PURPOSE : to present the final adoption of the general budget of the European Union for the financial year 2006.

LEGISLATIVE ACT : 2006/179/EC, Euratom.

CONTENU : the 2006 budget was adopted on 15 December 2005 with the European Parliament ’ s second reading. The total level of commitment appropriations amounts to EUR 121 190 million, which represents an increase of 4.5 % on 2005. Payment appropriations increase by 5.9 % to EUR 111 969 million, which represents 1.01 % of the gross national income (GNI) of the European Union. The margins remaining below the ceilings of the financial perspective are EUR 2 505 million for commitments and EUR 7 323 million for payments.

For agriculture and rural development commitments amount to EUR 51 051 million, leaving a margin of EUR 1 567 million under the ceiling. Payment appropriations increase by 5.2 % compared to 2005 to a level of EUR 51 991 million. During the budgetary process, an adjustment to the sub-headings of the financial perspective was agreed, allowing for modulation of funds from sub-heading 1a agriculture to sub-heading 1b rural development in line with the last reform of the CAP. Of the total commitments under Heading 1, EUR 7 771 million is for rural development measures, with payments at EUR 7 711 million.

For structural operations , commitments increase by 5 % on 2005 to EUR 44 555 million. Payment appropriations amount to EUR 35 640 million, which is an increase of 10 % compared to 2005. In addition, in accordance with the declaration agreed at the trilogue of 30 November, if the Commission becomes convinced of a shortage in payment appropriations, it will present a preliminary draft amending budget to the budgetary authority, which should be decided

on in a single reading.

Commitment appropriations for internal policies amount to EUR 9 373 million. This is an increase of 2.4 % on 2005, and leaves a margin of EUR 12 million under the ceiling. Payment appropriations increase by 10.9 % to EUR 8 889 million. The budgetary authority agreed to increase the financial envelope for a number of co-decided programmes, which are in their final year, for a total amount of EUR 100 million. The emphasis is on measures to encourage growth, environmental protection and encouraging active citizenship, especially among Europe’s young people, thus contributing to the Lisbon Strategy.

For external actions , commitments increase by 5.9 % to EUR 5 544 million, and payments decrease by 2% to EUR 5 369 million. Of this, EUR 275 million is to be financed outside Heading 4 by recourse to the Flexibility Instrument. This amount is broken down as follows: EUR 100 million for reconstruction in Iraq (out of a total amount of EUR 200 million); EUR 95 million for aid to the regions affected by the tsunami (out of a total amount of EUR 180 million); EUR 40 million for support to the Sugar Protocol countries affected by reform in the EU sugar sector; and EUR 40 million for the Common Foreign and Security Policy (CFSP).

For administrative expenditure both commitment and payment appropriations are set at EUR 6 656 million, which is an increase of 5.8 % on 2005. A total of new 800 posts are created, of which 700 are related to the last enlargement, and 100 are intended for external staff in order to prepare the accession of Bulgaria and Romania.

The preparation for future enlargements will continue, in line with the roadmaps agreed for Bulgaria and Romania.

Turkey and Croatia will also continue to benefit from the pre-accession strategy funding. An overall amount of EUR 2 481 million is programmed in commitments for pre-accession strategy (heading 7) , which represents an increase of 19.2% on the 2005 budget, but still leaves a margin under the ceiling of EUR 1 085 million.

In accordance with the political agreement that the new Member States should not become net-contributors to the budget at this early stage of their membership, compensation of EUR 1 074 million is foreseen under Heading 8. This will be available as transfers to the new Member States to balance their budgetary receipts and contributions.

The Council held a conciliation meeting with a delegation from the European Parliament to examine the EU's draft general budget for 2006. Despite major progress in bringing positions closer together, representatives of the two institutions were unable to reach total agreement at this stage, and the Council postponed its second reading of the draft budget. The presidency indicated that it would reflect on how to take work forward with a view to bringing the conciliation to a successful conclusion and also enabling the Council to approve its second reading as soon as possible.

The European Parliament adopted a resolution drafted by Valdis DOMBROVSKIS (EPP-ED, LV) on the EU's draft general budget for 2006 (institutions other than the Commission) and mostly focused on the Parliament and its targets for the coming year.

General framework: Parliament was in favour of leaving an adequate margin under the ceiling of heading 5 (Administrative expenditure). It proposed restoring some EUR 7.7 million out of the EUR 15.1 million cut made by Council in its first reading on the budgets of the other institutions (excluding Parliament and the Council).

Section I - European Parliament: 20% of the European institutions' administrative resources are dedicated to the European Parliament. With an estimated maximum of EUR 1341 million at its disposal, the Parliament decided to further limit its spending with a proposed cut of EUR 20m to EUR 1321 million. Parliament emphasised that this was not a precedent for future years. It also decided to enter in the reserve of the 'Provisional appropriations to cover the institution's property investments' (Item 2009) an amount of EUR 15 million to allow the continuing acquisition of buildings.

Furthermore, EUR 20 million will be put in an " information and communication reserve ". Finally Parliament decided, in addition to the amount of EUR 13.8 million entered in its estimates, to make available further appropriations totalling EUR 9 726 000 in connection with preparations for Romanian and Bulgarian accession

For the remaining sections, please see the summary dated 13/10/2005.

The European Parliament adopted a resolution drafted by Valdis DOMBROVSKIS (EPP-ED, LV) on the EU's draft general budget for 2006 (institutions other than the Commission) and mostly focused on the Parliament and its targets for the coming year.

General framework: Parliament was in favour of leaving an adequate margin under the ceiling of heading 5 (Administrative expenditure). It proposed restoring some EUR 7.7 million out of the EUR 15.1 million cut made by Council in its first reading on the budgets of the other institutions (excluding Parliament and the Council).

Section I - European Parliament: 20% of the European institutions' administrative resources are dedicated to the European Parliament. With an estimated maximum of EUR 1341 million at its disposal, the Parliament decided to further limit its spending with a proposed cut of EUR 20m to EUR 1321 million. Parliament emphasised that this was not a precedent for future years. It also decided to enter in the reserve of the 'Provisional appropriations to cover the institution's property investments' (Item 2009) an amount of EUR 15 million to allow the continuing acquisition of buildings.

Furthermore, EUR 20 million will be put in an " information and communication reserve ". Finally Parliament decided, in addition to the amount of EUR 13.8 million entered in its estimates, to make available further appropriations totalling EUR 9 726 000 in connection with preparations for Romanian and Bulgarian accession

For the remaining sections, please see the summary dated 13/10/2005.

The committee adopted the report by Valdis DOMBROVSKIS (EPP-ED, LV ) on the EU's draft general budget for 2006 (institutions other than the Commission). In its general remarks, the report reiterated Parliament's commitment to providing "the necessary means to consolidate the 2004 enlargement, to prepare for the next enlargement and to ensure the proper functioning of the institutions". While agreeing that budgetary rigour must be applied to administrative expenditure, the committee nevertheless criticised the Council's method of "undifferentiated across-the-board cuts". It wanted an adequate margin to be left under the ceiling of heading 5 (Administrative expenditure) and proposed to restore some EUR 7.4 million of the EUR 15.1 million which the Council had cut at first reading from the budgets of the other institutions (excluding Parliament and the Council).

- Section I - European Parliament : the report stressed that over the years Parliament had successfully respected its self-imposed ceiling of a 20% share of heading 5. Having prudently examined Parliament's real needs, MEPs decided that there was potential for reducing Parliament's budget for 2006 by EUR 20 million. They therefore set the budget at EUR 1 321.6 million, while stressing that this reduction did not constitute a precedent for subsequent years.

Although 2006 marked a pause in Parliament's successful buildings policy, the committee decided to set aside EUR 15m for the purchase of buildings in case opportunities arose in 2006. MEPs also said that, in line with Parliament's priorities, EUR 20 m should be entered in an 'Information and Communication' reserve for improving communication between the EP and the citizens. They also wanted to see "a more comprehensible and attractive structure for debates in plenary" and further improvement of provision of linguistic services to Members. Finally, they decided to increase the amount of EUR 13.8 m earmarked for preparations for the accession of Bulgaria and Romania by EUR 9.7m, bringing the total to EUR 23.5m;

- Section II - Council : the committee expressed concern at the appropriations allocated to cover expenditure on CFSP activities as well as the introduction of multiple new budget lines for ESDP/CFSP-related activities. It pointed out that other institutions' budgets should cover administrative expenditure;

- Section IV - Court of Justice : MEPs increased the appropriations made available by the Council by EUR 3.4 m, mainly for salaries, freelance transation and information technology;

- Section V - Court of Auditors : MEPs increased the appropriations made available by the Council by EUR 1.55 m, mainly for salaries;

- Section VI - Economic and Social Committee (ESC) : MEPs increased the appropriations made available by the Council by EUR 1.19 m, mainly for salaries and adjustments to buildings-related expenditure;

- Section VII - Committee of the Regions (CoR) : MEPs increased the appropriations made available by the Council by around EUR 1.26 m, mainly for salaries and adjustments to buildings-related expenditure;

- Section VIII(A) - European Ombudsman : MEPs increased the appropriations made available by the Council by EUR 173 056;

- Section VIII( B) - European Data Protection Supervisor : MEPs increased the appropriations made available by the Council by EUR 136 600.

A total of EUR 6 578 million has been allocated to Heading 5 (Administration) of the Financial Perspective. This is EUR 119 87 million short of that originally proposed by the Commission in its draft preliminary budget (PDB). (See 2005/2001 BUD). Of the EUR 6 578 approved, EUR 4 106 million is being granted to the European Commission’s budget (including OPECE, OLAF, EPSO with EAS, PMO, OIB and pensions). Although this is lower than that foreseen by the Commission, it nevertheless represents an increase of 3.8% on the 2005 budget, equivalent to EUR 149 469 090. For the remaining institutions a total of EUR 2 472 million has been allocated covering both commitment and payment appropriations. The Council has authorised that the margin for Heading 5 should be set at EUR 130 11 million, compared to that of the Commission’s PDB, where a figure of EUR 25 million was proposed.

Other modifications introduced by the Council to the PDB include:

- applying a 2% reduction on current expenditure. This takes account of savings made by an efficiency drive and the impact of inter-institutional co-operation.

- Increasing the standard flat rate abatement on salaries for some institutions. This takes account of the current rate of vacancy.

- Accepting all A grade posts needed for enlargement and the introduction of other new activities. Some reductions have been applied to B and C grade posts.

- Accepting 75% of the requests made by the institutions for new, pre-enlargement post. This takes account of the recruitment rate in recent years.

- Accepting conversions and upgradings, in particular those related to career development under the new Staff Regulations.

The Council’s other modifications to the PDB can be summarised as follows:

European Parliament – Section I: Under the terms of a “gentleman’s agreement”, the Council has agreed to include the European Parliament’s draft general budget for the 2006 financial year, without any changes. The estimate represents an increase of EUR 77 6 million, or an increase of 6.14% on the 2005 budget. Council – Section II: The Council has allocated itself at total of EUR 591 752 953 for the financial year 2006, representing an increase of 5.08% over the 2005 budget. The standard flat rate abatement on salaries has been fixed at 5.2% taking into account the current rate of vacancies. As far as staffing is concerned the Council has approved the creation of 161 new posts, as well as the transfer of one C1 post to the Commission’s ADMINFO. The transformations for career development, in line with revised Staff Regulations, were approved by the Council. It has also accepted two upgradings and the transformation of five grade A posts. However, it could not accept a request for two grade B posts and twenty-two grade C requested for the pre-enlargement process. Court of Justice – Section IV: The Council has allocated a total of EUR 246 940 602 to the Court of Justice, representing an increase of 7.86% on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 4% taking account of the current rate of vacancies. As far as staffing levels are concerned, the Council has approved appropriations for eight new Member States, equating to seven judges and one registrar for the new Civil Service Tribunal and the creation of twenty two new posts, of which eighteen are for the new Tribunal. In addition, the Council accepted 51 upgradings, of which thirty-six transformations are related to career development in line with revised Staff Regulations. Eleven posts have been removed. As regards contracts with agents and national experts, the Council has approved 75% of the appropriations requested to take account of the forthcoming accession of Romania and Bulgaria. However, in the case of the Civil Service Tribunal, the Council has rejected the request for nine grade B, three grade C and four temporary grade B posts. Court of Auditors – Section V: For 2006, the Council has allocated an over all amount of EUR 111 641 491 to the Court of Auditors, representing a 4.39% n increase on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 3.5% taking into account the current rate of vacancies. As far as staffing is concerned, the Council has accepted the creation of eleven new posts, equating to ten A grade (six without financing in view of the forthcoming accession of Romania and Bulgaria). One grade A post has been removed. Fifty two upgradings have been approved in line with revised Staff regulations as well as thirty one transformations. The Council approved 75% if the appropriations requested for contracts with national experts and agencies to take account of Romanian and Bulgarian accession. Four grade B posts were rejected. Economic and Social Committee – Section IV: A total amount of EUR 106 794 805 has been allocated to the Economic and Social Committee for 2006, representing an increase of 3.85% on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 4% taking account of the current rate of vacancies. As far as staffing levels are concerned the Council has approved the creation of 28 posts, of which twenty are directly related to the EU’s enlargement. Requests for ten grade B posts have been turned down. Committee of the Regions – Section IV: The Council has allocated a total overall amount of EUR 62 103 170 to the Committee of the Regions, representing an increase of 3.94%. The standard flat rate of abatement on salaries has been fixed at 4.5% taking account of the current vacancy rate. Concerning staffing levels, the Council has approved the creation of 20 posts, of which fourteen are language-related posts and one a temporary grade A. In addition the Council has accepted thirty one career transformations in line with revised Staff Regulations. Thirteen grade B and fourteen grade C posts have been rejected. European Ombudsman – Section VIII: An overall total of EUR 7 509 482 has been allocated to the European Ombudsman for 2006, representing an increase of EUR 3.94%. With regard to staffing levels, the Council has agreed to the creation of four new posts for six months, of which three are related to the accession of Romania and Bulgaria. In line with revised Staff Regulation, the Council has accepted the number of transformations requested. Two grade B posts were rejected. European Data Protection Supervisor – Section VIII B. An overall total of EUR 3 447 233 has been awarded to the European Data Protection Supervisor for 2006, representing an increase of 21.35%. Three new posts have been approved, whilst the request for one grade B and one grade C have been turned down.

A total of EUR 6 578 million has been allocated to Heading 5 (Administration) of the Financial Perspective. This is EUR 119 87 million short of that originally proposed by the Commission in its draft preliminary budget (PDB). (See 2005/2001 BUD). Of the EUR 6 578 approved, EUR 4 106 million is being granted to the European Commission’s budget (including OPECE, OLAF, EPSO with EAS, PMO, OIB and pensions). Although this is lower than that foreseen by the Commission, it nevertheless represents an increase of 3.8% on the 2005 budget, equivalent to EUR 149 469 090. For the remaining institutions a total of EUR 2 472 million has been allocated covering both commitment and payment appropriations. The Council has authorised that the margin for Heading 5 should be set at EUR 130 11 million, compared to that of the Commission’s PDB, where a figure of EUR 25 million was proposed.

Other modifications introduced by the Council to the PDB include:

- applying a 2% reduction on current expenditure. This takes account of savings made by an efficiency drive and the impact of inter-institutional co-operation.

- Increasing the standard flat rate abatement on salaries for some institutions. This takes account of the current rate of vacancy.

- Accepting all A grade posts needed for enlargement and the introduction of other new activities. Some reductions have been applied to B and C grade posts.

- Accepting 75% of the requests made by the institutions for new, pre-enlargement post. This takes account of the recruitment rate in recent years.

- Accepting conversions and upgradings, in particular those related to career development under the new Staff Regulations.

The Council’s other modifications to the PDB can be summarised as follows:

European Parliament – Section I: Under the terms of a “gentleman’s agreement”, the Council has agreed to include the European Parliament’s draft general budget for the 2006 financial year, without any changes. The estimate represents an increase of EUR 77 6 million, or an increase of 6.14% on the 2005 budget. Council – Section II: The Council has allocated itself at total of EUR 591 752 953 for the financial year 2006, representing an increase of 5.08% over the 2005 budget. The standard flat rate abatement on salaries has been fixed at 5.2% taking into account the current rate of vacancies. As far as staffing is concerned the Council has approved the creation of 161 new posts, as well as the transfer of one C1 post to the Commission’s ADMINFO. The transformations for career development, in line with revised Staff Regulations, were approved by the Council. It has also accepted two upgradings and the transformation of five grade A posts. However, it could not accept a request for two grade B posts and twenty-two grade C requested for the pre-enlargement process. Court of Justice – Section IV: The Council has allocated a total of EUR 246 940 602 to the Court of Justice, representing an increase of 7.86% on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 4% taking account of the current rate of vacancies. As far as staffing levels are concerned, the Council has approved appropriations for eight new Member States, equating to seven judges and one registrar for the new Civil Service Tribunal and the creation of twenty two new posts, of which eighteen are for the new Tribunal. In addition, the Council accepted 51 upgradings, of which thirty-six transformations are related to career development in line with revised Staff Regulations. Eleven posts have been removed. As regards contracts with agents and national experts, the Council has approved 75% of the appropriations requested to take account of the forthcoming accession of Romania and Bulgaria. However, in the case of the Civil Service Tribunal, the Council has rejected the request for nine grade B, three grade C and four temporary grade B posts. Court of Auditors – Section V: For 2006, the Council has allocated an over all amount of EUR 111 641 491 to the Court of Auditors, representing a 4.39% n increase on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 3.5% taking into account the current rate of vacancies. As far as staffing is concerned, the Council has accepted the creation of eleven new posts, equating to ten A grade (six without financing in view of the forthcoming accession of Romania and Bulgaria). One grade A post has been removed. Fifty two upgradings have been approved in line with revised Staff regulations as well as thirty one transformations. The Council approved 75% if the appropriations requested for contracts with national experts and agencies to take account of Romanian and Bulgarian accession. Four grade B posts were rejected. Economic and Social Committee – Section IV: A total amount of EUR 106 794 805 has been allocated to the Economic and Social Committee for 2006, representing an increase of 3.85% on the 2005 budget. The standard flat rate abatement on salaries has been fixed at 4% taking account of the current rate of vacancies. As far as staffing levels are concerned the Council has approved the creation of 28 posts, of which twenty are directly related to the EU’s enlargement. Requests for ten grade B posts have been turned down. Committee of the Regions – Section IV: The Council has allocated a total overall amount of EUR 62 103 170 to the Committee of the Regions, representing an increase of 3.94%. The standard flat rate of abatement on salaries has been fixed at 4.5% taking account of the current vacancy rate. Concerning staffing levels, the Council has approved the creation of 20 posts, of which fourteen are language-related posts and one a temporary grade A. In addition the Council has accepted thirty one career transformations in line with revised Staff Regulations. Thirteen grade B and fourteen grade C posts have been rejected. European Ombudsman – Section VIII: An overall total of EUR 7 509 482 has been allocated to the European Ombudsman for 2006, representing an increase of EUR 3.94%. With regard to staffing levels, the Council has agreed to the creation of four new posts for six months, of which three are related to the accession of Romania and Bulgaria. In line with revised Staff Regulation, the Council has accepted the number of transformations requested. Two grade B posts were rejected. European Data Protection Supervisor – Section VIII B. An overall total of EUR 3 447 233 has been awarded to the European Data Protection Supervisor for 2006, representing an increase of 21.35%. Three new posts have been approved, whilst the request for one grade B and one grade C have been turned down.

In a letter from the European Commission to the Secretary General of the European Parliament, it is stated that, in accordance with Article 272 (9) of the Treaty on the European Community, the maximum rate of increase of “non compulsory” expenditure for the 2006 budget is set at 3.6%.

PURPOSE: The presentation of the Preliminary Draft Budget for the EU institutions 2006 (Budget: Other Sections)

CONTENT: In presenting a preliminary draft budget for 2006, the Commission is taking into account the expenditure of all of the EU institutions.

In terms of its own spending the Commission draft proposes EUR 3 009 million, equalling an increase of 6.16% on 2005 figures. The proposed raise is due to the continuing enlargement process. For the other institutions an increase of 6.27% on 2005 figures is being proposed equivalent to a total budget of EUR 2 482 million. Adding the two together results in a total administrative expenditure for all of the EU institutions equivalent to EUR 6 683 million, in other words a rise of EUR 390 million compared to 2005. Proportionally speaking, Heading 5 is divided as follows:

- 45% for the Commission (not including communal expenses) - EUR 3 009 million;

- 37.2 % for the other institutions - EUR 2 482 million (including the European Parliament, Council, Court of Justice, Court of Auditors, Committee of the Regions, Economic and Social Affairs Committee, European Ombudsman and the European Data Protection Supervisor).

- 17% for common expenses - EUR 1 197 million sub-divided as follows:

pensions: EUR 904 82 million;

European Schools: EUR 130 million;

OPOCE: EUR 80 86 million;

OLAF: EUR 50 16 million;

All together this then adds up to EUR 6 683 million for the total of heading 5.

A new system is being introduced whereby administrative expenditure will, in future, be budgeted in line with its relevant policy field. More specific expenditure, such as Official Journal publications or Commission representations abroad, will be budgeted separately. It is noteworthy that the Commission is seeking to create 700 new posts to be established within the framework of EU enlargement – on top of the 700 created in 2005. One new, non-negotiable, expense is expenditure on increasing the security of Commission buildings.

PURPOSE: The presentation of the Preliminary Draft Budget for the EU institutions 2006 (Budget: Other Sections)

CONTENT: In presenting a preliminary draft budget for 2006, the Commission is taking into account the expenditure of all of the EU institutions.

In terms of its own spending the Commission draft proposes EUR 3 009 million, equalling an increase of 6.16% on 2005 figures. The proposed raise is due to the continuing enlargement process. For the other institutions an increase of 6.27% on 2005 figures is being proposed equivalent to a total budget of EUR 2 482 million. Adding the two together results in a total administrative expenditure for all of the EU institutions equivalent to EUR 6 683 million, in other words a rise of EUR 390 million compared to 2005. Proportionally speaking, Heading 5 is divided as follows:

- 45% for the Commission (not including communal expenses) - EUR 3 009 million;

- 37.2 % for the other institutions - EUR 2 482 million (including the European Parliament, Council, Court of Justice, Court of Auditors, Committee of the Regions, Economic and Social Affairs Committee, European Ombudsman and the European Data Protection Supervisor).

- 17% for common expenses - EUR 1 197 million sub-divided as follows:

pensions: EUR 904 82 million;

European Schools: EUR 130 million;

OPOCE: EUR 80 86 million;

OLAF: EUR 50 16 million;

All together this then adds up to EUR 6 683 million for the total of heading 5.

A new system is being introduced whereby administrative expenditure will, in future, be budgeted in line with its relevant policy field. More specific expenditure, such as Official Journal publications or Commission representations abroad, will be budgeted separately. It is noteworthy that the Commission is seeking to create 700 new posts to be established within the framework of EU enlargement – on top of the 700 created in 2005. One new, non-negotiable, expense is expenditure on increasing the security of Commission buildings.