Funding the future
Although experts agree that public-private partnerships provide the most efficient way of putting the funds to use, local politicians are reluctant to call in private companies for fear of being accused of corruption.
With the new EU budget for 2007-2013, Poland will receive a massive financial injection to bring its poor and backward regions up to European standards. Now, local governments must overcome their fears of political recrimination in order to implement the right public and private partnerships to use the money efficiently.
"Yes, yes, yes!" was former Prime Minister Kazimierz Marcinkiewicz's exclamation of triumph after the Polish delegation won EUR 59.5 (zł.235) billion at the EU 2007-2013 budget summit. The satisfaction was justifiable, since the amount granted for the convergence with 'old' Europe was increased by EUR 13 (zł.51.3) million just before Christmas 2005. Apart from the structural funds, Poland will be granted EUR 11.8 (zł.46.5) billion for the development of rural areas. Along with national funds, the total amount allocated will come to EUR 87.1 (zł.343) billion.
The National Cohesion Strategy (NSR), adopted by the Council of Ministers on August 1, gives an outline of allocations in each operational program and each region. The three largest operational programs - Infrastructure and Environment (EUR 21.4 [zł.84.4] billion), Human Capital (EUR 8.1 [zł.32] billion) and Innovative Economy (EUR 7 [zł.27.6] billion) - will consume 66 percent of all funds.
"We want to create conditions for the growth of the competitiveness of the economy, based on knowledge, and entrepreneurship - an economy that increases employment and increases the level of social, economical and infrastructural cohesion. The poor regions will get the promised help, but simultaneously we will build competitiveness in all voivodships," says Grażyna Gęsicka, Minister of Regional Development.
Old dilemmas
What concerns experts now are the state's priorities for fund allocation. Most agree that Ireland and Spain used EU funds to meet their needs ideally. Marcin Grodzki, deputy president of the Polish-Spanish Chamber of Commerce, believes that the funds should be mainly spent on infrastructure. "If we have a great mechanism to support companies but it is impossible to reach them, it won't make any sense," he says.
Ralph Victory, first secretary and deputy head of mission at the Embassy of Ireland, says that EU financial transfers to Ireland were spent in almost equal proportions on the development of human resources, on physical infrastructure and on support for private production and investment.
"They have also been spent against a background of a domestic policy mix," says Victory. "That is: an approach combining sound fiscal policies; industrial peace through successive social partnership agreements between the government, employers and trade unions; a regulatory environment that favors entrepreneurship and investment; and, perhaps above all, excellence in education and investment in people."
Focus on the future
Grodzki identifies other key factors to Spain's success, such as a focus on the future and the fact that the regions speak with one voice when it comes to funds designated for the whole country. "In Brussels there is this regional lobbying saying that Catalonia needs this much and Seville needs that much, but it is not seen at the state level, where there are no regional or political distinctions where money is concerned. The question is whether structural funds are a regional or a political matter. That's the main difference between Poland and Spain," says Grodzki.
Too many priorities
The Gdańsk Institute for Market Economics (IBnGR), in its report on the economic situation in particular regions, examined the priorities in the regional operational programs. "They are almost identical and don't reflect the situation of individual regions. The programs don't show a concrete vision of the future of the region," says Jan Szomburg, president of IBnGR.
Minister Gęsicka says that the Ministry of Regional Development defined priorities that should but don't have to be included in regional operational programs. Still, nearly all voivodships tried to include them in their programs.
"The biggest problem of the regional operational programs is that they all have too many priorities. This means that the needs are huge, but we need to decide the implementation of which priorities will allow us to generate funds to finance the next tasks," says Małgorzata Starczewska-Krzysztoszek, director of the experts' department at the Polish Confederation of Private Employers (PKPP) Lewiatan.
Marshals say that they prefer to direct money to infrastructural projects because they serve all inhabitants in the regions. "Infrastructure is extremely important, but it's important to balance the proportions," says Starczewska-Krzysztoszek.
"If we designate some of the funds to small investments in SMEs in the regions, we'll see that the regions create an extra source for their budgets. The firms will develop [and] pay taxes that will finance additional infrastructural projects. More and more regions are starting to understand that," she adds.
Not to worry
The government-adopted 80/10/10 allocation system has meant significant disparities in the amount to be doled out to certain regions. According to this method, 80 percent of the funds are allocated to regions according to their population, with the remainder going to regions with GDP per capita lower than 80 percent of the national average and unemployment higher that 150 percent of the national average, along with funds for the 'Eastern Wall'. Mazowieckie voivodship's allocation amounts to EUR 1.8 (zł.7.1) billion, while Lubuskie's is only EUR 439 (zł.1,732) million. The average per capita figure in all regions ranges between EUR 335.2 (zł.1,322.6) and EUR 725.6 (zł.2,863).
Still, there is the question of whether the regions will use the funds effectively. "Structural funds are defined to be added to private funds. Public-private partnership (PPP) is a natural instrument here. Foreign experiences prove that very well," adds Andrzej Kaczmarek, Deputy Economy Minister.
Private matters
"If there is a lack of public funding there's always room for private [funding], and private companies will ensure a project's profitability. [But] local authorities are afraid of situations when the private touches the public. Unless clear regulations are issued, PPP can be used as an argument in a political game," says Grodzki.
However, Starczewska-Krzysztoszek believes that the PPP system is the safest type of partnership between the public and the private sectors. "If a private company realizes a public task, the earnings last for 10 or even 20 years. Nobody can afford unclear actions if they know the profits will come for the next 20 years," she says.
Promoting PPP
According to the Economy Ministry, despite the fact that the executive regulations to the PPP law adopted last year took effect at the beginning of August, no PPP project has been launched yet. "If we want the PPP law to play a major role in the use of structural funds, we need to simplify it," says Kaczmarek. To this end, the Ministry has prepared amendments to it. Among other things, the amendments will extend the meaning of PPP. The draft has already been consulted with other ministries and it will be sent to the Council of Ministers' Committee in September, which means that the amendments could be passed this year.
The Economy Ministry is currently creating a team of specialists whose only task will be to promote the PPP system. In the autumn, it is planning a wide promotion campaign with British experts whose experience they took into account while creating the law. The Polish Agency for Enterprise Development (PARP) has already launched promotional and educational activities.
Data shows that structural-funds absorption in Spain and Ireland took time, and if the government makes good on its promises, the country could be transformed by 2013, giving Marcinkiewicz and Poland an even better reason to celebrate.
