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September 7th, 2008

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Reform politics, provisions blasted

Infighting, lack of exchange create 'sharp divide' in society

By Markéta Hulpachová
Staff Writer, The Prague Post
August 29th, 2007 issue

Since its introduction in April, the public finance reform bill has been a contentious issue for politicians.

Drafted by the governing Civic Democratic Party (ODS) as an effort to lower the state budget deficit, the package of social and tax modifications passed through the Chamber of Deputies Aug. 21 by a narrow margin of 101 to 99.

If approved by the president and the Senate, where the ODS holds a majority of seats, the law will come into effect Jan. 1, 2008.

While experts agree the changes in tax and social service payments will have minimal impact on the wallets of most residents, some say the reforms will have a long-term effect on the public’s perception of the government.

“Above all, the reform creates a sharp divide in society,” says Charles University political scientist Jan Bureš.

“[Prime Minister Mirek] Topolánek’s government didn’t even make an effort to seek support among the opposition, making it obvious the reforms are only meant to benefit its own voters, and not the voters of the current opposition,” he says.

During the bill’s readings in the lower house, the government’s reluctance to inform the public reduced its trustworthiness in the eyes of the population, says Zdeněk Zbořil, a political analyst at the Institute of International Relations.

“No one remembers whether Topolánek promised to reform public finances in the government’s official agenda,” Zbořil says. “There was far too little communication, and people began to perceive the whole affair as a con. Facts stopped being relevant and the whole thing became driven by emotions.”

By implementing a flat tax for all income groups, the reform bill is an embodiment of an “ideological cliché,” Bureš says. “The ODS just wanted to prove, at all costs, that it’s possible to apply the concepts of liberal theoreticians in political practice.”

Although the changes to public finances are largely cosmetic, turning the reform bill into a keystone of the ODS political platform hyperbolized its political significance.

“If the current government did not succeed in pushing through this meager form of budgetary cuts, it would be testament to its incompetence,” says Charles University political analyst Bohumil Doležal. “It would have little choice but to withdraw from power.”

The effects of the reform bill’s minor provisions may impact the outcome of the next government election.

Because they increase the prices of everyday essentials, such as groceries, school supplies and energy, the reforms will have a lasting effect on the political sentiments of the middle class — a critical voting bloc.

Although pensioners will be the most affected income group, “the expenses for individuals and families with midrange incomes will be more visible,” Zbořil says.

As an example, he points to cutbacks in birth grants, which will decrease from 17,760 Kč ($863) to 13,000 Kč.

Focus on health care

Although experts agree the reforms will have a diluted effect on most income brackets, former Health Minister David Rath (ČSSD), one of the bill’s biggest critics in the Chamber of Deputies, says the bill will have a negative impact on some of the neediest groups of society.

“An elderly pensioner with five illnesses will lose 500 Kč a month,” Rath says. “With a monthly pension of 6,000 or 7,000 Kč, this is not a negligible sum.”

Political analysts are concerned about the bill’s healthcare reforms, which include an increase in most medical fees.

“People here are not used to paying additional fees for such services as health care, and this reform will surely not lead to a higher quality of health services,” Bureš says.

The implementation of new fees, such as a 60 Kč payment for hospital food, will not raise the standards, he adds. “The food served in a vast majority of hospitals is utterly repulsive and almost inedible. If the 60 Kč fee led to the production of diametrically better food, it would definitely be an improvement, but I’m immensely skeptical.”

Although healthcare reforms will apply equally to all income groups, the elderly are most likely to feel the effects of cutbacks in drug subsidies as well. “For these people, the increase in drug expenditures will be a direct attack on their standard of living,” Rath says.

The healthcare reforms may also usurp the political independence of state medical organizations. By transferring the public health insurance company Všeobecná zdravotní pojišťovna and the Medical Chamber to the jurisdiction of the Health Ministry, “public health services will be subject to political pressures,” Rath says.

“Now it will serve the politicians, not the patients. The whole system will become nontransparent, which will lead to corruption,” he adds.

As health minister from 2005 to 2006 — during the end of the Social Democrat-led government — Rath was responsible for a range of successful reforms. “We managed to stabilize public health care,” he says. “When we handed it over [to the Civic Democrats], health care was debt-free, even profitable.”

While he admits public health care is an area requiring constant updates, Rath calls the public finance reform bill’s sweeping public healthcare changes “unsubstantiated.”

“Public health care functioned without any economic problems,” he says. “It was in the best shape since 1992, when public health insurance was first implemented.”

Markéta Hulpachová can be reached at mhulpachova@praguepost.com

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