To the Future Croatian Prime Minister – Part 1

Dear Sir/Madam,

to begin with, it is my sincere hope that you have no problems reading this little wish-list in English as I can’t imagine how you could otherwise keep track of world events, learn from other countries’ experiences and apply the knowledge at home. Normally, I would not make a point of it, but it seems that this requirement is not easily met by all our candidates. Having said that, as a Croatian citizen (and in the sequel, as an IT professional), I would like to draw your attention to some issues we have been having: the list is by no means exhaustive, but could be nutritious food for thought.

It might be frowned upon to digress from the political topics de jour, but it seems to me that while we have a fighting force deployed outside of our borders (on a non-UN mandate, I should add), that is the first thing to address. The immediate withdrawal of our armed forces from what used to be the sovereign country of Afghanistan followed by a sincere apology to the Afghan people would be a sign of a government which considers ethics more than a motive to flash at media to sway a few votes its way. As an aside, we would save over 30 million Euro every year, easily covering the damage done by 25 corruption cases like the one our former minister of defence Rončević was found guilty in.

While we are on the subject of the military, please publish the register of soldiers which took part in our independence war. It seems almost obvious (for years now) that at least tens of thousands of people lied about spending years on front lines. On the other hand, it is time to stop doubting the people who really did place their lives on the line. Publish the register immediately, instead of waiting until there is no one alive to remember or care. Not to ignore the financial effect, it is also time to stop frauds from pillaging mandatory pension funds: assuming a 20% fraud rate, 500 000 officially registered soldiers and a 500 Euro military pension, it amounts to 600 million Euro per year, roughly half the total yearly education budget in 2008. Imagine having 50% more money for all levels of the public education system! Of the existing 1.2 million pensions paid every month, as much as 830 000 are at least in part not covered by contributions from salaries: detecting and prosecuting the (at least) tens of thousands of frauds receiving military pensions would go a long way to improve the pension fund deficit problem.

With regard to education, I will start by mentioning a few representative numbers to provide some context. From 1996 to 2006, the number of students in Croatia rose by 80%, but the number of students forced to pay tuition rose more than 800%. Furthermore, the largest part of the population has high school education, but Croatia spent less then any other European country except Turkey on high school education in 2007. As a percentage of GDP, education is typically not a major expense, but bellow average education spending is indicative of governments which only care about winning the next elections rather than solving important problems which bare fruits in the decades to come. Please put an end to the ridiculous practice of placing obstacles (in the form of tuitions) in front of potential architects, doctors, IT professionals and mathematicians: if for no better reason (although there certainly are some), then because the loss of a single contribution such a professional makes to society far outweighs having to sponsor tuitions for a few other students who will not reach a graduate degree. While on the subject, please cut down state-financed tuitions for courses producing people unemployable in the foreseeable future: courses like comparative literature, art history, anthropology, some economy courses, molecular biology, etc. While it is fine and well to give people choice of what they would like to do with their lives, the damage several years of unemployment (and consequently utter dependence on others) does to an individual far outweighs any benefit they might have realized from being able to study a particular subject.

Stop the budget spending spree. We have heard ministers of finance say “everything is under control, the budget deficit is only 4%” – please introduce the concept of a budget surplus into the discussion and work towards it. It was high time to publish the budget spending structure on the web…in 2001. It is downright embarrassing that we have yet to see it happen in 2012 and I sincerely hope you will make sure it is done, precise down to a Euro and kept updated on a monthly basis. This is where trust is built or broken: if you want people – whose only allowed exercise of power is to select a candidate list every four years – to trust you with money that they put in the budget every year, you have to make absolutely, downright ridiculously clear how and why that money is being spent. If you don’t, your only shot of being trusted will be propaganda campaigns, regardless of whatever else you do.

The Pelješac bridge project was touted as the right and proper direct motorway connection to 60 000 inhabitants living in or around Dubrovnik and is estimated at 300 million Euro (probably much more when interest is added because we can’t possibly pay for it immediately). For the same amount, optical fibres for future-proof Internet access could be delivered to 600 000 households, effectively 30% of the population: when the economy, education and entertainment are moving to the Internet, that is a substantial opportunity cost. Or, to put it much more bluntly, it comes down to 5 000 Euro per capita, counting the population which is currently “disconnected” from the rest of Croatia. If you asked the people of Dubrovnik, it is fairly easy to guess if they would prefer the bridge to directly receiving 5000 Euros each. However, if the bridge is not for them, for whom is it? The project has been something of a public laughing stock in terms of the official reasons given for its construction, the way it compares to alternatives and basically, the fact that the “problem” being addressed is not that you can’t drive from Zagreb to Dubrovnik (you can), but that you have to drive through several kilometres of another country to do it. To cut the story short, please stop the project immediately and start official investigations around the people behind it: look for proof of callous spending of public money and, possibly, organized crime. The ring leaders should be easy enough to identify: just follow the connections from recent large land buyers around the places where the bridge was supposed to start and end.

Reduce the number of public sector employees by 5% – a goal utterly achievable by not hiring new people, sending people to early retirement where they aren’t really useful (virtually everyone has met quite a few of them) and provide severance packages. It is neither useful nor right that citizens actually producing things have to support what is clearly a heavily bloated administrative structure which only survives like this because various public services are, by their very nature, monopolies: there is no alternative efficient land register to turn to, for example. While you are at it, please publish the number of civil servants and their roles: we want to know. Furthermore, if the Ministry of Internal Affairs in neighbouring Slovenia can publish their numbers without jeopardizing security, so can we. The problem of bloat is no longer a controversial topic: it has been recognized in a series of Mediterranean countries and the public eye is only interested in seeing if the Government will address it or turn a blind eye of its own.

Put an end to the abominable practice of financing religious organizations from the budget (most prominently, the Catholic Church), with no less than 40 million Euro per year. Croatia is, by its constitution, a secular democratic state. In it, not all tax payers are Catholics and not all Catholics would like to finance the Catholic Church. To give you some perspective on how much money 40 million Euro per year is, Zagreb’s hospitals are struggling to save that much through a major restructuring effort. If people who have nothing to do with any of the state-financed religions are a minority, the state should be that much more careful not to trample all over their rights, just as is the case with many other minority rights. I would also venture a guess that the number of people who declare themselves Catholics might drop from 80% to somewhere around 40-50% of the population if taxes for the Catholic church were only collected from self-declared Catholics. It would be very interesting to see the social and cultural changes stemming from such a change in tax regulations. By the way, that is exactly the way taxes are paid in e.g. Germany. In France, the Church only receives money from the budget for educational and humanitarian activity. There are many other examples: it is enough but to peek outside of Croatia’s borders to see that our way is by no measure the usual or standard way of going about the issue.

While on the subject of taxation, Denmark represents a shining example when it comes to cars. Their tax on new cars is either 105% or 180% (the later rate being applied to more expensive cars). In a country staggering on the brink of bankruptcy (Croatia, not Denmark), new cars absolutely deserve to be heavily taxed as luxury. Croatia will import roughly 40 000 new cars this year and it imported more than twice as many in 2008. A 100% tax increase would at least halve this year’s this number, but the state budget would probably be unaffected or might even collect more taxes than it does now. Cars might be used more rationally and sparingly, they would be serviced better because they have to last longer. It might be expected that the total number of cars would drop a little, rather than grow, possibly reducing congestion, the total number of accidents, air and noise pollution etc. If Croatia went bankrupt tomorrow, nobody would really be surprised: in such circumstances, the goal is to reduce imports, keep the budget as full as possible, reduce spending on what is effectively imported luxury and get to enjoy a number of general positive side-effects along the way.

As for public spending, don’t buy a single official car during your term. Use the cars you have: they still work and they will continue to work during the following 4 years. Introduce a law to prevent the state from buying cars which cost more than 12 500 Euro. Let’s see if and how the next government will argue an attempt to remove this law. This year, more than 1200 vehicles were bought for use in various public services, of which at least 800 are worth roughly 20 000 Euro per vehicle, and many of them much more. If you manage to stretch the current car fleet for 4 more years, you save roughly 100 million Euros during your term. That would be quite a win for an economy struggling to pay off existing debts and would visibly improve the exports/imports ratio, since we ourselves produce no cars.

Regardless of what you thought about the above suggestions, I will conclude the list with something you are quite likely to balk at. In difference to most of the above suggestions, I am not sure it is a good idea either, but it might be worth pondering. Heating amounts to 25% of total personal energy use. At the same time hundreds of thousands of buildings through the 60s, 70s and probably 80s have almost no thermal isolation: such buildings are far from today’s isolation standards, yet they have been tolerated. Consider introducing a law which requires that all buildings – including existing ones – meet thermal efficiency levels currently applicable to new buildings. Make it very public, give people time to react, put teams on the ground with infra-red cameras to detect probable offenders, send out a series of warnings and then start issuing fines if necessary. With the inevitable rising scarcity of fuel, it is all the more important to protect our houses and apartments from the cold: it is no longer just a matter of money, but of squandering non-renewable resources just because the investment in better isolation hurts. I don’t have the numbers, but would venture a guess that the project would pay for itself through smaller heating bills within several years. That would be a project worthy of a loan from any foreign bank, if anything was. At 20 Euro per square meter of thermal isolation (work and material), redirecting funds from the Pelješac bridge project to building thermal isolation would buy…15 million square meters of isolation, covering 300 000 apartments with 800 000 inhabitants. Do that once more and our homes are in ship-shape!

Sincerely, a concerned citizen


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