Where should the money go? What unjustifiable expenses have to be cut? What sectors multiply money, and as such need to be privileged? Why should there be tight control of spending in the administration, as is the case in companies?
An employee earning the average wage per month, that is RON1,400, pays RON15,000 to the authorities every year, half of what a Dacia Logan costs. Why is that? To pay the employee RON1,400 every month, the employer pays another RON1,000 per month to the government, which makes RON12,000 a year.
When the employee takes the RON1,400 and goes shopping, they give to the government almost one quarter of this money as VAT, which makes RON3,000 a year. If this particular employee owns a car, they pay RON2 as excise duty for every liter of gas. If they smoke, they pay 32 bani (RON1 = 100 bani) for every cigarette as excise duty again. In addition, they have not paid their property tax and the parking spot yet.
This is how the government arrived at the amount of RON195 billion in taxes collected in 2012.
A handful of people have control over this pile of money. Yet in a time when taxation is burdensome, huge amounts of money are spent from the state budget without any clear justification and clear spending target. That is because there has not been anyone calling those in charge of managing the budget to account about how the money is spent.
The budget issue is essential, because it is where public policies start and end.
The proper spending of public funds should begin with greater transparency, explains economic analyst Laurian Lungu. What does this transparency mean?
“Things should be the same as in companies. Someone has to be responsible for how the money is spent. Yet, for that to happen, transparency needs to be implemented. Clear cost standards will indicate whether savings could have been made here and there or not.”
That has not been the case until now, at least. The latest report of the Court of Accounts on the spending of the budget stops at 2009, but brings out into the open something that cannot be tolerated.
Here is the conclusion of the document: the central and local authorities spent EUR9.9 billion (25% of the general consolidated budget) in 2009, in breach of financial and accounting regulations, so that the direct damage to the budget (which has to be recouped) stood at EUR172.7 million. The report of the Court was finished in 2010 using the general consolidated budget data for 2009. The Court, however, merely states the facts it found. Has anyone been held liable for the poor management of public fund spending? No one.
Where will the RON195 billion go?
To teachers’ salaries, to medical services, to social security – that would be the standard answer. If that is so, then why are medical services in such a poor condition? Why is the school where it is now, generating the results we all know about, as not even half of those finishing high-school managed to pass the high-school graduation exam this year? This will bitterly affect the years to come, because many people without a proper education will be part of the labor market, poorly paid as a result, and the government will collect lower taxes from them.
The net average salary of the President of Romania is RON6,700 per month, the prime minister makes RON5,300, and a presidential advisor is paid RON4,800. A teacher just starting out makes RON800, while the average net salary in the entire educational sector stands at RON1,200, which also goes for the medical system. On the other hand, a job in administration is paid almost 30% more, about RON1,800. There are 50,000 more employees in the public sector than in 2004. The authorities actually have no idea how many of them there are. One day their numbers are cut, one day they are not. Local authorities squander the money and no one calls them to account, there are no public reports, no public transparency. Civil servants rush out the office door at 4 or 5 p.m. Public services are a disaster, as is the medical system. Yet every year, the volume of salaries paid by the government stands at about RON40 billion, that is over 20% of the general consolidated budget.
Another big slice of the budget goes to “goods and services,” which will exceed RON30 billion in 2011. This is where one thing needs to be pointed out. There has been talk about swollen bills, contracts signed at a specific price that end up costing 20% or 30% more, by means of so-called additional contracts. Yet nothing is done. The EU funds have been frozen for this reason, too. If the cost of a contract was swollen by 20%, then someone took the 20% from somewhere and gave them to somebody else. They take it from the people’s taxes and give it to their friends.
In any company, costs are carefully monitored, money is carefully managed, and there is a genuine fight for resources and a huge anxiety when building the budget. The government does not show any anxiety when it comes to its own budget. This is why there are about 40,000 projects started in Romania, and almost none of them finished. The authorities announced RON36 billion in investment spending in 2011. Why are they not showing? The Transport Ministry has had over EUR20 billion to spend in the last ten years. Where are the highways?
(English version by Loredana Fratila-Cristescu)