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I am delighted to have the opportunity to express my support for the work of this group. We – Member States and the Commission – are completing the State Aid Modernisation (SAM) programme, the biggest overhaul of our rules in more than 50 years of State aid control. To me this symbols a new partnership where we work together, listen to each other and have the same general principles.
Changing the rules is only half the battle. One of the key challenges of my mandate will be to see that SAM is implemented in practice.
The issues at stake could not be more pressing. Investment in the EU is 15% below its 2007 peak and 25 million EU citizens remain unemployed, among them 5 million young people.
In a situation like this, we should not have a discussion of austerity versus investment but rather talk about how we intervene. That will help us regain balance.
The Commission's Investment Plan for Europe will deliver more than 300 billion euro of new investment to boost the recovery and help create new jobs through support to strategic investments in infrastructure. It will unlock private investment, and will focus on the type of investments that are a key to growth. That is how we need to intervene.
Unfortunately, it is not always what we get. Instead, too much State aid is still badly designed and hinders growth. By preventing inefficient companies from leaving the market or awarding tax breaks to multinationals, it disadvantages the young, innovative companies that could revolutionise our economy. By providing conditions that the private sector cannot match, it crowds out private investment. By benefiting domestic companies over rivals in other Member States, it fragments the single market, the cornerstone of our prosperity.
So today I want to set a challenge to all of us, Member States as well as the Commission, to work together in partnership to make every euro of taxpayers' money count. We need to promote good aid, while stamping out bad aid and ensure transparency of where the money go.
My services and I are ready to work closely with you to design growth-enhancing aid measures that promote a strong, integrated and dynamic single market. The Commission's long experience with State aid control has generated many insights about how to select and design projects to achieve the greatest impact at the lowest possible cost. By sharing our experience, we can learn from each other how best to design measures that secure growth. That would have the major advantage of allowing the Commission to approve well-designed individual measures in a matter of weeks.
At the same time, we need to step up our efforts to stamp out bad aid. The SAM slashed a lot of red tape, by hugely expanding the scope of aid that can be granted quickly without the need to notify the Commission. I am very happy to be able to report that since 1 July more than 80% of aid measures have been processed under the General Block Exemption Regulation (the GBER). I very much welcome the efforts of the working group to find ways to increase this proportion still further.
To balance that change, your commitment was to take greater responsibility for ensuring compliance. Unfortunately, the first results I have seen from our ongoing monitoring exercise show that there are 'issues' with nearly a third of all cases. Clearly, we are in a transition period between the pre-SAM and post SAM period and not all the issues we have identified are equally serious. However, some of them are very damaging. For example, failure to ensure that aid does not go to firms in difficulty without a proper restructuring plan means that zombie companies can be kept alive with State aid. And overall there is no clear feeling that compliance is high on the agenda. That worries me, because if the proportion of problematic cases remains this high, in a situation where we expect up to 90% of aid measures to come under the GBER, we can expect serious negative effects.
I'm therefore glad that the working group has focused some attention on compliance issues, and I warmly welcome its recommendations on those points. But we need to go further. It is not just a matter of formal compliance, but of ensuring that practices such as tax treatment of large multinationals or firms in difficulty are truly in line with the State aid rules.
Therefore, I will take swift and decisive action against breaches of the rules, as in the case of the EU-wide investigation on tax rulings that I have announced. And I will expect Member States to follow up effectively and in a timely manner whenever the Commission orders recovery of State aid paid contrary to the rules.
So far, we have been talking about the responsibility of the Commission and Member States. However, the money involved is taxpayers' money, and ultimately it is citizens who must hold us all to account for the quality of State support.
That is why two key elements of the SAM programme are particularly important: transparency, which lets citizens know where their money has gone, and evaluation, which tells them whether it has been well spent. Our rules set out a minimum set of requirements in that respect, but I want to encourage you to go further, and I am ready to support you. I am also ready to look at how we might streamline the way you are now reporting to the Commission on the volumes of state aid paid out if and when I see that transparency and evaluation work as intended.
As for the Communication on the Notion of Aid, the one piece of the SAM which has not yet been adopted, I have decided to take a moment for reflection at the start of my mandate. This document is too important for us to rush into a decision. But once I have had the chance to better assess where the limits of State aid control are, I intend to propose a Communication to the College for adoption.
So, where do we go from here? I would like to propose a strategic approach to how we can work together.
I invite you to join the Commission in setting up a working group on designing State Aided infrastructure projects in a way that does not raise issues under State Aid Law. I know that this is an area where there are significant concerns about the lack of clarity of our rules and the long times that our cases can take to process. I believe that there is a lot to be gained by explaining in a very practical way, for the different types of infrastructure, how projects can be designed so that they are unproblematic from a State Aid point of view.
In the context of SAM, we have developed rather straightforward rules for most types of infrastructure that involve aid and we are now able to better explain where aid is involved and where it isn't. There are clearly legal limits flowing from the Court's case law which we all have to respect. However, I am confident that we have found a way forward that would allow us to approve well designed projects much more swiftly than sometimes happened in the past. With the emphasis on infrastructure investment and the Investment Plan for Europe at this week's European Council, this is the right time to take this initiative.
I believe this is a programme that matches the scale of the challenges we face. It is time for a new kind of partnership, where we work together to give our EU economy the boost it needs.