The Lithuanian Government First, Taxpayers Second

Vilnius_Modern_Skyline_At_Dusk,_Lithuania_-_Diliff
DAVID ILIFF || CC-BY-SA 3.0

Lithuanians seem to have gotten used to governmental promises just as to the changing seasons. The only difference is that spring is bound to come eventually, while the government fails to deliver.

We have been hearing about the reform of the public sector for a long time. However, the government tends to look after themselves first. In fact, the population of Lithuania has decreased by 300 thousand since 2010, which is the number of people living in Kaunas (the second largest city in the country), but the number of public servants did not change. Undeniably, the public sector has to be restructured and reduced to meet efficiency standards, but the government is reluctant to reform it. It is not clear whom an army of public officials serves – the taxpayer or themselves.

The Lithuanian Free Market Institute has recently examined public expenditure on the maintenance of government structures and functions, including the parliament, parliamentary and governmental offices, municipal administrations, revenue service, contributions to the EU budget, etc. – everything concerned with the upkeep of bureaucratic structures. The results show that the government has not been thrifty for it spent EUR 800 million (over 2% of GDP). It turns out that itt is not as cheap as some officials claim it to be. In reality, we spend more than the EU average.

Although a costly government is expected to provide quality services, the reality is disappointing. According to the Word Bank, the performance of the public sector in Lithuania is below the EU average. But even when the results are that uninspiring, the government’s concern for its own well-being persists. In 2016 alone, the spending on business trips, training, representation and transportation for government officials has increased by EUR 6.5 million, skyrocketing to EUR 75 million.

The spending is outrageous not only in its sheer size, but in its form as well. For a few years now, the government could be diagnosed with the “fourth quarter syndrome”. There is a trend to reward oneself at the end of each year by squandering money on representation, transportation, experts, training, and, of course, bonuses. Paradoxically, thousands receive ever-growing bonuses for excellent work performance and in some cases their amounts have quadrupled (!).

If spending on the public sector is so high, why are citizens and businesses not satisfied with the performance of the government? Don’t we usually get our money back for faulty products? It is a shame we cannot receive refunds on our taxes. However, we shall soon see whether our new government will fulfil our expectations on restructuring the public sector as the Office of the Government is already preparing for a reform. Other state and municipal institutions should follow as well, because the taxpayer money is limited and will not be enough to satisfy everyone’s needs. The public discussion is raging on how to boost the budget and where to increase taxation. Nevertheless, the government should first calculate the potential savings if its institutions lived according to their means.

By sticking to EU average, Lithuania could save at least EUR 80 million in government expenditure. After all, we are outperformed by countries that devote the same (or even a smaller portion) of their GDP to finance the public sector. The government costs less but performs better in Ireland, Estonia, Belgium, Austria, the Netherlands, Denmark, Finland, and some other states and we should be measuring up to their standard.

If the government officials took care of their citizens at least as much as they do to provide for themselves, they would not only stop wasting taxpayers’ money, but also create opportunities to earn more. Now, however, they seem to be biting the hand that feeds them by increasing taxes and red tape – doing anything and everything to make people work more and earn less. What if there will be no money left to support them eventually?

Aiste Cepukaite
avatar