Press Conference after the Meeting of the Government, Held on 3rd November 2008

Martin Schmarcz, moderator: Good afternoon, ladies and gentlemen, welcome to the press conference after the meeting of the Czech government. The Deputy Prime Minister Mr. Petr Nečas will stand in for absent Prime Minister who is leaving for the Nuclear Forum which will be held in Bratislava. Also the Minister of Finance, Mr. Miroslav Kalousek is here with us. As an introduction, I give the floor to the Deputy Prime Minister so that he could briefly summarize the meeting of the government. Then there will be time for your questions.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: Good afternoon, ladies and gentlemen, thank you for coming to that press conference which was summoned hurriedly so that we could manage to cope with our tasks; that is why we did not want to take off the press conference. The government had standard items on its agenda; the course of the meeting was standard. I would like to say that we adopted proposals of crucial legal norms which we would pass to the Chamber of Deputies; for example the Bill amending the Act on Social Services. The Minister of Finance will be speaking about the Bill amending the Act on Foreign Exchange. We also dealt with the Bill amending the Act on Imprisonment, the Bill amending the Act on Electronic Communications, we discussed Solutions of further procedure in preparation of the Anticorruption Act and it will be the Minister of Finance again who will inform you of this issue. We discussed the issue of a one-stop public budget revenues collection points, it was again the point of the Minister of Finance. I would like to inform you, as the Minister of Labour and Social Affairs, that the government approved the Bill amending the Act on Social Services. This act is based on the analysis of that one-year-and-a-half function of that system and the respective data. This new system proved to lead to extensive expansion of mandatory expenditures in the social sphere. I have said many times that the new system which we inherited from the previous government and which came into force starting from 1st January of the last year was a step in the right direction; however, it was not financially sustainable for a long time; it was beyond all doubt. I would like to mention concrete data now. Contributions to social care were budgeted at the amount of 8,09 billion crowns for the last year. The actual expenditures were more than 14 billion crowns and the estimate for this year is 19 billion crowns. It means that it is the faster growing mandatory social expenditure. Besides, according to our analysis it is shown that 105000 our citizens draw the contribution of the first degree, which should be used primarily for the purchase of social services in the sphere of home care services. On the other hand, only 26000 persons purchase home care services from providers of these services. There are in total 240000 contributions to social services in our country. We decided to restructure the amount of those contributions because the total compensation for home care services for one client amounted to 1500 crowns. Thus it is proved that the contribution at the amount of 2000 crowns was extravagant, because it covered not only the contribution to the home care services but also an extra 500 crown bonus. On the other hand it was shown that the contribution to the care of fourth degree was set at lower level. It means for the most dependant persons, and that is why we propose to increase it up to 12000 crowns. A significant positive feature of this law is the fact that we will make access possible for children bellow 18 years of age, who suffers from various types of metabolic and internal diseases. These persons became to be excluded from the system starting from 1st January 2007. Thanks to this amendment we will return them to the system as we will define unambiguously persons who will have right to draw these allowances. The contribution to care will be paid only in case kins or other non-entrepreneurial person or a social care provider or a hospice provides such services. Besides, the amendment includes also the basis for decentralization of subsidy providing processes as of 1st January 2012. Until this date subsidies are allocated by the Ministry of Labour and Social Affairs. In the conclusion I would like to emphasize that this bill was debated at the tripartite session and it is the only one bill which won approval of all three parties. It has not been achieved in the social sphere in the last eight years. That is why we expect that this legal norm will be successfully approved by the Chamber of Deputies. Now the Minister of Finance will inform you on his points.

Miroslav Kalousek, Minister of Finance: Thank you for the floor. Good afternoon, ladies and gentlemen. A very brief amendment to the Foreign Exchange Act which was approved by the government only respond to the accession agreement between the Czech Republic and the EU. In that agreement a seven-year transition period was agreed and concerned real estates and natural persons-foreigners. The transition period was five years in case of real estates connected with housing (flats, houses) and the period of seven years was applied to farming land, forests and pieces of land. As the five-years period expires in May of the next year, I proposed the amendment to the Foreign Exchange Act, to be concrete – the amendment to the section 17, so that starting from May of the next year foreigners, natural persons, could purchase in the Czech Republic real estates connected with housing directly. That was the five-year transition period. For faring land and forests is the seven-year transition period applied and this issue will be solved later on. This amendment to the Foreign Exchange Act is applicable only to real estates connected with housing. The government approved the amendment today. Much more extensive and for the entire reform a crucial material was the project of the one-stop public budget collection point which was approved by the government today and which was a part of the tax reform. I just remind you that we published it on our websites so that it could be discussed and based on comments we are taking the individual legislative and executive steps. The reform has three pillars. They concern the reform of legislation, I mean quite a new Act on Income Tax which is in the course of a comment procedure now. As I noticed in your articles, you always point out some details like meal tickets or travel cards; nevertheless, the sense of that law is much broader than these details. Then, it concerns the reform of the process. The objective is to replace the old Act on Administration of Taxes and Fees by a new tax rules. In this case the articulated bill was approved by the Legislative Council of the Government and the government will debate it in the following weeks. And this is the third pillar – it is a reform of the institution. We are living in a country where there are four tax administrators and a tax-payer send tax statements and taxes to four different places. They are tax offices which collect income tax, property tax, road tax, inheritance tax, and gift tax. Then there is the Czech Social Security Administration which collects premium for pension insurance, premium for sickness insurance and the contributions to the state employment policy. Then, there are health insurance companies which collect premium for public health insurance and the Custom Administration which collects duty, consumption taxes and energy taxes. There are four different tax administrators, four identical functions and processes which concern the collection itself, registration, tax assessment, underpayments; thus a tax subject may be controlled by four different administrators in a very short time. The requirements for architecture and function of information systems are also connected with it. After the agreement on integration of the Custom Administration was reached, we decided to finish this project and to build a project of a one-stop collection point in which the state would collect all those direct and indirect taxes and other payments like social insurance, health insurance. It will be a duty of the state to distribute the individual payments to the respective places. Payments connected with pensions will be distributed to the Ministry of Labour and Social Affairs, payments of health insurance will be distributed to the health insurance companies or to the Ministry of Health; nevertheless, there will be only one collection spot established, which will result in great administrative economies in the sphere of state administration because of centralized logistics, centralized identical activities and it will mean great advantage for tax payers as they will pay a single amount on a single form and at a single place.

I was commissioned by the government to sign, in connection with the session of the World Band and the IMF, an agreement with the World Bank which would help us during implementation of that extraordinary complicated and challenging project by its advisory activities. I will start to negotiate with the opposition without delay on the this project because with regard to the fact that we decided to amalgamate issues of social and health insurance, the problem will exceed the mandate of one election period and we regard as reasonable to try to reach an agreement with the opposition on this project so that it would be unambiguous legal certainty and that tax payers will be sure that we are aiming at that one-spot point step by step. My task is to submit the articulated bill which would specify the individual steps of this project by May 2009. That was information on my points. I am ready to answer your questions.

Martin Schmarcz, moderator: I thank members of the government, the Deputy Prime Minister and now there is time for your questions. The Czech TV.

Zina Plchová, Czech TV: Good afternoon, I would like to ask both ministers a question. You have the external examiner's report on the Pačes´ report from which results, to say it in a simply way, that we cannot do anything without nuclear energy. I would like to ask the Deputy Prime Minister Nečas whether you will pressure to the Green Party, because they are your coalition partners, so that the nuclear energy would become more discussed. And then I have a question to the Minister of Finance concerning the opinion of the KDU-CSL to this issue.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I would like to emphasize that I belong among real adherents of the nuclear energy; perhaps it is like this thanks to my education as I am a physicist and therefore I do not feel any problems with this issue. I am also convinced that if there is somebody who emphasizes that myth of global warming, then he/she cannot be against nuclear energy because it is the only one real alternative how to cope with the alleged global warming. On the other hand, there is the coalition agreement here and I respect it. It is not the attitude of the government, the majority of its members; it is a result of a political compromise. I say openly that it was not possible to agree on anything else then on the implementation of the EIA (Environment Impact Assessment). This is the only one realistic matter which can be implemented in this election period even if the government had the support of nuclear power station construction in its programme. It is even out of question to manage to implement the entire EIA Project; it will be finished in the next election period and I baldly state that the EIA process concerning construction of further two blocks of the nuclear power station in Temelín was started and it is in progress. In other words, there is no delay in this sphere because the coalition agreement is still in force. It is not possible to manage nothing but the start of implementation of the EIA Project. Without this process it would not be possible to consider the completion of construction of the nuclear power station in Temelín.

Miroslav Kalousek, Minister of Finance: I am a member of the coalition cabinet which undertook, in the framework of the coalition agreement, not to start construction of new nuclear blocks. Nothing like this will happen in this election period. If you ask me on that issue from the long-term point of view, I am convinced that if the Czech Republic wants to be sovereign enough from the point of view of energy security, then we can do anything without nuclear energy.

Martin Schmarcz, moderator: Thank you, further question, please. The Z1 TV.

Z1 TV: I would like to ask a question – also the standpoint of the Ministry of Interior concerning the Working Party and the National Party was to be on the agenda. Did you debate it?

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: With regard to the fact that the Minister of Interior was not present at the meeting because of performing other duties, it was not debated.

Martin Schmarcz, moderator: Thank you, further question, please.

Daniel Novák, Czech News Agency: I would like to ask whether the government debated the proposal of Mr. Jiří Čunek regarding exchange differences in drawing European funds in 2007-2013. Thank you.

Miroslav Kalousek, Minister of Finance: The Deputy Prime Minister Čunek was not present at the meeting either, and therefore we did not deal with it.

Martin Schmarcz, moderator: Thank you, further question, please.

Vladimír Keblůšek, TV Nova: I have such an unpopular question – nevertheless, I must ask you whether you do not afraid of losing your ministerial chair. And another question – did not you hear about any changes?

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I will begin with the second question. First, I have heard lots about it, as well as you have. Second, I am not afraid of losing my ministerial chair because since the first moment when I was appointed a minister I have known that ministers are appointed and disengaged based on the proposal of the Prime Minister. If the Prime Minister comes to the conclusion that the minister XY, in this case Petr Nečas, does not do his work well then the minister is disengaged by the evening provided the Prime Minister recollect him in the morning. It is a part of my engagement. It is a standard part also in west democracies, it is a part of the political process that there are situations when the Prime Minister can reshuffle the cabinet. It is a standard step after defeat in elections, which we experienced in autumn in regional and senatorial elections. It is obvious that we are ministers today and we will not be ministers tomorrow. I have no fears as it is a part of our work; it is a part of the destiny of a minister.

Miroslav Kalousek, Minister of Finance: I do not know whether to nearly repeat what the Deputy Prime Minister Nečas has already said. Simply said, the only one man who can propose personnel changes is the Prime Minister and I am not sure if it is correct to speak about it in his absence. He will decide and the result will depend on his decision. As to the question whether I am afraid of losing my ministerial chair, you are asking a politician who altogether five times resigned various high positions in the Czech politics during my carrier. I can assure you that it does not ache and therefore you can hardly ask me whether I am afraid of it.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I would add to it that I belong among politicians who are rather reproached for not accepting the ministerial offer at certain time. It happened a lot of years ago, but I am constantly being reproached for it. I think it is proved clearly that I am not dependent on my ministerial chair.

Martin Schmarcz, moderator: Thank you, the TV Prima.

TV Prima: I apologize, perhaps you were speaking about it; nevertheless, I would like to ask the minister Nečas whether you can specify changes in the Act on Social Services.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: We were speaking about it, but I admit it would be incorrect to point out your absence as you could not manage to be here in time because of hurried arrangement of the press conference. I will say something about it again and I apologize to those who have already heard it. We have experienced about one-year-and-three-quarter time when the Act on Social Services had been in effect. It came to effect starting from 1st January of the last year and we inherited from the previous cabinet. The Act is a step in the right direction; nevertheless, it is not sustainable for a long time in the existing form. There is a great increase of expenditures here; I would remind you that in 2007 the budget for contributions to home care was 8,9 billion crowns, the actual expenditures were 14,2 billion crowns and in this year we will spend more than 19, billion crowns. If we add 7 billion crowns for subsidies in the sphere of social services we will reach the amount of 25,5 billion crowns for social services. In 2006 we gave 13 billion crowns to social services in the sphere of mandatory expenditures. It means double amount during last two years. We have to respond to it and therefore we had concrete analyses prepared which showed that for example 1500 crowns are paid on average for the home care of one client. The contribution to the care of the first degree is 2000 crowns and it was markedly overestimated as the amount was intended only to the home care. In this case there was a 500 crown bonus. Moreover, it is shown that home care services purchase 16000 citizens of the Czech Republic, but only 26000 of them receive contribution to the care of the first degree. On the other hand it is proved that we have underestimated contribution to the care of the fourth degree; this is the contribution to absolutely dependent people who are dependent on the help of another person. If we take into consideration the fact that the average costs for care for one client are about 22000 crowns, then the amount of 11000 will be increased. We are restructuring the amount of contribution because in the first degree it was too high and in case of the fourth degree it was low. We transfer financial means from the first to the fourth degree. Besides, the bill represents significant improvement of the situation of people who take care of children under 18 year of age, who suffers from various metabolic and internal diseases, I mean various oncological diseases, diabetes and such like, as they began to be out of the system starting from the coming into force of the new law. Also these families will get contribution for that care. It is an improvement of the existing law.

Martin Schmarcz, moderator: Thank you, the Czech News Agency, please.

Czech News Agency: Good afternoon, I would like to ask – the government was to debate the principles for granting subsidies to non-state and non-profit organizations. I would like to know whether the government debated it and what its stand was.

Miroslav Kalousek, Minister of Finance: It debated; it was a material of Mrs. Stehlíková and the government approved it.

Martin Schmarcz, moderator: Thank you, further question, please.

Hospodářské noviny: Good afternoon, I have a question to Mr. Kalousek. Maybe it has been discussed; nevertheless, it concerns the Anticorruption Act. Did you debate it today? Was it approved? What is the essence of the Act?

Miroslav Kalousek, Minister of Finance: We debated it. The essence of the Act was to publish as much as possible volume of information on awarding of subsidies on the Internet. The issue was suspended due to fact that the standards of requirements of the European Commission had been proposed and the Prime Minister insisted that the material should be above those standards – that more information than it had been required by the European Commission should be published.

Martin Schmarcz, moderator: Thank you. Are there any further questions? If it is not so, have a nice afternoon.