Spain Budget Continues To Miss Opportunities

spain challenges 2017spain challenges 2017

Rajoy’s government will face the first big challenge of its new term in office with the presentation of the 2017 State Budget. This will be from a minority position and it will need the backing of other parties to get it approved.

The precedents are clear: in 2013, there were nine amendments; in 2014, eleven and last year there were thirteen in all. But that doesn’t matter. At that time, the PP had a majority and did not need support. And both the government and the opposition parties knew the ground rules and maintained their respective arguments: “useless”, “insufficient” and “anti-social” were the opposition’s ephithets; meanwhile “this is a budget of solidarity”, “it supports the recovery” and “it’s the most social budget in history” were the government’s replies.

The model used doesn’t leave room to manoeuvre and the different parts of the budget, with fairly rigid income and expenditure, don’t allow for major sparks of genius. The State accounts are like a pond which is losing water all over the place, but the leaks are difficult to detect, even for the system itself.

The budget is a machine for spending money to the extent that electoral commitments are usually costly and are more about expenditure than income.

And in situations of deep crisis, when governments have to earmark almost the same amount of cash to pay off debt as for all the ministeries, or more than even what it pays out in salaries for all its personnel, there is very little room for spending. And if we add pensions and unemployment payments to this, then the margin is substantially reduced.

That said, the government of reform, once again has lost a historic opportunity to start from scratch and begin anew, instead of continuing to handle the same old, completely stale accounts.

Approving the budget will be difficult, which should force everyone to rethink the accounts from top to bottom, clean them up, prune the figures and where they go.

In technical terms, the general revision of the budget is called a Zero- Based Budget. It consists in revaluating each of the plans and each expenditure item always starting for zero; in other words, working on a budget as if it was the first one ever, evaluating and justifiying the amount allotted to each item. The past is put aside in order to plan the future with complete awareness and freedom. Many things are eliminated and others are increased. And all this is done rigorously and independently.

Anyone who knows the different levels of the Public Administration – state, regional and local – knows the amount of blubber which can be found in the State accounts, vegetating comfortably there year after year, without anyone daring to disturb this totally unproductive activity.

Terms like debt, public deficit, pensions or unemployment systematically fill the newspapers’ headlines and are in politicians’ mouths all the time. Perhaps it wouldn’t be a bad thing to sit down and start working on a zero-based budget, with independent professionals.

Someone might think that with his obligatory reformist attitude, Rajoy would take a risk with the Budget where real reforms are needed, and respond to a multitude of questions. These can be about the current structure of Defence spending, the efficiency or level of productivity of funds earmarked for research, as well as the underworld of innumerable less important issues which no-one dares to bring out into the open.
But that hasn’t happened and governments proceed in this way during their terms of office, without pain or glory. Despite the fact they have damaged many people and the country’s future.

*Image: Flickr/nene9

About the Author

Carlos Díaz Guell
Editor at consensodelmercado.com and innovaspain.com, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.