Andres Kaarmann: Reorganization would help Estonia stop overspending

Andres Kaarmann.
Andres Kaarmann. Source: Ken Mürk/ERR

The economy is in recession for the fifth consecutive quarter. It is high time to start thinking about public reorganization in which the government as a whole and sectoral executives would have concrete and quantifiable goals, Parempoolsed member Andres Kaarmann writes.

The government's conduct is becoming more unnerving with each passing day. More outspoken political observers have labeled Kaja Kallas' third administration a government of liars and tax hikes.

The PM half-way admitted to prevarication in one of the first interviews she gave post-elections, suggesting that had Reform been truthful in their campaign, they would not have gotten as many votes. She would also be hard-pressed to protest the tax hikes label as no other Estonian cabinet has planned so many tax hikes this century.

Of splinters and logs in eyes

Kaja Kallas' Reform Party general assembly speech was hardly surprising in light of her recent statements. It was arrogant, patronizing and placed blame left and right. That the Reform Party is infallible and every poor decision has been made by some other party. That Reform issued warnings against these poor decisions, while no one listened.

The cold hard facts point to the opposite. While Kaja Kallas may wax ironic in her speeches, Estonia's fiscal deficit, now stretching into billions, was created by her first and second governments.

Another fact is that the Parempoolsed were the only party trying to shed light on the frankly disastrous state of public finances in the [2023] elections campaign. We first drew attention to it last fall when this year's state budget deliberations were ongoing. The party also proposed a cost-cutting roadmap to end public sector squandering and actively search for ways to economize.

Several economic and financial specialists also urged the Reform Party, Isamaa and the Social Democrats to avoid piling on fixed costs Estonia had no way to pay for, while it was just so much hot air in the pre-election flurry.

The light at the end of the tunnel moving further away

I don't know how things look from Toompea Hill but our economy has been in recession for five consecutive quarters. Even pre-election prevarication is yesterday's news, and the government should be making every effort to put public finances back on track without harming the competitive ability of the business and tax environments. Looking at this mess, the government's hints that it should be afforded 100 days free of criticism come off thoroughly absurd.

Several of Estonia's neighbors with whom we compete on the open market, especially Finland and Sweden, have taken or are about to take forceful steps to turn their economies around. It is clear that public sector proliferation and living beyond one's realistic means needs to end, which course the Finnish National Coalition Party has plotted after winning the recent general election.

Meanwhile in Estonia, the Reform Party's Riigikogu whip is instead urging society to just deal with tax hikes. It would have been more honest to invite society to settle for management mistakes and inability to make the necessary decisions. Hiking taxes is the path of least resistance. The situation is made especially paradoxical by the fact that we still haven't been told how much extra revenue the hikes are projected to generate and what will be their wider effect.

While the coalition initially promised to try and find ways of cutting costs, in addition to tax hikes and new taxes, this momentum seems to have disappeared. Finance Minister Mart Võrklaev's relevant statements are increasingly few and far between lately. The only thing we have really been told is that ministers have been tasked with finding ways to dial back spending.

Estonia needs readjustment

Reorganization is a completely normal phenomenon in the world of business. Especially in situations where the owner is not capable of delivering the company themselves. The initial months of Kaja Kallas' third administration have not painted it as a responsible owner.

Not to get ahead of myself but giving left-leaning ministers the task of finding ways to cut costs in their administrative areas is an exercise in futility. Especially as more than a few ministers are rather looking for extra funding to retain insensible activities instead of mulling how to put and end to overspending.

Let us take the example of the education minister who has embarked on a public crusade against local governments that have decided to reorganize (dial back – ed.) their schools networks. Or the regional minister who aims to slash the tax revenue share of municipalities that have kept their house in order to benefit those that have made questionable political choices or indeed refrained from making any.

Relying on the parliamentary opposition to supply the voice of reason would be similarly shortsighted. EKRE, Isamaa and the Center Party were even more generous with their elections promises, and it would be decidedly naive to expect them to improve on the current situation in any way were they to come to power. Therefore, it is high time to start thinking about reorganization proceedings in which the government as a whole and sectoral executives would have concrete and quantifiable goals.


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Editor: Marcus Turovski

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