Viktor Orbán’s Speech at the Business Year Opening Event of the Hungarian Chamber of Commerce and Industry

6 March 2015, Budapest

Honourable President Parragh, Ladies and Gentlemen,

Good morning to you all. It is my task to tell you how the Government perceives the state of the economy and in which departments we see risks for the year 2015; afterwards, with your permission, and if time and your patience allow, I would also like to briefly respond directly to some of the proposals raised by President Parragh.

Ladies and Gentlemen,

We are not in the best of moods here today. While economic figures warrant a somewhat better mood, it is my experience that if money disappears from the economy, then the entire economy somehow finds itself under a cloud and in a negative mood. Only a couple of days ago I received 67 mayors who have lost money as a result of the brokerage scandal, and I suspect that they are not the only ones who have lost assets. It is obvious that small deposit holders’ money has also disappeared, but according to the rules in force their savings will be reimbursed by the deposit insurance fund, up to a limit of HUF 30 million. At the same time, I suspect that there were also larger deposits and that businesses have also lost money: a great deal of money. We do not know the exact figures, but it is difficult to hold a meeting here in a positive atmosphere – however favourable the macroeconomic figures may be – if everyone is wondering whether there is anyone in their company group or among their business partners whose reserves have evaporated overnight. We are already familiar with a case on this scale and, as you can see, an investigation has been launched. At the same time, we cannot at all rule out the possibility that there are other brokerage firms operating outside the boundaries of the law which will find themselves in an equally difficult situation. We have no way of knowing this precisely, though the latest news today appears to support this assumption. Therefore this will cast a shadow over every meeting. I only wish to tell you that the Government will, for its part, make every effort to reinforce the powers of the supervisory authority – if necessary, through legislative amendments. For our part, we would like to create a state of affairs in the realm of brokerage firms – as we have already done in the banking system – which ensures that this can never happen again.

Ladies and Gentlemen,

The first thing I would like to tell you comes from a thread picked up from Mr. Parragh’s speech. He mentioned that there were agreements between us which I quantified. We had several major agreements. We agreed on a total of 21 items of business policy and, according to our calculations, in terms of delivery on these we currently stand at 90–91%. As regards the items which we have not yet fully delivered upon, they are in progress – as it is customary to say in the world of bureaucracy. In other words, they have not fallen through, and there is a chance that they can still be realised. I would like to make specific mention of two items among our agreements. The first one is involvement in the reform of vocational education. For as long as I can remember – and I have been a Member of Parliament for 25 years – in every government term, business actors have sought to emphasise that vocational training cannot be operated purely in terms of the logic of education policy and within the institutional framework of education; this, they have said, is because the expertise that is given in education and the workforce which is trained in formal education is ultimately employed in the economy. For 25 years we have heard them say that the two things need to be linked. And so we had the idea of involving the Chamber in this effort. The Chamber is now taking part in the reform of vocational education, and we sincerely hope that this will yield tangible results, both in adult education and in secondary education. The second item we agreed upon that I would like to tell you about is the Chamber’s participation in the work of the State Reform Commission. This is the other thing that I keep remembering from the last 25 years; the Chamber has frequently said that it is all very well for the government of the day to want to implement a lot of good ideas, but what if the Chamber was also allowed to take part in initiating change, rather than merely enjoying the resulting acts of kindness? We have now devised the solution of inviting the Chamber – perhaps with the personal participation of President Parragh – to attend the meetings of the State Reform Commission, whose agenda features several of the items mentioned here by the Honourable President. I do not know at present what decisions will be taken there. We are making progress, and I would like to believe that useful decisions will be adopted. However, whatever the quality of those decisions may be, in the future no one can claim that we did not consult the Chamber on time and that the Chamber was not given a chance to state its case.

Ladies and Gentlemen,

In order to have a better understanding of our economic prospects we must assess the situation realistically, and I would therefore like to conduct this assessment with regard to one or two issues. The first premise, based on which the Government devises its plans for the year ahead and the next few years, is that the contemplated, announced and implemented reforms have been effective over the past four years and also appear to be effective in this term. There have been a number of such reforms; I will now highlight four crucially significant ones.

The first reform is that we linked demographics to fiscal policy; in simple terms, this means that we recognised the cost of raising children and relieved this from taxation. In other words, we linked taxation and the family. This reform is commonly referred to as the tax allowance granted for raising children. This is, by the way, an inaccurate description, but that is a different story, to be clarified by posterity. The tax allowance for raising children – which was made deductible last year not only from income tax but also from social security contributions – is working. You can see this in demographic indicators, and you can also see it in the country’s economic performance. These measures include the tax allowance granted for the raising of children and retirement provisions for women after 40 years in employment. I believe it is important that over the next few years these measures should be supplemented with our first-time homebuyers policy, and it is likewise important that we should be able to give our children a quality education in a cost-effective manner through reform of education. So we have accomplished this reform.

Our second and third reforms have been the reduction of household utility costs and accountability in the banking sector. It is not my aim now to discuss issues of social justice, because that is not why you are here. I would, however, like to point out that reducing household utility costs and introducing accountability in the banking sector boosted consumption, as shown in economic growth figures for 2014 and our projections for 2015. In consequence of both these measures people have more money left in their pockets. We do not wish to encourage people to consume more; it is up to everyone to decide what they do with their money. In actual fact, in the Government there is probably a majority in favour of savings over consumption – but that is a different story. At the same time, these measures will very likely lead to people spending more than they did earlier; what’s more, retail sales figures appear to confirm that they are already doing so.

And the fourth great reform is the idea of “work instead of benefits”. I believe this is a breakthrough. I do not wish to offend anyone’s political sensibility, but I think this is the point at which socialism ends. It is a real system change when you hear news that disadvantaged people in a small village in Hungary – with a majority of Roma people in the population – are demonstrating outside the local government office, demanding that they be allowed to join the public works scheme. Earlier these people would have been demanding benefits. A change in mentality has occurred in Hungary over the past four years, and the idea of “work instead of benefits” has gained ground to such a degree that qualitative change at a systemic level is evidenced by people demanding work instead of benefits, and demonstrating to be given work. This is why it is important that, if you look at the 2015 budget, you can see that we shall spend more on public works in 2015 than we did in 2014; in other words, more people will be able to participate in public works schemes – in spite of press reports about reduced numbers, which are lies, pure are simple. We shall spend more money, and shall employ more people than earlier.

You may also be aware that by 2018 we will have increased the percentage of public works schemes and will have adopted measures promoting employment, with a view to reaching full employment in Hungary by 2018. This means that unemployment should fall to 3% or lower. I believe this is possible – we can achieve this by 2018. The signs which indicate this are in the data for January, which shows that there are approximately 60,000 job vacancies in Hungary. This is not only due to the fact that we are unable to give enough people work; though there is also some truth in that. At the same time, however, there are occupations for which businesses do not have sufficient access to a qualified workforce. These are not overly specialised jobs; decent and demanding they may be, but not highly specialised – examples would be driving vans or lorries. But there are also others in which it would not be too hard to resolve the problem of aligning the needs of business and vocational training, and I sincerely hope that this will happen in the coming period. The tens of thousands of unfilled jobs in Hungary today represent a promising situation, as we can work towards full employment through good vocational education and sound employment policy.

Ladies and Gentlemen,

The Jobs Protection Action Plan is also important. Full employment cannot be achieved without maintaining this action plan. In the 2015 budget you can see that the necessary funds are available. In 2015 the employee categories for which lower social security contributions are payable will also remain the same.

Ladies and Gentlemen,

This is the first pillar of the assessment on which the Government has based its plans; the most significant structural reforms have proven to be effective. No one is saying they work perfectly, no one is saying they work without a hitch. But these major reforms – linking the economy, taxation and families, measures increasing people’s purchasing power, and the principle of “work instead of benefits” – are proving effective in the Hungarian economy.

The second thing I would like to draw your attention to is that, these results notwithstanding, Hungary continues to fall behind those regions with which we are compelled to compete in terms of productivity and employment. The rate of employment is somewhere around 65% in the European Union, 75% in the United States and 85% in China. In Hungary we have only just managed to raise this indicator to around 61–62%. But in 2010, at the beginning of the last government term, it stood at around 57–56%. We have come a long way, but there is still a long way to go for us to compete with those parts of the world which today are growing faster than us. This is not only true of Hungary, but of the whole of Europe. In Europe, debate is a higher priority than work itself. Europe is an ideologically-driven continent, where people tend to believe that if we somehow solve the big systemic and state problems, other problems in the economy will as a result somehow also resolve themselves. This is not the American way of thinking, nor the Asian. Politely, we usually say that those countries are much more pragmatic, that they concentrate on the economy, and that once the economy is working, they will then create theses and theories. In Europe we mostly do things the other way round. Of course Hungary is seeking a different path, but we do not always succeed.

The third pillar of the assessment is, Ladies and Gentlemen, the lesson – and I sincerely hope that actors in the Hungarian economy have all learnt this lesson – that the size of Hungary’s economy is such that economic success cannot be achieved without the ongoing cooperation and high performance of three key players. For economic success, we need workers, we need businesses, and we need government. There are countries of a certain size and countries at a certain stage of development which can dispense with one or other otherwise essential constituents of economic success. I know countries which perform well with no government – though I must say that these are the exception. And if you look at Hungary over the past ten or so years, we can certainly say that without cooperation between workers, businesses and government, without hardworking employees, without entrepreneurs willing to take risks, and without sound economic policy from government, then the Hungarian economy comes to a halt. And I think that this will also be the case in the future. It is therefore essential that we have good workers, good businesses and good government, and that there should be close cooperation between them.

Ladies and Gentlemen,

Let me reinforce the Honourable President’s words. This morning’s adjusted data, without an election budget, shows that in 2014 the Hungarian economy grew by 3.6% rather than by 3.5%, and that the initial estimates for government debt – in an election year – also show it falling below 77%, rather than levelling off. This clearly indicates the effectiveness of these reforms, this mentality, and the cohesion that has been forged between actors in the economy on the foundations of this mentality.

Ladies and Gentlemen,

I shall now devote a few words to the extent to which this economic growth reflects positive structural developments, and then share some thoughts with you on whether this growth – or at least the rate of this growth – can be sustained in the next few years. I think this is the most important economic policy debate in Hungary today: whether we are merely talking about the results of a single year which we have just come to the end of, or whether these achievements can result in a sustainable, high rate of economic growth that can continue in the years to come. As regards the structural changes giving us confidence in the 2014 growth rate, I would first of all mention that employment increased by 5%, while investment in the national economy increased by 14% for the year as a whole. There is some discrepancy here between the growth rate and specific percentage rates. We almost reached a 20% investment rate, but investment grew by 14%. I have seen somewhere that the last comparable year-on-year increase in investment in Hungary was some time in 1995, ’96 or ’97 – I am not exactly sure when, but it was before 1998. Based on our analysts’ conclusions, we believe it is also significant that the structure of growth has shifted. By this we mean that not only well-performing international corporations, but also a number of sectors typically and predominantly in Hungarian hands were able to make a contribution to the growth of the national economy. These sectors include the construction industry: this increased by 14%. Trade also made its contribution: sales grew by 5.2 %. Tourism is another example: there was a more than 10% increase in holiday accommodation revenue. And agriculture and freight are likewise among the growing sectors. This means two things: the foundations of growth are sectorally wider, and sectors are prospering which are typically dominated by Hungarian businesses.

Ladies and Gentlemen,

Finally, as part of my assessment of the situation, I shall mention the global economic environment. We achieved economic growth despite the fact that our most important external trade partner – the European Union – performed far more weakly overall than earlier. Hungary is an export-oriented economy, but we can hardly say that it was given growth impetus by a fast-growing, thriving economic environment in the world around it, where its most important markets are. That was not the case. We achieved economic growth under circumstances where there was no positive external change from our point of view. This, I believe, makes the performance of you and the entire Hungarian economy all the more remarkable, and of an altogether higher order.

I would like to draw your attention here to the fact that all sorts of analyses have been released recently, and yesterday a thick volume from György Matolcsy was also presented to the public. These publications and studies demonstrate that, for the first time in many years – at least sixty, but it may well be more than one hundred years – growth is not driven by increased borrowing, and it does not come from debt; the Hungarian economy is not growing from money borrowed from abroad. Clear mathematical proof of this claim is that our GDP grew by 3.6% while sovereign debt fell below 77%. If this is true, we may speak of an historic breakthrough, and we should not be afraid. There are here, I can see, ladies and gentlemen older than me, but there are surely some among you who remember the debate from the seventies and eighties, who then experienced the fall of communism first-hand, and lived through the nineties. I also remember comments like this from the beginning of the new millennium – that the Hungarian economy must decide what it wants. Whether it wants balance and no debt, or wants growth, but must then agree to increase borrowing. And in 2014 we have just seen a year which appears to confirm that we have succeeded in achieving changes in the Hungarian economy – increased employment is in my view the most significant of these changes – which have enabled us to achieve growth two to three times that of the EU average, without increasing public borrowing. And what’s more, this has occurred in parallel with a reduction in our overall level of government debt.

Ladies and Gentlemen,

What can we expect in 2015 and in the years ahead? The Government has an official position which is embodied in the budget. In this, we say that we expect an economic growth rate of 2.5%. Minister for National Economy Mihály Varga has committed to this. Today we are cautious; I believe that this is a highly conservative estimate and I will be sad if we do not exceed this projected rate; a growth rate for 2015 of 2.5% is a conservative, cautious estimate, which I believe is highly prudent in terms of fiscal planning. This should not, however, be binding on the Prime Minister; I am much more enthusiastic than a finance minister ever ought to be, and I believe that if we do things in the right order, in 2015 also growth will exceed 2.5%. I do not even dare to say by how much, and what my opinion is; we should wait until the end of the year. Let us wait and see whether the economic growth achieved in 2014 can be realistically expected to continue in 2015.

First and foremost, I would like to highlight here that the reform of the Hungarian political system has also been completed. You may be less aware of this, or may consider it a lesser priority, but we have created rules which enable all political actors and all political parties to operate in Hungary with supervised funds received from the state – both in election years and between election years. There are new laws on parties, party financing, election financing, parliamentary groups, and the regulation of foundations. Today Hungarian political actors are able to use state funding to pursue independent economic policies, free from the influence of various economic interest groups, solely with a view to the common good and the best interests of the economy. This possibility now exists. Hungarian political actors do not need any kind of external financial support. This is a major achievement, particularly when we look at other countries around the world – I do not want to mention where, as I do not want to see protest letters on my desk this afternoon, but we all know how these things are done. The truth is that in Hungary no interests of any kind can run contrary to good economic policy decisions. The Government has full freedom to make sound economic policy decisions – whether it succeeds or not is another matter. The second reason for being optimistic about 2015 is that we can expect to see a rise in consumption and improved performance in the retail sector. We can already see this in the numbers for January. I therefore hope that if the process of fully holding the banks accountable is seen through, and as a result borrowers’ monthly repayments fall and large numbers of people are actually repaid money already paid by them earlier, this will result in a higher increase in consumption than that which contributed to economic growth in 2014. I believe that, after a rise of 4% last year, real earnings may once again increase by 3 to 4%. This will amount to a rise of 7–8% over two years, meaning that consumption must make a tangible contribution to economic growth.

The third reason for optimism is that we have succeeded in agreeing a ceasefire with the banks; we may even have succeeded in signing a peace treaty – time will tell. We can see figures here, and there was one sentence in the President’s speech which I believe is worth underlining for the attention of those interested in macroeconomic issues. The good news we have heard – and it is true – is that in 2014 net business lending in Hungary increased by some 4%. However, if we deduct from this 4% the lending programme launched by the National Bank, there has been a decline. This is a serious matter, and a warning sign. This means that if the central bank led by Mr. Matolcsy had not announced the growth lending programme, there would have been no credit element to growth at all, and then in Hungary in 2014 there would have been less lending to the business sector than in the previous year. This is a very serious matter. The Hungarian government therefore had good reason to sign a peace treaty with the banks, as part of which the banking tax payable by them will be reduced. At this point, all that this commitment shows is that we shall reduce the banking tax. Having agreed this, it will be done. However, there is another side to the agreement that is not mentioned, even though from your point of view it is more important. This is that those banks which agree to mandatory increased lending will see a reduction in their banking tax. The agreement reached with Erste Bank has wider relevance. Perhaps I should not even have mentioned the name, but it has wider relevance than for this major Austrian bank, because it stipulates that it will increase its lending by HUF 300 billion in annual stages, if I am not mistaken. We would like to reach an agreement with credit institutions which not only permits reduction of their burdens but simultaneously boosts their lending activity. We cannot sustain a situation indefinitely or for decades in which it is a special lending arrangement devised by the central bank which keeps lending to businesses on a course of growth. The Hungarian financial sector and the Hungarian economy should be able to maintain a growth course without any kind of assistance from the central bank, but this is not the case today. We sincerely hope to achieve this, but as we are highly cautious, the National Bank has increased – and may have even doubled – the financial allocation of the Growth Credit Programme for 2015. I therefore believe that, while we may have succeeded in normalising relations with the banks, the financial resources necessary for growth will be made available through lending in 2015, just as they were in 2014.

I would now like to draw your attention, Ladies and Gentlemen, to the fact that there is a rule of thumb that we work with. Based on our calculations, which are derived from those of the central bank, a 1% increase in lending coming from improved credit availability generates 0.2% additional economic growth. From this it is easy to calculate that in order to achieve economic growth above our target of 3%, we would need an annual 7–8% increase in lending for the private sector. If we have this, growth is highly likely to follow; if not, there will be no growth. We will most definitely not have this rate of lending this year, but to help us out we have the Growth Credit Programme from the National Bank. But let me reiterate, we cannot rely on this programme indefinitely. The third reason why I believe that growth can also be maintained in the long term is that we expect a rise in households’ investments in their homes. Minister Varga will launch a new programme – also featured in the budget – which from July, perhaps, will make preferential housing construction and home purchase programmes more widely available to families; we hope this will in turn also contribute to improved economic performance.

And finally, I would also like to say a few words about what is happening in Europe. We do not allow for deterioration in Europe’s situation, but I should add that there are risks. What is more, these are risks over which we have little or no control. Whether or not the eurozone will be able to cope with the challenge posed by the Greeks, the current dispute between the European Commission and some EU Member States – including France, just to mention it on account of its size – and whether eurozone countries can be kept within reasonable economic policy restraints are issues which have yet to be resolved. And if the system is shaken, ruptured or brought to its knees, from that moment on we will find ourselves in a highly unfavourable environment – one which may affect Hungary’s growth prospects. This today is less likely than our being able to manage these problems in 2015. We can be optimistic; I merely wished to indicate that there are risks. Of course, there are not only negative possibilities, but also positive ones, which may yield results even better than expected; energy price trends are a clear example. According to our calculations, there is an obvious correlation between energy prices, the Hungarian foreign trade balance and economic growth. I do not want to recite the figures here, but based on our figures, future energy prices may favour Hungary over the coming period, and the agreement concluded with the Russians will protect us from all unpleasant surprises in the next two to three years.

Ladies and Gentlemen,

I would now like to mention a few more issues. EU funding is one. President Parragh specifically asked me to address this topic, given that from time to time you may hear some shocking things about what EU funds are and are not used for. If you will forgive me, I am now going to bore you with some figures, in order to give an overall picture. Between 2007 and 2013, EU development funds made available to Hungary amounted to HUF 8,700 billion. HUF 8,700 billion! The amount actually disbursed – rather than the amount drawn down and applied for – is 80% of this sum. This money is already in the bag. It follows from this that in order to be able to draw the remaining 20% in 2015 – and now you should not concern yourselves with the delay – we ourselves must disburse HUF 2,236 billion: HUF 2,236 billion! I bring this up here because I sometimes read analyses which claim that we can expect lower growth in 2015, given that reduced EU funding will be available. The very opposite is true. In 2014, we disbursed HUF 1,800 billion in funds, while in 2015 we shall be required to disburse some HUF 2,236 billion. Even if we cannot pay the full sum, we shall most certainly disburse as much as we did last year, but we are likely to pay more rather than less. Additionally, we are using a precautionary measure – let us not call it a trick, because that would sound bad in the context of such large figures. The Hungarian government decided to make excess commitments: to sign contracts for more projects than we have money for. As there are always projects that fall through, Hungary will contract for HUF 9,200 billion, even though we only have HUF 8,700 billion to allocate. We shall do this because we believe that this is how we can reach more or less one hundred per cent funding, bearing in mind the fact that some projects may fall through. If there are projects which go ahead but cannot be funded from the allocation of HUF 8,700 billion, we shall pay for this out of the budget’s development chapter. No business will be left in the lurch if it has agreed to implement a project, implemented it and accounted for it according to the rules; regardless of whether we run out of EU funds or not, those businesses will get their money. On the whole, we have taken a precautionary measure worth HUF 500 billion in the expectation of some projects falling through, in order to be able to draw the full amount regardless. I can therefore tell you that with regard to EU grants the country’s economic growth in 2015 is guaranteed; these funds are available. At the same time, we can also look at the issue of monitoring and margins of error. I had a look at these figures, and audits and errors account for 2% overall. In other words, if every project were audited and there were the same margin of error in each that we have observed to date, this would affect 2% of funding at most. The figures I have just outlined clearly show that this cannot constitute an obstacle to financing economic growth.

What about completion deadlines? Another thing I regularly hear is that programmes are not completed on time, and we therefore lose money. This is not the case. Anything that is not completed on time but which the Finance Minister sees as being worthwhile will be implemented from the central budget; and in certain cases – not in every case but in some – for programmes extending beyond the previous period there is scope for funding from the seven-year multiannual financial framework for 2014–2020. So phasing, as it is referred to, is also possible. The Finance Minister regularly makes decisions on phasing, in weekly meetings. Overall I want to tell you that in terms of EU funding, a high rate of economic growth in 2015 is guaranteed. This is particularly true as on 12 February the European Union accepted five sectoral and regional operational programmes for the 2014–2021 period. So we shall be able to call for applications in good time. I also have a date for when the calls will be released to the general public. In essence, calls for applications will be published in ever greater numbers, because the European Union has already approved the programmes for five major sectors.

I think that this is all I have to say on growth. There is one other thing I would like to share with you. Yesterday the Foreign Minister announced that we shall embark on a policy of southward opening. In recent years Hungary has successfully completed a policy of opening towards the East. That gate is open, there is free communication, and the political and regulatory obstacles have been removed from economic cooperation with emerging eastern markets. In July the Foreign Minister will start preparations for southward opening, and in the next year I shall primarily orientate our external economic activities in a southerly direction, rather than towards the East, as part of which we shall open embassies and trading houses. We shall launch a foreign policy and trade campaign in South America and Sub-Saharan Africa. I hope that this, too, will make a contribution to our economic growth.

I shall now respond in a few words to something the Honourable President said. As regards the reduction of red tape, I do not wish to say anything more than that the State Reform Commission is continuously working on this. You will see the debates arising from these efforts. The number of middle-level managers in public administration is being reduced by some 1,300. So deep down, very significant changes are taking place without much noise. As regards tax cuts, you have known me long enough to be fully aware that I think the ideal income tax rate is zero per cent. I believe that people should not be taxed on what they earn; they should be taxed from a public interest viewpoint when they spend their money. I think that this is much fairer, and it recognises the fact that the Hungarian people have a much more sophisticated system for avoiding income-based taxation than for avoiding VAT-based taxation; this is especially true now that through the introduction of online cash registers and an electronic tracking system for road haulage we are managing to drastically reduce the scope for the two main methods of VAT evasion. In the case of online cash registers, what I am talking about has already taken place. As regards road haulage, I believe that we shall succeed in radically reducing tax evasion in the future. This will therefore give us the scope, as the Honourable President said, for not introducing further taxes or increasing existing taxes; we must instead collect the taxes which are already in place. If we therefore succeed in strengthening the system – and there is a good chance that we shall – we can expect continuous tax reduction over the next few years. In 2016 there will be a tax reduction with major budgetary implications, as over the course of three or four years we shall effectively double the family tax allowance for families with two children; Mihály (Varga) knows the precise details. And also in general, if circumstances permit, we would like to seek your support in the reduction of income tax. I am convinced that a good income tax is one that is zero per cent. We must urge and encourage people to work more, rather than deter them with taxes.

Ladies and Gentlemen,

An important measure, left in force as part of tax reductions for 2015, is that those who were unable to deduct the tax allowance for raising children from their taxes because their incomes were too low were allowed to deduct it from their contributions. As a result, 280,000 families were able to benefit from the tax allowance for raising children, and the increased available tax allowance resulted in a tax reduction of some HUF 53 billion. In other words, last year we left HUF 53 billion with families with children, in addition to the amounts they were able to save in previous years.

Tax procedures. I believe that when the Chamber voices its dissatisfaction, it is justified. I, too, take the view that the biggest task we have in reform of the state is the transformation of the taxation system. And here there is also the issue of mentality that the Honourable President mentioned. I still hear critical voices saying that entrepreneurs feel as if they are seen as potential criminals, rather than as cooperating partners. We must change state administration’s attitude in this regard. This will not be enough on its own, however. It is not enough to adopt a soft approach; we must produce results, and I expect the Finance Minister to relax taxation procedures significantly. I would like to inform you, and the Honourable President himself will obviously also inform you, that the State Reform Commission will shortly discuss a proposal for simplification of taxation and introduction of less demanding procedures. There will be a wider debate and consultation on this issue. I would very much like to see a drastic increase in the number of people who are not required to prepare tax returns at all. We do not just need simplification, but a great many people should quite simply be removed from the circle of those who are required to submit tax returns. We are making good progress in this department. If the Honourable President’s proposal is still valid, the details could also be discussed in a joint committee formed by the Government and the Chamber. As soon as Mr. Varga’s material passes the State Reform Commission, it could be presented to the Chamber and discussed on a bilateral basis.

I would also like to share a thought with you on the issue of the labour force. The Honourable President is right to say that the workforce is not distributed evenly across Hungary. In line with our policy, centres of development are clearly emerging in Hungary; businesses then settle around these large development centres. For instance, in Győr unemployment is around 3%, which means that there is practically no unemployment. We are very close to this in Székesfehérvár. In Szombathely, too, we are very close to this target. Consequently, certain cities have distinguished themselves. The figures are not so good in Miskolc, but Miskolc itself has clearly elevated itself to the status of a major development centre. Nyíregyháza has become a city and development centre of phenomenal growth. There are other towns, however, where we have not yet achieved results. Szolnok may have improved in recent times, but there, too, we still have problems. We have problems in Pécs where we cannot even get the wheels in motion; we have now succeeded in bringing a major US investment there, creating 400 new jobs in the first phase; based on preliminary calculations this number may rise to well over one thousand. Perhaps, Pécs, too, has finally been given a flagship around which it may organise its own development policy. We very much look forward to the launch of the laser centre in Szeged, because there, too – in spite of their superb university and the city’s beauty – there is no flagship, no driving force, large corporation or activity which would be able to raise the region to the level of the city. There we are spending tens of billions of forints on establishing one of the world’s most modern laser research centres and we are trying to generate economic growth on the foundations of that facility. And we have one other problem – a serious problem; this is Békéscsaba and its surroundings, where I am convinced that until we build a road connecting Kecskemét with Békéscsaba we shall not be able to induce a major breakthrough, no matter what patches we may choose to apply to the disintegrating fabric of the region’s economic life. The reason I mention this now is that the European Union will not finance the construction of an express road between Békéscsaba and Kecskemét, and the funds necessary for the project will have to be found in the budget by Minister Varga, from Hungarian taxpayers’ money. If he is unable to do this, we shall not be able to implement the project; we are committed to it, however, and I sincerely hope that just as the funds necessary for this year’s works are allocated in the budget, they will also be available over the next few years. And if we have this in place and can also build dual-carriageways to make Salgótarján and Eger more accessible, we may be able to say that Hungary’s major development hubs are fully accessible, and none of the main development areas have been left unconnected. This will consequently enable us to involve further geographic areas in economic growth, as well as tens and hundreds of thousands of families.

This is our hope – this is my vision for 2015 and the period ahead. In closing, I would like to repeat the thought which I started with. Visions, plans and government programmes are all in vain, they are of no assistance at all if the other two actors are not ready to cooperate. We need good workers, and we also need entrepreneurs who are willing to take risks. If, as in 2014, there are workers, there are entrepreneurs and there is a long-term economic policy concept, in 2015, 2016 and in the years to come Hungary may count on economic growth well above the EU average. This is what I seek your help and cooperation with.

Thank you for your attention.