Where will the money for flood recovery come from? So far, the state has relied almost exclusively on further fiscal burdening of the already overburdened working class through the institution of quasi-working Saturdays (which are, in reality, just an excuse for the state to confiscate one day of wages this year and one day of wages next year). There was a lot of talk about European aid for a while, especially when we had a visit from the President of the European Commission, Ursula Von Der Leyen. We also had a visit from the President of the European Council, Charles Michel. What is happening?
The promises that have been made are quite big. The government wants to use the institution of emergency cash assistance, which is distributed by social work centres. This aid amounts to 465 euros for a single person, and about 1,600 euros for a family of four, and they have also promised that those who have suffered serious material damage in the floods would receive seven times this amount in a single payment. The Minister of the Economy, Matjaž Han, also promised that the state would cover 80 percent of the salaries of workers from companies that helped in the flood recovery.
The government wants to resettle the flood victims in uninhabited flats and houses, and the Prime Minister’s idea of building prefabricated houses has been circulating for some time, but the profession was quick to speak up, saying that such a process would take at least three years to finish.
Where will the money for the rehabilitation come from?
The government has announced two intervention laws, one to cover the first intervention and then a second “rehabilitation” law. Of course, these are just words until concrete action is taken. It seems that the state has no real plan on how to cover flood recovery, apart from additional taxation of workers.
They have invented the so-called “solidarity contribution,” which will have to be paid in 2023 and 2024 and will be calculated by the Financial Administration of the Republic of Slovenia at the time of the income tax calculations. “An alternative to the compulsory contribution is a Solidarity Saturday, where, with the agreement of the employees and the company, it will be possible to replace the compulsory contribution with work, with the income from that day going to the Slovenian Reconstruction Fund,” explained the Minister for Public Administration, Sanja Ajanović Hovnik. According to the Minister of Labour, Family, Social Affairs and Equal Opportunities, Luka Mesec, companies will have to have one working Saturday this year and one next year in order to be exempted from the compulsory solidarity contribution. Therefore, this is a very thinly disguised additional taxation of labour.
In any case, the government is not planning any major cuts to the state budget, apart from postponing the public sector wage reform until 2025, which was already known before the floods to be a theoretical concept with no practical possibility of implementation. The government is even now putting pressure on private companies to forward their profits into funds for flood relief, even though this is, of course, no more the task of private companies than it is of the workers.
What is going on with the European funds?
As the Slovenian Democratic Party (Slovenska demokratska stranka – SDS) MP Andrej Hojvik pointed out, the deadline for preparing to draw one part of the 2-billion-euro Recovery and Development Fund for flood recovery will expire on Thursday. “Or have we all accepted that new taxes on already taxed salaries are the only solution? Maybe for the Government of the Republic of Slovenia, but not for the people,” the MP wrote.
Foreign Minister Tanja Fajon, for her part, has made the excuse that the deadlines for obtaining EU money are very tight. Slovenia will have until the end of August to apply for loans from the Recovery and Resilience Fund, and within twelve weeks, it will have to apply for aid from the European Solidarity Fund. Although a working group has been set up to help with this, we have not seen any results yet.
What will happen on Thursday?
“The President of the European Commission came to Slovenia with a hefty package of possible aid. But there are still some steps to be taken,” said European Commissioner for Crisis Management Janez Lenarčič in a recent statement. Slovenia will benefit from the money from the European Solidarity Fund, notably the Regional Development Fund and the Recovery and Resilience Fund, which the European Commission set up at the start of the epidemic. Minister Fajon added at the time that it would only be possible to analyse the damage after the recovery and said that they would have to work very hard to compile these analyses.
Insiders claim that the visits by senior Brussels officials are aimed at helping to obtain EU funding and to prepare applications for EU funding because the government does not have enough qualified people for that.
The first part of rehabilitation after the floods is now over, and the deadline expires on Thursday. Meanwhile, the government has given no hint of anything important happening next week. It is counting on an extension of the deadlines, or perhaps it is true – as the MP speculates – that the government has come to terms with the truth that the main source of funds for flood reconstruction will be the taxpayers’ wallets. It is important to point out here that Slovenian workers are already taxed above average, and the government has already cut their wages on the 1st of January, and will do so again next year, when it will transfer supplementary health insurance from private insurers to the Health Insurance Institute of Slovenia (ZZZS) and make it compulsory. Is overburdening those who are already overburdened really the right solution?
We will certainly be watching with interest until Thursday to see what happens with the European funds. Will the government behave as nonchalantly towards the aid on offer as it did towards the cohesion funds? Indeed, the absorption of cohesion funds has literally come to a standstill under the new government, whereas under the previous, Janša government, we were one of the most successful countries in terms of using the potential of European cohesion.
M. I.
