WRITTEN QUESTION E-1393/01 by Christopher Huhne (ELDR) to the Commission. Public investment in the Member States.
Date: 2001-05-10
Institutions: European Parliament, Provisional data
Subjects: cost-benefit analysis, project evaluation, public investment, transport infrastructure

20.12.2001

EN

Official Journal of the European Communities

C 364 E/99

Answer give by Mr Solbes Mira on behalf of the Commission

(10 July 2001)

The Commission would agree that investments securing adequate rates of return should be undertaken in
both the public and the private sector. It also believes that the public sector must do its best to contribute
to the accumulation of capital within the economy and to promote economic growth (1). The level of
investment must, however, be compatible with the principle of budgetary discipline and cannot therefore
conflict with budgetary constraints, and in particular those imposed by the Stability and Growth Pact.
These constraints, which are intended to restore balance to the budget in the medium term, will also create
room for increased expenditure on government projects, by reducing the burden of public debt.

To evaluate projects in terms of performance and decide whether the public sector should shoulder the
costs, government bodies apply the techniques of cost-benefit analysis. Various methods are used, some
taking account of budgetary availabilities.
In any case, the profitability criterion must be viewed in
conjunction with budgetary considerations so that there is no risk of exceeding the limits imposed by
budgetary discipline.

(1) See the Communication from the Commission on (cid:145)The Contribution of Public Finances to Growth and

Employment: Improving Quality and Sustainability(cid:146), COM(2000) 846 final.

(2001/C 364 E/108)

WRITTEN QUESTION E-1393/01

by Christopher Huhne (ELDR) to the Commission

(10 May 2001)

Subject: Public investment in the Member States

Will the Commission describe the principle hurdle rate for public investment applied by each Member
State government? If there is more than one hurdle rate, will it describe the rate also applied to transport
infrastructure projects? Does the prospective flow of returns with which the hurdle rate is compared
include social costs and benefits, and if so will the Commission provide a brief description in each case of
the procedure and the key values attributed to time-savings and avoidance of deaths?

Answer given by Mrs de Palacio on behalf of the Commission

(13 July 2001)

the practice of many Member States for transport

The Commission understands that
infrastructure
investments is to (cid:145)discount(cid:146) future costs and benefits to establish a (cid:145)net present value(cid:146) rather than use
a single minimum hurdle rate (cut off rate). While this approach can be used in a strictly financial analysis,
the assessment framework most commonly used is that of social cost-benefit analysis. Here, capital costs
are compared with maintenance, vehicle operating, time and accident costs savings. In some Member
States environmental damage costs are also monetised whereas in others these and other broader impacts,
such as land use or regional economic development, are often taken into account as complementary,
qualitative information.

The discount rate normally applied in the cost-benefit analyses in the Member States varies between 3-8 %
on real (inflation adjusted) costs and benefits.

The Member States use a wide range of definitions, modal coverage and values for time savings. Using
harmonised definitions, the range provided by the EUNET (1) project is between € 6,3-23 per hour (h)
(1995 prices).

C 364 E/100

Official Journal of the European Communities

EN

20.12.2001

As regards savings from reductions in fatalities, the discrepancies in definitions and measurement among
the Member States is even bigger than for time savings. The values in use range from € 35 000-1 700 000
per fatality, representing a 48-fold difference. After harmonising for the definitions, the EUNET (1) project
reduced this difference to a factor of 4.5 and indicated a weighted average value of € 770 000 per fatality
(1995 prices). The 2nd Community programme on road safety (1997-2001) introduced the criteria of € 1
million for life saved.

The Commission also follows with interest the on-going work of Western European Road Directors on
project evaluation and impact assessment.

(1)

For more information, see final report of EUNET (cid:145)Socio-economic and spatial
impacts of transport(cid:146), Fourth
framework Transport Research programme, forthcoming at http://europa.eu.int/comm/transport/extra/reports.html.

(2001/C 364 E/109)

WRITTEN QUESTION E-1394/01

by Christopher Huhne (ELDR) to the Commission

(10 May 2001)

Subject: Corporation tax

What is the revenue raised by public authorities from corporation or other profits taxes on companies in
each year in each Member State, expressed as a proportion of GDP in each case? What conclusions does
the Commission draw from these figures concerning the debate over whether we need certain minimum
corporation tax rates to stop a so-called (cid:145)chase to the bottom(cid:146)?

Answer given by Mr Bolkestein on behalf of the Commission

(4 July 2001)

A table presenting taxes on corporate income as a percentage of gross domestic product (GDP) for the
Member States for the period 1980-2001 is sent direct to the Honourable Member and to Parliament(cid:146)s
Secretariat.

The Commission is not of the view that there is empirical evidence to suggest the existence of a so-called
(cid:145)race to the bottom(cid:146).

The Commission has in its recent Communication on tax policy concluded that the setting of tax rates in
this field is a matter for the Member States.

(2001/C 364 E/110)

WRITTEN QUESTION E-1396/01

by Nicholas Clegg (ELDR) to the Commission

(10 May 2001)

Subject: Directive for a general framework for informing and consulting employees

Has the Commission conducted an impact assessment of the proposed directive for a general framework
for informing and consulting employees? If it has, what were the results? If not, does the Commission
consider it to be responsible legislative practice to proceed with the adoption of a new directive without
being fully aware of its consequences?