Ministers’ Deputies
CM Documents

CM(2010)60 10 May 20101
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1089 Meeting, 30 June 2010
11 Administration and Logistics

11.1 Meeting report of the Budget Committee – May 2010 session
Item to be prepared by the GR-PBA at its meetings on 12 May and 17 June 2010
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1. The Budget Committee met in Strasbourg from 3 to 5 May 2010.

2. The Committee considered the following items:

    I. Opening of the meeting
    II. Election of the Chairperson and Vice-Chairperson of the Committee
    III. Examination of the following documents:
    - Report of the October 2009 meeting
    - Minutes of the September and October 2009 meetings
    IV. Presentation of changes made by the Deputies to the draft budget for 2010
    before its approval

    V. Execution of the 2009 budget - RBB and PMM results
    VI. Examination of the priorities for 2011 and exchange of views with the Special Representative of the Secretary General for Organisational Development and Reform
    VII. Concept of “Zero Real Growth” and preparation of the 2011 budget
    VIII. Exchange of views with the Audit Committee
    IX. Modification of the rules for the Reimbursement of Persons Travelling at the Charge of Council of Europe budgets
    X. Proposed adjustment to the budget of the Enlarged Agreement on the European Commission for Democracy through Law (Venice Commission)
    XI. Internal tax
    XII. Pension Reserve Fund

3. The agenda of the meeting appears at Appendix I and the list of participants at Appendix II.

I. OPENING OF THE MEETING

4. The Director of Finance opened the meeting and invited the Committee to elect a Chairperson and a Vice-chairperson for 2010.

II. ELECTION OF THE CHAIRPERSON AND VICE-CHAIRPERSON OF THE COMMITTEE

5. Ms Musset was elected Chair and Mr Hjalmarsson Vice-Chair for 2010.

III. EXAMINATION OF THE FOLLOWING DOCUMENTS:

- Report of the October 2009 meeting

6. The Committee took note of the report of the October 2009 meeting.

- Minutes of the September and October 2009 meetings

7. The Committee examined and approved the minutes of its meetings held in September and October 2009.

IV. PRESENTATION OF CHANGES MADE BY THE DEPUTIES TO THE DRAFT BUDGET FOR 2010 BEFORE ITS APPROVAL

8. The Committee took note of the changes to the draft budget which had been made by the Committee of Ministers in the course of the budgetary debate.

V. EXECUTION OF THE 2009 BUDGET - RBB AND PMM RESULTS

9. The Committee examined the following documents:

CM/Inf(2010)9: Budgets of the Council of Europe for the financial year 2009 - Progress Review Report
CM/Inf(2010)12: Programme of Activities 2009 - Progress Review Report

SG/Inf(2010)9: Budget and Programme of Activities 2009 - implementation review; summary note from the Secretary General

P-Bud(2010)2: Budgetary Execution of the 2009 Ordinary Budget

and held an exchange of views with the Secretariat on the execution of the 2009 Budget.

10. The Committee noted that there had been significant transfers of appropriations, approximately €3 million, in the course of the execution of the Ordinary Budget for 2009 so as to constitute a reserve aimed at offsetting the decrease in sundry receipts due to the fall in interest rates. It underlined that two-thirds of the transfers had been made from Vote II (programme of activities), amounting to slightly more than €2 million, which meant that 4.1% of appropriations had not been utilised as compared with the approved budget.

VI. EXAMINATION OF THE PRIORITIES FOR 2011 AND EXCHANGE OF VIEWS WITH THE SPECIAL REPRESENTATIVE OF THE SECRETARY GENERAL FOR ORGANISATIONAL DEVELOPMENT AND REFORM

11. The Special Representative of the Secretary General held an exchange of views with the Committee and presented the priorities for 2011 as set out in document CM(2010)42 rev.

12. He outlined the main priorities and the progress of the reform process highlighting in particular:

- new governance structures;
- increased mobility of staff;
- the necessity to control staff costs;
- a revised programme presentation under three thematic pillars;
- prioritisation and focusing on what the Council of Europe does well and where it can give real added value;
- review of working methods;
- avoiding overlapping with other organisations;
- examining ways of financing certain activities through partial agreements or voluntary contributions;
- European Union accession to the Convention on Human Rights.

13. The Committee asked to be kept informed of the impact on the Organisation's tasks and budget of European Union accession to the Convention on Human Rights and of the Interlaken Conference on the European Court of Human Rights.

Staff costs

14. The Committee welcomed the fact that the Secretary General was proposing a number of measures to contain the growth in staff expenditure and encouraged him to continue to explore other possible measures to this end, including not automatically replacing staff members who left the Organisation for whatever reason.

15. The Committee also referred to its recommendations of last autumn in respect of the creation of a new pension scheme and noted that a proposal on this subject was being prepared and would shortly be submitted to the Committee of Ministers.

16. The Committee welcomed the Secretary General's intention to achieve a balanced staff cost structure by 2014. It however deemed it necessary to have a specific definition of what was meant by "balanced structure"; a precise definition of this objective would be useful in terms of the staff cost ratio to be achieved by 2014.

Creation of a Contingency Reserve

17. The Committee noted that the Secretary General proposed to create a “contingency reserve” in order to respond to ad hoc requests arising from political situations. The Committee could recommend the creation of such a reserve only if its use were linked strictly to unforeseeable events external to the Organisation and subject to a prior decision by the Committee of Ministers determining the conditions for its implementation.

18. The Committee nonetheless expressed doubts about the creation of such a reserve in view of the Organisation's existing capacity to transfer resources within its budget in the course of a financial year, by decision of the Committee of Ministers, should the need arise and of the fairly limited level of the Organisation's operational activities. Furthermore the Committee considered it undesirable, at a time of financial crisis, to set aside appropriations with no precise allocation.

19. The Committee took note of the fact that the Secretary General intended initially to create this reserve by using the credit balance from 2009. The Committee's recommendation in respect of the use of credit balances of previous years' budgets is set out in the following paragraph.

Credit balances from previous years' budgets

20. The Committee welcomed the proposal that the credit balance from the previous year (€552 000 for 2009) should no longer be used to finance the Ordinary Budget and pointed out that this had been a recommendation of the Budget Committee for a number of years.

The Committee recalled that its previous recommendations stated that the credit balance of previous years should be returned to the member states. Consequently, the Committee could not recommend the proposal to use the credit balance for 2009 to finance the creation of a contingency reserve, since it could set a precedent for the future.

Negative Reserve

21. The Committee welcomed the commitment by the Secretary General to reduce the negative reserve gradually over the next few years. The Committee observed, however, that the priorities document contained no specific proposal to reduce the negative reserve and accordingly recommended that action should be taken to that effect already for 2011.

Biennial Budget

22. The Committee noted that the Secretary General mentioned in the conclusion to the priorities document the possibility of moving towards a biennial budget process.

The Committee was ready to examine the various aspects of this proposal; it particularly wished to study the proposed budget approval arrangements - whether the budget is to be voted every two years or whether there is to be a re-examination every year on the basis of an updated document.

23. The Committee recommended moreover that the priorities document presented in the spring should include pluriannual projections (covering at least three years) in order to show the main expected budgetary developments.

Joint programmes and voluntary contributions

24. The Committee noted that activities financed by extra-budgetary resources were increasing and that it was likely that this trend would continue in coming years. It pointed out that the European Union and other contributors paid only a small share of the Organisation's real administrative overhead costs.
The Committee expressed its intention to re-examine the question of the impact of extra-budgetary resources on overall expenditure at one of its autumn 2010 meetings.

New presentation of the Organisation's programme and budget

25. The Committee noted that with the proposed new presentation of the Organisation's programme and budget there would no longer be a distinction between the Programme of Activities and the other parts of the budget of the Organisation.

VII. CONCEPT OF “ZERO REAL GROWTH” AND PREPARATION OF THE 2011 BUDGET

26. The Committee examined the concept of Zero Real Growth together with the Secretariat's proposal to change the reference period for determining the inflation adjustment to be applied to the budget.

27. The Committee felt that there were two essential and separate issues to be considered :

- determination of the inflation adjustment coefficient for the budget and
- the base figure to which any inflation adjustment should be applied.

Determination of the inflation adjustment coefficient for the budget

28. The Committee noted that the Secretary General proposed to change the current method of determining the adjustment coefficient (using the average host country inflation as per Eurostat statistics over a period of 12 months from February of the year n-2 to February n-1) and to use average inflation figures over the period June n-2 to June n-1 (cf. Para 39-42 CM(2010)42 rev Priorities for 2011 and their budgetary implications).

29. The Secretary General intended to align the reference period for the inflation adjustment to the budget with the reference period for inflation used in determining the adjustment to staff remuneration, as calculated and recommended by the Co-ordinating Committee on Remuneration (CCR), and thus minimise the effect that using different reference periods could have on the Organisation's budget (and indeed had had in recent years).

30. The Committee pointed out, however, that the CCR recommendation on adjustments to remuneration was not based solely on host country inflation and that there were three factors which determined the recommendation of the CCR:

- host country inflation over the 12 month period from June n-2 to June n-1 (calculated on a point to point basis rather than an average basis)
- the trend of public sector salaries in a basket of seven reference countries
- purchasing power parity calculations.

31. Since the inflation parameter is not always the dominant factor in the calculation's results the Committee concluded that the proposed change in calculation method would not solve the problem of the differential between the CCR recommendation and the inflation adjustment to be used for the Organisation's budget. The figures presented by the Secretariat for the period 2006-2010 supported this conclusion.

32. The Committee recalled that the CCR methodology was currently under review and that new proposals would be formulated in 2012 at the latest.

33. The Committee noted that the inflation adjustment to be used on the basis of the existing calculation method (February 2009 to February 2010) would be 0.2%. The Secretariat indicated that a preliminary estimate of the inflation adjustment on the basis of a June 2009 to June 2010 period would probably be within the range 0.6% – 0.8%. and would lead to a further increase in member states' contributions to the Ordinary Budget for 2011 of approximately €1 000 000.

34. The Committee did not recommend the Committee of Ministers adopt the revised methodology proposed by the Secretary General. It recommended that the present methodology should be maintained for the period initially intended, namely 2008-2012. It proposed that the method of calculating the inflation adjustment should be reviewed when the conclusions of the CCR's study became available in 2012

35. The Committee noted that, whatever the methodology chosen, this did not prejudice its adoption on an annual basis by the Committee of Ministers, which could adopt another methodology each year.

The basis for the application of any adjustment

36. The Committee recalled that in its previous discussions on Zero, or Nominal, Real Growth, it had always considered that in purely budgetary terms the concept of zero real growth should be applied to the budgets of the Organisation as a whole.

37. The Committee underlined that in recent years the practice followed by the Secretary General in the draft budget had been to apply the inflation adjustment to the budget of expenditure and add this amount to the member states' contributions. This had the effect of increasing member states' contributions by slightly more than the inflation adjustment. The Committee nonetheless recalled that, during its budgetary debate, the Committee of Ministers had decided to apply the inflation adjustment solely to contributions taken into account for establishing the final budget. This meant that when there was a decrease in other receipts in the Organisation's Ordinary Budget the Secretary General had to include expenditure reductions in his budgetary proposals. The Committee further observed that the notion of Zero Growth (Nominal or Real) was a useful tool for controlling budgets.

VIII. EXCHANGE OF VIEWS WITH THE AUDIT COMMITTEE

38. The Chair of the Audit Committee presented that committee's terms of reference, which comprised both a role of coordinator of internal and external audit and a consultative function; the Audit Committee reported to the Committee of Ministers and could advise the Secretary General.

In the Audit Committee's opinion, the merger of internal audit with part of the old Directorate of Strategic Planning carried out within the reform framework to create a new Directorate of Internal Oversight would result in a better control system.

Furthermore the Audit Committee considered that the financial statements should be prepared more swiftly.

39. The Committee took note of this information and of the Audit Committee's report (CM(2009)106).

    IX. MODIFICATION OF THE RULES FOR THE REIMBURSEMENT OF PERSONS TRAVELLING AT THE CHARGE OF COUNCIL OF EUROPE BUDGETS

40. The Committee took note of the explanations given by the Secretariat concerning the difference between government experts and independent experts appointed by the Committee of Ministers for application of paragraph 1 of Article 2 of the new rules. It also took note of the changes made to Article 6 at its request, the revised wording of which is set out in Appendix IV. On this basis it recommended that the changes be adopted.

X. PROPOSED ADJUSTMENT TO THE BUDGET OF THE ENLARGED AGREEMENT ON THE EUROPEAN COMMISSION FOR DEMOCRACY THROUGH LAW (VENICE COMMISSION)

41. In the light of the information provided by the Executive Secretary of the Venice Commission, the Committee was able to recommend an adjustment to the 2010 budget as set out in document CM(2010)64 (examined by the Committee with the reference P-Bud(2010)4rev), by an amount of €53 448 corresponding to additional receipts following the accessions of Mexico and Tunisia.

XI. INTERNAL TAX – DOCUMENTS TRANSMITTED BY A MEMBER OF THE COMMITTEE

42. The Committee held an exchange of views on the information set out in the documents supplied. It thought that the introduction of an internal tax merited examination and intended to come back to this question at its next meeting. However, it stressed that the introduction of such a tax should pursue a specific objective, such as to bring Council of Europe practices into line with those of other similar international organisations or to help control staff costs.

43. It asked that the Secretariat carry out a study in this connection in order to ascertain in which international organisations an internal tax existed, how it was applied and what reasons had prompted its introduction when this had been done after the creation of the organisation concerned. It also intended to examine the impact on the net remuneration of staff. In addition, it wished to obtain a copy of the comparative study produced by the Co-ordinating Committee on Remuneration (CCR) on the wage levels of officials of international organisations compared with public and private sector employees.

XII. PENSION RESERVE FUND

44. The Committee took note of the 2nd Report for 2009 of the Management Board of the Pension Reserve Fund.

XIII. DATES OF THE NEXT MEETINGS

45. Dates of the Committee's next meetings: 13 – 16 September 2010 and 11 – 15 October 2010.

Appendix I

BUDGET COMMITTEE

May Session 2010

Monday 3 May 2010 at 9.30 a.m. – Wednesday 5 May 2010

Room 7, Palais de l’Europe

REVISED DRAFT AGENDA

Item 1 Opening of the meeting

Item 2 Election of Chairperson and Vice-Chairperson of the Committee

Item 3 Examination of the following documents:

      - Report of the October 2009 meeting

      CM(2009)147: Meeting report of the Budget Committee – October 2009 session

      - Minutes of the September and October 2009 meetings

      P-Bud(2009)CR2 et P-Bud(2009)CR3: Budget Committee - Minutes of the September 2009 session and the October 2009 session

Item 4 Presentation of changes made by the Deputies to the draft budget for 2010
before its approval

      P-Bud(2010)1: Summary of the modifications made by the Deputies to the 2010 draft budget examined by the Budget Committee

Item 5 Execution of the 2009 budget - RBB and PMM results

      CM/Inf(2010)9: Budgets of the Council of Europe for the financial year 2009 - Progress Review Report
      CM/Inf(2010)12: Programme of Activities 2009 - Progress Review Report

SG/Inf(2010)9: Budget and Programme of Activities 2009; implementation review; summary note from the Secretary General

      P-Bud(2010)2: Budgetary Execution of the 2009 Ordinary Budget

Item 6 Examination of the priorities for 2011 and exchange of views with the Special Representative of the Secretary General for Organisational Development and Reform
Mr Gérard Stoudmann

      CM(2010)42rev Priorities for 2011
      1075d01_5 decision of the Committee of Ministers
      1083d01_6 decision of the Committee of Ministers

Item 7 Concept of “Zero Real Growth”

P-Bud(2010)3rev: “Zero Real Growth”

Item 8 Exchange of views with the Audit Committee

CM(2009)106 : Annual Report 2008 of the Audit Committee

Item 9 Revised Rules concerning the reimbursement of Persons travelling at the charge of Council of Europe budgets

P-Bud(2010)5: Revised Rules concerning the reimbursement of travel and subsistence expenses to government experts and other persons travelling at the charge of Council of Europe budgets

Item 10 Proposed Budget Adjustment of the Enlarged Agreement Democracy through Law (Venice Commission)

P-Bud(2010)4rev: Proposed Budget Adjustment of the Enlarged Agreement Democracy through Law (Venice Commission)

Item 11 Internal tax – Documents transmitted by Ms VAN NIEUWENBURG

Creation of an internal system of taxation

      Regulation (EEC, Euratom, ESCS) No 260/68 of the Council of 29 February 1968 laying down the conditions and procedure for applying the tax for the benefit of the European Communities
      COUNCIL REGULATION (EC, ECSC, EURATOM) No 2459/98 of 12 November 1998 amending Regulation (EEC, Euratom, ECSC) No 260/68 laying down the conditions and procedure for applying the tax for the benefit of the European Communities

Item 12 Pension Reserve Fund

      CM(2009)179 rev: Pension Reserve Fund – 2nd report for 2009 of the Management Board to the
      Committee of Ministers

***

Appendix II

BUDGET COMMITTEE

May session 2010

(3-5 May 2010)

LIST OF PARTICIPANTS

STATES

      MEMBERS

Austria

Mr Christoph JACKWERTH

Belgium

Mr Arie GEENS (Substitute)

France

Ms Marie-Chantal MUSSET (Chair)

Germany

Mr Michael LAUMANNS (Substitute)

Italy

Mr Claudio DE ROSE

Poland

Mr Bartosz BURACZYŃSKI (Substitute)

Romania

Mr Stefan PETRESCU

Russian Federation

Mr Andrei Vitalievitch KOVALENKO

Sweden

Mr Åke HJALMARSSON (Vice-Chair)

Turkey

Mr Fikret DEMIR

United Kingdom

Ms Joycelyn BUCHAN

Appendix III

Additional Information Documents:

Title of Document

P-Bud(2010)8 : Budgetary Execution of the 2009 Partial Agreements

P-Bud(2010)9 : Budgetary Execution of the 2009 Partial Agreements : Eurimages, North South Centre.

***

Appendix IV

Rules for the Reimbursement of Persons Travelling at the Charge of Council of Europe budgets

Article 6

1. Experts travelling by car by means other than public transport a distance exceeding 30 kilometres per journey (one way) shall be refunded a lump sum based on a kilometric allowance determined annually by the Committee of Ministers. Distances over 1600 kilometres for the return journey shall be refunded on the basis of Economy Class air fare from the nearest airports, unless there is prior approval by the Secretary General authorising reimbursement based on the kilometric allowance. Journeys of less than 30 kilometres (one way) by car are not reimbursed.
the first class rail fare, or the “Economy Class” air fare, whichever is lower, also taking into account the entitlement to daily allowances, excluding any supplements and without taking into account any other expenditure occasioned by the use of a car.

2. The journey time used as the basis for the entitlement to calculation of daily allowances shall be calculated on the basis of the journey time by the means of transport taken as the basis for the refund of travel expenses the result of the number of kilometres divided by 90 and shall not exceed 24 hours.

3. Related costs, such as toll and parking fees, may only be reimbursed with the prior approval of the Secretary General and only where there is no other possible alternative. Such claims shall be accompanied by evidence of the expenditure actually incurred.

2.4. If two or more experts entitled to claim expenses use the same car, a refund shall be made only to the person in charge of the vehicle, with an increase of 10% for each passenger.

3.5. Experts travelling by car do so at their own risk. The Council of Europe disclaims all liability in respect of any accident that may occur during the journey.

Note 1 This document has been classified restricted at the date of issue; it will be declassified in accordance with Resolution Res(2001)6 on access to Council of Europe documents.


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