Explanatory Memorandum to COM(2015)701 - Establishment of the Structural Reform Support Programme for the period 2017 to 2020

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dossier COM(2015)701 - Establishment of the Structural Reform Support Programme for the period 2017 to 2020.
source COM(2015)701 EN
date 26-11-2015


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

The creation of a sound regulatory and institutional environment and a smoothly-functioning economy are essential for making gains in competitiveness, encouraging investment, fostering employment creation, raising living standards and producing sustainable growth across Union Member States. Many economies in the Union have been undergoing and continue to undergo adjustment processes to correct macroeconomic imbalances accumulated in the past and many are facing the challenge of low potential growth. This situation is often a result of delayed or insufficient structural reforms in the respective economies. The Union has identified the implementation of structural reforms among its policy priorities to set the recovery on a sustainable path, unlock the growth potential to strengthen the adjustment capacity, and support the process of convergence.

Reforms must be well-designed, legislated and effectively implemented. Successful reforms require more than just passing the necessary legislation – they require effective implementation which implies addressing the structural problems of the public administrations (e.g. competences, mobility, incentives, changes to work processes, etc.), and the challenges in the economic and societal domains. The benefits of the reforms may take some time to materialise. Therefore, early and efficient implementation is crucial, be it for crisis-struck or structurally-weak economies.

Provision of technical assistance (TA) has been crucial in supporting the economic adjustment of Cyprus and Greece (via the Support Group for Cyprus – SGCY and the Task Force for Greece – TFGR). Past experience with providing technical assistance (TA) to Cyprus and Greece, in areas covering almost the whole spectrum of public policy fields provides useful lessons for the future in relation to the roll-out of technical support to potentially all Member States 1 .

Against this background, the intention is to provide for an extension – under the auspices of the Structural Reform Support Service (SRSS) – of technical support to all Member States requesting this. Indeed, Member States may benefit from support in addressing challenges as regards the design and implementation of institutional, structural and administrative reforms. This may relate to factors, such as limited administrative and institutional capacity, and inadequate application and implementation of Union legislation.

In addition, improving the implementation of the Union acquis is one of the priorities of the Commission 2 . In this respect, the Commission indicated that it needs to '(c)ooperate with Member States in examining the best ways to ensure compliance with EU law at national level'.

The need to cooperate with Member States also exists in respect of gaps which have been identified with regard to the implementation of reform as recommended by Country Specific Recommendations (also referred to as CSRs) in the context of the European Semester.

Against this background, it is necessary to establish a Structural Reform Support Programme with the objective of strengthening the overall capacity of Member States to prepare and implement growth-enhancing institutional, structural and administrative reforms, including through assistance for the efficient and effective use of Union funds 3 , to the extent that these Member States request support from the Union for this purpose.

Support under this Programme will be provided by the Commission upon request by a Member State and be available in support of (i) the implementation of reforms in the context of economic governance processes, in particular of the Country Specific Recommendations (CSRs) issued in the context of the European Semester, and/or other actions related to the implementation of Union law, (ii) the reforms associated with the implementation of economic adjustment programmes for Member States receiving Union financial assistance and (iii) the reforms that Member States undertake at their own initiative in order to achieve sustainable investment, growth and job creation.

The support to reforms – including through assistance for the efficient and effective use of Union funds (i.e. the European Structural and Investment Funds, ESI funds, as defined in the Common Provision Regulation 4 , the Fund for the European Aid to the Most Deprived, FEAD 5 , as well as the funds related to asylum, migration and border control 6 ) - will relate to specific policy areas, in particular relate to public financial management, budget process, debt management and revenue administration, institutional reform and efficient and service-oriented functioning of public administration, effective rule of law, reform of the justice system and reinforcement of anti-fraud, anticorruption and anti-money laundering, business environment, private sector development, access to finance, investment, financial sector policies, privatisation processes, trade and foreign direct investment, competition, public procurement, sustainable sectoral development and support for innovation, education and training, labour market policies, social inclusion, social security and social welfare systems, public health and healthcare systems, asylum, migration and border policies, and policies for the agricultural sector and the sustainable development of rural areas.


• Consistency with existing policy provisions in the policy area

The Programme would be complementary to existing resources for capacity building and technical assistance available within other Union financing programmes under the Multi-annual Financial Framework and with technical assistance and other actions financed by Union funds.

Indeed, several Union programmes foresee the possibility of providing technical assistance to the Member States in deploying certain public policy actions within specific areas. Depending on their specific objective and field, they are designed to promote the creation of favourable conditions for economic growth, social and environmental protection and improvement. The support provided under these programmes is characterised by a specific thematic focus and contributes to the achievement of the specific objectives of the relevant programmes.

The proposed Programme intends to add value and complement the already successful results of the existing support measures, by focusing on the aspects of assistance that are more linked to the offering of advice and expertise on the ground, i.e. accompanying (where possible via embedded experts) the national authorities of the requesting Member States throughout the reform process or according to defined stages or to different phases of this process. This would be based on the most pressing country needs, as mutually agreed between the Commission and the Member State concerned.

In this fashion, the efficiency of the Union support would be enhanced if it could benefit from a comprehensive approach englobing a wider spectrum of Union policies coordinated within a single platform and providing, on request, tailor-made technical support on the ground by Commission and national experts. This complementary support would have the following distinct features: a) the capacity to provide technical and financial support to all Member States in respect of wide-ranging public policy reforms within a single platform, and b) the possibility to mobilise physical presence on the ground on a stable basis, whenever required and with the agreement of the Member State concerned.

This is in line with the practice of some International Organisations, such as International Financial Institutions, which have been integrating for many years a capacity to support their countries of operation with technical assistance in the context of their lending and non-lending activities.

The proposed Programme will introduce a more horizontal perspective to technical support. The support provided under the Programme would be cross-cutting in terms of the specific areas covered, while focussing on the most pressing reform needs of the country concerned as identified in the process of macroeconomic surveillance, or as emerging from gaps/inefficiencies in the implementation of the Union acquis. The Programme would add value to the support provided by the various sectoral Union programmes and the actions carried out under the Union funds, since it would offer a macro country-specific perspective while supporting the most important structural reforms in Member States in line with the key policy objectives of the Union. In particular, the added value of the actions under this Programme in respect of other Union instruments will be ensured bearing in mind that the decision to provide support to a requesting Member State will duly take into account the existing actions and measures financed by Union funds or other Union programmes in the Member State concerned.

The Commission and the Beneficiary Member States, within their respective responsibilities, shall foster synergies and ensure effective coordination between the Programme and other Union programmes and instruments, and in particular with the measures financed by Union funds. They shall take appropriate steps to ensure consistency and avoid duplication at the programming and implementation stages, between actions supported by this Programme and the measures carried out under other Union programmes.

In particular, the Commission will strengthen coordination within the internal working arrangements, with the creation of a coordination mechanism involving representatives of the services mostly concerned, so as to ensure that the support provided under Union programmes and funds is consistent and avoids duplication.


• Consistency with other Union policies

The Europe 2020 7 strategy aims to create the conditions for smart, sustainable and inclusive growth in all Member States. Economic growth is essential for reducing unemployment, improving social cohesion and raising living standards. The Union has identified the implementation of structural reforms among its policy priorities to set the recovery on a sustainable path, unlock the growth potential to strengthen the adjustment capacity, and support the process of convergence.

The reform process is complex, often costly, requires expertise on different areas simultaneously and may have a cross-border impact. Union support would contribute to enhancing the ability to undertake in-depth growth-enhancing reforms across Member States impacting throughout the Union as a whole.

The Programme, to be implemented in close cooperation with the national authorities concerned, would actively contribute to strengthening the administrative capacity in these Member States to reform institutions, administration, economic and societal sectors with a view to achieving simplified, efficient and modern structures at the service of citizens and businesses.

Finally, the Programme would allow for the provision of technical support that is vital for the successful implementation of important new elements of the Single Market (including its digital part). For example, the Capital Market Union (CMU) action plan 8 envisages technical support for capital market development. The Programme would provide for the necessary framework and funding for such support.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal is based on Articles 175(third paragraph) and 197(2) of the Treaty on the Functioning of the European Union.

Article 175 (third paragraph) TFEU provides that if specific actions prove necessary outside the Funds and without prejudice to the measures decided upon within the framework of the other Union policies, such actions may be adopted by the European Parliament and the Council acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of Regions.

Article 197(2) TFEU provides, that the Union may support the efforts of Member States to improve their administrative capacity to implement Union law, inter alia through facilitating the exchange of information and supporting training schemes. No Member State shall be obliged to avail itself of such support. The European Parliament and the Council, acting under the ordinary legislative procedure are to establish the necessary measures to this end, excluding any harmonisation of the laws and regulations of the Member States.

The combination of Articles 175 (third paragraph) and 197(2) allows for a comprehensive approach in devising a Union programme supporting the capacity and endeavours of the national authorities of Member States to carry out and implement growth-enhancing reforms (institutional – including governance aspects – structural and/or administrative reforms) to foster sustainable development and innovation and, in this context, to make more efficient and effective use of Union funds.

At the same time, Article 121 provides that the coordination of the economic policies of the Member States is a matter of common concern.

In view of Articles 175 and 197, this Programme can decisively contribute to: i) strengthening the administrative capacity of Member States in respect of the effective implementation of Union law through administrative cooperation among national authorities of the Member States, and ii) strengthening economic, social and territorial cohesion within the Union, outside of the actions undertaken with the ESI funds; this coordinated action would ultimately contribute to iii) the attainment of a better coordination of economic policies of Member States.


• Subsidiarity (for non-exclusive competence)

The funding of the proposed activities through the envisaged Programme respects the principles of European added value and of subsidiarity. Funding from the Union budget concentrates on activities whose objectives cannot be sufficiently achieved by the Member States alone ('necessity test'), and where the Union intervention can bring additional value compared to action of Member States alone.

The Union is in a better position than Member States to identify, mobilise and coordinate the best available expertise (be it from inside the European institutions services and from other countries, or international organisations), foster the exchange of best practices (as well as ensure its consistent dissemination across the Union) in support of the implementation of targeted growth-enhancing reforms in the Member States.

Moreover, the mobilisation of expertise by the Union would also be more effective as it would bring-along economies of scale and scope by building a Union-wide platform for the provision and sharing of good practices.

In this respect, the actions to be implemented should accompany the efforts of the Member States, and be complementary with other programmes and policies at national, Union and international level; this would materialise mostly by providing support actions that would accompany on the ground (where possible via embedded experts) the reform endeavours of the national authorities along the different stages or phases of the reform process, notably targeting interventions that are not already the object of the support measures under other Union programmes of Union funds, or of national initiatives.

In particular, the actions under the Programme would have to allow the development and implementation of solutions that, while addressing national challenges, have potentially impacts on cross-border and Union levels, and contribute to share good practices and help build a network of available expertise. Ultimately, the actions under the Programme would contribute to further promote mutual trust between the beneficiary Member States and the Commission.

The proposed Programme is the most suitable means of supporting on the ground those Member States that implement growth-enhancing reforms, since the Union is in a better position than Member States to identify, mobilise and coordinate the best available expertise and to provide a coordinated approach to technical support in Member States requesting assistance.


• Proportionality

The proposal complies with the proportionality principle in that it does not go beyond the minimum required in order to achieve the stated objective at European level and what is necessary for that purpose. The assistance to be provided to the Member State is to be based on a request for support stemming from the Member State itself. The scope of the support would be mutually agreed between the Commission and the Member State concerned.


3. RESULTS OF THE EVALUATION OF THE TFGR ACTIVITY, EX ANTE EVALUATION OF THE PROPOSED PROGRAMME

• Evaluation of the Task Force for Greece (TFGR)

The technical support that the Commission services (coordinated by 'Task Force for Greece') provided to Greece with a view to supporting the implementation of the economic adjustment programme was subject to an evaluation carried out by an independent consultancy in July 2014 9 . This evaluation assessed the technical assistance provided to national authorities in two key areas, i.e. tax administration and central administration reform, based on more than forty interviews, conducted with key technical assistance providers and recipients, including the political leadership, senior managers, middle managers, and junior employees from Greece, other involved Member States and International Organisations.

Overall, this evaluation concluded that technical assistance delivered and coordinated by the TFGR had contributed to the implementation of the reform programme in Greece in the areas of tax administration and central administration during the period 2011-2013. This conclusion was based on an assessment of the effectiveness, efficiency, relevance and sustainability of the assistance delivered and was largely confirmed by the responses of most of the stakeholders involved, who indicated that, in the absence of technical assistance delivered by the TFGR, the reforms undertaken would not have materialised.

Concerning the future of technical support, the report stated: 'Technical Assistance should not only be provided when an EU country is in crisis. It should be a normal activity within the EU. The European Commission can work with Member States to establish a permanent structure with a dedicated budget to enable co-operation and exchange of expertise between Member States and co-ordinate the provision of Technical Assistance to all Member States to enable sharing and adoption of best practice. Exchanging best practice not just in ideas but in implementation of those ideas has been highlighted as important in the feedback received.'

Against this background, the proposed Programme would allow enhancing the provision of technical support and would be aimed to allow the Union to concretely cooperate with and provide on the ground technical support to the endeavours of national authorities of Member States in devising and implementing growth-enhancing structural reforms, beyond countries receiving Union financial assistance and under an economic adjustment programme.


• Ex-ante evaluation of the Structural Reform Support Programme (SRSP)

An ex-ante evaluation of the proposed Programme has been conducted by the Commission services in the second semester of 2015 10 .

The ex-ante evaluation supports the Commission proposal for a Regulation of the European Parliament and of the Council establishing for the period 2017 to 2020, the Structural Reform Support Programme (SRSP). The ex-ante evaluation addresses the requirements of Article 30 i of the Regulation (EU, Euratom) No 966/2012 (Financial Regulation on the implementation of the Union budget).


• Collection and use of expertise

An evaluation of technical assistance provided by the TFGR in the areas of tax administration and central administration reform was used as external expertise input to support this proposal. Also, feedback received from Member States involved in the provision of technical assistance to Greece and Cyprus in the past has been taken into account.


• Assessment of policy options

The Commission has examined two policy options in the ex-ante evaluation which is accompanying this proposal: a baseline option that foresees no change in the status quo, and a second option where a dedicated funding Programme is introduced.

Under the baseline option, technical support would continue to be provided: a) through a number of Union financing programmes (open to all Member States) within the Multiannual Financial Framework on specific policy areas; and b) through the 'extensive' technical support (i.e. support tailored-made to the country needs, spanning several public policy areas and provided in a comprehensive way and with an overall 'country' vision) linked to the implementation of reforms under an economic adjustment programme for Member States receiving Union financial assistance (this is currently the case for Greece and Cyprus).

Such support would be provided under the objectives of the relevant Union programme and - as regards the “extensive” technical support - under the goals of specific provision of Regulation (EU) No 1303/2013 for Member States in financial difficulties 11 .

Under the second policy option, a dedicated funding programme, the Structural Reform Support Programme, is introduced and technical support is provided, on request from Member States, to assist potentially all Member States in order to support the implementation of growth-enhancing reforms in the context of economic governance processes, in particular as stemming from Country Specific Recommendations, from actions associated with the implementation of Union law, as well as to assist Member States with the implementation of reforms undertaken at their own initiative, notably to achieve sustainable investment, growth and job creation. The Programme would also allow continuing to provide assistance to Member States receiving Union financial assistance subject to an economic adjustment programme.

Based on the ex-ante evaluation, the second scenario is the preferred policy choice since it allows providing support in an organised and systematic manner to all Member States.


• Regulatory fitness and simplification

1.

The proposal is not linked to the Regulatory fitness and simplification exercise and does not have any costs of compliance for SMEs or any other stakeholders



• Fundamental rights

The proposal could have a positive effect in the preservation and development of Union fundamental rights, assuming that the Member States request and receive technical assistance in related areas. For example, technical assistance support in areas such as migration, labour market and social insurance, healthcare, education, the environment, property, public administration and the judicial system can support Union fundamental rights such as dignity, freedom, equality, solidarity, citizens' rights and justice.


4. BUDGETARY IMPLICATIONS

The financial envelope for the implementation of the SRSP for the period 1 January 2017 to 31 December 2020 shall be up to EUR 142 800 000 (current prices) for a period of 4 years. The legislative financial statement provides the appropriate explanations.


5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The achievement of the specific objectives of the Programme will be monitored and evaluated according to a number of indicators linked to the activities of technical support 12 . This will include: number and type of national authorities which received support, the number and type of support providers, the number and type of eligible actions performed (such as the provision of experts, training actions, seminars, etc.), the number of policy initiatives (such as action plans, road maps, guidelines, recommendations, legislation recommended/or adopted). This quantitative information will be collected in relation to CSRs, actions related to the implementation of Union law, economic adjustment programmes, or reforms of a Member State on its own initiative. Indicators on expected results will stem from the relevant measures taken by the beneficiary Member States as a result of support actions provided under the Programme; this information will also be split by CSR, actions related to the implementation of Union law, economic adjustment programmes, or reforms undertaken by Member States on their own initiative. In addition, feedback from the national authorities in receipt of support as well as feedback from other support providers on the impact and/or results of the support per policy domain and Member State concerned will serve as qualitative indication of the expected results. Furthermore, a key indicator will also be the evolution of the views of relevant stakeholders on the contribution of the Programme to the achievement of the reforms. Appropriate quantitative or empirical data will also be used for evaluation purposes as available.

The above indicators could be used according to data and information available and could be adjusted in the course of the Programme by the Commission, where relevant, on the basis of a delegated power to be conferred to the Commission.


• Detailed explanation of the specific provisions of the proposal

The general objective of the Programme is to contribute to reforms in the Member States by providing support to national authorities for measures aimed at reforming institutions, governance, administration, economic and societal sectors in response to economic and social challenges with a view to enhancing competitiveness, growth, jobs, and investment, in particular in the context of economic governance processes, including through assistance for the efficient and effective use of the Union funds (Article 4).

The specific objectives of the Programme will be to support the initiatives of national authorities to design their reforms according to priorities, to enhance their capacity to formulate, develop and implement reform policies and strategies and pursue an integrated approach ensuring consistency between goals and means across sectors, to support their efforts to define and implement appropriate processes and methodologies, and to assist them to enhance the efficiency and effectiveness of human resources management. The above mentioned support will relate to specific policy areas, such as public financial management, budget process, debt management and revenue administration, institutional reform and efficient and service-oriented functioning of public administration, effective rule of law, reform of the justice system and reinforcement of anti-fraud, anticorruption and anti-money laundering, business environment, private sector development, access to finance, investment, financial sector policies, privatisation processes, trade and foreign direct investment, competition, public procurement, sustainable sectoral development and support for innovation, education and training, labour market policies, social inclusion, social security and social welfare systems, public health and healthcare systems, asylum, migration and borders policies and policies for the agricultural sector and the sustainable development of rural areas (Article 5).

The type of actions financed under the Programme will include, among others, seminars, conferences and workshops, working visits, studies, research, analyses and surveys, evaluations and impact assessments, project preparation, implementation and appraisal, IT capacity building, expertise related to policy advice, policy change, legislative, institutional, structural and/or administrative reforms and provision of (resident) experts, organisation of operational support on the ground in areas such as asylum, migration, border control (Article 6). These actions may relate to the different stages of the reform process.

The Commission and the Member States concerned will ensure consistency, complementarity and synergy between actions implemented under this Programme with those implemented under other Union instruments in the Member State concerned, in particular with measures financed by Union funds (Article 13); double funding of the same expenditure will be avoided (Article 11).

A request for support under this Programme shall be made by a Member State wishing to receive such support. The request may be made within the dialogue of the European Semester, in any case by 31 October of the calendar year. The request for support may relate to three circumstances: (a) the implementation of reforms in the context of economic governance processes, in particular of relevant Country Specific Recommendations issued in the context of the European Semester or implementation of other actions related to the Union law (b) the implementation of reforms associated with economic adjustment programmes for Member States receiving Union financial assistance under the existing instruments and (c) the implementation of reforms undertaken by Member States at their initiative, notably to achieve sustainable investment, growth and job creation.

Taking into account the principles of transparency, equal treatment and sound financial management, the Commission will analyse the request for support by the Member State, based on the urgency, breadth and depth of the problems identified, support needs per policy areas, analysis of socioeconomic indicators and general administrative capacity of the Member State. On the basis of this, and taking into account the existing actions and measures financed by Union funds or other Union programmes, the Commission in close cooperation with the Member State concerned will identify the priority areas and scope of the support, to be provided and the global financial contribution.

In implementing this Regulation the Commission will establish multi-annual work programmes that will set out the policy objectives pursued through the envisaged support and the expected results as well as funding priorities in the relevant policy areas. The multi-annual work programmes will be further detailed in annual work programmes for implementation by way of implementing decisions (Article 12).

The dedicated financial envelope for the implementation of the Programme shall be up to EUR 142 800 000 (Article 9). This will be deduced from the technical assistance resources at the initiative of the Commission under Regulation (EU) No 1303/2013 and Regulation (EU) 1305/2013 and appropriately allocated for use within the scope and purpose of the Programme. For this purpose, it is proposed to amend Article 91(3) of Regulation (EU) No 1303/2013 and Article 51(1) of Regulation (EU) 1305/2013 (Articles 17, 18).

In addition, the Programme may receive additional financial resources also through voluntary allocations from the technical assistance financial resources at the initiative of the Member States. To that end, it is proposed to amend Article 25 of Regulation (EU) No 1303/2013, in order to allow all Member States (and not only Member States under temporary financial difficulties, as currently is the case) to contribute to the financial envelope of the Programme, by transferring part of the technical assistance resources at the initiative of the Member State available under Article 59 of Regulation (EU) No 1303/2013 (Article 17). These additional financial resources may be used to support actions which contribute to delivering the Union strategy for smart, sustainable and inclusive growth exclusively in beneficiary Member States (Article 10).