CiU and the PP reach a final agreement to approve the Catalan Budget

Barcelona (ACN).- The Centre-Right Catalan Nationalist Coalition ‘Convergència i Unió’ (CiU) and the People’s Party (PP) have reached an agreement to approve the Catalan Government’s Budget for 2012. CiU controls the Catalan Government but needs 6 MPs to reach the absolute majority in the Catalan Parliament. The PP, which now runs the Spanish Government with an absolute majority in the Spanish Parliament, is the third party in the Catalan assembly. Both parties have been engaged in intense negotiations over the last number of weeks to close a deal on the Catalan Budget for this year. They finally reached a definitive agreement in the early hours of Tuesday morning, after a long negotiation process. The agreement not only focused on the budgetary law itself, but on additional laws and plans that will be developed in 2012. The PP President in Catalonia, Alícia Sánchez-Camacho, was particularly satisfied with the final pact, which gives the PP a central role in the Catalan political arena. “This is an agreement for the present and the future, and it shows that the PP has a determinant role in Catalonia”, she said. CiU and the PP had already agreed on the 2011 Catalan Budget, but the PP’s influence then was much smaller than this time. Pressure from the PP has forced the modification of several measures, such as two of the main initiatives foreseen in CiU’s original proposal: the drug prescription fee and the tourist tax. However, those changes had already been agreed on last week and the latest negotiations focused on the water supply fee, on money allocation to organisations, as well as on additional laws and plans to be developed during the year to foster job creation, transparency and spending limitations. The Spokesperson for the Catalan Government, Francesc Homs, denied they have reached a “stable agreement with the PP” and praised the PP for its “responsibility” to give its support to pass “a difficult budget in such difficult times”. Opposition parties have criticised a long-term agreement between CiU and the PP. They say it is similar to the 1996 agreement signed in Barcelona’s Majestic Hotel, when CiU gave its support to José María Aznar to become Spain’s Prime Minister in exchange for more money and powers to Catalonia and the PP’s support in the Catalan Parliament. The ‘Majestic Agreement’, as it is known in Catalan political jargon, lead CiU to the loss of electoral support, particularly among its pro-Catalan-independence base. Besides, three minority parties consider some points of the agreement to go against the Catalan Statute of Autonomy (Catalonia’s “constitution”), and have appealed the budgetary law. This move will delay the approval of the budget by a further month and thus the implementation of some of the planned measures.

After weeks of discussions, CiU and the PP negotiators met on Monday night in a Barcelona hotel to have dinner. Their aim was to leave the hotel with a definitive agreement on the Catalan Government budget for 2012, since it is to be debated in the Catalan Parliament next Wednesday. The agreement came at almost 4am on Tuesday morning. Some hours later, the PP’s President in Catalonia, Alícia Sánchez-Camacho, proudly displayed the document that gives the PP “a determinant role in Catalonia”, she said. It includes aspects of the budget law and other initiatives that will be developed during the year. In addition, it creates a commission to undertake a follow-up of the agreement’s implementation.

Tourist tax and drug prescription fee, delayed and reduced

The agreement, as announced last week, foresees a modification of the Catalan Government’s original proposal for the drug prescription fee and the tourist tax. Finally, Catalan citizens will have to pay a €1 fee for each drug prescription from June onwards. However, neither low income earners will have to pay the fee: nor those on non contributive pensions, receivers of the minimum income integration grant, and chronically-ill patients. Furthermore, the fee will not be charged for medication that costs less than €1.67 and after 62 prescriptions in a year. The Catalan Government originally expected to obtain €100 million in additional revenue, a quantity that will be now reduced.

The tourist tax has been put off until November 1^st, leaving the summer-season without the tourist fee. In addition, the number of nights the fee will be charged has been reduced, from 10 to 7. Therefore, visitors will only have to pay for the first 7 nights, and from the eighth night, no fees will be charged. Furthermore, group reservations will only be charged the equivalent of two people, the rest will be excluded, no matter the number of people in the group. Neither children and teenagers up to age of 16 nor people participating in social programmes will have to pay the tax. Finally, all fees have been reduced regarding the original proposal and Barcelona will have a different rate from the rest of Catalonia, according to the PP. With the new proposal, people staying in five-star hotels and cruise ships would pay €2.50 per night. Those staying in four-star hotels in Barcelona would pay €1.25 and in the rest of Catalonia €1 per night. The remaining hotel categories will charged 75 cent per night in Barcelona and 50 cent in the rest of Catalonia. 30% of the money will go to the municipalities, except for Barcelona City Coucil, which will receive 50% of the amount. The Catalan Government expected to collect €130 million with the new tax in 2012, and now it will only receive €13 million.

Water supply fee

One of the key aspects of the negotiations in the last number of days was the initiative to increase the water supply fee to retail suppliers. The Catalan Water Agency (ACA) is the original supplier and is also in charge of managing water purification. Water retail suppliers, such as private companies and municipalities pay a fee to the ACA. The agency has a large debt of more than a €1 billion. The Catalan Government hoped to increase the ACA’s fees in order to balance its books. However the PP feared that that this increase would affect citizens. Tuesday’s agreement will see the fees municipalities have to pay delayed by six months. Water distribution companies will have their fees reduced from the Government’s original proposal. Furthermore, water distribution companies will have fee reductions to deal with arrears payments by their customers. In total, the Catalan Government will have 25% less revenue than expected by increasing the water supply fees.

Less money for public companies and organisations, except victims of terrorism and  municipalities

CiU and the PP have agreed to reduce the number of public companies depending on them by 25%. On top of this 25% reduction there is the 10% reduction that was already agreed in 2011. Both parties state in the document that with this reduction they want to “rationalise” and “simplify” Catalonia’s public sector.

They have agreed to reduce the amount of money allocated and subsidies to some public companies and organisations. In particular, some related to historical memory, Catalan identity and external relations and cooperation. One organisation has seen its budgetary allocation increased: the Catalan Association of Terrorism Victims. In fact, it has been a constant drive within Spanish politics the PP’s connection to certain terrorism victim associations, which have on many occasions protested against any kind of negotiation or peace talks with the terrorism group ETA.

Town halls, some of which are in difficult economic situations, will receive more money from the tourist fee but also from the fund to support local governments.

Building new schools and community health centres, as well as more police

Another aspect both Centre-Right parties have agreed on is building or renovating schools and community health centres in very specific locations throughout Catalonia. For instance, they have agreed to build a new high-school in Castelldefels, a coastal town in the Barcelona Metropolitan Area that is governed by the PP for the first time. In addition, the Catalan Government will keep the public subsidies to centres with students with special needs.

Besides, CiU and the PP have agreed to improve the resources and increase the staff of the Catalan Police force, called the ‘Mossos d’Esquadra’. However, to be implemented it needs the elimination of the measure that did not allow the hiring of new civil servants, which is not very likely to be modified this year.

An additional pack of laws and action for the rest of the year

The agreement foresees a programme for “economic recovery” that is split into three main laws and a plan to foster job creation in Catalonia. Both parties have agreed on an Employment Plan for Catalonia. In addition, there will be a law to foster and support entrepreneurship. Both initiatives aim to create more jobs in the Catalan economy.

Besides, two laws in line with the austerity plan will be developed and approved. Firstly, a transparency law that will provide greater information on all public salaries and appointments. Secondly, a budget stability law that will fix a spending ceiling, aimed at controlling the deficit of the entire public sector in Catalonia.