According to the statement of Parliamentary Minority member, Mikheil Machavariani, one of the reasons why the United National Movement is not going to support the draft budget of 2016 is that against the background of giving promises of a “belt tightening” policy, the Government of Georgia is increasing expenses for salaries. Mr Machavariani stated: “In the 2016 budget, expenses for salaries are increased by GEL 56 million.”
The Minister of Finance of Georgia, Nodar Khaduri, rejected the information circulated by the United National Movement. Mr Khaduri stated: “Lately, there has been a lot of talk that the expenses for bureaucracy will increase by GEL 64 million. This is a wrong interpretation. The Ministry of Internal Affairs is going to have GEL 64 million more, in fact. However, these are funds for the Fire Rescue Service. Before, that funding was allocated at the level of local municipalities. Therefore, there are no changes in the consolidated budget. The Fire Rescue Service is under the Ministry of Internal Affairs and will be funded from the state budget.”
FactCheck verified the accuracy of the statements.
Administrative expenses of the state budget are usually given in the labour remuneration and goods and services budget lines. Apart from the purely bureaucratic expenses (such as funding the executive and representative organs), these lines cover the salaries of policemen, the army, judges and the purchase of respective goods and services which are necessary for them to carry out their duties.
In the 2016 state budget, the labour remuneration budget line will be increased by approximately GEL 57.2 million whilst the goods and services budget line will be increased by approximately GEL 68.3 million. Of note is that the number of employees in state funded services will be decreased by 610 next year. In 2016 (the draft budget), labour remuneration will be increased by GEL 389 million as compared to the 2012 budget fulfilment report whilst the expenses envisaged for goods and services will be decreased by GEL 52 million. Therefore, government expenditures will be increased by GEL 337 million in the draft budget for 2016 as compared to 2012.
In 2015, the Fire Rescue Service was transferred to the Ministry of Internal Affairs. The Ministry was given GEL 20 million (labour remuneration not included) to fund the Fire Rescue Service. In 2016, there is a plan to allocate an additional GEL 44 million from the central budget to fund the Fire Rescue Service of the Ministry of Internal Affairs. The money will be spent for the wages of the Service’s employees. Previously, this money was spent by the local municipalities and, therefore, not reflected in the state budget. Expenses to fund the Fire Rescue Service do not increase with the sole change comprising an alteration of the funding source.
FactCheck obtained information about those organs whose labour remunerations will increase in 2016. The funding of the salaries for the personnel of the Central Election Commission of Georgia will be increased by GEL 19.3 million as a result of the 2016 Parliamentary elections. In 2016, labour remuneration will be increased by GEL 1.2 million for the Ministry of Education and Science and by GEL 0.5 million for the Ministry of Environmental Protection and Natural Resources. Additionally, the salaries for the staff of Georgia’s Public Defender will be increased by GEL 320,000.
In regard to the consolidated budget, this is a budget which encompasses the budgets of the state as well as autonomous and local entities. Taking the Fire Rescue Service out of the budgets of the municipalities and transferring it to the state budget makes for no changes in the consolidated budget. However, in the 2016 consolidated budget, the expenses for labour remuneration will be increased by GEL 88.7 million. Therefore, it is false to argue that nothing changes in the consolidated budget.
As we have mentioned above, purely bureaucratic expenses include the funding of the executive and representative organs, financial and fiscal activities and international relations (Chapter III, 7.1.1). This particular budget line in the draft budget of 2016 is decreased by GEL 304,000. In spite of bureaucratic expenses being cut, this does not necessarily imply a cut in labour remuneration (wages, premiums, bonuses) and it is possible that other types of expenses are being cut instead.
FactCheck also verified the part of the total expenditures of the state budget which is spent for administrative expenses. In 2014-2016, government expenditure constituted 29% of the total expenses. This number was higher in previous years (see Graph 1).
Graph 1: Ratio of Administrative Expenses to Total Expenses in 2011-2016
In the 2016 draft state budget, government expenses will be increased by GEL 125.5 million as compared to the previous year. Of this, labour remuneration will increase by GEL 57.2 million. We also clarify that the number of civil servants will be cut by 610 next year. In the 2016 draft state budget, the labour remuneration budget line will increase by GEL 389 million as compared to 2012 and total government expenses will increase by GEL 337 million.
In 2016, the increase ofthe total amount of labour remuneration was largely caused by transferring the Fire Rescue Service to the Ministry of Internal Affairs. In 2016, employees of the Fire Rescue Service will get their salaries fully from the central budget for which GEL 44 million will be allocated. However, this does not mean that the consolidated budget remains unaltered. In the 2016 consolidated budget, the labour remuneration budget line will increase by GEL 88.7 million.
Of note is that the ratio of administrative expenditures to total expenses will be decreased. In 2012, administrative funding would take 32% of the total expenses whilst in 2009-2012 that number was 29%.
Even though Mikheil Machavariani gave a correct number, he did not clarify the reason behind the increase in the labour remuneration budget line. Additionally, we have to take into account that the ratio of administrative expenditures to total expenses does not increase. Therefore, Mikheil Machavariani’s statement is MOSTLY FALSE.
In spite of the Minister of Finance correctly underlining the changes of funding for the Fire Rescue Service, the increase in the labour remuneration budget line is not a result of the transfer of the Fire Rescue Service to the Ministry of Internal Affairs. In total, the labour remuneration budget line will increase by GEL 88.7 million in the 2016 consolidated budget. Of further note is that the ratio of administrative expenditures to total expenses in previous years was decreased by 3%. Therefore, FactCheck concludes that Nodar Khaduri’s statement is HALF TRUE.