A cabinet whose time needs to be endured

With Saulius Skvernelis’ cabinet reaching its first birthday, a chorus of Happy Birthday is nowhere to be heard. On the contrary, experts note that this cabinet has given little basis to expect fundamental reform in the future either, Lietuvos Žinios writes.

“Perhaps I am too little informed or struggle to notice, however I have not observed this cabinet to have done anything much over the year that would have aided the public. Various checks have been marked – some sort of workgroups formed, procedural actions being taken and this is viewed as results by the coalition. However what has actually been done to make life better for any single social group?” Vilnius Industry and Business Association president Sigitas Besagirskas asked rhetorically.

Curve downwards

You could say that one year is not much. However it is namely in the first year that the ruling parties can take up key reforms while they still have a reserve of public confidence. The beginning of S. Skverneis’ term did not lack for reform enthusiasm. That said, less important, unmeasured or uncoordinated ideas often just caused chaos. On the other hand most of the problems – education, tax, alcoholism reduction or forestries – have been delayed too long and changes were urgently needed. Unfortunately some were less ambitious than promised, while others were cut down to size by the Seimas and proved that a technocratic cabinet is nothing great, it will always lack political support. The cabinet was also not aided by the ruling party’s dual leadership: S. Skvernelis and Ramūnas Karbauskis‘ tandem moves only when they pedal together. But what will happen as the presidential elections approach nearer?

However cabinet activity which it was notable for in the Seimas spring session appears to have faded with the coming of autumn according to Vilnius University Institute of International Relations and Political Science professor dr. Vitalis Nakrošis. State service law reform is belated. Tax reform and next year’s budget appear to be more moderate than radical.

Furthermore the number of unfavourable circumstances is only rising. The majority has weakened with the withdrawal of the old Social Democrats, thus compromise must be pursued with the other groups in Seimas and this makes decision making more difficult. State service reform is proceeding too slowly except individual cases, thus the ministries lack strong enough teams to prepare the reforms. Due to a lack of structural reform, movements are gathering in various spheres. Medical personnel for example. The majority’s public support is on the decline.The risks will only multiply: next year the 2019 presidential, municipal and European Parliament electoral campaigns will begin.

“The cabinet’s work effectiveness is curving down, there are doubts whether state service, healthcare, education reforms will be accomplished and upon them state competitiveness and people’s welfare depends,” V. Nakrošis held little optimism.

Lithuanian Free Market Institute (LLRI) president Žilvinas Šilėnas also agrees that this cabinet has so far done few good, necessary works and their work is also greatly hampered by the Seimas. “Good cabinet projects are extinguished or “improved” to the point of often becoming parodies in the Seimas. Most of the ministries are between two infernos – rationality and the Seimas Committee of Culture chairman’s whims,” he said.

The business community also expects little from this cabinet. “Businesspeople say that this government needs to simply be “endured”. Before we would write to state institutions, have meetings. Now we have somewhat abandoned this because we do not believe anything will change. So far we do not see any tangible results,” S. Besagirskas concluded.

He admits to having had few expectations – from the very beginning it was obvious that in many areas the imitation of reform was pre-programmed, for example the odd ideas about a state bank or state alcohol retail network, privatising pharmacies. This imitation of reform, S. Besagirskas believes, diverts attention from fundamental problems. For example children’s money while ending the untaxed income size for those who have children – more bureaucrats will be needed to administrate the system. This will raise bureaucratic burdens while not resolving problems. Nevertheless, he concedes that over the year this cabinet has also not done anything exceptionally bad.

R. Karoblis and L. Linkevičius – most successful.

By far not all the ministers of the self-titled professional cabinet have been able to work professionally. Minister of National Defence Raimundas Karoblis has practically been the best received, but this is not the majority’s achievement because he was chosen by President Dalia Grybauskaitė. Next year we will finally accomplish our commitment to NATO – national defence will receive 2% GDP spending.

Head of diplomacy Linas Linkevičius is also seen as one of the well performing ministers, though there are notions that he is no longer the same as last term – with initiative and heard on the international stage. Some ironize that he visits Lithuania ever more rarely not just from Brussels, but also from exotic countries.

Only the Ministry of Economy has lost its head – the withdrawal of the Social Democrats from the ruling coalition led to Mindaugas Sinkevičius relinquishing his post as minister, but the ministry has been evaluated relatively positively. Lithuanian Farmers and Greens Union representative Virginijus Sinkevičius who stepped in gives some hope. According to V. Nakrošis, this is an ambitious and active former chairman of the Seimas Committee of Economics, who pursued compromise between cabinet and Seimas.

The LLRI praises the Ministry of Economy of its pursuit of improved business conditions and prioritising increases in the Doing Business rating. “The recipe for success is that a number of cabinets in a row have not questioned the aim to rise in the rating,” Ž. Šilėnas stressed. However he notes that for Lithuania to become truly a favourable place to start a business, much remains to be done. Taxes have not been reduced, connecting to the electrical grid still takes 85 days and the average time to grant a building permit is an average of 75 days.

LLRI experts are surprised by the Ministry of Economy implementing investment attracting policies with one hand, but offering projects which would repel investors with the other. For example the strategic company regulation law, where private companies also appeared in the list of strategic companies, there are intentions to limit their right to sell part of their stock, which unambiguously harms Lithuania’s image and investment climate.

The LLRI gives the Ministry of Energy a plus for the increased pace of connection to electrical grids. However the question is raised whether such a ministry is still necessary after accomplishing the major energy projects and stepping back from grandiose new ones (such as a new nuclear power plant). Especially when based on the new energy strategy project, a shift will be made to decentralised energy production, toward minor producers-consumers.

The Ministry of Transport and Communications is praised for personnel changes in Lietuvos Geležinkeliai. “However the crucial question is whether there will be any serious changes in state owned transport companies, whether investors will be attracted, whether monopoly rights will be relinquished in, for example, railway transport and postal services. The European Commission has sent a clear signal that Lithuania’s policy so far of “what benefits the state owned company, benefits Lithuania” is antiquated,” Ž. Šilėnas noted. This ministry should also direct attention to plans brewing in Seimas to abolish the Roads Fund.

Cut down promises

The modest praise for ministries end here. “While many hopes were placed in the planned tax reform, it simply disappeared. Sodra ceilings were tossed aside, which would have at least somewhat reduced the state pension system unfairness and would encourage to bring higher paying jobs to Lithuania. The merger of employer and employee payments to Sodra also vanished, this would have made the tax system more transparent and was supported by almost all specialists regardless of their political views. Promises regarding reinvested profit not being taxed were also not implemented,” Ž. Šilėnas stated. However promises have been made of greater real estate taxation, the so-called Sodra “floor” (when those employed for, for example, half of the minimum wage will pay tax as for the full minimum wage), excises for diesel, cigarettes and others will increase. Concerns are rising regarding the creation of the equivalent of the state bank – this is outlined in the prepared national support financing institution legislative project.

There is much boasting about the balanced budget income and expenses next year, however the fundamental problems for the state budget remain: deficit, rising and not always necessary expenses, circumventing fiscal discipline regulation, ineffective and low income property management. Economic growth is an excellent time for key reforms, to reduce tax burdens, however such opportunities are not being used.

The Ministry of Social Security and Labour coordinated the passing of the new Labour Code, but most of the work was performed already last term. The new cabinet did little to improve it. According to the LLRI, the Labour Code essentially did nothing to increase Lithuania’s attractiveness to investment, it is apparently only a small step toward modern labour relations.

As for social policy, it is increasingly departing from that of social support for those most in need – the means of support chosen are inaccurate. For example universal grants to children or support (subsidies) to obtain the first housing in regions for young families, regardless of income. This way instead of resolving social problems, support measures are expanded without considering effectiveness and alternatives, dependent mentality is nurtured.

Minister of the Environment Kęstutis Navickas was praised by V. Nakrošis for being the first to take his reform project to Seimas and despite massive resistance, with the help of the Conservatives, forestry reform was passed. Afterward the ministry took up regional environmental protection department reform, presented other proposals. Unfortunately the ministry’s authority was diminished by a number of scandals over possible public and private interest clashes, resolving issues in an elite hunters’ band or when granting funding to the minister’s former place of employment.

The little heard of Ministry of Agriculture is one the Seimas’ victims. The finally prepared land safeguard law received a number of “improvements” in the Seimas.

The changes promised by this cabinet have, according to V. Nakrošis, to a great extent been hampered by the inert state service reform, for which the Ministry of the Interior is responsible. It showed initiative both regarding the state service law and regional policy, but it was difficult to reach consensus even at the cabinet level.

The main public governance task – the concept of institutional composition – is to be announced by the end of the year, but is still nowhere in sight. Changes are happening in only a few state institutions, albeit with varying levels success, until it is agreed upon. For example the changes are rational in the Ministry of Finance – a vision exists and work is orderly. However in the Ministry of Culture, in V. Nakrošis’ words, the reform is going chaotically – everyone received warning notes, however their term was extended. The superficiality causes instability due to the lack of clarity as to how the structure will look going forward, thus some civil servants may simply resign.

Meanwhile S. Besagirskas, who listened to the Ministry of the Interior presentation over regional specialisation this week, only concluded that it has not been this bad, dismissive, just for a “check” before. For example the Vilnius region has been declared a biotech, IT and finance sector, but the regional municipality mayors were surprised by it because most of the regions are agrarian areas. The specialisation of the Vilnius city has been expanded onto the whole region and that’s all the work done.

Minister of Justice Milda Vainiutė lacks initiatives and a clear position on leadership appointments according to V. Nakrošis. This is because in a number of areas there are institutions with interim leaders.

Most barbs to Aurelijus Veryga and Jurgita Petrauskienė

The Ministry of Healthcare, V. Nakrošis believes, is progressing in the area of public health. However the healthcare institution network is not optimised, thus we have little financing in a large network – the wages of healthcare staff are small.

The LLRI evaluates that the ministry’s specialists lack rationality. Instead of taking up greatly needed reforms, it has been notable for campaigns against alcohol of dubious results and a medicine policy which caused much confusion. “It is cynical that people are talking about how they are unable to obtain necessary medicines, while the minister claims that supposedly it is all for them – so that the medicines would decline in price. If we told everyone to purchase the cheapest bread, would this lead to a drop in bread prices?” Ž. Šilėnas observed, adding that what is worst is that such policy is to conceal fundamental problems. For example doctors’ wages are the result of a long term disorder in the healthcare system financing. But this problem is to be resolved by the worst way – by raising health insurance payments, which are already significant for those working based on work contracts.

The Ministry of Education and Science has presented truly many reform initiatives – for the state university network, for vocational education, for higher education financing. However V. Nakrošis points out that the problem is that these are “smoothed out” in Seimas because the minister is a technocrat and not a politician, thus she struggles to defend even slightly ambitious positions in Seimas.

Love-hate

Experts criticise this cabinet and not without reason. In the public’s eyes it is notable perhaps only by expectations having been exceptionally high, thus the drop of ratings is particularly notable. But with a year passing, the people’s love for the cabinet and prime minister is little different to their predecessors.

Public opinion and market research centre Vilmorus director dr. Vladas Gaidys compares: in November, the cabinet of Algirdas Butkevičius was positively evaluated by 18%, the current – by 21% of respondents. A. Butkevičius was a little more popular, with positive evaluations from 58%, while S. Skvernelis now – from 51% of respondents.

Four ministers of A. Butkevičius’ cabinet had a positive opinion balance – Vytenis Andriukaitis, Valentinas Mazuronis, L. Linkevičius and Juozas Olekas. Now there are seven – L. Linkevičius, Rokas Masiulis, R. Karoblis, Linas Kukuraitis, Bronius Markauskas, Vilius Šapoka and Liana Ruokytė-Jonsson. Among the current ministers, in the eyes of the public there are two clearly positive “personages” – L. Linkevičius and R. Masiulis and two negative – J. Petrauskienė and A. Veryga. The latter’s ratings are rapidly falling.

When asked about the cabinet as a citizen, rather than a sociologist, V. Gaidys admitted that after A. Veryga’s changes for pharmacies, when he has to go to the clinics every time he needs some pill, he recalls the minister practically every day. The Ministry of Education and Science appears to be trying to do something, but no-one is listening. “Everywhere, not just at the cabinet level, just as in the Polish–Lithuanian Commonwealth several hundreds of years ago everyone has the liberum veto right, disregards one another and thus nothing is achieved,” V. Gaidys spoke. He lamented that we are unable to even come to terms over a monument, what to speak of education or finance reforms.