Editorial: proposals worth pondering

Estonian Air.

PHOTO: Toomas Huik / Postimees

Proposals presented at the initiative of economy minister, aimed at reorganising governance of state enterprises, will probably not be received will shouts of exuberant joy in the coalition cabinet. Explicitly, the authors advise to reorganise the basics of state participation in enterprises, as well as expectations towards these. Also, the formation procedure of governing councils ought to be improved, and an ownership body created to manage companies with public holdings.

In many ways, the criticism voiced resembles the National Audit Office 2007 owner supervision report on state enterprises and foundations. Even then, it was underlined: uniform, agreed and open holding policy is absent; ministers’ behaviour at directing state enterprises and foundations is opaque, etc. This year, Audit Office is to follow up – and, according to draft quoted by authors of above proposals, the problems largely remain the same.

Of the four proposals presented, discussions over the need and options for the ownership body will probably pose the greatest political difficulty. The issue being that, in a government, the rise of any minister’s influence and power will come at the expense of a fellow cabinet-member. The ownership of the new holding body will lead to lengthy contentions between ministries of finance and economy. The ministers in question coming from different parties, they may soon forget why – come to think of it – does the state participate in companies, anyway. With companies of obvious public functions like Tallinn Airport, goals and considerations ought to be self-evident. Not so with companies geared mainly towards making a profit – as admitted by authors of the proposals. Meaning that everyday politics may harm long-term needs of state as shareholder. 

Thus, expectations and goals («why?») need to be clearly stated, first, Only then, the question of «how?» may be answered. In the eyes of OECD, the Nordic practice of governing public companies is highly esteemed. This includes the so-called dual model where ministries responsible set goals and tasks to corresponding companies, the entire portfolio being held by a separate entity. This promotes and enhances leadership capabilities, while relieving governing councils of political pressures. Currently, appointments to governing councils of such companies tend to be questionable; seats often come with political strings attached.

Therefore: laying aside political envy – who is to gain and who stands to lose – the proposals should be carefully pondered. The goal being to better consider the interests of the state – read: of us all – and to take decisions loftier than immediate political gains.

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