The administration according to PiS

Law and Justice (PiS) plans to reduce the budget deficit by zł.2.5 billion next year, and the state's bloated bureaucracy will be first on the chopping block. A number of government offices will be liquidated, including the Office of Telecommunications and Post Regulation (URTiP) and the National Broadcasting Council (KRRiTV). Government employment will be sharply reduced, while Poland's foreign-investment agency is up for major surgery.

PiS has on a number of occasions underlined its determination to keep the budget deficit at zł.30 billion - however, the 'Cheap State' program is already coming under fire. Only a few days after the new Ministers received their portfolios, Finance Minister Teresa Lubińska asked Prime Minister Kazimierz Marcinkiewicz to increase the budget deficit to zł.31-32 billion. "The Prime Minister wants zł.30 billion, but my opinion is different, I would like to increase expenditure on R&D and technology," she said.  

Marcinkiewicz responded by publicly refusing Lubińska's request to increase the deficit, telling the press that he intended to cut government spending by zł.3 billion next year and by a further zł.5 billion each year after that. Several of the government's most prominent institutions are therefore set to be sliced and diced.

The first to go

The Office of Telecommunications and Post Regulation (URTiP) is likely to be the first institution eliminated. PiS has on a number of occasions criticized the office's president, Witold Graboś, for favoring Telekomunikacja Polska. PiS will soon prepare a bill creating the Office of Electronic Communications (UKE), which would replace the current regulator by the end of the year.

"We are establishing a new office with a name more appropriate to its future scope of activities," PiS' telecommunications expert Antoni Mężydło said. He denied charges that the proposed change is motivated by a desire to get rid of Graboś, whose term ends in 2007. The new institution will have much wider competencies than URTiP, since it will take on issues regarding frequencies, currently dealt with by the National Broadcasting Council (KRRiTV). Moreover, PiS intends to simplify the procedures regarding the analysis of competition in the market, and introduce a rule whereby the regulator's decisions must be immediately implemented.

Old enemies

PiS has been at odds with KRRiTV since its days in opposition. The Council is a nine-member body made up of appointees chosen by the Sejm, Senate and the President,  and whose existence is guaranteed by the Constitution. PiS intends to reduce the number of members on the Council to three. "Since some of the Council's tasks will be moved to the regulator, there will be no need for such a large membership," Mężydło said. He added that the three members would be elected by the same bodies as currently.

That's a controversial proposal. The president of  KRRiTV, Danuta Waniek, says "the Council guarantees the independence of the media," and claims that with just three members it would really no longer be a council.

After the initial reduction of members, the new draft bill envisions the liquidation of the Council altogether by merging it with the new regulator. "This is a rational solution if we consider the convergence process between different means of telecommunication. Today it is increasingly hard to tell where telephony ends and data transfer starts," Mężydło explained.

Middle ground

Waniek agrees that there is a tendency in Europe to establish offices regulating all media segments. "I would have nothing against a regulator like Ofcom in Britain, and I would have nothing against the Broadcasting Council being merged with it, as long as the new regulator were independent from the government," she said.

However, in order to abolish KRRiTV, the Constitution would need to be amended, which requires a two-thirds majority in the Sejm. "That shouldn't be a problem. PO [Civic Platform] supports the idea and there is a chance to get perhaps the League of Polish Families to vote for the changes," said Mężydło. He added that these changes would mean that one third of the employees at KRRiTV and between a quarter and one third of those at URTiP would be dismissed, which will result in significant savings. But Waniek concludes: "It would be better to talk about concrete, written proposals. This is too important an issue, so we have to wait for the government's and not a group of MPs' draft proposals."  

Plans for PAIiIZ

The Polish Information and Foreign Investment Agency (PAIiIZ) is another institution which will probably experience changes in the coming months. PiS intends to link the joint-stock company more closely to the government, which would clarify the agency's status as Poland's official investor-relations agency.

"The agency should become a legal entity whose president will be appointed by the Prime Minister. The head of the institution would have the status of a Deputy Economy Minister or Undersecretary in the Prime Minister's chancellery," said Adam Pawłowicz, who worked on PiS' proposals to improve PAIiIZ.

"Every proposal which could strengthen the agency's negotiating position is good. This proposal could be a step to achieve that goal," the president of PAIiIZ, Andrzej Zdebski, said.

PiS also believes that the agency should manage Poland's Special Economic Zones. "The agency should definitely have some influence on what is happening in those zones," said Zdebski. But he added that this idea should be accompanied by the establishment of industrial zones in every voivodship - special areas with infrastructure already prepared for investments.

Another proposal is to establish close cooperation between PAIiIZ and the economic departments (WEHs) of Polish embassies abroad, which could be used as subsidiaries. In countries where there are no WEHs, the agency could set up its own branches. "Offices abroad are something absolutely necessary for the agency," said Zdebski, who estimates that PAIiIZ requires some 35 branches abroad.

RPP row

Although as yet there are no plans to liquidate the Monetary Policy Council (RPP), plenty of tension exists between PiS and the interest-rate setters. Deputy Finance Minister Cezary Mech has spoken out against the RPP's stand on inflation on a number of occasions, while President-elect Lech Kaczyński announced during his campaign that he would refuse to nominate the Council's president, Leszek Balcerowicz, for another term when his tenure comes to an end in 2007.

Last week Prime Minister Kazimierz Marcinkiewicz joined in the familiar chorus when he criticized the RPP on the controversial nationalist Catholic broadcaster Radio Maryja. "We will try to convince the National Bank of Poland and the Monetary Policy Council to take not just inflation into account, but also economic development. ... Interest rates in Poland must be lower," the Prime Minister said, claiming that this would result in cheaper loans, which would lead to higher investments.

Government payroll

With the new government's intention to keep the budget deficit at zł.30 billion in the coming years, another area where the new cabinet will be looking for cuts is in regional and state bureaucracy. The number of people employed in public administration has been growing since the mid 1990s - from 737,900 in 1995 to 873,000 in 2003. The program states that it is necessary to reduce employment in state administration by 10 percent, thanks to which the state budget will save up to zł.550 million.

Furthermore, PiS plans to liquidate a number of other government agencies, funds and offices, such as the Government Center for Strategic Studies. "The tasks which are carried out by the Center - not very efficiently in our opinion - will be carried out by independent institutes and research centers," Marcinkiewicz said.

Other offices to be liquidated include the Military Housing Agency, the Agricultural Property Agency, and the State Fund for the Rehabilitation of the Disabled. According to Marcinkiewicz, the operations carried out by the regional offices of the Agricultural Property Agency can easily be taken on by local government.

Regional impact

The government will also do away with numerous institutions' regional delegations, such as Voivodship offices, Voivodship Police Headquarters, the Polish National Tourist Office (POT), Treasury Ministry branches and offices of the National Fund for Environmental Protection and Water Management. But the changes go beyond just liquidation. "Within a year we will merge the Agricultural Market Agency with the Agency for Restructuring and  Modernization of Agriculture," Marcinkiewicz announced. There are also plans to merge different supervisory institutions into one office - the Central State Inspectorate (CIP).

The second stage of the program, which will be introduced from the beginning of 2006, is the 'standardization' of the administration. This means introducing modern management standards and methods aimed at increasing the effectiveness of state offices. According to Prime Minister Marcinkiewicz, this could lead to the liquidation of up to 20 percent of public sector posts, which would save the country zł.1.1 billion annually.

"We estimate that annual profit from the 'Cheap State' program will amount to around zł.5 billion," Marcinkiewicz said. But he underlined that he doesn't expect to gain such an amount in the first year due to the high costs of implementing this program.