CM(2007)72 22 May 20071
999bis Meeting, 20 June 2007
11 Administration and Logistics
11.2 Meeting report of the Budget Committee – May 2007 session
Item to be considered by the GR-AB at its meeting on 29 May 2007
1. The Budget Committee met in Strasbourg on 9-11 May 2007.
2. The Committee considered the following items:
I. Opening of the meeting
II. Election of Chairperson and Vice-Chairperson of the Committee
III. Presentation of changes made by the Deputies to the draft budget for 2007
before its approval
IV. Modification proposal for the 2007 Investment Programme and consequences for the Medium-Term Investment Plan
V. Future evolution of the Pharmacopœia
VI. Execution of the 2006 budget - RBB and PMM results
VII. Examination of the priorities for 2008 and exchange of views with the Secretary General
Mr Terry Davis
VIII. European Court of Human Rights:
- reinforcement requests of the Court for 2008
- follow-up to the “Report of the Group of Wise Persons to the Committee of Ministers” on the European Court of Human Rights
IX. Study on components of the total salary costs
X. Treasury management
XI. Any other business
3. The agenda of the meeting appears at Appendix I and the list of participants at Appendix II.
I. OPENING OF THE MEETING
Report of the October 2006 meeting
4. The Committee took note of the report of the October 2006 meeting.
5. The Committee examined and approved the minutes of its meetings held in September and October 2006.
II. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON OF THE COMMITTEE
6. Ms Musset was elected Chair for 2007, and Mr Waldert Vice-Chair.
III. PRESENTATION OF CHANGES MADE BY THE DEPUTIES TO THE DRAFT BUDGET FOR 2007
BEFORE ITS APPROVAL
7. The Committee took note of the various changes made to the draft budget by the Committee of Ministers during the budgetary debate in November and December 2006.
IV. MODIFICATION PROPOSAL FOR THE 2007 INVESTMENT PROGRAMME AND CONSEQUENCES FOR THE MEDIUM-TERM INVESTMENT PLAN
8. The Committee took note of the information in document P-Bud(2007)2, in particular the increase of €1.35M in the budget necessary for fire safety compliance work in the Palais de l’Europe, and agreed with the proposal to finance this increase by means of redeployment of appropriations within the Investment Programme for 2007 and forecast for 2008. The amendments to the 2007 Investment Budget are set out in Appendix III, on the understanding that changes for 2008 will be incorporated in the 2008 draft budget.
V. FUTURE EVOLUTION OF THE PHARMACOPŒIA
9. After an exchange of views, the Committee decided, in agreement with the Secretariat, to resume discussion of the question of the allocation of the Pharmacopœia's 2006 surplus (€6.7M) at its September 2007 meeting and to examine the draft 2008 budget in parallel. It would re-examine the proposal for the creation of a reserve fund (€8M) in September. As for the second fund presented by the Secretariat, the Committee does not recommend the creation of this fund. The Committee also asked to receive at its September 2007 meeting:
- a balance sheet for the Pharmacopœia as at 31/12/2006
- the budgetary management accounts for the previous 3 financial years
- budgetary forecasts for the next two to three years.
VI. EXECUTION OF THE 2006 BUDGET - RBB AND PMM RESULTS
10. The Committee considered the documents:
- CM/Inf(2007)17 Budgets of the Council of Europe for the financial year 2006 – Progress Review Report
- CM/Inf(2007)15 Programme of Activities 2006 – Progress Review Report
and held an exchange of views with the Director of Strategic Planning.
11. The Committee reiterated its remarks made during the examination of the 2007 draft budgets that, in order to be able to report on the actual results of activities, it was essential to include clear and specific expected results and performance indicators in logframes, particularly in Vote II, (Programme of Activities), and from the beginning of the budget preparation process, to set better defined and less numerous objectives. The Committee did however recognise the efforts of some services to in this respect.
12. The Committee noted that a significant part of the credit balance of €4.2M of the 2006 budget arose from the Programme of Activities. Whilst it welcomed that some of this credit balance was due to strict management and control of appropriations, the Committee requested that it be provided with further information, at its next meeting, in respect of the reasons for the existence of this balance and why certain projects were not implemented. in order to take this information into account when examining the 2008 budget proposals.
VII. EXAMINATION OF THE PRIORITIES FOR 2008 AND EXCHANGE OF VIEWS WITH THE SECRETARY GENERAL, MR. TERRY DAVIS
13. The Committee took note of the document CM(2007)49 – Priorities for 2008 – Budgetary Implications and held an exchange of views with the Secretary General.
14. The Secretary General outlined the main elements of the Priorities document, namely:
- The proposals represented zero real growth in terms of overall contributions of member states to the budgets of the Council of Europe.
- Certain mandatory budget adjustments in terms of maintenance of buildings, the full year effect of the 2007 salary adjustment, ant the full year effect of previous decisions in respect of the Court had been covered by requesting efficiency gains from major administrative entities within the Organisation.
- Further savings had been identified through proposals to reorganise certain areas of the Secretariat.
- Some activities were being reinforced within the context of zero real growth, such as the Commissioner for Human Rights.
- In order to remain within zero real growth, the initial requests of the European Court of Human Rights for an additional 75 posts during 2008 had been reduced by one third.
- A more restrictive approach to budget management in 2006 had resulted in a significant increase in the credit balance for 2006, which the Secretary General proposed to reinvest in the budget, as had been the case in previous years.
15. The Committee noted the fact that, following its recommendation, the priorities document contained an initial indication (at Appendix 1) of the amounts of member states’ contributions to all budgets of the Organisation for 2008, including the Pensions Budget and the partial agreements. This allowed the Committee and the Committee of Ministers to have an overall view of the 2008 budgetary proposals.
16. The Committee acknowledged the fact that the Secretary General had presented a priorities document respecting zero real growth.
17. It observed that achievement of this result depends in part upon implementation of further efficiency gains within the Organisation. On this point, the Committee disagreed with the Secretary General’s statement that it would be difficult to implement further efficiency gains, and considers that efficiency gains must be pursued in the future.
18. Additionally, the Committee recalled that this result supposed the agreement of the Committee of Ministers for the reallocation of the sizeable credit balance at the end of the 2006 financial year.
19. In this respect the Committee recalled its position of principle concerning credit balances, as expressed in the report of its 2006 Spring meeting:
“18. Decisions concerning the allocation of the credit balance of previous years are taken by the Committee of Ministers at the time of adoption of the accounts for the year in question. Whilst the Secretary General is free to make any proposal to the Committee of Ministers regarding the financing of the budget in 2007, the Committee nonetheless recalled its firm opinion, expressed on numerous earlier occasions, that unspent balances in relation to prior year budgets should in principle be returned to the member states and did not in themselves constitute a receipt.” (CM(2006)74 para 18)
20. The Committee noted the fact that the increased credit balance was due in part to strict budgetary management and additional control procedures put in place by the Secretary General during the financial year in question. It was, however, concerned about the fact that a credit balance could be so high and that it was proposed that it should be used for the financing of the budget in 2008. The Committee noted that, in the event that the credit balance for 2007 were to fall back to its 2005 level, additional receipts and/or further savings amounting to €3.2M would have to be found for the 2009 budget.
21. The Committee recalled its principle that unspent balances should be returned to member states. However, should the Committee of Ministers nevertheless decide to reinvest the unspent balance in future budgets of the Organisation, the Committee questioned whether or not it might be more prudent either to spread this particularly high credit balance over two years, or to allocate it in 2008 to the financing of specific, one-off costs and not to ongoing recurrent costs of the Organisation. Indeed, in the case of a highly desirable lowering of the credit balance, the budget should be correspondingly reduced. A willingness to reinvest the credit balance in the budget must be accompanied by a willingness to cut expenditure when the credit balance is reduced.
22. However, two members did not recommend spreading the use of this credit balance over a second financial year.
23. The Committee stated that it would resume consideration of this issue at one of its meetings in Autumn 2007 when it would discuss the draft budget for 2008 and make specific recommendations as it felt appropriate.
24. The Committee took note that although the priorities document contained a proposed reduction of €300K (representing 2% efficiency gains) in the budget of the Parliamentary Assembly, the Bureau of the Parliamentary Assembly had not agreed to these efficiency gains being applied to its budget.
25. The Committee pointed out the significant efforts which had been made by all sectors of the Organisation to identify efficiency gains and savings for the 2008 budget and was not aware of any reason why the budget of the Parliamentary Assembly should be exempted from this exercise.
VIII. EUROPEAN COURT OF HUMAN RIGHTS
Reinforcement requests of the Court for 2008
26. The Committee noted that the budget proposals for 2008 of the Secretary General included an amount of € 1 959 400 in respect of the creation of posts as from 1 October 2008 within the European Court of Human Rights.
27. The Committee also noted that the initial proposal of the Court was for the creation of 75 posts with effect from 1 October 2008, (at an overall cost to the budget of €3.1M in 2008, and with a full-year cost in 2009 of €5.6M) but that the Secretary General, “in the light of the overall budget situation”, recommended that a smaller number of posts, concentrated on case processing staff, be created in 2008 so that the budgetary increase be restricted to €1.96M.
28. The Committee noted that the budgetary proposals of the Court had to be slightly amended and that a revised proposal would be submitted shortly. The Committee held an exchange of views with the Registrar of the Court concerning the budgetary proposals of the Court for 2008. The Committee noted that the proposal of the Secretary General was a general proposal in respect of the overall amount of resources that could possibly be made available to the Court in 2008 and did not correspond to specific proposals in respect of staffing levels or the average date of recruitments.
29. The Committee would review the final budgetary proposals of the Court when considering the draft budget for 2008, at its Autumn 2007 meetings. The Committee noted, during its discussions with the Registrar, that due to problems in the timetable for recruiting staff to posts and positions which had been approved in previous years, it was foreseen that appropriations amounting to approximately €1M would not be required in 2007. This led the Committee to wonder whether or not the Court could really cope with the 75 recruitments requested for 2008.
30. When considering the full year effect in 2009 of any decisions taken in respect of the 2008 budget, coupled with the proposal to use the significant credit balance of 2006 to finance the 2008 budget, the Committee posed the question whether the requests of the Court could not be reduced to an amount lower than the €1.96M proposed in the priorities document of the Secretary General.
31. The Committee took note that the Court considered that its capacity in respect of case processing had been hampered by decisions in previous years which prescribed where posts should or should not be created within the Court (case processing rather than support staff). Accordingly the Committee felt that whatever final decision was taken in respect of the number and date of any posts or positions which may be created, the proposal of the Court should be examined in respect of the type of posts to be created in order to maximise the output of the Court within the framework of the budget proposed by the Secretary General in the priorities document.
IX. STUDY ON COMPONENTS OF THE TOTAL SALARY COSTS
32. Mr Jakob Dahl Thomsen, chair of the ad hoc working group on staff expenditure issues (GT-SA), presented the work of his Working Party, to the Committee.
33. In particular, the Committee took note of the decision by the Deputies in December 2006 to set a ceiling for the expenditure on staff-related expenditure in the Ordinary Budget for 2007. It recommended supplementing this ceiling with a ceiling on the number of people who could be employed (full-time equivalent) by the Organisation, on the understanding that this figure should include both permanent and temporary staff.
34. The Committee also recommended that human resources be managed with a greater concern for efficiency so that staff costs could be controlled in the medium term. It was therefore of the opinion that it was not sufficient simply to renew the expenditure ceiling from one financial year to the next, making merely technical adjustments, but that it was necessary to take a more determined approach. This approach presupposed that thought be given on a regular basis to the structure of the administrative set-up and the definition of job profiles and to take into account productivity gains to be made by staff.
35. As for the various allowances payable to staff members, the Committee recommended that these be subject to ceilings rather than being fully indexed to salaries. More specifically, the Committee was of the opinion that careful consideration should be given to the expatriation allowance which was currently being considered by the CCR, as this represented an important element in total staff expenditure. It also recommended making the changes to the language allowance proposed by the Secretary General, as long as the member of staff justifies the use of three languages in their work.
36. The Committee requested the Secretariat to provide to it information on all allowances being paid to the staff as of 1 April 2007 as presented in the document GT-SA(2007)2 (definition of the allowance, reasons for payments, number of staff paid, length of payment, etc.)
37. The Committee also wished to point out to the Committee of Ministers that the contributions of the Pension Reserve Fund should be taken into account when analysing the proportion of the Organisation's budget devoted to staff related expenditure.
X. TREASURY MANAGEMENT
38. The Committee took note of the information in document P-Bud(2007)3: Treasury Management. The External Auditor had recommended in his report on the 2005 accounts that current policy for the investment of temporary cash surpluses should be reviewed with the objective of increasing short-term interest income. The Secretariat had examined alternative investment products which could increase interest income, but which carried certain risks as compared with present policy. The Committee was of the opinion that the Organisation should not make speculative investments and could not therefore endorse the proposal that such operations be carried out, even with limited amounts. It therefore advocated the continuation and optimisation of the current investment policy, which it found well adapted to the nature and circumstances of the Organisation.
XI. ANY OTHER BUSINESS
39. The Committee recalled that its autumn 2007 meetings would be held on the following dates:
- 10th to 13th September
- 8th to 12th October