Hina’s news states: ‘Prime Minister and HDZ President Andrej Plenković stated on Monday evening, after a three-hour meeting of the Presidency and the National Council of the HDZ, attended by all government members, that the relevant ministers presented the outlines of the pension system reform and indications of the second phase of tax reform. The Prime Minister assessed that the ideas were well received and expects further public consultation and discussion on the best and sustainable solutions.’
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When it is added that the government, along with the appearance of President Kolinda Grabar-Kitarović, also discussed demographics, it turns out that the ruling party is seriously engaged in conceptualizing, and perhaps even implementing, as they say – structural reforms. They should be wished all the luck, but with a high probability, it can be predicted that everything will end in wandering, inconsistency, dilution, and lack of results.
Outlines and Indications
Every discussion about pension or demographic reform should start with the sentence: ‘Only with growth rates above four percent can we solve all these problems!’ I bet that in the coming weeks, no politician will utter that.
First, Plenković’s government still does not have a clear and measurable economic program. Everything being done in the ministries is quite chaotic and fragmented. It should be repeated: it turns out that the government is accelerating reforms, and the consequence of that will be slowed growth in the coming years. At least that is what the Ministry of Finance’s projections predict.
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Instead of a forecast that GDP will slow to 2.5 percent, it would be logical for the government to set a goal for itself and all of us that, for example, in 2020, the growth rate will be four percent. And that public policies are adjusted to that and priority reforms are chosen.
By the way, if anyone knows who the economic strategist of Plenković’s government is today, please let us know at Lider!
Setting completely normal KPIs (key performance indicators) in business does not occur to politicians. Elections are coming, and someone might ask about the achieved measurable results. Instead, performances are being staged. Minister Pavić comes out with proposals for pension changes that ‘de facto’ contain the abolition of the reform from fifteen years ago. So that would be a pension rereform.
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Given the expected reactions from the public and the leniency of the ruling party, in the end, we will have a reform proposal for the reformed pension system reform. After all, attention should be paid to the news at the beginning of the column. We are talking about the OUTLINE of the pension reform and the INDICATIONS of the tax reform. All this reminds one of the long-ago Račan’s policy of ‘decisively maybe’. And, actually, when it comes to pensions, this is not about any reform. It is merely an acknowledgment that the pension system has bankrupted and that the annual hole in the treasury is 17 billion kuna. And that it will increase.
The same goes for demographic reform. There, too, bankruptcy has occurred. The measures being proposed are an escape from the real causes of young people leaving Croatia. Lacking the strength to tackle clientelism, crime, the judiciary…, the ruling party is stirring up concoctions, so to speak, of alternative medicine.
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Is money being picked in the forest?
Since we already have a central European bank, a central investment fund, we would like to ask for the establishment of a central EU pension fund. Since we have already exported so many brains, it is legitimate to demand the establishment of an EU pension fund from which we receive ‘pensions’.
In the ‘outlines’ and ‘indications’, there is no mention of reducing one form of state expenditure to reduce the hole in the pension system. In discussions between politicians and interest groups, something is always being shared and taken. Our ideas – your gasoline! Employers, give higher wages and better pay for Sunday work! As if entrepreneurs go to the forest every now and then and pick money as much as everyone needs.
It will be interesting to await the budget projection for 2019. In the last two years, the budget has increased by about 13 billion kuna. Given the current appetites, the real sector will likely be burdened with an additional five to seven billion kuna. This money would finance the brilliant reform ideas that are born at the government’s coordination meetings. And then it will be said that the economy is being relieved because it has only taken five, not ten additional billion kuna by the grace of the state. So entrepreneurs and managers should jump for joy.
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Every discussion about the pension, health, or demographic system should start with the sentence: ‘Only with growth rates above four percent can we solve all these problems!’ It would be a surprise if in the coming weeks or months, any politician, whether in power or in opposition, utters that sentence. And is there any other solution, since that four percent is not likely? Well, here is one ‘out of the box’.
In the new round of EU cohesion policy, social solidarity is also emphasized. So since we already have a central European bank, a central investment fund, we would like to ask for the establishment of a central EU pension fund. Since we have already exported so many brains into whose education the money of retirees was invested while they were working, it is legitimate to demand the establishment of an EU pension fund from which we receive ‘pensions’.
