Press Conference after the Meeting of the Government, Held on Monday 2nd March 2009

Jana Bartošová, government spokesperson: Good afternoon, ladies and gentlemen, welcome to the press conference after the meeting of the government. Let me welcome members of the government, the Prime Minister Mr. Mirek Topolánek, the Deputy Prime Minister and Minister of Labour and Social Affairs Mr. Petr Nečas and the Minister of Finance Mr. Miroslav Kalousek. I ask the Prime Minister for his introductory speech.

Mirek Topolánek, Prime Minister: I, who was not present at the meeting of the government, will act as a guide through the agenda of the meeting. If you have some questions concerning details, my colleagues will answer them. As far as matters that were approved by the government are concerned, a very interesting was the Act on Election to the Parliament. The Bill amending the Act on Local Fees was withdrawn from the agenda as the Deputy Prime Minister Bursík was not present as he was in Brussels. As to those deputies´ proposals, the government approved the proposal for promulgation of the Act on Rules of Procedures of the Chamber of Deputies, which concerned the bound mandate, and it did not approve the proposal for promulgation of the Act on Energy management. All the other materials were approved. As to those items you might be interested in, which concerned the anti-crisis plan, all of them were approved; nevertheless, in case of the Insolvency Act a negotiation would be held and we would want to include in the Insolvency Act certain changes which would reflect striking or protesting glassblowers. It concerned payments of wages in the time of beginning insolvency or a moratorium. I think that is all as far as those interesting items of the agenda are concerned Perhaps one more thing I would like to mention and to present it at this press conference. It will not concern the visit of the American President Obama who will arrive by the invitation of the Czech presidency; he will take part in the session of 27 EU countries in Prague. It will be an informal session of heads of states and the president will give a European speech of the year.

I do not want to speak about great number of other matters, but I would like to revert to the Nordic Ski World Championship which was held in Liberec. It is very interesting in the entire story that its essence is not mentioned and with a typical Czech pettiness it is heighten that everything turned out bad. I regard this event as a unique sport event in the recent history which has been logistically managed. There could have been some more medals won there but that was not the principal problem. Three groups of people failed in that story and it is necessary for you to focus on these groups, not on those "red herrings". The first group is a group of people who invented this event and placed it to the area where there were lots of investment necessary, in spite of the fact that in nearby Harrachov and Bedřichov had been sport area prepared. I cannot imagine that a Nordic Ski World Championship in Italy would not be organized in Val di Fiemme where sport areas are prepared. That was the first faulty decision. It is necessary to ask what that group around the organizer Kumpošt did for organizing the championship in Liberec and why it was not held elsewhere. Why was such a disadvantage contract signed? Why the marketing rights had somebody else and not the Czech organizer? The second group which failed was the socialist government which decided on the championship and which allocated that amount of money that formed apparently only half of expected costs for construction of sport areas and other investments in Liberec. Do ask why the government did it. Ask why such a small amount of money was allocated and why that decision was made. The third group, which failed, formed journalists because of scandalous informing throughout the entire preparation and the course of that unprecedently the most significant sport event in our recent history. Groups which did not fail and I insist on it, was my government which could begin to deal with that project in the situation when unprecedented diplomatic, sport, political and financial scandal threatened as it had been invested already 800 million crowns and 114 million crowns from the first financial tranche had been lost. In that situation my cabinet took a decision and it was a correct decision. The second group which did not fail was undoubtedly the Executive Committee of Kateřina Neumannová. I would like to thank her as she did her best for the success of the championship. I feel necessity to say it like this as information in media is biased and untrue. That was introductory information.

Jana Bartošová, government spokesperson: I thank the Prime Minister and now I give the floor to the Deputy Prime Minister Mr. Petr Nečas.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: Good afternoon, ladies and gentlemen. The government also debated today laws which will form a part of the anti-crisis plan which would be passed to the Chamber of Deputies. Those laws which concern the tax sphere will be explained by the Minister of Finance. I would like to say that the government approved the amendment to the Act on Social Security Insurance and the Contribution to the State Employment Policy. Based on this law a premium reduction will be included in the system in case of the approval of the Chamber of Deputies. The premium reduction will have a degressive character. It will begin at the amount of 613 crowns in case of the minimum wage and it will finish at the amount of 1,15 multiple of the average wage – at the amount of approx. 27000 crowns. To give you an example in case of 15000 wage the premium reduction will be about 400 crowns. This measure will be used by the end of 2011 as a anti-crisis measure which is aimed at low-income and low-income groups of people because it has been shown from the point of view of the structure of new unemployed people that this was the most affected group on the labour market. Moreover, this group has worse prospects of integration in the labour market in case of a new economic growth and the revitalization of the individual spheres of industry. This measure should maintain 50000 jobs. It is an informed guess of the Ministry of Finance and the Ministry of labour and Social Affairs. It is necessary to say that we this measure will also result in the decrease of revenues from the social insurance by about 18 billion crown. I would like to say that it is very incorrect and untrue that objection of members of the opposition who claims that those financial means could be used for lots of useful things; they mention for example a bonus in case of purchase of new cars in return of scrapping of old cars and such like. I would like to point out that about 16 billion crowns out of that amount of 18 billion crowns is the pension insurance. They are financial means which must not be used for anything but pensions. If this argument is used, it is because of ignorance or it is even untruth.

Further measure which was approved by the government is the government order based on which the government may reduce scope of profession that may be offered by labour agencies. The government adopted a relevant resolution. Based on a task which was assigned to the Ministry of labour and Social Affairs it will be allowed to perform through the job agencies only such professions for which a secondary education is required and other professions which are specified in the annex of that government order. It concerns such professions like bricklayer, carpenter, joiner, plumber, and locksmith and so on. As against the original proposal of the Ministry of Labour and Social Affairs, following an agreement with the Ministry of Industry and Trade, some more professions were included in the list, for example technical, health care and pedagogical workers. Only for these professions which are mentioned in the annex plus for all profession where a secondary education is required will be allowed employment through job agencies.

As to the amendment to the Insolvency Act, we have prepared a proposal based on which it would be enabled to broaden protection of employees against insolvent employers by means of prolongation of so called relevant period. The existing state which results from the law of 2002 and which proved to be very imperfect and which we inherited enabled to pay out wages employees by the Labour Office only in the period prior to declaring an employer insolvent. Based on this amendment which will be approved by the government definitely on Thursday we propose the system in which it will be possible to pay out wages even in the calendar moth when the insolvency i declared and one more following months. The effect of this principle will be from 1st September 2008. Overwhelming majority of requirements of workers of the glass and ceramic industry will be solved through that measure without necessity of taking extraordinary measures. It will be solved by this amendment to the Act no. 118/2000 Coll. Thank you.

Jana Bartošová, government spokesperson: I thank the Deputy Prime Minister and now the Minister of Finance has the floor.

Miroslav Kalousek, Minister of Finance: Thank you for the floor. As the Prime Minister has already said the amendment to the Act on Local Fees was withdrawn after a debate from the agenda. With regard to the recent information that has been given I emphasize that I did not propose increase of prices for waste liquidation; I just proposed to increase the upper limit for municipalities. Then it would be upon the decision of municipalities to change those prices. Local fees are 100% revenues of municipalities and they are municipalities which decide on them based on their municipal ordinances. With regard to the fact that waste liquidation costs of municipalities in many villages and towns exceed the existing limit, I proposed to increase that limit. However, the final price will depend on the decision of a municipality. Owing to the newspaper headlines the general public did not understand the problem well. That is why I am peaking about it. Nevertheless, it has been withdrawn for one thing because the absence of the Deputy Prime Minister Bursík and because the government was holding an animated debate whether there is the proper time now for increasing those possible limits. In other words, we will discuss this matter in connection with the amendment to the Act on Budgetary Allocation of Taxes and in connection with the Act on Waste.

Then the government approved the amendment to the Act on Income Tax; I mean that threefold shortening of the depreciation period. We will submit to the Chamber of Deputies one of tools of that anti-crisis package which should be in effect from the force of the law to 30th June 2010. Investments of the first depreciation group, where the depreciation period is three years, will be depreciated immediately. Investments of the second depreciation group which have depreciation period five years will be depreciated in two years; 60% in the first year and 40% in the second year. It is an incentive for all subjects who are considering purchase of an investment, whether I mean computers, cars or other technology. In other words, through this proposal we say entrepreneurs: "consider these investments as you will have more advantageous conditions for certain period of time". I would like to point out that this measure also include the tax deferral relating to tax prepayments for natural persons and legal entities with up to five employees. When I heard the Chairman of the Association of small Entrepreneurs to say that it was tax prepayment deferral is not any relief as they would have to pay taxes in 2010, then I have to say that this deferral will enable them to invest in the framework of that shortening of the depreciation period and thus to optimize their tax liability so that they would not have to pay any tax in 2010 because of investments in 2009. I highlight the interconnection of those tools and I firmly believe that the Parliament will approve this proposal.

The third item of the agenda that was submitted by the Minister of Finance was the decision on the privatization of the TECHNOEXPORT joint stock company. The government decided today on the privatization and on the sale of the company to the company Chemoprojekt. There was a two-round tender organized and the highest offer amounted to 516 720 000 was submitted in the second round by Chemoprojekt. The investment advisor who cooperated with us had estimated that the price of the company would be 195-230 million crowns. The government decided on the sale to the Chemoprojekt unanimously as it was the highest offer and it exceeded the market price. That is all.

Jana Bartošová, government spokesperson: I thank the Minister of Finance. Now I ask for your questions. The Czech News Agency.

Czech Press Agency: Good afternoon, I have two questions. Was the purchase of transporters for our army debated at the meeting of the government? What was the result like? And the second matter – there is news from the Russia that the American president offered Moscow that American side would not insist on the European pillar of the anti-missile defence in return of the Moscow's help in banishing fears of Iran. Could you make any comment on it? Thank you.

Mirek Topolánek, Prime Minister: I believe only 50% of news of the ITAR-TASS; I will wait until confirmation of that news. I have never claimed that the new American administration would decide immediately. We will wait for that information; perhaps it will be on the occasion of the visit of the President Obama when we will learn more about it. We signed the agreement and the American side would have to cancel it in this respect. I do not know whether it is jut a rumour or whether it concerns a deferment. I am unable to make comments on it. As to the first question, I am able to do so. First a bit of history - we were unable to solve Grippens which was a fault but we decided on the contract which at the beginning concerned 199 transporters for 21 billion crowns. We were confronting with a problem whether to execute that contract or not. As the company General Dynamics, the Austrian Steyer did not meet terms of the contract as far as time and technical conditions were concerned, the Minister of Defence were given a mandate to withdraw from the contract. It did not happen and a compromise and settlement was reached. After testing and purchase of 17 transporters, which are now being in the Czech Republic, we approved today further procedure; I mean the purchase of 107 transporters for the price which is in current time 14 billion crowns. About 153% of offset programmes were contracted; majority of them forms direct offset programmes in the production process in which number of Czech firms would be involved, for example the army enterprise in Nový Jičín. The Czech Army has been waiting for that contract for a long time as it has been facing lots of operational problems resulting from the delay not only in our country but also in foreign missions. The government approved today further procedure which meant that the Minister of Defence was given a right to sign the contract. There are financial means allocated in the state budget; they would not result in any extraordinary expenditure. In this respect I am very glad that the compromise and settlement was reached and we can execute the contract with regard to our needs, price, technical level of transporters, and their equipment. Our precondition was that the unit price agreed during the negotiations would be respected.

Jana Bartošová, government spokesperson: Thank you, Czech TV.

Czech TV: I would like to ask the Prime Minister for his brief comments on today's protest of glassblowers in front of the building. And I have one more question concerning the methodology. Part of those anti-crisis measures is to be debated in the Chamber of Deputies in the following days. Is it still true that the coalition wants to vote on a single package? Have the two main groups reached any agreement? Thank you.

Mirek Topolánek, Prime Minister: You know well that the overwhelming majority of those measures are of an executive character and these measures were implemented immediately. As to those legislative measures, they were approved two measures out of three. The third one will be approved on Thursday and we will submit the entire package. I do not think that there will be a single vote on them. We debated it today and we decided to debate them in a single debate in the Parliament and to vote individually on them. There is a great chance of the success in case of depreciations. In case of the Insolvency Act, if there is not a tendency to add some creative proposals, the only one problematic proposal is that of the left-wing parties which concerns the social insurance, about which inter Nečas was speaking. I think that this proposal have a real chance to be passed. The only one thing that obstructs the opposition is the fact that the proposal is to maintain 50-70000 jobs, in particular in those low-income categories which form typical electorate of the Social Democratic Party. This is perhaps the principal reason why that party refuses it. I hope that these employees hear me and that they will not vote for socialists any longer as they seize them up to 800 crowns a month. As to the first question that concerned glassblowers – I am sorry for them, but the same trade union leaders who are leading them to demonstration were members of supervisory boards; the state had not such an opportunity. Those leaders had their share in the decision-making process, while the state had no chance to act. It is not the problem of current crisis; the glass industry has been facing problems for a long time because of the competition of South-eastern Asia. After those firms began facing problems the owners were interested only in financial not real restructuring. That was the essential problem. The state did its best, and Miroslav Kalousek will say more about it, to find a solution for them, to maintain them out of insolvency which was not possible as there was no subject which could legally participate in the solution. It could not be the state and banks were not willing to help. We immediately undertook relevant actions in this respect; we made an agreement with the ČEZ so that electricity in those glass works would not be cut at once but gradually. Thus the equipments worth billions crown was saved. We ensured better traffic services on the spot and ensured higher financial means for labour Offices so that they would have better chance to find jobs for those people. Now we took a measure, which we have already explained, with retroactive effect and thus people would have a chance to get wages that they rightfully want. We amend the error in the law and they will be given their wage retroactively. As to the proposal of the Minister of Finance, the state can, based on the restructuring programme, to include firms in the programme and it can help them. There is a procedure running which concerns the restructuring programme of the company Crystalex; the other firms have not asked for it. The bankruptcy trustees perhaps cannot see any prospects at present or they have not any programme prepared. That is all what I can say about it. I understand those people; I do not understand the trade union leaders.

Miroslav Kalousek, Minister of Finance: I would like to add brief information. As to the future of those firms I am sorry but that demonstration should be organized elsewhere. There is no owner of a team of creditors here. Since September it has been true what I said. We can help in case that there will be agreements between owners and creditors and in case it is apparent that it is possible to finance operation of those firms without loss using money of tax payers. This has been valid since September and the Ministry of Finance has not received any agreement of owners and creditors so far. A far as I am informed now there is the month of March. I have not seen any agreement on the restructuring plan. As to the request for extraordinary allowances, it was addressed to the Deputy Prime Minister Nečas and me. We were frequently mentioned at those banners. We are Minister of Labour and Social Affairs and Minister of Finance and we can pay out only such allowances that the law allows us to pay out. If must not pay out allowances which are not mentioned in the law, we would breach the law in such a case. The systemic solution has already been presented by the Deputy Prime Minister Nečas.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I would just like to add that thee glassblowers lost their jobs because of owners, not because of the government. They are owners who owe them wages, not the government. Restructuring of these firms or the sale of their viable parts is not hampered by the state but by owners of these firms. Therefore I do not understand why the trade union leaders brought for the second time those glassblowers in front of the Office of the Government and why they did not bring them in front of a different seat., for example in front of the seat of those firms which are responsible for the situation of those glassblowers. Number of those problems would be possible to solve. A great part of those glassblowers could get a job in case of sale of those firms; nevertheless, it is being blocked by their owners. We are aware of that complicated social situation and we are intensively communicating with the relevant municipalities which are responsible for payment of allowances and with Labour Offices. I am of the opinion that glassblowers cannot complaint about the approach of workers of Labour Offices; they are instructed methodologically since the very beginning to treat those employees helpfully. We also very intensively negotiate with representatives of local governments. We organized a session with mayors on the situation in the ceramic industry; I will visit the Karlovy Vary Region just because of this problem. We are dealing intensively with this situation and the fact that we submitted the amendment to the Act on Protection of Employees against Insolvency in which the relevant period was since September 2008 leads me to asking a question: why? - Because we do not care a rap about them or because we are interested in their problems and want to help them?

Mirek Topolánek, Prime Minister: I will add one more thing. I have already mentioned it. I do not read newspaper much but I read lately that the first victims of the economic crisis were companies CEWood, České sklo a porcelán. I refuse it. These firms have been facing problems much sooner and to connect them with the crisis is incongruous. I think that we will be solving problem of economic impacts of that crisis here nevertheless no one of those firms which I had mentioned was a victim of the crisis.

Jana Bartošová, government spokesperson: Thank you, further question, please.

TV Prima: I have a question to the Prime Minister. It concerns the visit of the President Obama. Could you say something about security measures and what do you say to that statement of Mr. Minister Schwarzenberg who said that he would prefer not leaving the house on that day. Do you also recommend people to do the same?

Mirek Topolánek, Prime Minister: I do not believe that Minister Schwarzenberg said it. I have already noticed very suggestive reports in our media; that it is not good that the American President will arrive in Prague, that the Czech Republic will be affected by the visit and that it was not good to invite him. I would like to ask you to take the arrival of the President Obama as a great honour for the Czech Presidency and the Czech Republic, not as some troubles in the history of our country which would result in great expense and victims. That some security measures will be taken is obvious. I will not disclose any of them; it would not be security measures. I think you understand it well. Yesterday Erwin Stean was here an he would come once more. We are discussing the programme at present, we are discussion security measures during this visit which will begin on 4th April and will continue on Friday by session of head of states of all 27 member countries of the EU. Also a bilateral negotiation between with the Czech President and the Prime Minister will be held. Barack Obama intends to give relatively essential speech. That is all what I am willing to say about it and I would like to ask you not to incur an impression that the visit of the American President is bad news.

Jana Bartošová, government spokesperson: Thank you, E15.

E15: I would like to ask whether the government dealt with the situation in the health care sphere; I mean the health insurance companies which are facing the crisis.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: Not now at this meeting of the government.

Miroslav Kalousek, Minister of Finance: I can confirm that the Ministry of health is intensively negotiating with the Ministry of Finance because with regard to the wage and GDP trends, the decrease of expected revenues of health insurance companies is apparent.

Mirek Topolánek, Prime Minister: I understand that question. The problem is not as urgent as anti-crisis measures. It is not an anti-crisis measure. It is rather a consequence and an impact of the crisis situation, a consequence which does not threaten immediately; nevertheless, we know that there will certain decline in revenues take place and we must to prepare such a proposal which would respond to it. We are working on it.

Jana Bartošová, government spokesperson: Thank you, E15.

E15: I would like to ask you, Mr. Prime Minister, whether in the connection with Grippens that you have mentioned, and there were speculations that those offsets were not do advantageous, whether you think that better offset projects have been ensured for the Czech industry. Thank you.

Mirek Topolánek, Prime Minister: I should say that information on those direct offsets, on the share of number of Czech firms not only in the course of the production but also consequent transfer of the manufacturing to the Czech Republic and the continuation of the military programme is exactly what we could do for the Czech employment rate and Czech employees. It concerns mainly state-owned companies, not exclusively, and it concerns 3000-4000 employees, not all of them are involved in these offsets but those employees will help to maintain that production on forms which would face great problems. From this point of view are those direct offsets advantageous.

Miroslav Kalousek, Minister of Finance: If you allow, Mr. Prime Minister, I will give an advice to the journalist. Do you know how to find it out in the best way? Go back and read you own articles and commentaries which you wrote about one year ago, and when you informed the Czech public that in case of non-concluding of that contract it would have a negative impact on the Czech economy. It is still valid what you wrote then. And as it will be implemented, it will have a positive impact on the Czech economy.

Mirek Topolánek, Prime Minister: I will have a survey of the Czech journalist community made by Miroslav Kalousek so that to be able to learn something about the individual faces and their articles. I apologize I have completely forgotten it.

Miroslav Kalousek, Minister of Finance: The structure remains the same; even certain strengthening of the programme takes place because the assembly will be done in Nový Jičín.

Jana Bartošová, government spokesperson: Thank you, Právo.

Právo: Good afternoon, I would like to ask a question – Minister Kocáb opened again the issue of piggery in Lety. I would like to know whether you debated it at the meeting of the government and whether the stand of the government changed.

Mirek Topolánek, Prime Minister: I No, it was not debate it yet.

Jana Bartošová, government spokesperson: Mladá fronta, please.

Mladá fronta Dnes: I have a question to Minister Nečas – how much money do you have prepared for those glassblowers. What is the amount of money for those wage compensations since September 2008?

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: The amount will correspond with their claims resulting from the law. The initial estimate is about 90-100 million crowns.

Mladá fronta Dnes: And one more question – in case of some problems with adopting the reduction of the social insurance premium in the Chamber of Deputies – do you have any modification prepared so that you satisfied the opposition? Thank you.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I should say several things. The reduction of the social insurance premium is one of recommendations of the European Commission from the point of view of the economic restructuring plan. This is the first argument. The second argument – it is a temporary measure aimed at low-income groups. We can only speculate about the motivation of left-wing parties which do not want to enable this measure. Perhaps they want those people to lose their jobs and to support left-wing political parties through their frustration. It is an absolutely legitimate speculation and they give a message to those 50000-70000 workers in this country that they wish them to lose their jobs. Third, I regard as important to ay that this proposal have support of all groups of employers and I would like to point out that that it is supported by the second largest trade union association in this country. Only the Communist Party and the Social Democratic party are against. The communists have a negative stand to it for the present; nevertheless they are willing to negotiate about it, at least. I am of the opinion that it gives information rather on the Social Democratic Party than on the proposal of the government.

Jana Bartošová, government spokesperson: Thank you, the last question. Právo.

Právo: I would like to know our opinion on the piggery in Lety. Do you think that it is good to open that issue now?

Mirek Topolánek, Prime Minister: My opinion will become the opinion of the government and the government has not debated it.

Jana Bartošová, government spokesperson: Thank you. If there are no questions we finish the press conference. Thank you for your attention. Good-bye.