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Ireland’s high Solidarity Fund thresholds based on Government “Leprechaun economics" -Carthy

25 October, 2017 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has called for an urgent review of Ireland’s inordinately high Solidarity Fund Thresholds which he said are based on the Government’s “Leprechaun economics” GDP figures.

The European Union’s Solidarity Fund enables the EU to provide financial support to Member States or regions in the event of a major natural disaster.

Speaking on the fallout of Storm Ophelia during the European Parliament’s plenary session in Strasbourg this week, Carthy outlined one of the reasons why EU funds would not be available to Ireland.

He said:

“Last week Ireland was hit by the most extreme weather in 56 years in the form of Hurricane Ophelia. Homes, farms, businesses, roads, schools and sports stadiums all fell victim to massive structural damage caused by high winds, flying debris, flooding and falling trees. Unfortunately, three lives were lost too.

“Government politicians have been quick to call for applications to the European Solidarity Fund although they are aware that the threshold has not been reached for the 3rd consecutive catastrophic storm. 

“The reason for this is that in 2015 the threshold for Ireland to apply for Solidarity Funds was €803m. This year however, the threshold is €1,223m – an increase of €402m!

“The story is the same for regional thresholds, which are based on 1.5% of regional GDP.  The Border Midlands North West regional threshold has risen by €58m while the South and East Region has risen by a whopping €338.4m. These figures, based on the Government’s GDP figures, are making it impossible for regions to apply for much needed recovery funding.

“The greatly inflated regional thresholds are a result of distorted GDP figures famously described as “leprechaun economics”. The use of GNI figures to calculate the national threshold of a completely unattainable €1,223m also doesn’t take into account adjustments for retained earnings for re-domiciled firms and depreciation on foreign-owned domestic capital assets. The fact that Ireland again has not reached the threshold should serve as a message for government to cut out the fantasy figures. 

“In 2016 the value of the Irish economy was €275bn, but according to GNI adjusted for retained earnings of re-domiciled firms and depreciation on foreign-owned domestic capital assets, the value was €190m. The massive difference indicates that not only is the Irish economy not as strong as the official narrative portrays, but also that the Irish Government may have facilitated US multinationals in avoiding up to €85 billion in tax in one year alone.” 

“On the EU side too there is a need to review the solidarity fund as it discriminates against rural and peripheral regions.  GDP, even when adjusted for purchasing power parities across regions, is not the best way to measure the level of need in regions when it comes to responding to natural disasters.

“With damage from Ophelia estimated as being between €500m-€800m, the Government must begin looking for exceptional access to the fund, as well as a change in the way these thresholds are defined going forward”.

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