The budget audit that began last fall involved the Ministry of Finance, the Ministry of Social Affairs and the Ministry of Economic Affairs and Communications (MKM). Under the leadership of the Finance Ministry, the hope was to compare the targets set in development plans with whether and how money spent by the state would help achieve these targets.

This process was intended to identify services that could be scaled back or even discontinued altogether. Between the three ministries, the government aimed to come up with a combined €150 million in savings.

The first proposals were added to the table at the beginning of this year already. Since then, these tables have been repeatedly bounced back and forth within and between ministries, various services have been analyzed, and the government will soon be presented with a concrete memo to decide on.

According to Mändmaa, the Ministry of Social Affairs reviewed 125 different services; around a hundred proposals made it onto the initial list.

"They include the kind of proposals that require political consensus and government approval," he said. "But they also include the sort of minor proposals that don't require much political debate."

Pensioners living alone benefit to be nixed for care home residents

According to Mändmaa, some proposals requiring only regulatory changes are already in the works. For example, it was decided to simplify the process involved in taking medications across the border. Among things awaiting a political decision, however, is a proposed change to the benefit for pensioners living alone.

"In the case of people in general care homes, i.e. who don't actually live alone, we're proposing to stop paying this benefit," he explained. "This is a measure that has been approved, but which hasn't yet been implemented. It should enter into force next year."

Each year, the state spends around €13 million on the benefit for pensioners living alone. Of this, only some of it currently goes to pensioners living in care homes. In other words, this austerity measure, which the secretary general described as one of the Social Affairs Ministry's proposals with a more significant impact, will only contribute a small amount to the expected €150 million.

€150 million in savings likely not happening

Mändmaa also brought up the budget audit-related expectation of finding a large sum of money that could be used differently.

"I'm sorry to say that we didn't make any such discoveries," he admitted, noting that most of their proposals concern improving the efficiency of the state's operations. "The idea that we found an extra €100 million, that didn't happen."

At the same time, a significant share of the Ministry of Social Affairs' calculations still lay ahead.

Although the pensioners living alone benefit will be included in the table of proposed cuts being submitted to the government, a broader discussion on benefits, including whether child benefits should become needs-based, will come later.

"A report on which benefits these are and whether there is any overlap anywhere should reach the government by the end of this year at the latest," the secretary general said.

This in turn means that the 2025 budget won't be seeing any major savings from changes to benefits.

"Changing [benefits] may even be more difficult than making changes to taxes," he acknowledged. "It must be communicated very clearly in advance, and there definitely also must be time to implement these changes."

According to Mändmaa, it also needs to be discussed whether modifying benefits can take something away from people.

"Or we could say that those who have been receiving it so far will continue to under the same scheme, but no new recipients of this benefit will be added," he said, noting that some difficult discussions lie ahead. "Preparations for this will surely take a long time. So we have always communicated that no quick budgetary savings will be coming from this."

Former finance minister: MKM proposals concerned one-off costs

Mart Võrklaev (Reform), who served as minister of finance through the end of last month, wasn't going to start predicting whether this target of €150 million in savings would be met; he says that these decisions are up to the new government led by Kristen Michal (Reform).

"I very much hope that this work has continued in earnest, and that these savings will still be shown as a number," he said. "The new government has also said that austerity has been extended to other ministries as well. So that hopefully that €150 million will be achieved between all of them combined, even if for some reason the Ministry of Social Affairs or the MKM really does say they have less."

The former finance minister confirmed that all three ministries did submit proposals for austerity measures, although the quality thereof varied.

"As far as I know, the MKM was the one who had the most trouble fulfilling its tasks within the framework of the zero budget, at least at the time I stepped down from my position as minister," Võrklaev said. "They offered one-off potential savings, but we needed something permanent and long-term. But the minister at the time [Tiit Riisalo (Eesti 200)] was repeatedly reminded of this too, and I hope that process continued in the right direction."

Last year, the Estonian government decided that all ministries must carry out a zero budget project. According to the current state budget strategy, the impact of the audit should reach €275 million by 2027.

Whether the project will continue in its current form and which ministries will be next will be decided by the end of September at the latest.

Officials: Licensing, supervision sector should be streamlined

In addition to specific ministry-related audits, a broader spending review involving state investments has been in the works for the past year as well. In simple terms, the goal is to come up with policy recommendations on how to make investments in ways that would maximize the impact of each euro spent.

Sven Kirsipuu, deputy secretary general of the Ministry of Finance, wrote in the ministry's blog in February that it's important to know both the overall impact of all investments on the economy as well as each project's comparable socioeconomic impact.

"As a result, we will achieve more impactful choices even with the same resources, thereby helping fulfill one of the key requirements of a financially savvy state," Kirsipuu noted.

He believes the state supervision and licensing field needs a similar spending review as well.

At the Ministry of Social Affairs, Mändmaa agrees.

"We conduct supervision under the Chemical Weapons Convention (CWC), for example, but we also review how sailors or kindergarten kids are fed," he said, citing examples of this work. "But then again, supervision methods differ, institutions do it in different ways, and this is a process that needs to be made more efficient."

According to the secretary general, the possibility of utilizing self-assessment with businesses and other service providers should be considered. "So that state supervision wouldn't be all-encompassing," he added.

Mändmaa confirmed that even if some other cross-ministry topic of focus is found for next year, the Ministry of Social Affairs still plans on taking a closer look at supervision and licensing matter. "And there should be some savings there as well," he noted.

Development plans unrealistically ambitious

The Ministry of Finance's website states that on top of concrete cut proposals, the zero budget process could also result in the creation of tools that could be used to continuously evaluate the fitness for purpose and efficiency of state spending.

"The Ministry of Finance did develop a methodology for how each ministry could ask itself these questions and how to conduct this analysis," Võrklaev said.

Mändmaa, however, noted that the Social Affairs Ministry did not in fact receive a specific tool for daily use.

"But this process did help us reach the understanding that we need to significantly improve the quality of our substantive planning and our financial planning," he acknowledge, adding that these things at the ministry have been too out of step.

He described how over the years, ministries have set ambitious goals without considering what it would cost to achieve them.

"I remember when I first became secretary general and made a budget request, we asked for an additional €700 million and got €20 million," he recalled. "Then we even asked ourselves how we could have been so off the mark."

Mändmaa noted that it became clear during the zero budget process as well that people need to be more realistic when drawing up development plans.

"This financial literacy in planning our development plans is something we need to seriously work on," he admitted.

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