Buying time on credit
Wiesława Lewandowska talks with Paweł Szałamacha about real economy instead of speculations, the liberal illusion and the need for developing Polish industry and also a difference between a jest and responsible optimism.
WIESŁAWA LEWANDOWSKA: - The Prime Minister has recently been stressing the fact that Poland is an oasis of economical and industrial peace and stability but we must protect our Homeland from irresponsible action of the opposition and a possibility of its egoistic ruling. What do you, as the chairman of this opposition, think about it?
PAWEŁ SZAŁAMACHA: - Well, the Prime Minister Tusk behaves today as his colleagues from Portugal, Ireland who had put on a good face and had consequently been leading a successful propaganda till the last moment when their laboriously patched reality started ripping for good. Similarly, our Prime Minister must keep this good face on as he has got nothing else to do...
- Minister Jacek Rostowski says that the Law and Justice Party ( Pol.- PiS) is 'totally unprepared for a debate about economy'. What would you like to ask the Prime Minister about?
- I would like to receive an answer from the Minister of Finance to the question: how much did the interventions cost on the currency market which the Prime Minister performed in December 2010 in order to reduce the amount of the State debt through those artificial measures? Another question is: how much do the transactions cost - done by Ministry of Finance, of the so-called currency swaps, the same as those which were concluded by the Greek Government several years ago and whose aim is to transfer the height of debt into the future...? Why did the government decide to take money from the Demographic Reserve Fund? The next question is: why did the majority of Parliament block the work over the draft law on bank tax, submitted last year? Etc. Etc.
- Isn't there any answer?
- No, there isn't. We did not hear it even during the Parliamentary debate on the state of public finances. We can have an impression that every occasion but not for a specific discussion is scrupulously used by the government to attack the asked questions. I think that the present team want to use citizens in this way who are, naturally, likely to listen to the opinions of ruling people and rely on the authority of a high office.
- The leading publicist and economists are continually comforting that the recession is hanging over the world whereas Poland is still in the black! The government even managed to tighten its belt despite of a huge budget deficit...
- That's true but I must repeat it, it is nothing but a fairy-tale scenario which in the years 2003- 2008 also comforted the today unluckiest European countries in which the economic situation was also sustained for the price of debt ...There was also a talk about a success of an economical strategy, a good economical and industrial model, and a development...
- ...do you suggest the fact that the prophecy of our Prime Minister from 4 years ago that we may become 'another Ireland' might come true?
- And probably it will be the only fulfilled promise. I wish it wouldn't! It is really difficult to hide anxiety about the fact that we may have to repeat what the Portuguese and the Spanish have experienced... In those countries the ruling teams also gained a trust credit for another term, as, for example, gold reserves were sold in Spain...
- Poland is apparently resistant to a crisis which is proved by the economical growth in the second quarter, higher than expected and amounting to 4.3 percents!
- In my opinion it is a far-going conclusion. We just need to look at similar indicators in the aforementioned countries in the years 2007 - 2008. This afterburner was working till the very end, followed by a spectacular breakage, which -I'm afraid - we are just being led to. Truly speaking I understand why our Prime Minister behaves so and not otherwise as he saw, for example, that the Prime Minister of Spain Zapatero was able to buy another term on credit....Last year in the moment of honesty, the minister Boni - presented as an economic strategist, the main brain in the intellectual background of the Prime Minister - said to the public (in the moment of honesty): 'we are buying time', in a similar moment, minister Rostowski admitted that the deficit in the public finance deficit is over 100 mln zl.
- The Prime Minister said from the Parliamentary rostrum recently that the opposition (and more specifically PiS (Law and Justice Party) with its chairman ) 'is striving for power', but it has got no program, no ideas and, in addition, it is cowardly and avoids any discussion.
- I am sorry to say but frightening with the Law and Justice Party (PiS) seems to be the only weapon owned by the Prime Minister. It is not good if the Prime Minister swerves from the truth. It is a situation when all bills presented by the Law and Justice Party (PiS) (recently for example the law on the consumer bankruptcy or the law on the vote right between Social Insurance Company ( ZUS) and Open Pension Funds (OFE) were immediately rejected by the governmental majority whose representatives instantly repeat in media, as if nothing has happened, that the opposition has not got any specific suggestions...
- Why aren't the suggestions of the Law and Justice Party (PiS) liked by the governmental majority so much that it does not accept their existence?
- Maybe because the Law and Justice Party (PiS) appreciates the importance of the real economy whereas the Civic Platform (PO) remains deeply in the economy of finance and service, which probably results from the beliefs and life-history of the politicians of the party...We do not say that industry, agro-food processing are decadent forms of active economy, which we should be ashamed of.
- Aren't The Law and Justice Party (PiS) ashamed? What does it mean?
- It means that unlike the Civic Platform (PO) we do care about for example, developing Polish industry.
- Doesn't the ruling party care about it?
- Apoparently it doesn't. It is proved by the fate of the shipbuilding sector which was closed during the reign of the Civic Platform (PO) ...If it is assumed that economy must be based only on some imagined financial services or if we believe what the Minister of Treasury was trying to convince of, saying that the capital has not got any nationality, it really doesn't matter if those companies and shipyards are in Poland or somewhere else; because there will always be somebody who will produce these ships and the world economy will not lose as a whole... Whereas we worry if we will still have these real industry supplies or if Polish polytechnics will educate engineers and if the Polish youth will learn traditional jobs in technical schools, or if we will enter the world which the Civic Platform (PO) choked on and which is just breaking like a soap bubble before our eyes....
- The Civic Platform (PO) also suggests a beautiful and colourful world and it tempts the youth with it, instead of technical schools and work in factories!
- It's true but this youth is not completely aware of the fact that it must be the world in which we will have to sell only some financial advisory services or insurance policies to each other...It is a liberal illusion and choking on the past world of the economy in the early 90s when all the barriers to the capital were banned. Then the stimuli started to work, resulting in the economical growth but now this model is coming to an end. Therefore the Law and Justice (PiS) clearly states in its program the importance of industries. Fortunately, not everything was closed - we still have a chemical industry, agri-food industry, transport industry and the industry of building materials. These branches should be developed in Poland.
- Should they?
- Yes, they should be strengthened and developed. There is a necessity of using advantageous tax solutions from abroad stimulating this kind of activity.
- What kind of activity?
- We postulate, for example, a one-time write-off of capital expenditure made by other companies and reducing tax base at the same time. In this way two basic aims will be achieved: firstly, the ability of the Polish economy to create new technology, and, secondly, stimulating investments. Then we can talk about real modernization of our country.
- We have been talking about it for a long time...
- Yes, indeed, but it is still imitated modernization, from import... it is rather side and quite an accidental effect of general decisions of transnational corporations or EU policies which promote some solutions. We mean modernization resulting from the principle of caring about the national economical interest.
- Do you think that the national economical interest is neglected at present?
- Yes, I do. I will give you one of many examples: in 2008 when France pushed energy package, Prime Minister Tusk agreed on the solutions which mean the price rise of the electrical energy in the moment of implementing that package, that is, in 2013 by 30-35 per cents. It means that a lot of branches of the Polish industry are going to lose competitiveness. It concerns mainly forest-based, steel, building industries, processing and many others. These our industrial supplies have still existed so far and are functioning but in the confrontation with such burdens ,they may not be able to cope with them and companies will start moving to the neighbouring countries, to Ukraine...
- Much will depend on the position of Poland in EU. For now we enjoy the presidency, but is it possible, in your opinion, to provide competitiveness to the Polish Economy, when the most powerful countries are taking care of their businesses more and more uncompromisingly?
- It won't surely be easy. Providenatially, despite the optimistic announcement by Prime Minister Tusk in 2008, Poland did not accept euro in 2011. From the beginning the Law and Justice Party (PiS) used to speak about the unreality of that project and, first of all, stressed its disadvantage for Poland. Thanks to the fact that we have not entered the euro sphere, today we are not forced to spend money on paying off debts of other countries. And, secondly, our export is still somehow competitive and the rate of exchange doesn't destroy export possibilities.
- In the program of the Law and Justice Party (PiS) we read: 'Poland needs some budget revolution'. It sounds scary.
- But it isn't scary, although it is really a task requiring strong determination. In Poland we have a tax system with big gaps made by the protection of big money in Poland. It is unacceptable that bank sector gets a half of all incomes in the economy and pays only every sixth zloty coin of the income tax. We think that different rules of the game for various economy sectors should be set, including manufacturing and industrial sectors. And apart from that we assume that tax burdens should be equitable distributed.
- Critics of the social solidarity suggested by the Law and Justice Party (PiS) warn that Poland must be protected from those bad 'good Santa Clauses'.
- I do not understand this irony and think that it is out of place. Solidarity is a general postulate which concerns the whole state social policy. It can be realized in many ways and sometimes only little corrections are needed.
- Little corrections which may violate bigger interests ...
- Probably, it's true but not always. We suggest for example, introducing the so-called Family Charter which would entitle families with their growing number of children to have various discounts, for example, in using public transport. An expression of the solidarity will be for example, changes in the market of school course books where an ill free market is ruling and frequent changes of school course books do not bring any advantage to students but bring income to their editors. Therefore, reasonable changes must be done here, not saying that in many other areas important corrections are needed to make the life easier.
- Poles would like to live better and the Law and Justice Party (PiS) adds that they deserve it. However, can it give a recipe for repairing public finances and helping Poles to live quite well?
- Simple recipes do not exist. In 2007 actions taken by Prime Minister Gilowska were going towards a good direction and their aim was to implement the so-called task budget and show those areas in which it is possible to save money in a reasonable way or where it is necessary to raise funding. These actions were written for all ministries and for several years. Minister Rostowski seems to be not convinced of this solution, does not enforce it, but takes a conservative position... the budget is formally prepared, in the performance-oriented layout but it results in nothing, no conclusions are made, or it is not shown where these means are wasted and where the financial slack is....
- And where is the slack?
- Being outside the Ministry of Finance makes it difficult to determine it precisely. It's known that in countries where the task budget was introduced, savings reached 7-10 per cents of expenses - on the scale of the whole budget it gave quite high amounts. It's a result of specific actions and suitable determination.
- Has the Law and Justice (PiS) got any specific ideas for a quick realization of settling the 'Polish building area'?
- We have just introduced a program concerning infrastructure and transport. The situation in this area is really difficult, nearly led to a chaos.
- Do you mean Polish railways?
- Not only but mainly. The situation of Polish State Railways is a clear example of the wrong policy of the Civic Platform (PO) government. The Company of Regional Transport was given to 16 regions which means that each of them has got several per cents of the share and the whole company has not got one owner indeed, nor an efficient governor. Recently there was even up for tender for the several dozens new trains, and only because marshals of regions - everybody from the governmental coalition were not able to agree on the vision of the company development. We clearly support a situation where the State Treasury would regain 51 per cents of its share in this company and somebody who would be responsible for the Regional Transport.
- And what then?
- Then we would have to take care of a situation where people resorting to work every day wouldn't waste their time in the traffic because in many places, for not clear reasons, a well-functioning railway was reduced to 2-3 trains a day....Here train tracks must be often repaired and also transport services should be restored - in the morning and in the evenings, with several trains each, so that people from Obornik or Grodzisko could easily get to their work in Poznań.... In our program we strongly stress the issues of public transport. We have suggested, among the others, co-funding the modernization and repair of streets in towns and countryside by the central budget - but only those repairs which definitely improve the quality of travelling - for example, tunnels under railways, preventing traffic and a danger on railway passages which happens to be a nightmare for small towns. There is a lot to do in Poland and it can be achieved without propaganda and great words.
- Anyway, you are an optimist! And in the program of the Law and Justice Party (PiS-u) we read that settling the Polish economy will be extremely difficult after four years of the present coalition's government...
- Unfortunately, it is true but I'm an optimist, indeed.