THE MAIN message of The Best of All Possible Worlds – Value for Money in Slovak Public Policies, an initiative economist Martin Filko introduced just after the general elections and a few days before he died in a drowning accident, is simple: government decisions should be based on analyses which lead to an effective and performance-oriented public administration. While this may look simple and obvious, this requires a change in the way of thinking of the state so that politicians do not decide subjectively.
Elements of the initiative on which Filko worked together with Štefan Kišš and Ľudovít Ódor have made it to the programme statement and now the government is launching pilot examinations of expenditures in health care, transport and the cross-sectoral process of informatisation. This will mean checks of expenditures which account for about 40 percent of public administration expenditures based on which measures to achieve a better value for money should be proposed.
“We have very ambitious goals,” said Finance Minister Peter Kažimír on April 29 when the cabinet approved the Programme of Stability and the National Programme of Reforms. “We want to achieve better value for money.”
Filko introduced the initiative after the elections on March 7 in order for politicians to be inspired by it for the next term. In the 76-page document he, Kišš and Ódor explained how the way of thinking of the state should change and that politicians should decide on the basis of results of analyses.
This way “the best benefit for citizens, meaning the best ways of obtaining and spending public finances or regulation of behaviour of people and firms is being sought”.
The initiative touches on three levels, with value for money as the first one. The second level is the reform of institutions and the third is collecting and making accessible data and usage of modern analytic instruments. The reform of public administration can save the state €300-€500 million annually, according to the report.
View of analysts
Most economic analysts support The Best of All Possible Worlds initiative, even though their support is not unconditional.
“We agree that lack of information about effectiveness increases the risk of wasting public resources, either consciously when often accompanied by corruption, or unconsciously,” the Institute for Economic and Social Reforms (INEKO) think tank wrote in its response to the initiative.
The Institute for Economic and Social Studies (INESS) think tank has been pointing to the need of analytical evaluation of expenditure policies since 2008 as this process is commonly used in the world’s most developed countries.
“Systemic evaluation of expenditures, its regular re-evaluation should be a must for the state administration,” INESS analyst Radovan Ďurana told The Slovak Spectator. “The discussion should be limited to only the methodology of this evaluation.”
Ďurana also warns that one should not expect miracles from an analytic evaluation.
“The IFP already during the Iveta Radičová government pointed out the ineffectiveness of the premium that housing construction savers receive, but politicians have not found courage yet to cancel this senseless expenditure,” said Ďurana, adding that a natural weak point of analytical evaluation is the fact that not everything can be calculated and that there can be an uncritical stress on some variables like GDP growth.
Martin Reguli, an analyst from the F. A. Hayek Foundation, also has mixed feelings about the initiative.
“On one side it is in a certain direction a really theoretically important document, but which, in my opinion, approaches the issue of the public administration from a very idealistic viewpoint,” Reguli told The Slovak Spectator.
Reguli assesses positively the value for money approach and cost benefit analyses as well as the focus on performance.
“But in context of long-term problematic system of ineffectiveness of the public administration in combination with political influences that we have here, I consider this proposal to be a wish that will be never fully implemented,” said Reguli, adding that he does not share the goal of this plan focusing on effectiveness of the state administration regardless of its limits.
INEKO also does not believe that civil society can be fully replaced when evaluation is in many cases politically too sensitive and thus its main concerns are related to proper staffing and overcoming of administrative obstacles.
“The staffing and autonomy of the analytical centres that should also publish analyses that will not always be in line with projections of politicians will be of key importance,” Peter Goliaš of INEKO told The Slovak Spectator.
Kažimír also sees the staffing as important.
“We have drawings, but we do not know whether the plane will fly,” Kažimír said on April 13. “Our main designer and testing pilot died, thus everything is upon us. Each activity is about people and the question is with what people we will manage to materialise this idea.”
So far there has not been chosen a successor for Filko at the helm of IFP and Lucia Šrámková was appointed to act as a substitute director.
Goliaš also sees as another hindrance in overcoming administrative obstacles when introducing new goals pursuing effectiveness of public finances and also when measuring fulfilment of these goals.
“I do not have great expectations but I cross my fingers for the project,” Goliaš said.
Initiative in the manifesto
INESS notes that many of Filko’s principles are in the new government’s adopted programme statement, but notes that it remains to be seen whether they will be included in practice. Ďurana also sees several conditions that have to be met for the adopted proposals to bear fruit. These include allocation of funds for the analysis of expenditures and that politicians would not obstruct such analysis. Another condition is that the analyses should be made public and the last but not least condition is that politicians must be willing to conform to results of these analyses, Ďurana said.
“The government, parliament or the state administration must adopt this approach to public finances, otherwise expected effects will not materialise,” he added.
Reguli, meanwhile, remains a sceptic and does not expect real reforms from the current cabinet.
Checks of expenditures
The Fico government already plans to examine expenditures in health care, transport and informatisation based on the initiative. Changes should reduce the deficit and the public debt as well as secure more effective spending of taxpayers’ money. The Programme of Stability counts on reduction of the general government deficit to 1.93 percent of GDP in 2016 and its further decline to 1.29 percent in 2017 and 0.44 percent in 2018 and reaching a surplus of 0.16 percent in 2019.
Analysts welcome the checks while Ďurana would like to see such checks in other sectors too.
“But the analyses would not be complete immediately; the methodology will develop gradually,” said Ďurana.
Reguli questions whether there will be a will to examine the most acute problems.
16. May 2016 at 6:15 | Jana Liptáková