Gov't policy agenda full of promises, but short on funding options, say analysts
The first draft of the new Czech government's policy agenda — leaked to the press this week — has been criticized by economists and political analysts for promising something to everyone at a time when Prague has committed to reining in the spiralling state budget deficit.
The opinion pages of the leading business daily, Hospodarske noviny, were no less sceptical: "In the category of promises that cannot be fulfilled, we find at least three points ... [The policy statement] promises 100,000 job opportunities in regions suffering from high unemployment; 50,000 state-financed apartments annually and loans for newlyweds."
The chief economist for brokerage Patria Online, David Marek, says the new government has pledged to carry out the fiscal reforms of the previous government but hasn't come up with any new ideas how to pay for it.
"The programme of the new government is very ambitious and quite specific in how to spend money from the state budget but it isn't specific in how to reduce the state budget deficit. And looking at the new policy draft, I don't see any mention about reforming the pension system and financing health care — the main problem of public finance now."
In addition to the aforementioned policy initiatives — which the new government coalition led by the centre-left Social Democrats had not before Wednesday spoken about in detail publicly — Prime Minister Gross has pledged to increase the salaries of teachers and government officials, bridge the gap between the pay of men and women — which can only mean an increase in pay for women — and work to promote Czech agricultural goods abroad.
Just over two weeks ago, Prime Minister Gross, the second most popular Czech politician after the current president, officially took over the reins of government from fellow Social Democrat Vladimir Spidla, who was widely seen as an honest but ineffectual leader.
The draft cabinet agenda also calls for increasing the state subsidies for construction-savings accounts — reversing the unpopular move by Mr Spidla to lower them as part of a fiscal reform package, and in contrast to Finance Minister Bohuslav Sobotka's stated opposition to funding the soft loans. Meanwhile, the Minister of Labour and Social Affairs, Zdenek Skromach, said the priorities are higher pensions and low-interest loans for newlyweds, regardless of their income.
So, how to pay for these measures? Deputy Premier Martin Jahn, who until last week was the CEO of CzechInvest the government agency charged with attracting investment, has said funds would primarily come from faster economic growth, but just how the government would create conditions to realise this goal is only set out in broad brush strokes.
Economist David Marek again:
"It isn't specific on how to promote greater economic growth, job creation and so on; [the draft agenda] is something that could be called a political wish, or political agenda, but not an economic paper."
The government has promised not to increase the overall tax burden; the only significant tax increase in the agenda would be to make the personal income tax structure more progressive; namely, by asking those earning more than 25,000 crowns to pay more.
If the draft government agenda is shorter and more specific than such the average 'manifesto' this may well be because it is to be used as campaign tool in regional elections this autumn, the daily Lidove noviny writes. And commentators say Prime Minister Gross's finance minister will be tasked with striking the unaffordable items off the agenda.
Be that as it may, political scientist Jan Bures says that Prime Minister Gross is taking an important step by setting out specific targets, the fulfilment of which voters can measure for themselves.
"Yes, of course the measures will probably be expensive. Even so, I believe that the main difference is that unlike the previous government, Mr Gross is trying with this policy agenda to deal with concrete targets. This means, for example, to build 50,000 dwellings annually. These concrete figures make the politicians' promises more concrete, and this is politically important, because two years down the line the voter will be able to compare these real promises with what the government has really achieved, or not."
