Commission Report 2002 (Hungary)

The executive

Implementation of public administration reform has continued according to schedule; the re-structuring of central public administration was already largely completed in 2000. The main focus of the reform process was deconcentration (devolving official powers to lower-level organs of state administration), decentralisation (devolving official powers to organs outside the system of public administration) and deregulation (reviewing existing and planned legislative acts to simplify the legal system). Following the Parliamentary elections of April 2002, the portfolio of certain ministries was restructured and two new ministries were created (Ministry for Labour and Employment, the Ministry for Information Technology and Telecommunications), whereas two others were abolished (Ministry for Transport, Telecommunications and Water Management, Ministry for Social and Family Affairs).

Within the Hungarian public administration, the legality of administrative decisions and actions is ensured through judicial review (although there are no courts specialised in administrative law). Liability is institutional, not personal to the individual official. Appeals are brought against the administrative authority, not against the civil servant responsible for a decision, action or fault.

At the level of counties (of which there are 19, with Budapest also having county status), towns and villages, certain administrative tasks are assumed by the self-governments, which are elected every four years. The 3 158 local self-governments have, in particular, powers and rights in the areas of basic welfare services, such as social and health care, and education. Most of their revenues come from the central government budget, with predetermined distribution keys. The proportion of revenues at the free disposal of self-governments has fallen steadily since 1990 and currently represents only 5% of locally collected personal income taxes. As mentioned in previous Regular Reports, this situation has led over the years to a deterioration of the financial situation of self-governments. According to a 2001 report by the State Audit Office, one third of the self-governments need additional financial resources to carry out their increasingly wide range of tasks resulting from decentralisation. This problem has not been addressed over the last year. Concerning the overall administration, the following new measures have been taken during the reference period:

For the first time, by end-October 2001, senior civil servants had to declare their own assets and those of their relatives living in the same household. The declarations cover real estate property, savings, securities and company interests. Members of the Government, state secretaries and deputy state secretaries are obliged to make such declarations annually. The heads of ministerial divisions and departments, public notaries, officials with decision-making rights in public procurement cases and civil servants subject to national security checks have to present such documents once in every two years. The Government Control Office is responsible for monitoring the declarations and investigating questionable variations.

A system of performance appraisal of civil servants was introduced in January 2002 and the first staff reports are to be produced by the end of 2002. These will be used in setting the remuneration for the following year, which might be up to 20% higher or lower as a result.

To complete the reform, an Inter-Ministerial Committee on Public Administration was set up in February 2002 to produce an action plan based on the conclusions of the 2001 Regular Report and on the recommendations of the OECD report on the regulatory regime. The Hungarian Institute for Public Administration is in charge of implementing this action plan.

In spring 2002, 450 civil servants were appointed as senior civil service staff (300) and to law enforcement agencies (150). The appointments are part of a new scheme for civil servants - introduced by the Law on Civil Servants of June 2001 - aimed at making government more efficient, strengthening strategic planning skills and helping to prepare more efficiently for EU membership. Participants in the scheme were selected on the basis of a simple application. Minimum requirements were a university degree, civil servant status and a declaration of personal assets, but no professional track record was required. A committee of three experts did the pre-selection, and the Prime Minister took the final decision. Once appointed, the civil servants in question can be dismissed only in exceptional circumstances, and receive a particularly high salary. Their status is totally incompatible with any other remunerated activity or involvement in political matters. In July 2002, the selection criteria for the appointment of this special staff were made more transparent through an amendment to the law on civil servants.

Progress was made in preparing for e-government with the opening of an Internet portal. The portal aims at promoting a more effective use of data related to public administration, accessible to the public and enabling citizens to conduct their official affairs more quickly and more flexibly.

Following a complex review of the salary structure for the public service, the gap between earnings in the public and private sectors was further reduced: in January 2002 law enforcement officers received an increase of around 70%, while other civil servants received a further salary increase of 30% (which resulted for the latter in an overall increase of 70% from 2001 to 2003).

As part of the reform, training has continued to be a priority. The 2001 Law on Civil Servants introduced a compulsory specialist examination for promotion to management positions. So far, more than 16 000 civil servants have taken this examination under the supervision of the Institute of Public Administration.

The reform of the public administration at central level has nearly been completed. The 2001 Law on Civil Servants, of which parts entered into force in 2002, was an important step forward in the consolidation of the legal framework for civil servants. However, the introduction of the senior civil service scheme without fully transparent selection and appointment criteria has increased the scope for politicisation of the administration.

At the local level, the lack of sufficient financial resources puts the autonomy of the local administration at risk. The financial reform of local administration should be speeded up to allow the authorities to carry out their new additional tasks in the context of decentralisation and with a view to EU accession.

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