Friday, 18 November 2011

Tusk's exposé - my reaction

Firstly, a translator's note. The Polish word exposé (a prime minister's first policy speech on taking office) is not the same as the English word 'exposé' ('the publication of some disreputable facts').

Well do I remember premier Tusk's first exposé, four years ago. In those days, I drove to work (an act I now consider to be anti-social behaviour) and I listened to some of it on the radio. As I approached red traffic lights on ul. Sobieskiego, I actually found myself clapping to Tusk's words. What a refreshing change to the intrigues, plots and counter-plots of the PiS-Samoobrona-LPR coalition that the Tusk government had just replaced! Heavy on the word zaufanie, ('trust'), I felt that at last - after four years of dodgy SLD leadership and two years of excruciatingly embarrassing government by PiS and its coalition partners, at last Poland was heading in the right direction.

The past four years proved that at least Poland was no longer moving in the wrong direction any more. But instead of progress and reform, the first Tusk administration found itself accused of being a 'do little' government. True, it had its successes - particularly on the economic front; Poland was the only EU member state not to slip into recession in 2009. And externally, Poland's government looked professional, with grown-ups minding the shop (Jacek Rostowski, finance, and Radek Sikorski, foreign affairs). But all in all, a 'could have done much better' assessment summed up the first Tusk administration.

So then - on to today's exposé. The full text, in a non-native translation into English, can be found on the Economist's website.

On reading it, I could see that was that here was a speech written-to-measure for the ratings agencies rather than to attract foreign direct investment. If zaufanie peppered Tusk's first exposé, this time it was bezpieczeństwo ('safety', 'security'), mentioned 34 times in a speech that filled no more than 12 sides of A4. And my first impression is of a schoolboy admitting to Headmaster Fitch (cane in hand) at the start of his second term in Big School that he hadn't worked nearly hard enough at those tough subjects like pension reform, taxing farmers or deregulating burdensome red tape, but that this term he promises to pull his socks up. And indeed. The headmaster put the cane down and let off Tusk with a warning that his performance (as with those class dunces Greece and Italy) would be under continual review.

Of 12 pages of speech, a full ten were to do with the economy. Retirement age will be raised. Farmers with larger holdings will pay proper social security contributions and be obliged to keep accounts (like any other business). Internet use tax relief will cease. High earners will lose child benefit unless they have two or more children. Copper and silver extraction will attract higher duties. People (like me) on umowa o dzieło ('authorship contracts') currently taxed on only half their income will have that privilege capped at 85,000 złotys a year (around £17,000), and pay full tax on income over that figure (fair enough - I've long thought I don't pay enough tax!). And so on. More like a Chancellor's Budget speech than a Prime Minister's maiden policy speech, to the extent that I was surprised when Tusk wandered, almost off-topic, onto subjects like religion and nationalism near the end.

So - the aim of the speech was to reassure the markets, bond-holders and ratings agencies that public sector debt and the budget deficit were both under control. He set targets for his government - to cut debt to 47% of GDP by 2015 (55% in 2010) and the deficit to 3% of GDP by the end of next year (from 7.9% in 2010).

All well and good. But what about growth? What about employment? One thing that REALLY worries me was Tusk's proposal (may it just stay a proposal!) to increase employers' ZUS (social security) contribution by an extra two percentage points. Employers, he says, can afford it, he says, in the nearest we got to economic populism in his speech, because 'businesses are not willing to spend money'.

This is in effect, a tax on jobs. When the UK Labour government announced an increase in employers' social security contributions by just one percentage point, all hell broke loose. It now stands at 13.8%; in Poland, employers will be forking out something like 24-25% of employees' pre-tax income. Where's the incentive for employers to take on new workers? Tusk should CUT employers' ZUS contributions - if he needs extra money, increase the corporate tax rate by one percentage point - take the money from profits actually earned, rather than by increasing the tax on jobs. Panie premierze - think again on this one!

The other thing that dismayed me was the complete and utter lack of the word 'infrastructure' in the speech. If there's one subject on the report card for Premier Tusk's first term that merits an F-, it's Poland's dreadful roads and railways. And, if we are to take the exposé as a road map for the next four years, we can assume it's one that won't join Warsaw or Kraków to the eastern borders by motorway.

Having said all that, I take heart that the tone of the exposé is one of long-term consideration for the good of the nation's finances, not a speech of political expediency knowing that a four-year term of office is all a premier can hope for. At last, Poland has re-elected a government; with luck and a fair wind, Poland will make it through the impending global economic recession without having its growth fizzle out.

This time last year:
Into Poland's former Heart of Darkness

This time two years ago:
Powiśle - synchronicity of shape

This time three years ago:
The last of the rampa na kruszywo

This time four years ago:
Airport zoning to halt development in Jeziorki?


wersy2 said...

"If there's one subject on the report card for Premier Tusk's first term that merits an F-, it's Poland's dreadful roads and railways."

Pardon? If there's a one thing that the former/current government has done right over the last four years, it was the kick-start of construction of the highway system. It was worse woth railways but at last we have some fresh rolling stock on the Polish rails and some railways are undergoing a long awaited modernisation. We wil also have a pseudo-HSR from Gdansk to Krakow soon. Lots of airoports were built or renovated, too.

That said, our situatio is still absymal, but for God's sake, it's not Mr. Tusk fault. We're moving in the right direction unexpectedly quickly.

student SGH said...

Good points Michael.

Driving to work anti-social? It can be too expensive, time-consuming, impractical, obesity-conducive, but could you elaborate on this?