Subsidies do not answer all EU’s ills

Tajani has not thought through his ‘kind of Erasmus for senior citizens’ scheme.

Antonio Tajani, the European commissioner for enterprise, has a taste for eccentric utterances that is reminiscent of the man who sent him to Brussels, Silvio Berlusconi. Like Italy’s former prime minister, Tajani exhibits a disconcerting tendency to simplify issues to the point that they seem ridiculous.

Tajani is currently on a visit to Berlin (25-26 April) and in a curtain-raising interview with the Financial Times Deutschland he suggested that governments should consider public subsidies to encourage elderly people to go on holiday. Tourism, he said, would benefit from “a kind of Erasmus for senior citizens”.

Erasmus is the EU’s programme to encourage young people (mostly) to spend part of their university courses studying in another European country. Those in the European Commission and elsewhere who fought hard to establish what is now widely recognised as an EU success story ought to bridle at the insinuation that Erasmus is tourism for the young. But there are other reasons for thinking that Tajani has not fully thought through what he is saying.

Erasmus has a strong element of European Union funding, but Tajani does not, apparently, want the EU to subsidise his “kind of Erasmus”. Rather, he thinks other governments should follow the example of Spain, which has offered subsidies of between €90 and €130 to the elderly to encourage them to take stays of eight days or longer in Spain. He thinks there should be subsidies at the level of regional and national government. In his discussions with representatives from the German tourism industry (both public and private) he will be reviewing a pilot project in Mecklenburg-Vorpommern. But to confuse a European subsidy scheme – Erasmus – with regional and national subsidies is careless, to put it mildly.

Tourism is undoubtedly important to the European economy. It is also true that the industry has some structural difficulties: the trade is distressingly seasonal and horribly vulnerable to economic cycles. So one can see why policymakers might worry about how to prolong the tourist season and indeed to encourage more off-season travel.

It is also true that the elderly are important actors in the European economy in a way that was not the case a few decades ago. The grey euro – and the grey dollar, yen and Swiss franc – is worth courting. What is less clear is whether it is this generation of baby-boomers – the grey panthers who have taken retirement or early retirement – that is most in need of public subsidy. True, the elderly have the time and the disposable income to indulge in tourism. But it does not follow that they need subsidy in order to persuade them to do so.

Tajani argues elsewhere that tourism is “a moral right of European citizens”. Perhaps that explains his strange thinking. Or perhaps the lack of scepticism should be put down to Tajani being a former MEP – for MEPs there is a special slush fund to bring members of their electorate to visit the Parliament. Either way, subsidies for individual tourists are administratively heavy, hard to target efficiently at those who would not otherwise travel, and the returns are uncertain. In most parts of the EU, public-sector money would be better spent (ie, would attract a greater return on the investment) if it were used to improve the infrastructure for tourism.

There is a broader point that Tajani would do well to note in the week that the European Commission publishes its proposal for the EU’s 2013 budget: all European commissioners should be wary about where and how they advocate more public spending. The Commission, like the member states, has to make tougher, better choices about where to spend taxpayers’ money to boost economic recovery. Wrong choices and lazy choices will discredit the Commission, already perceived as being profligate and spendthrift. The commissioner for enterprise should choose his words more carefully.