Setting a bad example

He was banned from teaching in secondary schools, imprisoned on charges of conspiracy and later 'pardoned' before becoming the father of tax reform in the 1980s. For two years following the regime change he served as finance minister. He founded the Centrum Party before announcing this year that he is to turn his back on politics. hvg.hu spoke to Mihaly Kupa about his life, political economy and the government's forced reform agenda.

© Végel Dániel

Your successors then delayed the necessary measures until Lajos Bokros was forced to take some drastic steps - his cuts rebalanced the budget.

The great achievement of the 1994-98 period was that most incomes moved into the private sector and private pension funds were established. Politicians were too nervous to bring about other reforms. They forced people into commercial enterprises, gave them an interest in becoming "independent," but this had serious consequences for social security. They lost control of contribution payments, which has led to today's catastrophic deficit. Today's situation, where fewer than two million honest citizens working and paying taxes have to support the other eight million, could have been avoided if social security had been reformed. It didn't happen, and we're very late starting. I'd add that this wasn't yet the case when I was Finance Minister - social security was in surplus at the time.

In 2002, the Orban government lost the elections, even though they'd started a spending spree in their final two years in order to win. Many claim that the Centrum Party's 4 per cent of the vote in that election cost Fidesz their victory.

I don't agree. Istvan Stumpf's institute conducted a survey which showed that we took roughly as many votes from the Right as from the Left. I'd add that in 2006, the Socialist regarded Centrum as a danger mainly to themselves.

Let's talk about the explosive situation we're seeing at the moment, which is the result of introducing shock therapy in order to catch up with years of inactivity. Until now, it's always been possible to shift responsibility for difficult circumstances on external factors or the failing of predecessors. But now there are so many ad hoc, ill thought-out measures, that various groups are in a more or less permanent state of outrage.

I don't know why the government is hesitating when the governing parties' drawers were stuffed with ideas for reform. The era of "enlightened absolutism" passed a long time ago. It would have made sense to hold consultations before moving, but the government missed that opportunity.

Will the Hungarian economy have the capacity to absorb EU subsidies?

It will be hard to spend those trillions of EU forints rationally. Brussels monitors the way its money is spent very strictly, but there is still a risk of the money being wasted: Hungary's public administration is too centralised. The local authorities are powerless, the smaller regions either work or they don't, and the large regions just exist on paper. Nobody has any money, or rather, everything depends on the benevolence of central government, because there has been no effort to reach a compromise at lower levels of government. There are huge risks.

How important is public support in these circumstances? How can the government expect citizens to be honest, to pay ever higher taxes and contributions if a large number of politicians see themselves as being above the law and conduct their financial affairs accordingly?

I'd say that politicians don't have to be saints, but they have to realise that they act as a role model for other members of society. If the ruling class sets a bad example, and if justice is inconsistent, then it is simply impossible to establish the truth, and we can't expect much good to come of it.

János Pelle