Enter the Political Year of the Dragon
The election shocker has only been a prelude to weeks of agony and dramatic turns before the 10th Slovenian government has sworn in.
On December 4th Ljubljana Mayor Zoran Jankovic and his Positive Slovenia party emerged as the surprise winners of the early general election. The result came as an almost complete shock, as nearly all polls in the final week of the campaign had Janša ahead by as much as ten points.
While building a coalition turned out to be an increasingly complicated and painful issue, Janković bungled the first major task, the appointment of the parliament speaker, due to a tug-of-war with a potential coalition partner, Social Democrats’ (SD) president Borut Pahor. This created an opening for the smaller parties, which banded together and, with the help of the Democrats (SDS), succeeded in appointing Gregor Virant, the head of the Virant List, to the top post in the National Assembly.
Emboldened by the success, the Virant List, Pensioners’ Party (DeSUS) and People’s Party (SLS) joined forces and made the surprising move of airing an initiative for a national unity government.
The other parties dismissed the proposal but the trio gave them until next week to reach a final decision, in effect stalling the formation of government since neither Janković nor SDS president Janez Janša can form a government without them.
Virant in particular came under fire from the media, which accused him of derailing the democratic process for the sake of raising his own price. The party did back-track a bit and announced it was open to all options if its proposal for a national unity government fails.
The New Year was celebrated without a new government.
No to Janković
The vote on prime minister was held on 11th January. Endorsed by a prospective coalition of the PS and the left-leaning SocDems and Pensioners’ Party (DeSUS), Janković came to parliament facing a deadlock of 44 votes on each side and seeking two votes from the other side of the isle. In the end, the nominee put forward by President Danilo Türk managed to secure only 42 votes. The vote marked the culmination of a frantic day in parliament dominated by speculation about potential defectors from the no camp featuring the Democrats (SDS), the Citizens’ List of Gregor Virant, the People’s Party (SLS) and New Slovenia (NSi). To defend against defections in the secret ballot, the camp decided not to pick up its ballots bar a few needed to ensure a quorum.. The development opened the door to the right-leaning bloc to propose its own nominee, with Janez Janša, the leader of the SDS - the second biggest party in parliament, appearing to be the most likely candidate. Janša however said the SDS would not nominate him until it secures a coalition agreement with a firm majority in parliament.
The right-leaning bloc, which also holds 44 seats in the 90-strong legislature, sent an initialled draft coalition agreement to DeSUS and SocDems as potential partners in its coalition.
Meanwhile, President Danilo Türk called a new round of consultations with the parties on a prime minister-designate. The president had two weeks to nominate a new candidate or Janković again for the second round of voting, for which nominations can also be made by MPs.
The President Gives Up
President Danilo Türk proposed to parties to consider the possibility of supporting former NLB bank chairman Marko Voljč as a candidate for PM-designate. He said that Voljč, who chaired Slovenia’s biggest bank between 1992 and 2004, was ready to stand if a consensus among parties is secured beforehand. But the proposal was welcomed only by Janković, who said he would not seek nomination in the second round or a post in the government if Voljč becomes a candidate. The idea was rejected by the SDS and New Slovenia (NSi), as well as the Virant List, People’s Party (SLS) and Pensioners’ Party (DeSUS), the three parties who had proposed Slovenia get a government of national unity with a “third person” as the prime minister. After that, five parties launched official negotiations on forming a right-leaning coalition as DeSUS decided to join the talks. The first meeting of the parties of the emerging coalition brought among other things agreement that divisive historical issues would not be brought up by the new government. Virant List boss Gregor Virant said that this will be a “coalition whose main common denominator lies in economic and financial matters.”
Janša is Back
The leaders of the five parties signed the coalition agreement just as President Danilo Türk announced he would not put forward a PM-designate, not even Janša, whom he did not find a fully legitimate candidate given the indictment he faces in relation to the 2006 defence contract with Finnish company Patria.
While the support for the coalition was more or less expected in the four centre-right parties, DeSUS was faced with a tough call with 37 out of the 48 members of the council voting in favour after hours of debate.
On 28th January the National Assembly endorsed Janez Janša, leader of the Democrats (SDS), for prime minister-elect by 51 votes to 39.
Enjoying the support of 50 MPs from his coalition, Janša will also be able to count on two votes from the deputies representing the Italian and Hungarian national minorities, who reached a deal with the coalition on efforts to protect the minorities. After the coalition agreement was finalised, Janša pointed to efforts to restart the economy and balance the budget as priorities for the next government. As part of this efforts to rack up EUR 800m in savings in an austerity budget began.
The Anti-Crisis Cabinet
Prime Minister-Elect Janez Janša presented the candidates for his cabinet, which is to have 11 ministers and one minister without portfolio. This will be the smallest cabinet in Slovenia’s history, but Janša is confident that his team will be up to the task. He labelled the cabinet as a team built on compromise and said it was the best possible in the given situation.
SDS MP Andrej Vizjak is to take over the ministry for labour, family and social affairs and Vinko Gorenak is to be the interior minister. Former Development Minister Žiga Turk is to be in charge of education, science, culture and sport ministry, while MP Zvonko Černač is to take over the ministry for infrastructure and spatial planning.
President of the Pensioners’ Party (DeSUS) Karl Erjavec has been nominated for foreign minister and doctor Tomaž Gantar for the health minister.
The Virant List vice-president Janez Šušteršič is to be the finance minister and Ljubljana Law Faculty professor Senko Pličanič is to be in charge of the Justice and Public Administration Ministry.
SLS president Radovan Žerjav is to become the economy minister and SLS MP Franc Bogovič minister of agriculture and the environment.
NSi president Ljudmila Novak is the candidate for minister without portfolio for Slovenians abroad, and former board member of motorway company DARS Aleš Hojs is to become the defence minister.
Focus on Public Finances
A significant portion of the coalition agreement is dedicated to shoring up public finances, which the new government plans to make the top priority. The coalition partners pledge to cut public expenditure to 45% of GDP and cap debt at 46% of GDP with a combination of spending and tax cuts.
This year alone budget expenditure is to be reduced by at least 5% with a supplementary budget. A bipartisan consensus has already been reached to put the golden rule, a combination of a debt ceiling and other measures, in the Constitution. Businesses will be disburdened, according to plans, as the corporate income tax rate is to be gradually reduced to 15% and tax breaks for investments in R&D increased to 100% from 40%. Administrative obstacles will be reduced, acquisition of permits simplified, as well as taxation of small businesses and sole traders. The shift to e-commerce will be promoted across the board. Personal income tax rates will be changed to reduce taxes on “the most productive workers” and a cap on the social security contributions of the highest earners will be introduced.
The coalition agreement also talks about improving the prosecution of white collar crime and creating a specialised court to handle cases of money laundering, unlawful privatisation and non-payment of social security contributions. Ownership of banks and state-owned companies will be consolidated with a view to attracting private investors. The coalition plans to “create conditions” for overcoming the credit crunch, including by forcing banks to sell housing they seized as collateral in order to free up funds. In the long term public finances will be strengthened with pension and health reforms.
According to the agreement, pensions will be frozen this year with an emergency act, whereupon they will increase based on wage and consumer price growth with a 60:40 formula. When the economic circumstances improve, average pensions should not be lower than 60% of average wages but the long-term target is 72%. Early retirement will be curbed. Pensions will depend more on years of service than on retirement age and voluntary extension of employment beyond retirement age will be intensified. Pensions will be more closely aligned with contributions. However, “decent pensions” will be provided for everyone unable to save enough.
Greater emphasis will be placed on the second and third tier (private pension funds and supplementary pension insurance). Long-term care will refocus on programmes that allow people to continue living at home. Competition will also be increased in health care as well as on the supplementary health insurance market provided that analysis of comparable EU countries shows this to be appropriate.
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