Speech given by Auditor General Janar Holm to the Riigikogu on November 10, 2021 on the problems of public administration based on the example of the coronavirus crisis

11/10/2021 | 5:00 PM

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Honourable President, honourable members of the Riigikogu

The National Audit Office presents the Riigikogu annually with two reports for discussion. The first report is on the state’s annual report audit which has just been thoroughly discussed by the Minister of Finance. The second one is the Audit Office's annual report focusing on the more important problems in public administration. The focus of this year’s annual report is the coronavirus crisis.

Let me speak first about the audit of the state's annual report. I confirm the statement of the Minister of Finance that last year's annual accounts are, in the National Audit Office's opinion, substantially correct, which means that they accurately and fairly reflect the state's financial position, results and cash flows.

According to the National Audit Office, a significant part of the state's economic transactions have also been performed in accordance with the State Budget Act and the 2020 State Budget Act, which has been adopted as law. But this certainly cannot come as a surprise to the National Audit Office or the Riigikogu.

I have also pointed out before that the annual state budget act has reached such a level of generalization that, in addition to providing a better understanding of the state budget, it also makes it quite impossible to violate this law.

I welcome the fact that the Minister of Finance has initiated an amendment to the Basic State Budget Act. This is aimed at making the state budget a more meaningful document. Yes, the ministry has good intentions. Yes, the overall picture of the budget will be more detailed once this draft has been approved. Unfortunately, the problems with the state budget are much more serious.

Unfortunately, I am convinced that even when the new draft is adopted, the information provided in the state budget will not actually provide the leaders or the public with a clear understanding of how the state budget funds are used and what is the impact of the financed activities.

As a result, financial management in the ministries will not be based on the programs and the structure of the state budget. Instead, there will be even more red tape delivering results that nobody needs. One budget is kept for real and practical life and the other one for translating the reality into the form required by the Basic State Budget Act.

I dare say that I know what I am talking about because I have had the honour of being the Secretary General of the Ministry of Education for nine years. At the time, it was the Ministry of Education that was the first to experiment with activity-based budgeting.

The images created by activity-based budgeting enthusiasts are, indeed, tempting, but merely describing theoretical advantages does not substitute for reality and practical needs. In real life, we do not see the promised benefits of an activity-based state budget, it lacks clarity and comparability. And the current budget is activity-based only by name, not in reality.

But, of course, anything that involves a lot of activity, like drawing up a budget, can be called activity-based.

By the way, the government itself does not use either such budget version that is presented here to the members of the Riigikogu in the budget discussions. The government is talking about specific amounts and specific costs, not programs. The fact that the Riigikogu receives the budget in the form it does now has been, however, decided by the Riigikogu itself. The Parliament itself has approved the current basic act.

However, amending the basic act alone will not make the budget more meaningful. Even if the state budget will be prepared more thoroughly and in more detail in the future. The law provides a framework that must be filled with clear and meaningful content, while maintaining budgetary flexibility. This requires strong and mindful leadership in the Ministry of Finance, the government as a whole and the Riigikogu.

The National Audit Office will continue to provide support with its knowledge and experience, should the Parliament now decide to thoroughly reform the budget.

The second report we are discussing here focuses, as usually, on current problems in the functioning of the state. This time, understandably, the functioning of the country in the coronavirus crisis is being observed. Over the past two years, the National Audit Office has prepared and published several audits, reviews and memoranda concerning different aspects of resolving the coronavirus crisis. The said aspects have been discussed by the State Budget Control Select Committee in the Riigikogu, as well as other committees.

The overview you have in front of you today summarizes the main points of these reports. As we are on the crest of the third wave of COVID-19, we can see that the lessons learnt from the first and the second waves of pandemic have not lost their relevance. The report lists five important lessons from the coronavirus pandemic, so you can look into them. However, I would like to talk about two other pandemics - a pandemic of analysis that is exhausting but not leading anywhere, and a pandemic of abandoned responsibility.

Dear members of the Riigikogu

The origins of many of our problems today do not lie in current decisions, but in the past. They root in the decision making and non-decision making in the past. Today, we feel the consequences of that.

Estonia headed into the coronavirus crisis with government agencies aware of the fact that the Health Board will not be able to man a crisis management structure or solve the crisis. The board had indicated as much, recently in 2018, two years before the crisis broke out. They said that the state all but lacks crisis supplies, including personal protective devices. That the capacity of emergency care and hospitals in handling a major crisis caused by an infectious disease was unknown. Etc., etc.

But this cry for help was like the alarm of the Health Board cold storage unit in that it went exactly nowhere.

The Health Board was left to its own devices regarding its tasks and problems. The result was that as the crisis progressed, the agency tasked with solving the crisis became one that needed support. At the same time, the state had various existing risk assessments describing in sufficient detail what would happen during a pandemic.

Allow me to give an example. Gaps in preparedness for mass vaccination were highlighted a decade ago. A description of vaccination problems from a Health Board risk analysis from 2011 could as well be an excerpt from some current news articles in 2021. The analysis reads that operatively organizing mass vaccination could prove problematic in the conditions of rapid spread of dangerous infectious diseases because it takes a long time to determine, notify and summon persons belonging to risk groups for vaccination, due to the limited capacity of vaccinators, that is to say family physicians, and negative attitudes toward vaccination in society. The analysis also pointed to the problem of determining close contacts of infected persons due to the rigid position of data protection authorities etc.

What happened after this analysis? Instead of the state addressing the highlighted problems, more risk analyses followed. These described already established and unsolved problems in even greater detail.

But why did we not see decisions aimed at solutions or resources allocated? Allow me to propose a few potential reasons.

Firstly, it is clear that decision-makers find it difficult to channel resources into solving theoretical problems of the future, especially when problems that require immediate solutions keep pouring in. Secondly, there was no strong political pressure for decisions as crisis preparedness has traditionally not been a fiscal priority for governments. It is much more popular to offer the public something new, various new measures. This, unfortunately, in a situation where vital core functions have been overlooked. The topic is seemingly a technical one and too far removed from the everyday problems of ordinary people during so-called peacetime.

Not to mention the fact that a lot of emergency situation preparedness problems are classified as state secrets that has caused the actual grave situation to remain hidden from the public and indeed the Riigikogu.

Unfortunately, the malady of constant analysis in place of solving known problems also exists outside crisis management. It has spread as a separate pandemic to various fields where the public and interest groups are waiting for decisions that are never made. Decisions require difficult choices that can lead to a conflict or require a great deal of money in a situation where there is no shortage of applicants. People who have worked in the state apparatus know that if you need to slow down a process on the political or administrative level, analysis is in order.

And no one can complain that problems are not being addressed. They are. They are being analysed. Constant analysis has become a kind of cover for outstanding decisions.

One area of constant analysis used to be whether Estonia needs a state reform, while its urgency had actually been determined long ago. Recently, we have heard a great deal about boosting the financial autonomy of local governments, while hardly any progress has been made.

Despite the finance ministry having mountains of existing data, they are dispatched to analyse and calculate new things every six months.

Once again, decision-making is only really stuck behind political will. Examples of avenues of analysis that exist to hide indecisiveness go on.

Plans to develop draft legislation can also be filed under this tactic. Their goal is to make it look like a problem is being addressed, while this kind of intent to develop is really only meant to slowly kill the topic. Things happen with very little delay when there is political will to see them done and are channeled into perpetual analysis if that will is lacking.

It is good to keep in mind that the finance ministry has said it wants to initiate a plan to develop a thorough amendment of the State Budget Act next year.

I looked at the two recent government activity plans and can tell you that analysis is by no means underrepresented in either.  The word "analysis" makes an appearance on 173 occasions in the recent activity plan and on no fewer than 300 occasions in the previous one.

There can be no doubt that certain things need to be analysed. A good analysis is useful. However, we desperately need an agreement according to which every analysis or problem highlighted by a study needs to be followed by a decision on the appropriate level. A decision of whether to tackle the problem or not tackle it despite its seriousness.

Another option is to decide that the problem is not serious and will therefore not be addressed. That would make it clear what will be pursued and what will not, as well as who made the decision. This also means it is clear who is responsible for making the decision.

Resources spent on rediscovering the same problem over and over again using analyses can instead be used to solve said problems.

Dear listeners

We also have reason to talk about responsibility this year.  It often becomes a hot mess. For example, it turned out this year that state agencies can have tasks for which they are not responsible, with responsibility lying instead with contractual partners, builders, architects and others.

In other words, the miraculous phenomenon of collective responsibility has appeared. This kind of mentality seeping into public administration is a dangerous development as a situation where everyone is seemingly responsible means that no one actually is.

Responsibility needs to solidify again, with everyone aware of their tasks and accountability. It is immediately evident in crises when the latter condition has not been met.

In addition to collective responsibility, the crisis has also highlighted examples of discarded responsibility. One small but telling example comes from this very annual report. The National Audit Office points out that the Ministry of Social Affairs largely left the Health Board to its own devices before the crisis.

However, when we sent the text to be looked over by the ministry, we received a reply where the ministry described our claim of the ministry's central role in crisis regulation in its administrative area as inaccurate.

Ministry officials had gone to some trouble in their feedback to the Riigikogu to shift responsibility from the ministry to the Health Board, citing a plethora of provisions on the board's responsibility. The National Audit Office in its report quoted and quotes the Emergency Act verbatim: Crisis regulation in a given administrative area is organized by the ministry in charge.

Dear members of the Riigikogu

We have all learned a lot of lessons in this crisis. We should take them with us to the future. The aim of the National Audit Office was not to go rifling through the past looking for culprits but to understand what needs to be done differently in the future.

To err is human and we can learn from mistakes. The National Audit Office's report concludes that the greatest mistake would be to refuse to learn from past mistakes as new crises are already in their way.

We do not know their nature or when they will arrive. But they will come.

I will end on this optimistic note. Thank you for listening.

  • Posted: 11/10/2021 5:00 PM
  • Last Update: 1/10/2022 1:39 PM
  • Last Review: 1/10/2022 1:39 PM

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