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Needs-based family support not seen as viable means of state budget savings

Analysis on the family support system in Estonia will not be ready until next fall.
Analysis on the family support system in Estonia will not be ready until next fall. Source: Ken Mürk/ERR

Some government ministers are closing the door on possible savings for the 2024 state budget, if those savings were to arise from switching to a child and family benefits system which was more means-tested, particularly solely on income.

In any case, these changes would need to be done swiftly and the costs might negate the supposed savings; the concept of providing child and family support has been somewhat universal to date in Estonia, on the principle of every Estonian qua Estonian meriting value, regardless of income or, in the case of children, their parents' income.

The prime minister recently suggested that savings could, nonetheless, be made by linking child support to household income.

Minister of Social Protection Signe Riisalo (Reform) says that in the long term, politicians do indeed wish to make support issued in proportion to income.

However, three things need addressing before this can go ahead, she said: First, better tech solutions are required. Second, the legal underpinning of being able to compare personal data in the manner required would have to be carried through. And third, and most important, Riisalo said, precisely which types of support will be based on means needs to be analyzed.

Minister of Social Protection Signe Riisalo (Reform). Source: ERR

This analysis will not be ready until fall 2024, she said.

Ultimately, this also means that even through the social affairs ministry, which Riisalo and Health Minister Riina Sikkut (SDE) represent, is required to make cuts of up to €200 million in the coming year, needs-based support is not one of the areas where cuts can be expected.

Kristina Kallas is Eesti 200 vice chair; the party's chair, Margus Tsahkna, also foreign minister, says that the current benefits system is ineffective, and virtually all subsidies can make the switch to a needs-based model.

This would not only concern money, but would also take into account where the individual lived, their level of health, number of dependents, whether any of those dependents have special needs, the person's "social status" and more.

This ties in with Eesti 200's vision of a personalized state.

"We only have 1.3 million people in Estonia, but we manage this country like Bismarck-era Germany," he said, likely referring to the Bismarck Model of healthcare.

At the same time, Tsahnka conceded that the switch may not make significant savings in the near term.

Another minister, Regional and Rural Affairs Minister Madis Kallas (SDE), stressed that while some scope for savings exists, the only way to provide sufficient support is to raise taxes.

Signe Riisalo also said that needs-based goes beyond just economic aspects and depends on, for instance, family size – meaning being linked solely to net household income is inappropriate.

"I would venture to say that child support, the purpose of which is to partly compensate the expenses related to raising children, is something that has been universal in Estonia. This has sent a signal to Estonian families that every child is valuable, and it should stay that way," she said, in so doing hinting at the underlying philosophy in providing child support in Estonia as a whole.

Pirjo Künnapuu, head of the family benefits area at ​​the Social Insurance Board (SKA) told ERR that the current family benefits system relies heavily on automation, while the changes needed to be made to gather date on individual or household income would require about a year's work .

Other complications would include the fact that many Estonian citizens reside or have some connection with other countries, the fact that estranged parents of children often take turns to look after those children, the range in family sizes and many other "nuances and details here that we cannot forget," as Künnapuu put it.

A switch to needs-based child support, for instance, would require many human-hours of administrative labor also.

Prime Minister Kaja Kallas (Reform) had said Tuesday, following prompting from a Postimees journalist, that the Ministry of Social Affairs must review it support system, and make it needs-based as far as possible.

Education Minister Kristina Kallas (Eesti 200) had said in September that the current system of parent and child support benefits are in many cases "very generous," noting that she personally does not require such levels of support.

"For this reason, they need to be made need-based," she said at the time, appearing on ETV politics show "Esimene stuudio."

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Editor: Andrew Whyte

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