Palo: Government’s plan to consolidate state transport companies aims to obfuscate how they are run

MP Urve Palo (SDE) (Postimees/Scanpix)
7/8/2016 2:44 PM
Category: Business

Minister of Finance Sven Sester (IRL) introduced a new white paper to the government on Thursday dealing with the state’s stakes in companies as well as detailed proposals how to reform state-owned companies.

The new proposals have moved away from the earlier idea to consolidate all of the state’s companies in a single administrative unit. Such a unit would have been subordinate to the Ministry of Finance.

Another plan for the reformation of state companies by Minister of Economic Affairs and Infrastructure Kristen Michal (Reform) calls for the consolidation of the government-owned transport companies under one roof. With the finance ministry’s proposal now out of the way, it seems likely that Michal will get his way.

Former Minister of Economic Affairs and Infrastructure Urve Palo (SDE) said on Friday that she didn’t understand why current minister Kristen Michal (Reform) wanted to push through a plan to consolidate all state-owned transport businesses in a single company.

In a comment published on social media titled “What’s next? Will we merge theatres with hospitals?”, Palo wrote that it was very hard to imagine how such a step could be effective or at all proportional.

The running of an airport couldn’t be compared to managing a railway company, Palo said. The same applied to tenders and contracts, personnel, funding - virtually every aspect of these businesses differed greatly.

“Following the same logic, we could merge theatres with hospitals. But if the objective is to create new blind spots, obscure how these businesses are run, and evade political responsibility, then such a plan fits it perfectly,” Palo wrote.

According to Palo, the OECD supports the view that one of the chief issues of many state-owned companies is the diversity of their management level - with management, board, ministry, government, and parliament all exercizing influence.

These structures should be minimized, rather than built into something even bigger and more complex, Palo thinks.

“This doesn’t mean that there is nothing to be done here. State companies could be merged according to their area of business, state-owned ships could be brought together under one roof, for instance. It’s clear that the consolidation of the companies as well as their assets has to be in the interest of society,” she wrote.

The plan to consolidate the state-owned transport companies in a single business as introduced by the Reform Party’s Kristen Michal was not decided over in Thursday’s cabinet meeting. Discussions around the plan in the coalition government are likely to continue next week.

Editor: Dario Cavegn

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