How effectively does Hungary’s government develop strategic policy solutions and foster dialogue in the process?
The Management Index assesses a country’s capacity for reform. Three categories examine the ability to plan and implement policies. Accountability assesses the extent to which non-executive actors are included in the political process.
Policy-making in the period under review has been dominated by short-term crisis-management. The two cabinet committees that had been established in 2006 in order to develop long-term strategies – the Committee of State Reform (ÁRB) and the Development Policy Steering Board (FIT) – ended their activities in July 2007 and April 2008 respectively. However, the New Hungary Development Plan (ÚMFT), an outline of Hungary’s socioeconomic development from 2007 – 2013 prepared by the FIT in October 2006, proved vital in getting and absorbing EU transfers while providing some strategic guidance.
The institutionalization of scholarly advice in Hungary is weak. In the hectic years from 2008 to 2010, interactions between public officials and academic experts became less regular. However, the so-called Reform Alliance (Reformszövetség), an expert group sponsored by the National Alliance of Entrepreneurs (Vállalkozók Országos Szövetsége, VOSZ), had a large influence on budget policy. The fiscal reform package of the Bajnai government drew strongly on the recommendations made by the Alliance in early 2009, and one of the Alliance’s leading figures, Péter Oszkó, served as finance minister in the Bajnai government. Academic experts proved less influential in the case of civil law. The new civil code eventually adopted after ten years of debate in September 2009 deviated substantially from the draft originally prepared a commission (Vékás Commission) consisting of nine professors and justices for the government.
In the context of Hungary’s “chancellor democracy,” the Prime Minister’s Office has always been rather strong. Prime Minister Gyurcsány further expanded the Office’s sectoral policy expertise. Prime Minister Bajnai built on these changes, but did not initiate further changes.
The Prime Minister’s Office has strong gatekeeping powers. It monitors all stages of the policy-making process and is strongly involved in the preparation of draft bills. It can return most items on policy grounds.
The Prime Minister’s Office is strongly involved in preparing the line ministries’ policy proposals. Under the Gyurcsány government, the general lead rested with the PMO and the advisory bodies steered by the PMO. Ministries were bound to serve, not to lead and lost the authority to prioritize policy decisions. Ministers were seen as agents of the cabinet rather than representatives of their ministries. The Bajnai government returned greater autonomy to the ministries.
Cabinet committees have traditionally played an important filtering role in Hungarian policy-making. The Gyurcsány government further strengthened the role of cabinet committees by setting up two cabinet committees with strong powers - the Committee for State Reform and the Development Policy Steering Board - in 2006. With the transition from the Gyurcsány to the Bajnai government, the role of cabinet committees declined. The number of standing cabinet committees was reduced to three (Economic Cabinet Committee, National Security Cabinet Committee, Social Policy Cabinet Committee), and their coordinating function declined.
Senior ministry officials play a major role in inter-ministerial coordination. For one thing, they are in charge of clearing issues with other line ministries during the drafting process. For another, before being submitted to cabinet, all draft bills are discussed at regular meetings of the state secretaries. The role of senior ministry officials is further aggravated by the powerful Interministerial Coordination Committee for European Affairs (Európai Koordinációs Tárcaközi Bizottság, EKTB) set up in 2006. This committee brings together senior ministry officials from various ministries and meets once a week to prepare Hungary’s positions in EU decision-making.
Line ministry civil servants also play a significant role in policy coordination. Inter-ministerial coordination can take the form of working groups consisting of civil servants from different ministries. It is often complicated by hierarchical structures within the ministries, a culture of departmentalism, and differences in the political affiliation of ministries.
As minority governments, the Gyurcsány and Bajnai governments were dependent on the support of the liberal SzDSz, the former coalition partner of the MSzP. The necessary informal coordination turned out to be relatively easy, especially under Bajnai’s less partisan “expert” and “caretaker government.” Most liberal MPs accepted the case for reform and did not want to risk early elections. Under Prime Minister Gyurcsány, informal coordination within the socialist MSzP featured prominently as well. After all, Gyurcsány resigned because of its loss of authority in the MSzP.
Hungary has seen various attempts at improving impact assessment ever since 1987. In 2006, the Ministry of Justice and Public Order published new guidelines, modeled on EU approaches. However, these guidelines have not been adopted as an official government document yet. RIA suffers from unclear and fragmented competencies. Both the Prime Minister’s Office and the Ministry of Justice and Public Order have been active in the field. In practice, there is no systematic application of RIA. In a number of cases, no RIA is undertaken; in other cases, draft bills come with in-depth assessments of more than 100 pages.
Draft bills normally say a few words on the purpose of and the need for a regulation. However, RIA largely focus on the direct budgetary impact of draft bills or other measures. A comprehensive analysis of the need for a regulation is rare.
Although the RIA guidelines published in 2006 by the Ministry of Justice and Public Order have called for a comprehensive analysis of alternative options, the consideration of alternatives has long been limited. Draft bills usually mention such options, but do not elaborate upon them. Under the Bajnai government, the situation improved. Major draft bills, for example in the field of taxation or labor market policy reform, included a detailed examination of the pros and cons of different reform options.
In Hungary, there are various institutionalized forms of consultation with economic and social actors, including the tripartite National Council for Interest Reconciliation (OÉT). In October 2008, Prime Minister Gyurcsány also convened a National Summit (Nemzeti Csúcs), an exchange of views about reactions to the global economic crisis among 66 leading personalities, including the heads of the opposition parties and representatives of economic and social actors. However, this vague attempt at producing some kind of national consensus on crisis management failed. The Bajnai government presented itself as a government of experts doing dirty – but necessary – work. Pre-occupied with crisis management, it did not pay much attention to the consultation of economic and social actors.
The Gyurcsány government tried to achieve a coherent, centralized communication policy, but failed to cover the substantial differences among the coalition partners as well as among the various platforms within the Hungarian Socialist Party. The Bajnai government had an unambiguous general message – the need for painful reforms – and presented itself as a government of experts. However, it lacked a centralized communication policy, which resulted in contradictory statements being issued. The poor public image of both governments contributed to the electoral defeat of the Hungarian Socialist Party (MSzP) and the Free Democrats (SzDSz) in 2010.
The records of the Gyurcsány and Bajnai governments have been mixed. Despite the dismal economic situation and the tough political resistance by Fidesz, both governments succeeded in improving Hungary’s fiscal situation and in preventing a currency crisis. Both governments have been less successful in addressing other, more long-term issues.
Both the Gyurcsány and Bajnai governments largely succeeded in keeping ministries in line, though the Bajnai government proved more successful in this regard. This partly reflects the strong role played by the prime minister in the Hungarian political system. The tough requirements of crisis management also played a key role. There was almost no opposition by ministers to the drastic budget cuts imposed upon them through a series of reform packages. When ministers occasionally turned against Prime Minister Gyurcsány, they did so not in their role as ministers, but as party politicians fighting for the leadership and influence within the MSzP. Under the Bajnai government, the government’s stronger detachment from the parties further increased ministerial compliance.
Under the Gyurcsány government, the PMO adopted a hands-on approach and monitored the ministries both comprehensively and effectively. Under the Bajnai government, with its focus on crisis management, some ministries – dealing with public finances, the economy in general or EU resources – were closely monitored, whereas others (e.g., the Ministry of Defense or Ministry of Agriculture) received less attention.
A major attempt at improving the transparency and the monitoring of executive agencies was initiated in 2006, but has not been completed yet. In a number of cases, the competencies of executive agencies and the monitoring mechanisms have remained ambiguous. In the period under review, the fiscal situation led to deep uncertainty over the funds available for the executive agencies. In the advent of the 2010 elections, some politically motivated disintegration was visible, with the heads of some agencies trying to please Fidesz in order to save their jobs.
Local governments in Hungary, which get about 90% of their revenues from central government, have traditionally suffered from underfunding. The austerity measures adopted by the Gyurcsány and Bajnai governments included serious cuts in the share of tax revenues allocated to local governments, thereby aggravating the discrepancy between local functions and local resources. A further problem is that the responsibility for distributing EU funds has long rested not with the self-governed counties, but with the regions, a territorialized tier of central government not legitimized by elections. A 2009 decision by the Constitutional Court changed the situation, but did not really clarify the relationship between the subnational and central levels of government.
The central government formally respects the constitutional independence of subnational governments. De facto, however, the central government has often narrowed subnational discretion. This has been favored by the far-reaching fiscal dependence of subnational governments on the central budget and the weakness of municipalities that are very fragmented and often very small. Moreover, the central government sought to balance the strong position of Fidesz at the subnational level after the 2006 elections.
The Act on Local Government stipulates 26 basic public functions for all local governments. The large number of small municipalities is often overburdened by the wide range of responsibilities to be performed, including primary education, water supply and various forms of health care. In order to limit local and regional disparities, the central government has set certain quality standards. The implementation of these standards has largely rested with the districts and the counties, that is, the higher tiers of subnational government.
Government structures only partly meet international and supranational requirements. At the central government level, coordination of EU affairs has improved. Moreover, the Bajnai government did a good job in preparing Hungary’s EU presidency for the first half of 2011. In contrast, the attempts at improving the policy implementation capacity of the subnational governments have been less successful. The existing administrative-territorial units still do not correspond to the EU requirements, and the representation of Hungarian regions in Brussels is rather weak. A further problem is that, due to a lack of interest in security issues, the institutional structures for organizing military missions suffer from shortcomings.
The Hungarian government has actively participated in EU institutions, supporting all moves to deepen and widen European integration. Hungary was the first member state to ratify the Lisbon Treaty and has played a prominent role in developing the Eastern Partnership and the Danube Strategy. From July 2009 to June 2010, Hungary held the presidency of the Visegrad group. However, this presidency did not produce much in the way of results and was not used for managing and improving the tense relations to Slovakia.
There is no regular monitoring of the institutional arrangements of government. During the period under review, the predominance of crisis management meant that relatively little attention was paid to the performance and reform of institutional arrangements.
The Hungarian government adopted comprehensive reforms of the executive branch after the 2006 elections. These reforms were largely completed before the period under review, the main exception being the reform of human resources management. It focused on strengthening performance assessment in central government. Badly prepared and implemented, this reform provoked strong resistance within the administration and was eventually abandoned. What turned out to be more successful was the creation at the end of April 2008 of a new super-ministry, the Ministry of National Development and Economy, led by Gordon Bajna (who later became prime minister). After the change from Gyurcsány to Bajnai, the interest in institutional reforms declined. Pre-occupied with crisis management, the Bajnai government left the institutional arrangements of government largely unchanged.
Few citizens are well-informed about government policy-making. Political interest is weak, the quality of the media low. Within the context of strong political polarization, even basic facts are contested and attention tends to focus on politics rather than actual policies. A majority of people thus neither understand the motives and objectives, nor the effects and implications of policies at stake.
The number of committees exceeds the number of ministries. Except for the committee on EU affairs, however, all committees oversee just one ministry, so that the committee structure does not hamper the monitoring of government activity.
Hungary’s supreme organ of state auditing, the State Audit Office of Hungary (ÁSZ), is accountable only to the parliament. Its president is elected by parliament for six years, with a two-thirds majority vote required, and the office reports to the parliament and its audit committee. Enjoying a broad range of responsibility, the ÁSZ has played an important role in monitoring the government’s activities. The fact that Árpád Kovács, its active, long-standing president, failed to get the required two-thirds majority needed for re-election in late 2009, stands as testimony to this body’s independence and power.
Hungary has four separate ombuds offices, including the Parliamentary Commissioner for Civil Rights, the Parliamentary Commissioner for Data Protection and Freedom of Information, the Parliamentary Commissioner for the Rights of National and Ethnic Minorities and, since mid-2008, the Parliamentary Commissioner for Future Generations. All four commissioners are accountable exclusively to parliament. The requirement of two-thirds majorities has favored the selection of independent candidates.
The media cover government decisions only in a rudimentary manner. Public and private TV and radio stations alike largely limit themselves to infotainment and suffer from political bias. The sharp polarization of political life has favored a replacement of in-depth analysis by a preoccupation with scandals, be they real or alleged.
The coherence of party and electoral programs is low. This particularly applies to the two big parties. Fidesz has promised radical change for years, but has been silent on the details. Its calls for tax reductions and a flat tax have conflicted with its spending promises. The MSzP program is the lowest common denominator of its different platforms and factions. Due to the strong political polarization, political debates have focused on issues such as legitimacy and corruption rather than on policies.
Most interest associations are very narrow-minded and lack solid expert support. Trade unions in particular have not made many innovative proposals for crisis management. Business associations have been more active. The Reform Alliance (Reformszövetség), an expert group sponsored by National Alliance of Entrepreneurs (Vállalkozók Országos Szövetsége, VOSZ), provided the blueprint for the fiscal reform package of the Bajnai government.
Social interest associations and environmental groups are weak and largely lack the capacity to develop full-blown policy proposals. The religious communities are dependent on their respective denominational hierarchy and have narrow-mindedly focused on stabilizing, and expanding, the role of their churches in a basically secular society. Attempts by the government at strengthening the civil sector, most notably through the National Civil Fund (Nemzeti Civil Alapprogram, NCA), have shown only modest effects.
Governments in charge
SGI 2011 review period (May 2008 to April 2010) is outlined. Shown are: Prime minister or president, type of government, and ruling parties. Asterisks indicate national parliamentary or presidential elections.
Country scores and texts were produced by the country coordinator, based on comprehensive assessments by two country experts.
Dr. Frank Bönker University of Cooperative Education, Leipzig
Prof. Attila Agh Corvinus University, Budapest
Prof. Jürgen Dieringer Andrassy University Budapest