Opinion of the Economic and Social Committee on the "Communication from the Commission on 'Cohesion and transport'"

(1999/C 258/09)

On 14 January 1999 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the "Communication from the Commission on 'Cohesion and transport'."

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 June 1999. The rapporteur was Mr Tosh.

At its 365th plenary session (meeting of 7 July 1999), the Economic and Social Committee adopted the following opinion by 104 votes to two.

1. Introduction

1.1. This opinion consists of five sections, the introduction followed by section two which provides a summarised overview of the content of the communication from the Commission.

1.2. In the third and fourth sections the Committee has undertaken a clinical review of the document and tables. It provides general comments and recommendations. Finally, the fifth section outlines overall conclusions.

1.3. Given the somewhat intangible character of the Communication messages and the importance and expansion of the EU transport budget during the next five years, the Committee has attempted to signal clinical review and control features and provisions it believes are essential to bring conviction to Cohesion and Transport evolution.

1.4. The interwoven relationships of various funding mechanisms - Structural Funds, Cohesion Fund and European Investment Bank (EIB) - have been considered in the context of evolving Common Transport Policy and Spatial Development Policy where the importance of the matrix for enlargement must be clearly understood. This opinion provides recommendations on how the Commission may be able to more effectively integrate the disparate financial instruments supporting transport measures in support of the overall goals of the EU. The relative importance of Structural Funds spending for transport is about ten times that of the Cohesion Fund.

2. Summary of the Commission Communication

2.1. The communication relays the European Union aspiration to (a) release the drive for economic convergence and (b) promote social integration, and the significance that transport infrastructure brings to this commitment for sustainable development throughout. Its focus is directed to mitigate against (i) peripherality, (ii) disadvantaged regions and (iii) disadvantaged groups of people(s).

2.2. The communication signals the importance of converging aims of (i) Structural Funds Programmes and Initiatives (ERDF, Interreg), (ii) Cohesion Fund Programmes and (iii) EIB support.

2.3. The Common Transport Policy (CTP) aims to reinforce/enhance the needs of people and of the economy to promote prospects and competitiveness.

2.4. The communication conveys that co-ordinated and well conceived regional policies are believed to be the appropriate channel to deliver:

- economic development (growth, competitiveness, employment);

- balanced development throughout the EU;

- conducive conditions for future enlargement;

- improved mobility for all disadvantaged, both economically and impaired

without compromising environmental goals.

2.5. It outlines disparities where transport can influence improvement to:

- reduce demographic centralising shifts contributing to congestion and environmental impact;

- improve peripheral access and service availability to bring prosperity through competitiveness;

- freight costs as an investment variable.

2.6. The Communication claims that transport improvements can create:

- both the opportunity for increasing access for inputs and to markets for outputs; and

- if tailored, durable and sustainable economic growth, and employment can result;

but needs to recognise that:

- competing alternative growth drivers e.g. telecommunications;

- employment creation is as important as access into Peripheral Disadvantaged Regions (PDRs).

2.7. Investment spending will increasingly be directed more at people and targeted social needs, by filling major transport and infrastructure gaps, whilst recognising that affluent Member States include pockets where transport will release underperformance or increase disparities. It gives explicit emphasis to the future role of public transport in realising these goals.

2.8. The gap filling is addressed by broad brush EU funding programmes performing in concert to promote development; and cohesion funding is a key supplementary.

2.9. EU spending focuses heavily on road transport:

- 2/3 of ERDF investment in transport for the period 1994-1999;

- 2/3 of Cohesion Fund investment in transport between 1993 and 1999;

- EIB's lending directed to regional objectives (transport is sub-set).

It is to be noted that 1/4 of the EIB's lending for regional development projects includes cofinancing operations with the Structural Funds.

2.10. The communication recognises that national development plans have led to the creation of many inconsistencies and barriers leading to an unbalanced use of the European territory and the need for a European Spatial Development Perspective through global management. Public/private finance cooperation and social partnership should ensure a coherent joint vision for the development of Europe's territory.

2.11. It relays the belief in the outcome of liberalisation to promote regional cohesion by:

- providing available and affordable transport services for all in the EU;

- providing a regulatory framework to police outcome and ensure sustainable choice between modes of transport;

- avoiding market-only driven transport policies by ascribing social and general economic value;

- creating operator award procedures to protect service quality, employing selectively cabotage, for the more peripheral links.

2.12. Pricing for infrastructure use is suggested to only reflect/recover marginal costs, through levies, and the suggestion is that as a result:

- efficiency improves through optimal selection with lower transport costs;

- peripheral costs "may" disimprove;

- peripheral production will be modified to dislodge low value addition output.

2.13. The thrust to integrate transport modes, with all ports and terminals, is identified as part of the essential diversification of network links.

3. General comments

3.1. Whilst the Committee supports the ethos of Cohesion principles, it finds little historical evidence of the value of Structural and Cohesion Funds' expenditure in support of delivering the aims described under 2.1.

3.1.1. The Committee believes that the appended tables contribute little either to the understanding of the principles underpinning Cohesion expenditure in Transport or to providing evidence in support of the claims made concerning the impact of EU intervention. They are outdated and are not referred to in the Communication to support its thrust(s). Nor is there supporting evidence of how Cohesion Fund spending have interacted with Structural Funds and EIB financing to meet declared aims.

3.2. Whilst recognising the difficulties in establishing cause and effect, the absence of case study or operational audits frustrates judgement of the policy and expenditure. There was concern that delegation of the management of the funds to respect subsidiarity could see less than optimal priorities adopted, with e.g. concentration and growth in conurbations possible, if only market driven objectives for Transport are pursued. Moreover, emphasis on market driven objectives pose difficulties for ensuring that public transport is of adequate quality, either to meet locally the social inclusion and equity goals of the EU or to promote sustainable mobility and reduce dependence on cars.

3.3. Coordination of Cohesion spending on transport where inter-regional aspects were important was not examined, nor were external linkages to non-member countries. Transit routes through non-cohesion countries were also ignored in the communication despite their obvious value strategically.

3.4. The essay style of the Communication, with its repetitive assertions of the added-value of Cohesion impact, if anything, irritates and underscores the absence of validation and undermines its conviction.

3.5. The high proportion of Cohesion expenditure on road infrastructure is of concern in the light of policies on social cohesion and sustainability. For the individual, socially justifiable cohesion investment to create sustainable development and mobility, whilst at the same time balancing the environmental impact, is the objective. Financing future public transport requirements needs considerably greater attention particularly given the absence of financial viability achieved by many public transport initiatives.

3.6. For the future, the Committee believes the EU must increase its efforts on public transport services, because:

- public transport plays a supplementary role in relieving social exclusion, and

- good public transport services reduce the detrimental effect on our environment.

4. General recommendations

4.1. The Committee recognises that whilst Member States set their own investment priorities, Structural and Cohesion Funds' principles overlay subsidiarity and competence for programmes should rest with the European Union if it is to pursue Cohesion objectives. Specific programmes should be developed and imaginative financial instruments created to attract private finance and partnerships between the EU, Member States and operators. The potential for funding transport via marginal social cost pricing needs to be identified and such a policy should be adopted as a matter of principle(1). Nonetheless, peripheral areas of the EU and other disadvantaged areas may require special dispensations from such provisions where sustainable transport options are not either available or financially viable. Wider remit interregional Cohesion programmes should be encouraged in such an environment.

4.2. Investment in transport must be set strategically. Common constraints to guide subsidiarity should be evolved. Linkage to output targets for qualifying projects would assist prioritisation. Specific recommendations on interoperability, trans-Europe and locally, will assist benefit-development on a common playing field.

4.3. Investment in rail, sea transport, waterways and short sea crossings should expand where intermodal links are included, in preference but normally and necessarily alongside road investments where appropriate.

4.4. The Committee believes that intermodal links are worth more recognition and evolutionary support in Cohesion programmes.

4.5. The Committee feels that efficiency in identifying cohesion spending in transport can only be achieved if the social partners influence is embodied in the decision making process.

4.6. The scope for transport expenditure in support of cohesion, post enlargement, should be explored rigorously now. It will be ever more imperative that the efficiency of resource allocation, and the policing of expenditure are proactively driven by regional economies where globalisation is clearly recognised.

4.7. Clear evaluation of the impact of infrastructure "pricing" on peripheries should be pursued to reveal the impact on production where net loss is a clear possibility and counterproductive to measures in favour of cohesion.

4.8. It also believes that where peripheral regions are cut off by sea such as exists in part in Greece and in Ireland, and by distance such as in the Iberian peninsula, or by poor levels of transport service with non member adjacent countries, these regions should be considered for support because they do and will continue to suffer transport cost disadvantage to market. GNP status should not be the sole defining criteria. Additional indicators could include for instance accessibility measures. Funding needs to be extended beyond those countries defined as Cohesion countries.

4.9. The Committee is of the view that consultation with the social partners in the Cohesion regions could impact constructively on the programmes and could lever the cross functional aspects of expenditure to optimise the principles featured under 2.1.

4.10. Long-term financing of Transport as a Cohesion feature should be examined by the Commission and the link(s) with balanced economic development, with improving the lot of disadvantaged people with services, and with aiding enlargement, defined. Despite their acknowledgement by the Commission, the inherent difficulties are unlikely to diminish in an enlarged Union and the adoption of quality benchmarking as an aid is advised. By definition this requires that much greater emphasis on policy and resource allocation be given to public transport.

4.11. The Committee recognises the common objectives of this Opinion and that on the European Spatial Development Perspective(2) which it adopted in September 1998, as both clearly feature the "reorientation of policies with a spatial impact". In that Opinion, the Committee stresses that quality of life should be an underlying aim of any spatial initiative. It also signals, for instance, that "uplands" exhibit peripheral characteristics. It fits with the view that transnational and cross-border approaches should be coordinated as well as links should be established between all policies on socio-economic regeneration. The Committee notes the dangers associated with over concentration of activity in the core at the expense of the periphery and believes that inter-peripheral links could go some way to offset centripetal forces.

4.12. The Committee would reiterate the views expressed in its Opinion of September 1998 on the Commission proposal on the granting of Community financial aid in the field of trans-European networks(3) which will permit the Commission to finance 100 % studies of an overall strategic nature. These studies should help supporting and improving the validation of Cohesion spending. It is noted that the TEN's Transport budget for the years 2000 to 2006 is proposed to amount at ECU 4992 million, which means an increase of 277 % compared to the period 1995-1999. Given this acceleration and scale it is questionable as to whether the cohesion impact on transport development will be measurable.

4.13. The Committee believes the Commission should recognise the claims for air links and railway development despite their high initial investment costs in peripheral regions and particularly for linking enlargement countries.

4.14. With enlargement approaching, the Committee believes that the shortcomings of some past Transport Cohesion projects must not be repeated and strategic vision linking e.g., spatial planning, environmental protection, employment creation and rural development in a coordinated fashion, and, where appropriate, across borders, must evolve centrally and translate to regions for adoption and delivery. The importance of the ISPA programme is noted.

4.15. The Committee is of the view that a future Communication on the subject would require a restructuring so as to include:

- a definition of cohesion based on spatial development and proper cohesion objectives;

- the identification of specific objectives and performance indicators;

- a review of current strategies for TEN's-T, the Cohesion Fund and the transport components of the ERDF Fund;

- a modelling of the impacts of TEN's-T, the Cohesion and Structural Funds and EIB and EIF funding, regionally;

- the adoption of priorities on the basis of these impacts on relative accessibility, competitiveness, current and potential GDP and infrastructure deficits.

5. Conclusions

5.1. The Committee is of the view that the purpose of the Communication should be clarified and its objectives should be clearly stated. It believes that the essence of the message should be the fundamental compatibility of the following EU objectives:

- improving peripheral regions economic development prospects, competitiveness and employment;

- contributing to a balance development in the 15 Member States and create conditions favourable to the integration of new members;

- promoting sustainable mobility via considerable emphasis and priority being given to improving public transport;

- ensuring the availability of transport services affordable to those reliant on public transport and to those with impaired mobility; and

- adopting best practices to manage the environmental impact distilling from transport infrastructure build and transport services adopted and promoted under Cohesion funded programmes. It is widely recognized that road transport is one of the main contributors to pollution.

5.2. It is essential that planning, evaluation, appraisal and monitoring formats, and the adoption of indicators and measurement techniques, draw on the Research and Technological Development programmes and other research programmes.

5.3. It is also imperative that principles for peripheral regions are developed to ensure that fair and efficient pricing prevails and does not discriminate due to lack of alternatives or an absence of sufficient demand to produce viable services.

5.4. Enlargement will entail additional problems for both new and existing Member States, and at the EU borders. It will push the EU centre of gravity eastward which will add to the problems already faced by existing outlying regions and will have an impact on newly created peripheral regions. This should be fully recognised.

Brussels, 7 July 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

(1) OJ C 56, 24.2.1997, p. 31 - OJ C 138, 18.5.1999, p. 7.

(2) OJ C 407, 28.12.1998, p. 85.

(3) OJ C 407, 12.1998, p. 120.