Mr. Speaker, Fellow Members of Parliament, Honourable House,
In keeping with our constitutional traditions, at the beginning of each upcoming parliamentary session the Government gives an account of the work it has completed since the previous session of Parliament. Today I must talk about four things. First of all, I wish to inform you that a large amount of data and information related to 2016 is already available; the Government has reviewed this, and has taken stock of our economic and political achievements in 2016. Secondly, the budget for 2017 has entered into force, and, in accordance with Parliament’s decision, the Government has begun its implementation. Thirdly, the Government has completed its political and economic plan for 2017. Fourthly, the Government has assessed the risks for 2017, and has identified the dangers.
At the end of last year, government debt as a proportion of gross domestic product fell to 74 per cent; last year the budget deficit amounted to HUF 848.3 billion, which is HUF 388.9 billion less than the previous year, and an extra HUF 490 billion in tax and contributions flowed into the central budget. Through working and paying taxes the Hungarian people have earned our sincere appreciation. Thanks are also due to the Ministry for National Economy and Minister Varga for the work they did. Last month there was a budget surplus of HUF 123.4 billion, which is the best January result in the past 17 years. In the 21st century we have not had such an outstanding performance for the month of January, and I also expect to see positive developments over the next few months. I believe that the deficit target for 2017 of 2.4 per cent is clearly attainable. In 2016 the GDP increased by 2 per cent; this growth rate exceeds the EU average of 1.9 per cent and the eurozone average of 1.7 per cent. When assessing last year’s results it is well worth noting that both our external and internal balances further strengthened alongside growth. For some time one of the Hungarian national economy’s widely acknowledged problems was that growth was often accompanied by deteriorating financial balances and increased budget deficits: in other words, growth was coupled with increased government debt – which simply meant that economic growth was debt-financed. We remedied this problem: current economic growth is not due to higher debt, but to actual economic performance. In 2017 the Government expects a growth rate of 4.1 per cent, and 4.3 per cent in 2018. The European Commission’s recently published winter forecast also predicts a higher rate of growth: they have revised the estimate they issued in November from 2.6 per cent to 3.5 per cent. We expect an even better result, but if their estimate proves to be correct – even if they are right – this would be the fourth best result among the current 28 Member States of the European Union. That’s not bad. The prospects are good – all we now have to do now is translate them into reality.
In 2016 Hungarian foreign trade had a record year. We succeeded in generating a EUR 10 billion foreign trade surplus in just one year: an unprecedented achievement in the history of the Hungarian economy. Compared with the previous year, in 2016 the value of exports expressed in euros increased by 3.1 per cent, while that of imports grew by 1.7 per cent. The foreign trade surplus amounted to EUR 10 billion, and this highlights the fact that we are well advised to adopt a sufficiently nuanced and cautious approach to the issue of free trade. I would remind you that Hungarian economic policy’s other nagging weakness used to be that whenever our economy grew, our foreign trade balance deteriorated. We have now found a solution to this as well, and it seems that we are leaving that period behind. I would also like to inform you that at the end of the year we could see that 71 large corporations had decided to invest in our country, and as a result working capital worth EUR 3.2 billion was channelled to Hungary.
In the last quarter of 2016 unemployment fell to 205,000, and it now stands at 4.4 per cent for the year: a record low after 52 months of continuous decline. I can also say that full employment is well within our reach. Since the Government entered office in 2010, the number of people in employment has increased by more than 700,000; the Hungarian private sector accounts for the majority of these jobs, providing an additional 486,000 people with employment. This means that we are well on course to reach the one million jobs we have undertaken to create over a period of ten years. The latest figures indicate that the volume of retail sales increased by 4.5 per cent in 2016. This means that over 2 years – 2015 and 2016 – Hungarians purchased 10 per cent more than earlier. Last year we restructured the National Tax and Customs Administration of Hungary, rendering it more customer-focused. The National Tax and Customs Administration generated a total revenue of HUF 12,793 billion, which was HUF 31 billion higher than the revenue expected by the central budget.
In December 2016 the number of guest-nights spent by foreign guests in hotels increased by 21 per cent, while the number of guest-nights for Hungarian guests grew by 8.6 per cent. At the same time the sales revenues of commercial hotel facilities increased by 17 per cent. This means that in total 27.7 million guest-nights were registered last year, 7 per cent more than in 2015, while total sales revenues increased by more than 9 per cent, and exceeded HUF 402 billion. We can congratulate our tourism experts and those working in the sector: their efforts are increasingly valuable to the national economy.
Ladies and Gentlemen,
I have just now outlined a series of figures which are rather dry – as figures usually are. But we all know that behind each and every improving figure there is the hard work of millions of people. The Hungarian people have worked hard for our results, and – setting aside party affiliation – I believe that it is comforting to see our efforts gradually coming to fruition. With due modesty – but with confidence – I can now assert that the economic facts in 2016 demonstrated that the Hungarian model is viable. In summary, I am now reporting to the Honourable House that Hungary achieved its economic policy objectives for 2017.
As regards implementation of the 2017 budget, the most important goal is not just to have full employment well within our reach, but also to make working in Hungary more worthwhile. This is why we came to an agreement with employers and workers at the end of the year. As a result, in January 2017 wages increased and taxes decreased. Payroll taxes fell by 5 per cent, and corporation tax was reduced to 9 per cent. In January the minimum wage was increased by 15 per cent, while the wage minimum for qualified workers rose by 25 per cent. Next year wages in the lowest income brackets will increase by another 8 and 12 per cent. Last month pay rises were implemented in a number of sectors. The pay rise for those working in higher education reached its second stage: after last year’s average 15 per cent increase, their pay increased by another 5 per cent. From 1 January 2017, the some 16,000 workers employed by government offices became public servants. For those employed at county level there were graded pay rises from 10 to 35 per cent. On 1 January the pay of members of the military increased by a further 5 per cent, and members of the police, parliamentary guards and intelligence agency employees also received a further 5 per cent pay rise. Last month all education assistants were given a 7 per cent pay rise, and a further discretionary 3 per cent rise may be awarded according to employers’ decisions and performance evaluation. In January crèche workers with tertiary qualifications also joined the teacher career model. Pay for social sector workers will likewise be addressed, and the salaries of public sector workers in cultural institutions operated by the state and municipalities have also been increased. In January salaries in health care continued to increase. After doctors, the situation of nurses has also improved, and last year they also received a pay rise. Salaries have increased by another 12 per cent this year, and there will be further 8 per cent increases in 2018 and 2019. We have also come to an agreement with the trade unions in state-owned companies, entering into an agreement that is valid for several years. Over the course of three years wages and salaries will increase by some 30 per cent. Today’s statistical report shows that net earnings in the private sector last December exceeded earlier figures by 7.3 per cent, meaning that, according to the latest statistics, average earnings are HUF 305,000 before tax – which is around HUF 203,000 after tax.
It is important that while investing the maximum possible effort into the country’s future we do not overlook those who for decades have worked hard and carried the country on their backs: our parents and grandparents. This is why in January pensions were increased at a higher rate than planned, this is why the elderly were given Erzsébet Vouchers, and this is why the VAT on some basic foodstuffs – the most important for pensioners – was reduced. In January the range of individuals eligible for family benefit was broadened, and family benefit for those with two children was increased. In 2017 parents with one child will pay 10,000 forints less in tax every month, those with two children will pay 30,000 forints less, while for those with three or more children the reduction will be some 100,000 forints. It is important for Hungarian society to see the justice of always linking benefits to employment. This is also the rule we shall follow in 2017.
This year will also be the year of home creation, which I look upon as a national cause, as we believe that it is right for every Hungarian family to have their own home. When we introduced our new housing programme, we intended it to serve several goals at once. First of all, we wanted to avoid the nightmare of foreign currency loans. We cannot allow Hungarian families to again be cheated so cruelly. We launched a programme which helps to create homes, while boosting the economy, creating new jobs and encouraging parents to have more children. From what we see, today I can tell you that 36,000 families have applied for home creation funding worth more than HUF 87 billion. The number of building permits increased by 150 per cent compared with the previous year, and this year the intensive efforts of the Minister – Minister Varga – enable us to make even more funding available for home creation: HUF 211 billion to be precise.
By the end of 2017 we can also focus more attention on a liveable environment. We expect a great deal from the work of Government Commissioner Máriusz Révész. In late December 2016 we handed over the first subsidised electric car, and we plan that by 2020 there will be at least 30,000 electric vehicles on Hungary’s roads. We signed a cooperation agreement in Budapest, and as a result around 250 charging stations and 500 charging points can be built, at a cost of some HUF 600 million. I would also like to inform you that we have increased the allocation for our economic development and innovation programme by HUF 105 billion, and so the overall allocation for economic stimulus in 2017 has risen to HUF 2,430 billion. Since we last met, the Hungarian government has approved a strategy for Hungarian digital “start-ups”: I would be happy if linguists could finally come up with a good Hungarian translation for this term. We have arranged for the establishment of a centre for coordination and methodology, for the promotion of entrepreneurship and related training, the development of cooperation between industry and start-up companies, and the formulation of a Budapest start-up programme.
Fellow Members of Parliament,
The Government continues to believe that a country which has no borders – or which is unable to protect its borders – is not, in fact, a country at all. With this in mind, we have held back the migration pressure on the country, the temporary border security fence on the southern border has been completed, and its enhancement is ongoing. We have made it clear that the security of the Hungarian people is the highest priority, and therefore no one shall be allowed to enter the territory of Hungary illegally. In consequence we have effectively doubled the numbers of military and police personnel protecting the Csongrád County and Bács-Kiskun County border sections. The first group of border guard trainees – 532 in all – took their oaths back in December. The heavy pressure on the Hungarian border will not end in the next few years, and therefore border protection will remain a priority national security issue. In Europe today we can see that an increasing number of people share Hungarians’ view on this matter. But that is life for us: we Hungarians “are not right, but will be right”. At the latest EU summit of heads of state and government, more attendees than at previous meetings supported the idea of setting up refugee camps outside the EU; this was originally a Hungarian proposal. Previously politicians in Brussels did not want to consider this. Now the view that refugee centres should be set up outside the territory of the European Union is gaining ground in the EU. This is not yet the majority view, but developments are heading in that direction. In relation to the whole migrant issue, one sees that viewpoints which were previously condemned, despised and held in general contempt are slowly becoming common positions: the former black sheep are coming to be seen as models of sober foresight.
The leaders of the Visegrád countries have also met in February. We confirmed that we must continue to protect the borders, those who have entered must be taken back out, and those who want to enter must be detained and vetted outside the European Union. These are the three pillars which continue to support the position of the Visegrád Four.
The Government has identified five dangers which we will have to face in 2017. These are the following: firstly, Brussels’ prohibition of reductions in household utility charges; secondly, illegal migration; thirdly, attempts from abroad to interfere in Hungary’s affairs; fourthly, Brussels’ attacks on Hungarian tax reductions; and fifthly Brussels’ attacks on our job creation programmes.
You surely remember that a major dispute developed in Brussels over the reduction in household utility charges in Hungary. Through Brussels, large international corporations sought to force us to rescind reductions in household utility charges. An independent energy policy is a strong tool in the hands of the nations, to be used for the benefit of their citizens. We understand that several Member States want energy supply to be regulated at a European level. This is all very well, and we understand it, but we insist on our right to set energy prices. The exercise of this right must not be transferred to Brussels: it must stay here, in this building.
Secondly, Honourable House, many in Brussels still support illegal immigration – despite the depressingly bloody reality and the shocking facts. Step by step we are making progress in holding back the countries that support migration, and the Brusselites. Germany – and, more recently, Italy – are changing course, albeit slowly. Now, therefore, we must deal with a new issue of self-defence: the issue of immigration detention. The Government has proposed that migrants submitting asylum applications must be kept in custody until the final assessment of their applications. This is in contrast to the current situation, in which they have freedom of movement not only in the territory of Hungary, but across the entire Schengen Area. In these times of terrorist threats, this simply cannot be allowed.
Thirdly, in recent years we have noticed a problem in an increasing number of countries, with covert coordinated attempts being made to influence their internal politics through externally funded international networks. Here these networks have nothing to do with civil society: they are the Hungarian branches of international organisations. You may have noticed the debate about interference in the US presidential election campaign, and you can see this debate is happening now in France as well. It seems that this is a general problem in Western democracies. On a number of occasions throughout history we Hungarians have demonstrated that we are able to decide our fate for ourselves, and therefore we should not allow our decisions to be influenced by organisations financed from abroad. We shall not allow global capital to make decisions instead of the Hungarian people. We want the same transparency, openness and accountability as for political parties.
I believe that in 2017 Brussels will attempt to further deprive nation states of powers over the organisation and control of their economies. This attempt by Brussels will extend to Hungarian tax regulations also. I ask you to reject this, to resist these attempts, and for us to unite our efforts in defending Hungary’s successful taxation system.
Fifthly, and finally, you are no doubt aware that a number of countries in the European Union have decided to introduce job protection support. Hungary itself makes use of public works schemes, it has a job protection action plan, and it provides support for individual projects and investments which create and maintain jobs. These measures are under constant attack from Brussels. This has been the case so far, and will remain the case. I counsel that we act to prevent them depriving nations of the right to provide job creation support.
Honourable House, Mr. Speaker,
The measures being considered in opposition to these five attacks are referred to by the Government as the “new national policy”. Our intention is for the new national policy to defend Hungary, defend our national interests, and defend the results we have achieved through joint effort and which we have jointly fought for in recent years. In order to successfully defend ourselves, we first of all need agreement: the wider and fuller the agreement, the better. To this end, remaining faithful to our traditions, we shall first launch a national consultation on these issues, and we sincerely hope that once again we will succeed in reaching the areas of understanding that are necessary for action – indeed, for international action. I also sincerely believe that, by putting aside current political duels, members of the Hungarian parliament will be able to stand shoulder to shoulder with the Hungarian electorate in order to defend our country’s independence and sovereignty.
Finally, Mr. Speaker, Honourable House,
While my account today relates to 2016 and 2017, we are all interested in the long-term significance of what is happening in Hungary today, and what it amounts to from a historical perspective. We can give the following answer to this question. During the roughly 120 years since the end of the 19th century, Hungary has undergone periods of growth and development that were similar to each other in many respects. Each followed the same course: they began with consolidation, then this was followed by an extremely successful upward phase, which was then disrupted by an emergent local or international crisis. We can identify at least four such periods over the past one hundred years. A succession of severe economic shocks had a major effect on both economic growth and financial stability. An even more serious consequence of the crises of the past 120 years, however, has been that these successive crises not only halted growth, but even destroyed some of the results achieved; and the consequences of the crises could only be erased through still further years of consolidation. The combined effect of all this was that between 1900 and 2010 average annual GDP growth per capita amounted to just 1.5 per cent. This is below the growth rate of the advanced countries and those European countries that successfully caught up with them. In other words, each of our attempts to catch up – the attempts of the Hungarian people – proved to be unsuccessful. In the last 110 or 120 years Hungary could only approach – but never cross – the boundary of long-term growth. In 1990, with the fall of communism and the switch to a market economy, the country was given another chance. You all know the story: we were unable to make the economic breakthrough vital for the country. There were economic policy U-turns, economic shock therapy and massive debt, and a multitude of misguided steps. Finally – in the latest international shock – Hungary’s financial collapse in 2008 and the 2008–2009 global financial crisis found Hungary in a vulnerable position. This, too, called for the launch of a new era, and in 2010 Hungarian economic policy was given direction and leadership.
In terms of Hungary’s progress since 2010, we can say that the average growth rate of Hungary’s GDP has been 1 per cent higher than that of the eurozone. Consumer spending in Hungary has grown 1.2 per cent faster than in the eurozone, but in 2016 it was 5 per cent in Hungary, compared with just 2 per cent in the eurozone. As a result, Hungary’s GDP per capita has narrowed the gap with the eurozone by 5 per cent. As regards development in our labour market, since 2010 the number of people in employment has increased by more than 700,000; this is a 19 per cent increase, and is the highest level in Europe. Only Luxembourg and Malta have similar growth rates. Since 2010 the employment rate has risen from 55 per cent to 67 per cent, which is itself higher than the eurozone average.
Honourable House, Mr. Speaker,
These are all facts which indicate that we can succeed in achieving an economic breakthrough. During the 2017 parliamentary year you are requested to also take these historical facts into consideration when you frame policies in your respective parliamentary groups. Between 2010 and 2016 Hungary earned itself an unprecedented opportunity. Rather than squandering it, we must turn it into reality.
Thank you for your attention.