of the OECD for good budget management.
So I would say that there is at least one core, and I can think of more amendments, but okay, one core amendment that probably should be made in the text and that is that real costs should be allowed for operations when justified. That means in the way that I talked about it, there are criteria that we can connect to that, this doesn't have to be I want to do things the way I want to do it, it can be transparent why sometimes we would not want to do output-based financing because it is going to be counterproductive and basically make some of our operations not happen anymore or make them do things that we don't want them to do because they just want to have the money.
It's a core aspect of all the different parts of the regulation which I find problematic. It's not just that on its own, it's if you combine all of that, you are making the types of operations I just explained highly unattractive. So it's it's it's just what will happen. Why? There is no more additionality and well social is a percentage now linked to some outputs, I can tell you that will not be hard.
So this is for most member states not a big problem. We can substitute simple existing national programs with EU funds. That is what is going to happen because it is unattractive to do something else. It's not because we really don't want to do that, but it's just going to be so unattractive for member states fiscally also to want to do that, that we're not going to do it. And that is with all of these other elements in the regulation.
It's been discussed of course, you are talking about that, it's the N+1 rule. This is a fast spending on what do you spend fast on products that you can buy of course, not on complex interventions that take a much longer time to set up and to properly govern. There is really not going to be any simplification at the level of the member states. We get nothing in return for this output-based funding because other elements in the regulation still force us to do all of the controls that we have to do anyway at the level of the beneficiaries. We have to pay them also if the Commission does not pay us.
You know, this together with the output-based financing will just mean that it's so unattractive we will just find the stuff we do already and don't tell me this has not happened in the RRF, the stuff we do already and that we can easily fit into the EU budget. This means there will be zero added value from the EU budget. Is that what we actually want? I probably don't think so. And then we're going to reduce because of course apparently we're simplifying things.
That is really the I think the strangest sentence ever. So we don't need technical assistance anymore because it's all going to be more simple. So we would reduce from 4 to 3%. There is talk to increase it again but still, you know, 4% is you there also you have to make a distinction what type of operations are you running. So I don't even need 2% if it's the output-based kind honestly.
It's if we go for the complex added value that is hard to do, then honestly it should be more because you have to have a lot more in place to make sure that money is well spent and used effectively. That was basically my presentation.
So thanks a lot for these very engaged speeches. Now I give the floor to Carlo.
Karlo Ressler
Thank you very much for the really interesting presentations. I think there is really a little doubt that these insights should be translated then into the EU policies, namely here in the NRPPs, but I think that the presentations also show how complex all these issues are and maybe even more how complex it is to translate them into the real legislative text. Thank you for this references to the impact of N+1 or N+3 rule of this decision on the meaningfulness of the of the actions and I think that it's quite clear that sometimes for more meaningful but also more complex actions it will take more time also. And I see that also this N+1 can just incentivize these perverse incentives. I will have to leave unfortunately but I would be really wondering and I would like to pose one question on the on this right to stay which is now increasingly mentioned here in the European circles coming from the Letta report as one of the objectives of EU investments and of the cohesion policy.
So in practical terms from your own experience and it's for both of the presenters, what would be the most important or meaningful investments that actually influence a person's decision to to remain in a rural, in remote, in islands or declining regions and how can in the end cohesion money and the European budget better support them? Thank you.
Jean-Marc Germain
Yes, thank you very much and thank you for this very useful presentation. Maybe for the last presentation we already met and I don't feel it engaged. I feel that it's very relevant. It's also my job when I'm not elected and I think that there are big dangers of this output-based system. It was together concerning the performance framework we made hearings with people from research and they told for example that if you base the money, the European money on let's say the number of publications in big review, then researchers spend their time to try to publish as much paper as they can.
So and you can take a lot of example and I find and maybe we will work on that with the colleagues, your distinction between basic things that can be buy and complex one I think is going to be very helpful in our attempts to not to reject the whole thing because we would like also to simplify whenever we can but still avoid the system of payments that would have the opposite effect of what we want. Maybe I will have one question for the concerning the first presentation because in the work that we have to do we are thinking what we are going to do with those chapters of the NRPP. And more or less when you advise us not to work in silos, maybe you can develop a little bit what it means for you as far as chapter is concerned. My group for example is thinking of a ESF+ chapter, dedicated chapter because we think that here we're in a complex situation where we need to be able to trigger all bunch of possibility from housings to health and whatever situation that may rise. But also we are thinking of a chapter on health, but is it relevant in your view or not?
Some others think that we should have chapter on regions as a whole because themselves have to handle complex situation linking their local development together with the possibility to solve social or environmental issue. For example the Brittany region of France wants to rely a lot on defense industry to tackle a lot of social issue, namely unemployment or quality of job, quality payment and even purchasing power issue. So again what is what would be your advice about those chapter of the NRPP which are more or less what we used to call operational program in the former framework?
Angéline Furet
So thank you very much, I think it's Angeline Furet.
Merci Madame le Président, chers collègues, Monsieur Waters, Monsieur Azvé, vos présentations actent le naufrage de la technocratie bruxelloise. Monsieur Waters, votre diagnostic est implacable et je le partage, l'application d'une logique de rentabilité comptable aux drames sociaux est une aberration. Concrètement la Commission veut désormais faire payer les États au seul résultat chiffré, tant de chômeurs, tant de lits créés.
Vous démontrez qu'imposer ces quotas financiers va provoquer des manipulations dignes de la planification des États socialistes. Sous la menace financière, les États fuiront les politiques de long terme pour se contenter de cocher les cases de Bruxelles. Ma question est donc la suivante, Monsieur Waters : confirmez-vous que ce chantage financier va obliger nos États à abandonner les vraies politiques sociales par simple peur de perdre l'argent européen ? Monsieur Azvé, vous étudiez notre effondrement démographique. Nos jeunes ont besoin de stabilité pour fonder une famille, mais votre conclusion est glaçante.
Vous appelez à renoncer à la relance de la natalité pour simplement nous adapter au déclin. Ma question est donc la suivante : ce refus idéologique du sursaut démocratique ne condamne-t-il pas définitivement la survie historique de nos nations pour mieux justifier le remplacement migratoire ?
So, I take now the next one before we are starting to abolish history, all history. So, next one is Bogdan.
Bogdan Rzońca
Yeah. Yeah, generalnie, generalnie chcę powiedzieć, że wszystko zaczyna się od demografii i dobrze, że o tym rozmawiamy na poważnie i uważam, że wypowiedzi państwa ekspertów były jak najbardziej na miejscu. Tyle tylko, że potrzebujemy wyraźnego programu dla Europy, dla mieszkańców Unii Europejskiej, dla rodzin europejskich, dla młodych ludzi w Europie, a nie tematów zastępczych, zamydlanych, komplikowanych. Więc moje pytanie do ekspertów jest takie, dziękując za to, co powiedzieli, bo nam unaocznili sytuację, że jest źle, a będzie gorzej, jeśli niczego dobrego nie zrobimy dla normalnej rodziny, dla młodych ludzi, którzy chcą żyć w Unii Europejskiej. Moje pytanie jest takie, czy da się zaproponować coś szczególnego według państwa ekspertów dla mieszkańców wsi europejskiej, miast europejskich, przedsiębiorstw funkcjonujących w Europie?
Jak wy, gdybyście wy decydowali o pieniądzach, co byście nam podpowiedzieli?
Monika Hohlmeier
Then Thomas Geisel is no more there. So I think I would have only one question. You spoke about silos, and this former minister knows that all our legislation are thinking in silos. So if you want, if you have very complicated, Bogdan said for example for rural areas, elderly people with children, combination of social projects, combination of rural development projects, combination of new villaging projects of living together, of whatever, of housing. So I have sometimes the impression that our legislations are not fit for this type of purpose because if you deal with two-year-old children, the legislation is not about elderly people.
If you have a certain institution for childcare, if you do it together with handicapped elderly people, then you have silos as legislation. So what would be your recommendation for European funds? And I think it's right to say N plus one for this type of project is not feasible because these type of projects need time to be planned, need time to be developed, and they are not developed in one year. They are developed mostly even in two, three, or four years because it takes time to have this bottom-up approach and you cannot do it in a top-down approach because a top-down approach does not is not fit for the purpose.
Now we have a lot of top-down approach in this new proposal. So I would like to see your recommendations about this because I see there really a problem upcoming that was not existing before.
Arnstein Aassve
Yeah, okay. Thank you, thank you for great questions. Let me let me start with putting on the glasses. Yeah, so if I'm going to put on my demographer hat, then I think the data and the trends are basically saying that there is no way you're going to maintain populations across all regions the way it has been. I mean, we are facing population decline, and it's going to be more prevalent or stronger in the in the decades to come.
And even if we manage to turn the tide, it's still going to take some time, we are talking decades before you are getting these, let's say, demographic trends back on a healthy healthy trend. Now that is then to say the uncomfortable truth, and that is that when you ask me what kind of advice I would have if you're going to, let's say, help a community to thrive. So the number one is that you probably can't help all communities. There is just not the population size around any longer in many places around. I think this is a grim reality that that is there.
Now second, it doesn't help much if you pick a particular region and then you say, oh, let's build a train line or a or a road. If that's the only thing you do, you are not going to make that community thrive. It needs to have the full package because people care about having good schools, a bit of kindergartens, there needs to be some economic activity, there needs to be some care for the elderly and so on. So my my argument was that whenever you think about this, and this is also coming talking about the the problem of siloing, is that these kind of policies is labor market, is education, it is health. And some there was another question about the importance of health.
Now let me remind you here that when we talk try to measure resilience, there you can do it at the individual level and you can do it at the institutional level. But at the individual level, one of the most important drivers for people's perception of their resilience in order to overcome problems, that is to be in good health. So that I would not ignore at all. Now then there is a question about it was mentioned adapt to decline. I don't see it that way.
All I'm saying here is that the kind of model that we've had now for the last forty years is just not holding up any longer because the model we had was based on this idea, and it used to be the case, that we had a lot of children, lots of youth, a large labor force, and we didn't have very many pensioners. But you know, over the time, fertility rates have been going down, longevity is been going up.
I should mention here that longevity is one of the major successes, and we should not, of course, so the demographic reality we're in, in it, there are some huge successes as well. You should also keep in mind here is that Europe is not alone when it comes to this demographic issue. You pick China, for instance. You know, so they are already facing it now, but China is going to face major demographic issues, probably worse than Europe in the next two, three decades. Think South Korea, think Japan.
In fact, there is a global fertility decline, and so it's not only Europe. But that builds up under the argument to say, listen, we cannot simply try to engineer these fertility rates. We have to take on board the fact that they are declining. And one question here was about migration. So we have done a lot of simulation models for the next 10 years, next 20 years, next 30 years on different scenarios.
And they are pretty, they are pretty predictable because demographic trends go slowly, no? So it's not as if it has a huge confidence interval. Now, can you solve everything with migration? No, you can't. You know, why?
Well, migrants have quite high fertility the first generation. The second generation have the same fertility rates as the natives. They adapt to the natives very fast. Migrants also age. They also going to retire.
They also going to put a burden on the welfare sooner or later. So it's not to say that you can basically say, resolve everything with migration. You cannot. What matters the most in all of these, in these simulations that we are doing, is really to get young people into work early. So not in education, not in employment, not in training.
That must stop basically. Because if you change that, that is what's going to have the biggest impact on sustainability, on welfare sustainability, on long-term care and so on in the future. I think that was all.
Benedikt WAUTERS
Thank you very much. Now Benedikt Joutas.
Yes, I will address the question more about the structure of the plans, as we don't really have a lot of remote or rural or island places in Flanders, so that's not really my cup of tea. But yes, I think on the, I was never very worried about the architecture in terms of the chapters and so on. Even the distinction between ESF and ERDF falling away was also not the biggest concern I had. It also gives some possibilities that we would not have otherwise. So yes, I think the chapters, I'm thinking along the same lines, of course.
If you want to cut across silos, a very obvious way to do that is to have the place-based approach that has sort of disappeared from the discussions all of a sudden. That used to be something that Europe was very much pushing, not necessarily I would say the member states. So this was added value from Europe. If we think about having a place-based approach like we do with these local partnerships for the highly disadvantaged, putting that into a chapter, then you can act on that multi-sectorally.
It just conflicts a little bit with all the output mechanisms. So that's why for reporting that's fine, it will be relatively meaningless if we report on those indicators. This is the same today, just don't pay on that, that would be very bad idea. So as a chapter structure I have no problems with that. There was another question on will there be no more social policies?
I don't think so, there will just be product-like social policies paid with the EU funds. So and I think that a lot of what is not product-like is actually today funded with EU funds. So that will probably diminish or disappear altogether because also for the national budget this has always been hard to fund. This is not the types of things that you can easily get funded. This is not what everybody is easily understands and because of the triggers and the incentives in the past provided by EU funds and the push also from the European Union, that was being became a lot more easy to do or at least became part of the way that we are doing business and more targeted towards the fact that reality today is a little bit more complex than it was many years ago.
So now we are at the end of our hearing. Mayor thank warmly to our specialist first for the first panel Ivan. You have still a question because we finalized already our but I give you the last round.
Tomasz Buczek
Szanowni Państwo, w kwestii demografii to warto wspomnieć, że według danych Eurostatu 75% rodzin w Europie nie posiada dzieci. Więc jesteśmy w sytuacji dramatycznej i tutaj cieszę się, że ta debata dzisiaj się odbywa, bo przewidywalność, o której mówił nasz prelegent jest bardzo ważna, czynniki gospodarcze, bytowe, długofalowe myślenie o tym, czy wystarczy nam pieniędzy na założenie rodziny, to oczywiście Europejczyków te pytania nurtują, ale to nie jest rzecz najważniejsza, bo jest jeszcze kultura, jest kwestia promocji tego, jak my przedstawiamy model rodzinny, bo w obecnej rzeczywistości często jest tak, że mówimy i widzimy to, że jest albo singiel, albo jest rodzina złożona z rodzica numer jeden i rodzica numer dwa, a towarzyszy im psiecko, tak, czyli psie dziecko lub innego rodzaju zwierzątko. Więc my się musimy pochylić też nad kwestiami kulturowymi, bo zauważmy przecież, że imigranci, którzy napływają do Europy, faktycznie tutaj w pierwszym pokoleniu mają bardzo dużą liczbę urodzeń. Więc to nie jest tak, że Europejczycy tylko i wyłącznie przez kwestie gospodarcze nie posiadają dzieci, ale również przez kwestie społeczne, przez kwestie kulturalne, przez kwestie ideologiczne i też tutaj w to wpisuje się polityka Komisji Europejskiej Unii Europejskiej i promocja określonych trendów, mód. Przecież w maju nie było chyba tutaj w Brukseli budynku użyteczności publicznej, na którym nie wieszałaby się flaga LGBT.
Więc promocja tych treści niesie też za sobą pewne konsekwencje. Musimy sobie to jasno opowiedzieć i chciałbym, życzyłbym sobie, żebyśmy promowali modele rodzin wielodzietnych, abyśmy na to przeznaczali pieniądze z budżetu i abyśmy więcej o tym mówili.
Speaker 38
Sorry, we have to finalize. Please no speeches, if you have a question put a question but no speeches.
Tomasz Buczek
Moje pytanie jest moje pytanie jest takie. Tak, moje pytanie jest takie, czy nasi prelegenci mają jakieś dane dotyczące wpływu na dzietność właśnie tej promocji kwestii LGBT przez Komisję Europejską Unii Europejskiej? Czy posiadamy takie dane, czy jest to przebadane, czy może ktoś pochyliłby się nad tym i chciał to przebadać?
Arnstein Aassve
So I don't know any studies that would try to look into the causal effect of this LGBT promotion and then fertility rates. I suspect that if you try to do it, it's sort of econometrically hard. But I would not suspect that you would find any strong impacts. I think you need to keep in mind here that there are a whole range of factors that I certainly I would touch on first. So housing crisis, when we ask young people what is the most important reason for postponing or delaying or not having children at all is number one, not sufficient financial security and not sufficient of income.
I mean, we could try about different policy interventions. The impact of sort of these attitudes in one way or the other, it probably wouldn't be my first priority.
Monika Hohlmeier
Ich glaube auch nicht, dass diese Art von Förderung damit zu tun hat mit Familienpolitik, sondern mit den Rechten von LGBTQI als gleichberechtigt mit allen anderen anerkannt zu werden. Und das ist glaube ich das Ziel, das wir haben und das ein Ziel der europäischen Werte ist. Und insofern sollte man die Dinge vielleicht nicht vermischen. Aus diesem Grund ein herzliches Dankeschön. Thanks a lot to Ivana Maletić.
Thanks a lot to Livia Vasakova. Thanks a lot to Odilia van der Valk. Thank you very much Guntram Wolff and to our last two speakers Anne-Sels Asave and Benedikt Wauters. I think it were very valuable contribution for us and helped us perhaps some of our rapporteurs will have in future some questions to you, further questions. So thank you very much for being ready to accept this.
So I finalize now the panel and again thanks a lot for all the questions and for the contributions that we have heard today. So I would like to change to point 20 of the agenda.
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