This post is an excerpt from Erik SAELENS' column in newspaper Business AM Find the full Dutch version here.
For the full picture you had to tune into the Flemish government last week. The way in which the September Declaration came about - including sulking ministers and a party chairman who took more spectacular turns than Max Verstappen - was again such that the gap between the citizen and the governing class, which is excellently analyzed in the just published book Despair in de Wetstraat of Ivan De Vadder, will be further widened.
This circus overshadowed what really mattered: the budget measures that the government took to fight the crisis. They disappeared on the fringes of the newspapers and the news sites. However, the Flemish government has taken a considerable package of measures, good for no less than EUR 4 billion of our tax money: from an increase in child benefit to an extension of job bonuses to a support package for companies that have difficulties paying their energy bills.
Is this money going where it should go?
“We have turned over every euro to ensure that the additional cents we allocate will be put to good use,” Prime Minister Jan Jambon said in the September statement. “It should end up with the citizens and companies where the real needs are. Because it would be nonsensical and unjust to distribute money to people who do not need it in this economic crisis.”
But is that really so? Is this money going where it should go? Let's take a look at the new, extended job bonus, a so-called 'trophy' of Open Vld (that terminology is problematic, we are in an economic and soon social war, you can't win it by claiming the victory in a loose fight, but through a comprehensive strategy).
Inefficient
Experts such as Ive Marx (University of Antwerp) and André Decoster (University of Leuven) call this measure inefficient, because they dispute that it has an activating effect. It is actually a simple and very limited purchasing power measure, which will cost taxpayers EUR 100 million, and moreover, according to expert social policy Wim Van Lancker (University of Antwerp) will not reach the right people. According to Van Lancker, the bonus will not reach the people with the lowest standard of living.
A confetti cannon
Distributing subsidies and premiums transparently and efficiently is a shortcoming that our governments have been dealing with for some time. The way it is happening now looks more like a confetti cannon: a wild shot in the dark with unfounded hopes that the confetti money ends up with the vulnerable citizens and companies. In response to the El Kaouakibi fraud case, Flemish Finance Minister Matthias Diependaele admitted that the Flemish subsidy system has two structural problems: vulnerability to fraud and a lack of efficiency. He announced more checks on whether subsidies are achieving their purpose and whether they are not being misused. “If we grant a subsidy now, we will check after two to three or a maximum of five years whether it achieves the social goal that we want to achieve,” said the Minister.
Why wait?
But why wait two to five years? The technology already exists to monitor the spending of public money both in advance and in real time. This technology uses closed loop systems, in which, after the necessary pre-audits, no cash is paid out, but the subsidies are converted via blockchain technology into virtual Ucoins in a closed system. This way, everyone involved can follow every step of the spending with full transparency. Only once they have been spent on the authorized product or service, the Ucoins are converted into euros.
Pre-audits prevent that taxpayer money goes to people or companies that are not the target audience of the measures, including the EUR 1 billion in loans that companies will receive from the Flemish government, which hopefully will turn out to be real loans and not subsidies. This technology ensures that the money reaches the people who really need it. This is called good housekeeping. It is therefore a mystery why, in times when every euro counts, our governments do not embrace this technology, but continue to believe in an outdated system of shooting a mosquito with a bazooka.
Gap with the citizen deepens
I already referred to the deepening gap between citizen and politician. This is not only emphasized by the political circus, but also by the inefficient use of government resources. Sending the message to the population suffering from high inflation and declining purchasing power that the correct and efficient use of millions of taxpayers' money may be controlled within five years' time only further undermines confidence in a redistributive government’s ability to do its job. What is more: it undermines support for that redistribution. Recent polls and elections abroad show what this can lead to: traditional policy parties evaporate, and extremes win.
I am already seeing signs that the lower middle class is delaying doctor visits because they cannot afford it right now. Are we still going to shoot the bazooka? Use a precision weapon. The technology is there.