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Public sector reform in Spain: propaganda and little else

Fernando del Pino Calvo Sotelo

July 18, 2013

A few weeks ago, the government made public its much awaited public sector reform, which was pompously labeled by its spokesman as a “titanic and unheard of effort”. Such language inevitably reminds me of the well-known remarks made by a member of the Socialist Party at the time of President Zapatero, who described the short-lived handshake between Zapatero and Obama as a “planetary event”. What can I say! The presentation and content of this new reform reflect the style of the current administration, ever so consistent in its mediocrity: it proposes tiny changes, flies to Brussels to sell them as deep structural reforms and sits tight hoping things will improve by themselves. This government is an expert at pretending, not at truly being, an expert at believing it’s buying time, while it’s just wasting it.

Spain badly needs a deep reform of its public sector to remove two of its greatest cancers. First of all, its oppressive and gigantic set of regulations, built up in the last 30 years by an ever growing bureaucracy, which has multiplied by four since the advent of democracy in 1978 – with barely the population remaining the same. Probably the most overregulated country in the OECD, a drastic deregulation should allow citizens and businesses alike to get on with their normal lives without being obliged to ask for absurd, ridiculous and whimsical permits for everything you might imagine, obliged to live in a permanent state of dependency. Secondly, its lavish public spending, drowned in a morass of inefficiency and waste, should be firmly reduced. Well, the abovementioned reform addresses none of these. It just makes a shy call to serve the citizen better and to simplify just a little bit the bureaucracy in the next two years or so. Not my definition of urgency. Probably to exemplify how simple bureaucracy should be, the reform starts with a 2.000 page document and a merciful 250 executive summary. Also, in order to lecture on the convenience of reducing the number of public bodies, the reform recommends the creation of still two more of them, namely a so called Information Central Office and a Fiscal Responsibility Independence Authority.

The reform particularly refers to the Transparency Act, aimed to appear to tackle the privileges of the ruling class. To understand the real pace of reform of the current government, let’s remember that the Transparency Act’s presented with great fanfares on March 12th, 2012; that is, nearly a year and a half ago, and is yet to pass approval in the Parliament, in spite of the fact that party in power holds a vast majority. In deep contrast, the genuine specialty of this government, that is to say, tax increases, are swiftly approved in the blink of an eye.

What can indeed be in justice described as titanic is the effort that the intelligent reader has to make if he wants to understand the savings, if any, this reform will bring to public spending. The only paragraph that mentions this relevant issue has been written in such a murky way that makes it a daunting task to pick up a single figure, probably what its authors wanted it to be. In a 250 pages’ document there is not a single Excel spreadsheet with the savings’ breakdown, but a muddy potpourri of heterogeneous data aimed at achieving fast, misleading and favorable headlines in Spanish media. According to some serious analysts, the true savings’ figure, if any, would probably be measured in basis points of GDP (not even 1%!), that is to say, a joke. Imagine a group of people hired by a private business to tackle on excessive spending in order to prevent bankruptcy. After a year and a half nowhere to be found, they finally make it to the Board to lecture puzzled Board members that nothing serious should be done on the basis that some other competitors are still in worse shape but that, if given two more years, they would be able to reduce savings by an staggering 1% of budget, in the best case scenario. Wouldn’t they be unceremoniously fired (to enter politics right away, I presume)?

In my view, the most relevant aspect of this reform is that it clearly shows how little we can expect from this government in terms of true, structural reforms. It continually praises the status quo, speaks wonders of Spanish bureaucracy and constantly justifies the amount of public spending on the grounds that other countries spend still more, as if group defaults were better fun, as if Spain had not been in 2012 the European country with the highest budget deficit and highest increases in public debt, as if we had not been at the very edge of defaulting twice in the last two years, only to be saved in the nick of time by foreign third parties. The vice president was very clear: “We have exposed some myths in basic black and white”, such as an excessive public sector size or that “there is no such enormous bureaucracy”. Reaching this point, isn´t it fair to argue that, if neither the size of the public sector, nor our bureaucracy pose any threat and are both in pristine condition, what is the sense of making any reform at all? Obviously, it shows the lack of motivation to do what needs to be done, making default much more probable.

It now remains crystal clear that this government believed public spending could not and should not be reduced. Even when we put forth some obvious figures that upset taxpayers and analysts alike, the government considers them completely adequate. For instance, just in the Central Administration (in de-centralized Spain the majority of public spending belongs to the autonomous regions,) the Cervantes Institute, created to “promote and teach the Spanish language”, has a payroll of 1,100 people; the Statistical Office (in our computerized era) holds a payroll of 4,400 people; the Unemployment Institute, 10,700 people; and the Fiscal Agency has 28,000 employees (per capita, nearly double the US IRS payroll).

The watchwords are propaganda, complacency and slowness. Every mini reform means a lost opportunity, wasted time, another nail in our reputation’s coffin. In the meanwhile, Spain is suffering its Great Depression under the intermittent threat of default, and we continue to have a regrettable lack of vision and leadership, as we have had for the last nine years. Asking why there is a total lack of will of committing to a serious reformist agenda, one wonders if the socialist ideology of the last three administrations (including the current one, despite its labels) is to blame, or maybe the conflict of interest of the two big political parties, obsessed in keeping their privileges intact. In addition to all this, there might be something else. Maybe this something else is purely and simply a question of incompetence.

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