Tuesday, 25 May 1999
Dáil Éireann Debate
24. Mr. Connaughton asked the Minister for Agriculture and Food the reason the Western Development Commission has not been given authority to spend the £7 million allocated to it following legislation passed in February 1999; the consultation, if any, with the EU concerning the status of the Western Development Investment Fund prior to the legislation being passed to ascertain if moneys or equity shares from the fund would be classified as State aid; if his attention has been drawn to the many projects evaluated since September 1998 and shelved; and if his attention has further been drawn to the great anger and resentment over the lack of action on this matter in the west. [13619/99]
Minister of State at the Department of Agriculture and Food (Mr. Davern): The Western Development Commission Act, 1998, requires that aid provided to enterprises or projects by the commission shall be in such form and subject to such terms and conditions as the commission determines, subject to the consent of the Minister for Agriculture and Food and the Minister for Finance.
The commission, which I established under the Act on 1 February this year, decided at its meeting on 7 April how the western investment fund is to be used, including the forms of aid. Consequently, the terms and conditions to be applied to aid could not be finalised before then. My Department was in consultation with the non-statutory commission on this matter since last November. In accordance with the Act, I recently sought the agreement of the Minister for Finance for a set of terms and conditions to be applied to aid provided from the fund and I expect a decision very soon.
 It was not appropriate to hold consultations with the European Commission, prior to the passage of the Act, on the question of aid from the fund being classified as State aid. Given that the fund is Exchequer financed, it would be most likely to be regarded as State aid and, in the circumstances, there would have been little point in pursuing the matter prior to the Western Development Commission taking a definitive decision on the forms of aid to be provided. Now that it has done so, I hope to have clarified this week whether a formal notification to the European Commission is necessary. In that event, the notification will be submitted without delay. It is important to remember that, under the EC Treaty, a member state must not implement its proposed measures until the European Commission has considered them and reached a decision. The Commission can require aid not notified to it to be repaid, even long after the aid has been granted.
In relation to projects seeking aid from the fund, no projects have been shelved by the Western Development Commission. I expect that any projects on hand will be considered fully and adjudicated on once the fund is operational.
Mr. Connaughton: The Minister of State has a very short memory. When the legislation was going through the Dáil, I asked him if the aid that would given to the Western Development Commission would be regarded as State aid. He said, and I agreed with him at the time because I did not know any better, that he thought that because shares and equity would be used it would be treated differently by Brussels. I put it to the Minister of State and his officials that he should have known it would be regarded as State aid at that time.
If my information is correct and if the Minister of State must seek approval in respect of the aid being classified as state aid, it could be next October or November before we get an answer to this. If the Western Development Commission is to be treated in a manner in which the Minister of State and I would like to seek it working—
Mr. Connaughton: Does the Minister of State believe that a single penny of the £2 million made available last year or the £5 million made available this year will change hands in respect of  evaluated projects before next September or October?
Mr. Davern: —by the Department of Finance – as the Minister said, that can be difficult to secure. This is unique legislation and it is the first time it has been tried in Ireland. We did not want to insist that it was State aid at that time because we did not want to pre-empt decisions that might be made by the European Commission. We will know this week whether we must approach the Commission formally on this. If we must, a reply normally takes two months, but there is a fast-track procedure whereby a reply could be given in one month. Given the unique position of the west and the atmosphere created by this legislation, I believe an exception can be made in this regard.
Approximately 70 or more projects have been considered or are still being assessed by the Western Development Commission. More than £600,000 will be spent to cover the cost of staff and payments for this year alone. The Deputy will also be aware that the recent development of Dillon House in Ballaghaderreen has cost a good deal of money. I was pleased to see the leader of his party at the opening of that house, which is called after a former Member.
Mr. Davern: The Deputy will be aware that Europe is sticking its nose into many more areas than it did in the past. We must tread carefully to ensure we maintain good relations and to ensure this unique legislation will work for the west.
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