Speech of Auditor General Janar Holm at the Riigikogu on 13 November 2019 about the problems related to the use and preservation of state assets – #e-state

Janar Holm | 11/14/2019 | 9:55 AM

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Honourable chairman of the session, dear members of the Riigikogu, good evening!

The National Audit Office sends tens of reports to the parliament every year. Two of them are being discussed by the plenary assembly today. The first of them is the audit of the annual report of the state, which the Finance Minister spoke about a little while ago. This report concerns the money and other assets of the state. And the second is the annual report, which covers the most important problems in the economy and administration of the state.

These two reports together comprise an overview of the use and preservation of state assets for the parliament.

This year’s annual report, which I submitted to the President of the Riigikogu the day before yesterday, focuses on the health and vitality of the e-state. Why this topic? Because Estonia is known in the world as an e-state. Estonian was one of the first to perform the so-called tiger’s leap in state governance and move successfully to the digital world. And the success story of our e-state has everything necessary to be this long-sought Estonian Nokia.

However, nobody wants to be Nokia anymore, as it doesn’t stand out with anything any longer. History doesn’t matter when it comes to development. It’s the opposite. A glorious history and achieved success may feed contentment, which may lead to a standstill.

Today, only the countries that avoid getting stuck in obsolete technologies can maintain their success.

Life has shown that if you fail to constantly update your IT solutions, the information systems also will start dictating political choices in the end. I believe that many of you have seen when processing draft acts how the necessary decisions are postponed because it’s impossible to make changes in information systems, which are required for the implementation of the decision, at reasonable speed and reasonable cost.

Yes, situations like this can sometimes present rushing, but there is no doubt that they are obstacles to political processes. They may even be regarded as a threat to democracy with some exaggeration.

The Tiger Leap has received a lot of attention. The tiger is a territorial animal. It knows exactly where it is at any given moment. Our e-tiger should also know this. Our e-state is a source of Estonian national pride, but unfortunately, it seems that our e-tiger has lost its head a bit. It doesn’t know where it is and how big its litter is.

This means that we don’t know how much this pride is going to cost us and it’s difficult to obtain a clear picture of how many and what kind of information systems and databases exist in Estonia. When preparing the annual review, the objective of the National Audit Office was to find out the size of IT investments as well as the administrative and staff costs related to IT. Unfortunately, there is no comprehensive overview of this.

It was easier to obtain information about the estimated shortage of money in the area of IT in the opinion of ministries. Therefore, the Ministry of Finance and the Ministry of Economic Affairs and Communications should prepare an overview of the actual IT costs first of all.

In the political world, saying that the management costs of state agencies will be cut again is very tempting. It brings popularity. Unfortunately, the administrative expenses of IT systems have been included in the ordinary management costs of state agencies since 2003. And this means that the IT activities required for keeping the systems operational are often under pressure, as maintenance cannot be presented as a new and exciting victory.

Considering the importance of the IT sector, we should seriously consider whether we should start keeping separate account of the maintenance costs of IT systems and IT investments. Whilst we precisely define which costs are and are not defence costs, then there is no reason why we shouldn’t define IT costs in the same manner.

As the National Audit Office didn’t find any information about the IT costs of central government, we tried to prepare such an overview ourselves. We only managed it partly, but the data were still sufficient to get an idea of the dynamics of the costs.

We found that staff and administrative costs in the area of IT have increased by ca one-third in the last two years. It’s true that this has mainly occurred due to the increase in the number of IT employees and not due to salary increases. The state cannot compete with the salary increases in the private sector in this situation. This is why there are many IT vacancies in state agencies and the turnover of labour is high. However, the increase in costs is unavoidable if we want the e-state to develop and the existing information systems to work.

Honourable members of the parliament,

The government has primarily used European Union grants in the case of new IT developments. However, they cannot be used to cover the maintenance costs of systems that are already operating. Estonia’s own tax revenue, however, is not big enough.

Also, the costs of streamlining and maintenance of information systems are not attractive or visible enough in comparison with the creation of new information systems. Investments in a façade that everyone can see bring more attention than, for example, replacing the old wiring.

What we can see here again is the same old problem – the desire to constantly offer new and shiny things in a situation where no attention is given to the critical base functions. New builds keep appearing in the middle of the ruins in an endless circle, only to turn into ruins themselves in no time.

The more be rely on the digital state, the more we must invest in looking after the digital tiger. If zoologist Aleksei Turovski was standing here instead of me, he would definitely tell you that a tiger spends half of its waking hours on grooming its coat. Otherwise, its health and leaping ability would suffer. And the tiger’s smell would betray it before it even gets close to its target.

This applies to the e-state as well. We have to incur these additional costs if we want to ensure the tiger’s ability to leap. We need money to keep the present e-services working and also to update outdated IT solutions and to implement new technology at optima speed.

The Ministry of Economic Affairs and Communications should be given a clearer leading role in order to create a systematic plan about investments, also in the areas of supervision and the technological planning of IT developments.

Dear audience,

The eHealth system is one of the components of the Estonian e-story that has attracted the most attention. The digital prescription solution or the patient portal are a big step forward. But the eHealth project is contradictory – shiny on the outside, but creaky on the inside. shiny,

The nationwide digital reception, which was supposed to start working in 2008, only became operational 11 years later, this August. The initial solution of the digital reception was completed and accepted, the money was spent. But it was not implemented and a new information system had to be developed.

Or let’s take a look at the user-friendliness of the eHealth system. Instead of helping patients, doctors have to spend unreasonably large amounts of time on clicking to match summaries of medical records and obtain overviews of the heath statuses of patients. As many as 65% of the hospitals that responded to the survey of the National Audit Office considered the eHealth system inconvenient to use. 45% of respondents pointed out that they cannot get all of the data they need for treatment from eHealth.

For example, when the patient’s information is sent to the doctors at the EMD from an ambulance, the ambulance record has 24 pages, all of which have to be read to find the necessary information in a situation where the pressure is high.

The Estonian eHealth Strategy with new and ambitious goals was approved only four years ago. And yet, the earlier goals haven’t been achieved yet.

This raises the question of why problems that have been known for a long time haven’t been solved in an area as important as this? Why is it that a triumph is quick to come in some areas with the help of political and administrative will? Some problems are solved instantly despite any hardships there may be. But this is not the case with other important things.

The issue with eHealth is not so much an information technological one, but a problem of under-management and a lack of ownership.

Dear audience,

It’s true that the increasing digitalisation of everyday life helps make services more accessible, the collection of information faster and the systems more efficient. However, in addition to everything that’s good this also has a downside – it creates a more efficient opportunity for escalating stupidity and bureaucracy.

In the digital world, it’s much easier to request information that isn’t really necessary. In this manner, it’s easy to needlessly burden people and organisations click after click, unnoticed.

Soon, the National Audit Office will complete a report in which we analysed the collection of data about welfare. For example, the audit revealed that the Ministry of Social Affairs demands that local governments regularly submit 11 different welfare reports in an environment called the S-web. And there are 793 data fields in total!

Municipalities, towns and cities themselves do not need such detailed data. And the examples of uses given by the Ministry of Social Affairs itself also indicate that many of the data only need to be used once. For example, there are data that have only been used to prepare the visits of the minister or to write articles.

The Ministry of Social Affairs should release the local governments from the obligation to collect pointless data as quickly as possible.

In addition to the Ministry of Social Affairs overburdening local governments, many of the latter are just as bad. They, in their turn, burden those who need help. They request data that already exist somewhere else or that are actually not used for the provision of the service. For example, there was a local government where filling in 17 fields was enough to get the subsistence benefit but in another, the applicant was faced with a form consisting of 50 fields.

Let me give you another example of the convenient opportunities for increasing bureaucracy created with an e-solution. A couple of months ago, the portal of the Estonian Public Broadcasting published an article where the head of the Procurement Department of the University of Tartu described the organisation of mini competitions before and after the development of the Public Procurement Register.

Previously, requesting a price quote in the case of a mini competition meant that a simple e-mail was sent out, but the same work now has to be done in the relevant information system.

According to the university, the organisation of a mini competition now requires 100 mouse clicks and 50 minutes.

As on average, the university requests nine price quotes per day for purchasing travel services, it means that the university should hire a full-time ‘clicker’ just to obtain price quotes for travel services. The Ministry of Finance also acknowledged the existence of the problem in the article, but also added that it saw no quick solution to this. Let them click.

Unfortunately, we have to admit that many of the silly bureaucratic restrictions and requirements that burden us bear the label ‘Made in Estonia’.

I would speak a lot more about procurements if I had the time. The National Audit Office is also auditing this at the moment. For example, the new Public Procurement Act entered into force two years ago and one of its goals was to simply public procurement procedures.

Many of the agencies we spoke to during the audit said that they cannot see this simplification anywhere. It’s true that the Ministry of Finance has started collecting the proposals of agencies on how to simplify the simplified act again. Unfortunately, the simplification draft will not get to the Riigikogu before next year. This raises the question of why the act that burdens the public sector cannot be amended at a speed expected from information society? For example, in the course of agile legislative drafting with a five-day approval deadline?

Dear members of the Riigikogu,

As I said in the beginning of my presentation, an opinion of the previous year’s financial statements is a traditional part of my overview. I can confirm equally traditionally that the financial statements of the state give a true and fair view of the state’s financial position as well as its financial performance and cash flow for the year ended.

Like all of my predecessor in the position of auditor general before me – Mihkel Oviir twice and Alar Karis three times – I also have to ask a question similar to the one recently asked by Riina Sikkut: what are the benefits of the consolidated report for 2018 on 13 November 2019, when I will shortly be adopting the state budget for 2020? If you will.

The people of the National Audit Office have been wondering about this question for at least 15 years.

The Riigikogu has approved the previous year’s annual report right before the end of the current year for decades already. This has been done both before and after the e-state. In Sweden, however, the financial report is submitted to the parliament in April and in Finland only a little later.

But in both cases, the report can be used when the state budget for the next year is prepared.

Maybe Estonia also needs a discussion of what the content of this report should be like so it would also have practical benefits for people other than future accounting archaeologists. I think that the state’s consolidated annual report could indicate more simply and clearly what the allocated money was spent on and what was achieved for it. And also what was not achieved and why. And only by presenting the most important information. We should also consider whether we need such an annual report at all this day and age. Technological solutions make it possible to show the state’s performance indicators online all the time and it would also be possible to make screenshots-extracts of them whenever necessary.

Dear Riigikogu,

I would like to end my speech with a few words about the state budget. The experts of the Ministry of Finance have developed a habit of reacting the same to almost all questions concerning the budget and reporting: all concerns will be solved by activity-based budgeting.

But they will not be. It’s the opposite. The annual budget keeps getting less understandable and informative every year. Many members of the Riigikogu have expressed their concerns about this to the National Audit Office for years, irrespective of whether they are in the opposition or the coalition.

Activity-based budgeting, which is launched to the full in the next year’s state budget, has opened brand new opportunities for making the state budget document even more complicated than before.

The problem does not lie in activity-based budgeting were information is presented by programmes. No matter what the budget is based on, it can still be presented in an understandable manner. Especially in the digital era.

The government has decided to conduct a state budget audit. During this audit, it would also be reasonable to audit the state budget document and the annual report.

If the central document that guides the state’s strategic development were easier to understand for the decision-makers and the public, it would also make it possible to make better decisions for cutting costs.

I would like to share with you a thought from last spring. The current government stepped into office on 29 April – only a month and two days before the deadline for submission of the state’s budget strategy established by law. The strategy was submitted by the deadline. So it could’ve been worse.

If the coalition negotiations had taken longer and the government would have stepped into office a month later, for example, they would’ve had just two days for this. It didn’t happen this time, but it can happen some time in the future.

I believe that more flexibility would be reasonable in the interests of the quality of financial planning in the future – the minimum period from the time the government steps into office until the budget strategy is submitted should be agreed. Even if it’s just a month – the government would still be guaranteed minimal time for debates.

It must also be noted that for some reason, we have set ourselves great additional heights in the budgeting process from this year onwards, which we can heroically overcome.

Namely, the law now requires the government to approve the draft state budget for the next year according to the same schedule as the budget strategy, i.e. in spring. The draft, not the plan as usual.

Is it really reasonable to prepare two state budget drafts in the same year – one in spring and other in autumn? Why is it necessary to work on the State Budget Act to such detail before the economic forecast published in summer?

Especially since we all know that the spring document cannot be taken too seriously and the actual budget is completed in autumn?


The letter E in front of e-Estonia should not mean electronic Estonia alone, but also efficient Estonia and energetic Estonia. In many cases, we don’t need digitalisation or legislative amendments to fight everything that’s useless.

The Finns have proven that all you need is the will and action.

Similar to us, they are also struggling with bureaucracy. This is why the goal set by the Finnish government a couple of years ago is also to reduce bureaucracy. Since they struggled with the processing of major projects, they chose a real life project as the practical test for implementing zero bureaucracy.

The project was the processing of the plans and permits related to the large Äänikoski industry. As a result, the whole process was completed in nine months. Two detailed plans were processed, environmental impact assessments were carried out and about 10 environmental permits, including the planning permission, were processed in this time. All of this was done without amending any acts.

So, they key to success is the will to solve the problem. This experience is now also applied to other similar processes in Finland.

In Estonia, we started reducing bureaucracy by identifying legislative requirements and starting to amend them. The Finns proved that you don’t need to amend legislation to succeed, you need to change your attitude.

This is the attitude and the will that will also serve us in the future. When nobody remembers what a Nokia was and why Estonia was looking for at all.

Thank you!

  • Posted: 11/14/2019 9:55 AM
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