Fr, 1.12.2023

Busy year ahead

Government. Photo: Sander Ilvest

The new political year promises to be a busy one. While there are no elections on the agenda, there are plenty of questions that need answers before local government council elections in 2021. The government can no longer say it’s only settling in nor blame its predecessors as plans have been laid and the state budget put together by the coalition of the Center Party, Isamaa and Conservative People’s Party (EKRE). Amendments that entered into force from January 1 were also largely shaped by the incumbent government.

What has 2020 already changed and what more can we expect?

Things that will definitely happen

The minimum salary of teachers will grow to €1,315, with the average climbing to €1,540.

The average old-age pension will be hiked by €45 of which €7 is an extraordinary hike worth €20 million in the state budget. It pays to keep in mind that the Center Party promised a pension hike of €100 before Riigikogu elections. We will see whether the government will return to the promise made by the prime minister’s party this year.

Estonia started work as a non-permanent member of the UN Security Council. Estonian diplomats have been dispatched to New York to represent us at the very heart of world politics for the next two years.

There is no way around excise duty changes. Life became a little more expensive for smokers this year as the duty on cigarettes was hiked by 5 percent. This translates into a pack of smokes costing an extra 10 cents on average.

The excise duty rates on liquid and natural gas were also hiked, while those on motor fuel remain unchanged.

The duties on alcohol, lowered this summer, will also not be hiked in 2020.

It is very likely the first stage of eastern border development will be launched this year. A 23.5-kilometer section between the triple border point, where Estonia, Latvia and Russia meet, and Luhamaa. The Police and Border Guard Board (PPA) estimates the construction will take three years.

Questions that will be answered

The coming months will reveal the fate of the controversial pharmacy reform. The Riigikogu decided five years ago that the pharmacy reform will enter into force on April 1, 2020. It was agreed that pharmaceutical wholesalers will not be allowed to own pharmacies and that all pharmacies must be owned (at least 51 percent) by licensed pharmacists.

The end of last year saw a failed attempt to reverse the reform in the Riigikogu, while author of the bill Tõnis Mölder (Center) is already contemplating his next move. What this means will probably become clear in the opening weeks of 2020.

The other major change moving from 2019 to 2020 is the pension reform. Rendering Estonia’s current mandatory funded pension, the second pillar voluntary. The Isamaa party behind the reform expected the law to enter into force from January 1. However, the bill was entered into proceedings so late that deliberations will continue this year.

The beginning of the year should also shed light on the form the 2021 census will take. While a decision was to be made last year, no agreement has been reached yet. Statistics Estonia has spent millions preparing for a census that would only use national databases for the past decade, while politicians want additional data, for example, on people’s language proficiency, dialects and religion that can only be collected in the form of interviews. The last government sitting in 2019 saw a proposal of returning to the most traditional census type. This would require at least an additional €8 million.

Decisions that are in the air

The new year will present Jüri Ratas’ government with the chance to really get to work. If last year, scandals took up a lot of the government’s time, we can hope to be done with growing pains now.

The new year will be used to prepare for local elections in 2021. The year before elections is a good time to make good on a few more election promises to be used later in local elections campaigns.

We must also keep in mind that Estonia will also elect a president in 2021. Debates on the process of presidential elections will likely start in 2020. Isamaa leader Helir-Valdor Seeder tried to kick things off a few months ago when he pointed to a new situation following Estonia’s administrative reform that has resulted in there being fewer local government electors in the Electoral College. It is up to the Riigikogu to decide whether to change the procedure of presidential elections and how.

Elections at the Reform Party in spring will show how much love members have for chairman Kaja Kallas who won the party the Riigikogu elections but could not deliver it from the opposition.

EKRE also holds in-house elections every year, and we are set to learn whether rumors of a new chairman or Mart Helme swapping the interior minister’s portfolio for a seat in the Riigikogu are true.

The ruling Center Party should also hold elections in 2020.

Things that need to be decided

What will happen to the Linnahall? Will an agreement be reached in terms of what to build there and how, or will we see the grand building continue to dilapidate? Harmony needs to be found between the government, city of Tallinn, heritage conservation, architects and those interested in the development.

Minister of the Interior Mart Helme’s plan of an internal security reserve morphed from a half-baked idea into an analysis for draft legislation last year. The reserve plan has become more expensive, however, with the required sum now estimated at nearly €6 million a year over four years. The reserve force should have 1,500 members by 2023.

What happens next depends on the assessment of agencies and ministries, whether the plan will be approved by the Riigikogu and whether the necessary funds can be found.

Minister of Finance Martin Helme has promised to lower the excise duty on diesel fuel this year. Lowering the duty would see EKRE make good on another election promise, after lowering the duties on alcohol last year.

Heading into local elections, the Center Party tried to initiative a tax debate already last year. While no specific proposals were made, the party promised to introduce a package of tax changes in spring.

What will happen with the supervisory board of the Bank of Estonia? On the day of the pharmacy reform vote, another item on the Riigikogu’s agenda was amending the Bank of Estonia Act. After proposals to amend were approved, the second reading of the bill was canceled because the ECB needs to be notified of amendments to the Bank of Estonia Act. Work on the bill will continue once the ECB responds.

The year should also see a decision on whether Estonia will get a shale oil pre-refinery. The state’s stake in the joint pre-refinery of Eesti Energia and Viru Keemia Grupp has been estimated at around €200 million.

Even though no decision has been made yet, the government considered how to help finance the construction of the refinery last year. Any decision is affected by the fact a shale oil pre-refining plant would not coincide with Estonia’s goal of achieving carbon neutrality by 2050.

In domestic politics, the main questions are whether the government of the Center Party, Isamaa and EKRE can endure, how many ministers will be replaced this year (Jüri Ratas’ second government had to replace three ministers in last year) and how the Reform Party will perform in the opposition.