2018 budget to be “load test” for newly-elected lower house of parliament

The newly-elected lower house of Parliament has started debating the most important bill of the year – the state budget for 2018. Although the time-frame for its approval is tight, observers predict a tough battle ahead, not only as regards the allocation of funds but the size of next year’s state deficit.

Andrej Babiš, photo: Filip Jandourek

The battle over next year’s state budget is being viewed as a litmus test of the new assembly’s action-capability. The assembly is more fragmented than ever before with a record nine parties represented, three of which are newcomers. And with the prime minister designate having formed a minority government the positions of individual parties on key issues and possible coalitions-in-the making in the lower house remain unclear.

With time running short prime minister designate Andrej Babiš has expressed the hope that the outgoing coalition of Social Democrats, ANO and Christina Democrats will vote unanimously for the draft budget which it presented to Parliament.

“I think the current coalition should support its own budget in its present form and not push for too many changes.”

Even after the shakeup of the last elections, the outgoing coalition has a slim majority in the lower house and would be able to push through the budget proposal. However much has changed with the elections and it is not clear whether the Social Democrats and the Christian Democrats, who are heading for the opposition benches, will not choose to rock the boat.

Practically all parties are proposing changes as regards the allocation of funds – altogether shifts worth 56 billion crowns. And while the proposals are hard to argue with – such as more money for social services, old age homes, sporting facilities and teachers’ salaries – none of the parties say where the money they want to re-allot should be taken from. Unless it is spared elsewhere, the new proposals would increase the proposed state deficit which now stands at 50 billion crowns.

While the prime minister designate wants to keep it under that limit, the right-wing Civic Democrats and TOP 09 will challenge the height of the deficit at a time of stable economic growth. The Civic Democrats would like to see the deficit lowered by 10 billion crowns, TOP 09 is pushing for a 20 billion crown cut.

Lower house of Parliament, photo: Filip Jandourek

The recent vote in the budget committee of the lower house may be some indication of what is to come. The committee recommended approving the basic parameters of the budget in its first reading thanks to a yes-vote from ANO and the Social Democrats. The Pirates, the SPD and the Communists abstained from the vote, saying they would push for fundamental changes in allocation.

What is likely to work in favour of this budget however is that parties who vote against it would be voting against a planned hike in salaries for public sector workers and a planned increase in pensions. Since early elections cannot be entirely ruled out this would not be tactical.

The budget proposal needs to win approval in the lower house and be signed into law by the president by the end of the year. Should this fail to happen, the country would have to operate on a provisional budget –in other words according to the 2017 budget. Given the uncertainty as to whether Andrej Babiš’ minority government will get a vote of confidence in the lower house, this would be a highly unfortunate scenario.