Katalin Nagy: Today is 1 October, the International Day of Older Persons – when greater attention is paid to senior citizens, who today make up a significant section of our society. I welcome Prime Minister Viktor Orbán to the studio. Part of social provision is that if the economy performs well enough, pensioners may even be paid pension bonuses. And how much will that be? Good morning.
Good morning. Fortunately, as you’ve said, there are indeed many pensioners in Hungary. This means that our parents – and perhaps even our grandparents – are still alive; that’s good. The more people there are in our family, the greater the joy. And of course there’s a financial side to all this. We often talk about the need to pay pensions as a matter of conscience. In Hungary we have a pension system that pays pensions from taxes collected. This isn’t the case in every country. Those countries which have never experienced communism have accumulated capital throughout long periods of stability, and the returns on that capital are distributed to pensioners. Hungary is not one of those fortunate countries. Our country has been subjected to plunder on a regular basis: we were invaded by the Germans, who plundered us; and then by the Soviets, who plundered us; then came the communists, who even stole what we had stored in our lofts. So here it was never possible to accumulate any kind of collective capital, the proceeds from which could be used to pay pensions. So we have a pension system in which we pay pensions from the taxes of working people, those wage earners who are alive today. We mustn’t allow this fact to deceive us into believing that it is we who are supporting pensioners. That is a complete misunderstanding; because they are the ones who supported us throughout our education, and by giving us an upbringing throughout our early years until we reached working age. So basically this is recognition for past actions. A pension is retrospective recognition of the work of our parents and grandparents. Today is the International Day of Older Persons, when governments tend to focus a lot of their attention on the situation of pensioners. This year we have good news, because the current performance of the economy is satisfying the boldest of dreams. Many people wouldn’t have dared to dream that it was possible to achieve what the Government committed itself to: pushing, raising annual economic growth above 5.5 per cent. This is what has happened. In Hungary the law states that if economic growth exceeds a certain level, and this year it has, then pensioners must also benefit from this economic outcome. We call this the pension premium. The Government has also dealt with this question, and we’ll pay a pension premium in November. The amount of this pension premium will be 80,000 forints. Under the Pensions Act a smaller sum would have been received by 435,000 people: people living with disabilities, and former members of agricultural cooperatives who retired a long time ago. So there is such a group, which numbers 435,000. But we’ve looked at – I’ve looked at – the performance of the economy, and we can pay everyone this 80,000 forints: we’ll be paying it across the board. What’s more, inflation is higher than we could have reasonably expected at the beginning of the year, and so – reasonably and understandably – we’ve only paid out the amount in compensation for inflation until 1 July: half of the annual total. Now we also need to correct for the higher-than-expected inflation in the second half of the year, thereby adjusting pensions for inflation. So there will be a good number of pensioners who will receive a one-off supplement higher than 80,000 forints, who will receive around 100,000 forints – including the correction.
Last week you indicated that you’d fight to ensure that at the beginning of next year pensioners receive not only the second week of the reinstated thirteenth month’s pension, but possibly more. Is there progress on this, or do we have to wait longer?
Well, I’m determined. After eight years in opposition, in 2010 the electorate entrusted me with running the Government, and I made a public commitment, declaring everywhere that we would repair whatever the Gyurcsány-Bajnai government had ruined. One of those great wrongs was high unemployment. We’ve corrected that, because in Hungary today the bigger problem is a shortage of labour. The other wrong was low wages: they had taken away one month’s wages, and the minimum wage was ridiculously low. Now by increasing the minimum wage we can almost double the sum, and from 1 January the minimum wage in Hungary will be higher than the average wage under the Gyurcsány-Bajnai government. So we can consider this as having been achieved – even though it’s never enough, and it’s always good to raise wages further. And the third issue was the thirteenth month’s pension, which had been taken away from pensioners. That has been the most difficult thing for me and for us to wrestle with. But the Hungarian economy has got to a point at which we’ve managed to pump so much energy into it and reorganise it to enable us to definitely give back two weeks’ of that month’s pension – that additional pension – at the beginning of next year. But if we don’t make a mistake, and if the Government’s policy of stimulating, lifting and pulling up the economy is as successful in the next three months as it’s been so far, I see a chance of us being able to give back not just two weeks’ pension but a whole month’s pension at the beginning of next year – some time in early February. This is by no means certain, and I ask your listeners not to take this to the bank just yet, but I see a chance of it happening. We’ll have to work for it, we’ll have to fight for it. It’s not impossible.
When they upgraded Hungary, Moody’s were also evaluating the state of the economy and the momentum of its recovery. This surprised some analysts, because there’s a great reluctance to upgrading countries. This will allow the economy’s performance to finance the tax refunds that you’ve spoken about and that we’ve heard details of. These represent something that’s never been done in Hungary before, with those raising children being able to get this money back. When is this expected to happen?
Indeed, the Government made a decision this week. Listening to our economists, we’ve come to the conclusion that the condition we set for the tax rebate – an economic growth rate of 5.5 per cent – will definitely be fulfilled. Touch wood that we’re not speaking to soon, but there would need to be some kind of bedlam during the remaining part of this year for us not to reach 5.5 per cent. We’re counting on a pension premium figure of 7.5 per cent. There’s been a big debate about what should be done with the extra revenue generated if in fact we succeed in the economic strategy described by György Matolcsy, Governor of the Central Bank, as “overtaking on the bend”. When it comes to money, everyone in Hungary has a thousand and one ideas about how it should be spent fairly and well. What we’ve seen is that, in addition to older people, the pandemic – this coronavirus pandemic – has hit families with children the hardest. Perhaps your listeners won’t disagree with this statement. This is why we’ve decided that if economic performance generates this kind of increase in public finances, and we believe that it will, then we’ll return it to those who have paid taxes while raising children, because during the pandemic they’re the ones who have borne the greatest burdens. This decision has been made, and this is what will happen. Complicated calculations needed to be made, and there’s an upper limit on how much we can pay out and for how long. Without getting bogged down in all the data, in summary I can say that a total of 1.9 million people with children will be refunded the tax that they’ve paid. So everyone will only get back the tax that they’ve paid – but they will get it back.
This should happen by mid-February. People don’t need to concern themselves with the intricacies of public administration, but there’s a huge amount of work involved in the tax office determining how much tax each individual has paid while raising children. They’ve been working on this for weeks, and I think that it’s possible for the development of the digitalisation and the extra work to be successfully completed in order to make payments by 15 February at the latest. In any case, I’ve respectfully submitted this request to the tax office.
The everyday lives of individuals and families are strongly influenced by the amounts they have to pay each month in utility charges. Has this long-term gas supply agreement between Hungary and Russia been made to ensure that utility prices don’t skyrocket? Of course this is relevant, because we see that they’re not only already higher in the West, but now they’re also being increased.
Well, it’s no joking matter, but given the artistry of the Hungarian language you could also say that “there’s a smell of gas” [there’s a problem]. There’s a smell of gas because there’s no gas. In other words, the gas reservoirs in Western Europe aren’t full. The price of gas is sky high, and this has placed huge financial burdens on family budgets in Western Europe. At such a time it’s good to pause for a moment and think back to a time when we were together with them in that situation. From 2002 to 2010 I continually lambasted the Gyurcsány-Bajnai government for repeatedly raising the price of gas and electricity: more or less doubling the price of electricity and tripling the price of gas. During the 2002 election campaign, when I said that this is what would happen, [Hungarian Socialist Party vice-president] Ildikó Lendvai said in person, “I’ll say this slowly, so that everyone – even Viktor Orbán – understands it: there will be no gas price increases.” And then they tripled the price of gas and doubled the price of electricity. So Hungary has a bad past in that respect. On this issue people have been cheated, with left-wing governments increasing profits for the big multinationals and increasing the burdens on the public. Big multinational firms have done well and families have done badly. And in 2010 that had to be brought to an end. It was a huge battle. I don’t know if your listeners remember it, but we had to fight a battle with the international companies and with Brussels, because we said that we would freeze utility prices, that we would prevent them increasing. So these market movements won’t affect the price of utilities. There’s a price, and everyone can count on that in the long term. This is how we’ve got to the point at which Hungarian households today enjoy the cheapest gas in Europe, and the second cheapest electricity. And this achievement also has to be seen in light of the fact that Hungary doesn’t have its own sources of energy. So it’s easy – although in the West it’s not working too well – to keep prices low if you have gas or oil coming out of the ground in your country, or if you can operate hydroelectric power stations. Hungary doesn’t have the means to do that, so we buy energy, including gas, and then distribute it to people. We have to buy it at the market price, and we have to be able to supply it to the public at a price below the market price; this requires a certain amount of economic knowledge. Hungarian energy experts are among the best in the world – not only in terms of their engineering knowledge, but also in terms of their intelligent approach to the entire gas market. So we couldn’t do this without them, and we can be proud of them. In Hungary we have an energy office, where we have the best experts, who help us to keep our utility prices down. So that’s been the position up until now. The current situation is that there isn’t enough gas in Europe. There are many reasons for this, but either way, one consequence is that families everywhere are seeing their finances squeezed by increased energy prices. We’re seeing price increases in Western Europe that we find hard to fathom; because while here we’ve got out of the habit of Ildikó Lendvai raising gas prices in direct contradiction of her promises, that’s what’s happening now in the West. So let’s be glad that we’ve managed to avoid that. Of course there’s a lot of pressure on us to adapt to ever-changing prices, but we have a good body of experience and practice, and we’ll continue to rely on that. Now of course we need gas. To keep gas prices low we need gas, and Europe mainly gets that gas from the Russians. There are all kinds of political attacks on the Russians now, and criticisms of them. I don’t think that political criticism should be brought into the question of energy supply and energy security. Because, as we’ve heard from [Minister of Foreign Affairs and Trade] Péter Szijjártó, you can’t light your stove and keep your house warm with ideological rhetoric. So we need gas. This is the reality. We have to reach an agreement with the Russians, and we’ve made an agreement for another fifteen years. We’ve agreed a slightly lower price over fifteen years than the one featuring in the previous long-term contract. This is with prices going up all over the world. This is another tour de force. This speaks volumes for the merits of the Foreign Ministry and its negotiating team; and the Russians were also fair-minded, concluding an agreement which is worthy of a reliable partner and which respects bilateral considerations.
Politics isn’t brought into the economic agenda when the gas pipeline in question is called Nord Stream: no one has a problem with that. Now, incomprehensibly, Ukraine has spoken out against the Hungarian-Russian gas contract, saying that it harms its interests. Clearly if the gas doesn’t flow through their pipeline, they’ll lose their transit fee. The question is, do they have the right to complain? They didn’t challenge the Germans when Nord Stream was built, did they?
The Ukrainians think that it’s easy to play the tough guy with the Hungarians, although if I were them I’d reconsider that; but with the Germans it’s harder, so they’d rather not play the tough guy with them. But the point is that unfortunately we aren’t at liberty to take the Ukrainians’ point of view into account. So I respect Ukraine and I wish the Ukrainian people every success, but when it comes to gas it’s not the interests of Ukrainians that we need to take into account, but the interests of Hungarians. And we need these contracts, and we need to ensure that gas is supplied to Hungary. That’s not something that can be guaranteed from the direction of Ukraine, so for the next fifteen years we’ll be importing this gas along the more southerly route. Once again, I understand the Ukrainian point of view; but if in Hungary we weren’t able to pursue this policy on utility charges, then the average Hungarian family would be paying an extra 386,000 forints a year – which is an extra 32,000 forints per month for the average family. So I understand the Ukrainian point of view, but I was elected by the Hungarian voters, and they are the ones I serve.
Interestingly the opposition haven’t given any figures, but the candidates in the opposition primaries always talk about the need to adapt to world market prices. Although if we were to be told the figures, perhaps we consumers wouldn’t demand such an approach.
This is the point. I understand their textbook-style comments calling for us to adjust to world market prices – which, incidentally, reiterate the theories developed by the big international companies; but In Parliament I’m always telling them that this means that they’d reverse the policy of cuts in utility charges. So what the Left is saying would spell the end of cheap utility charges in Hungary and the reversal of the price cuts. We’d go back to where we were before 2010. This is the problem with Hungarian politics in general: we’re not debating about the future, but whether or not to bring back the past; because the well-known figures of the Gyurcsány-Bajnai government are coming back, or they want to return to the front line of Hungarian politics. This is what Hungarian politics is about now, and this is also true for the reductions in utility prices: if they come back to power, high prices will come back with them.
There’s been a military exercise in Hungary, but it’s not usual to hold a government meeting on the site of such a military exercise. Why has this happened now?
The Hungarian army is in a difficult situation. The last twenty or thirty years has somehow seen the rise to ascendancy of a view that our membership of NATO means that we can make economies in our own military capabilities, and that we need a smaller army. This idea has turned out to be a complete fallacy. Our neighbours, by the way, are implementing very substantial developments in their capabilities. And I’m also convinced that if we don’t have a Hungarian army, and we find ourselves in distress, we certainly won’t get help from outside; because who would risk their own nation’s sons, their sons’ lives, for our sake, while we’re not doing everything we can to provide for our own defence? No one would expect that of a foreigner, any more than others would expect it of us. Nor would I be enthusiastic about helping a NATO member in distress that isn’t doing all it can to provide for its own security. This is the normal order of life, and this is why we need an army. Furthermore, we live in dangerous times. We also need an effective, well-functioning army to deal with migration; today we couldn’t maintain our border defences without soldiers. And who knows what the next decade will bring in world politics. We need to be prepared for this, but an army cannot be deployed overnight; it has to be built up over many years. And here I’m not just talking about hardware and equipment, which of course costs a huge amount and cannot be bought all at once, with the army’s technical supplies needing to be built up over a long, ten-year, plan. I’m talking mainly about the personnel, the soldiers – who must be trained, who must have the spirit, comradeship and patriotism to defend their homeland, and who have sworn to do so even at the expense of their lives. This is not empty rhetoric: during their training they have to come to the realisation that this could happen, and that they’re taking a very serious vow. So you have to build up that culture and you have to practise the profession itself, the quality of which we saw in the form of an exercise, and which looked pretty reassuring. True, it was only one battalion, and in the future we’ll need more than one battalion. So at the beginning of the exercise the Government held a meeting to review the building up of the military industry, because we’re building a military industry, to review the technological side of the development of military capacities, and to review progress on recruiting, training and equipping soldiers. And we’ve made decisions on the development steps for the coming year. The Hungarian Defence Forces will remember this as a historically important Cabinet meeting.
Youve mentioned migration, so let me just ask you a brief question on that. [Finance Minister] Mihály Varga has said that recently Hungary has spent 590 billion forints on border defence. How much of this did Brussels provide, how much of it did it pay?
Peanuts. We’ve received very little money: virtually the amount that every country usually receives for border surveillance even in normal times when there’s no migration. With that amount it would be impossible to defend the borders, and even difficult to monitor them. So we can say without hesitation that Brussels has paid no regard to the costs involved in the military and policing measures needed to relieve the enormous pressure on the Hungarian border, and the cost of building the fence. I’ve repeatedly told them that we’re not only defending Hungary, but also defending them. In order that they can sit in comfort and peace in Western Europe, Hungarian patrols, soldiers and police on the Hungarian border need to perform well, and a fence has had to be built. But Brussels hasn’t lifted a finger. Now to me it seems that other countries have been promised money, but if someone else gets…
Lithuania for example…
If someone else gets it, then fair play demands that we get what we’re entitled to in relation to the burdens of border defence. I repeat: the precondition for a comfortable, peaceful, prosperous life in Western Europe is that Hungarian soldiers and police officers perform well in their defence of the border. For Hungarians this isn’t an unfamiliar calling or mission. It was the same in the Middle Ages: they used Hungary as a buffer zone, when we fought the Mongols and the Turks, and when we held back their advances so that Western European citizens could live their lives in comfort and peace. So this isn’t an unfamiliar situation, but that era is no more: now we have the European Union, and now we should recognise the costs borne by Hungary on others’ behalf.
We can’t end this discussion without talking about the fact that there were 630 new infections in a single day, and 87 of the 500 or so people in hospital are on ventilators. So we see those numbers rising and the number of first vaccinations increasing very, very slowly in small increments; but the number of people coming in for their third vaccination is growing at a fair rate. There’s a dichotomy here.
Yes. Those who have been vaccinated have felt how good it is to be protected. And a huge number of people – more than 600,000 – see that a third dose will further strengthen and prolong their immunity. The Government also says that it’s better to receive the third dose than not to receive it, so we’ve made that possible. All summer we’ve been preparing for a fourth wave: we’ve reached out to the elderly; we’ve organised and implemented a campaign to vaccinate young people, schoolchildren; and we’ve stockpiled enough vaccine – a total of about 17 million doses by the end of the year – to vaccinate the entire country twice, or maybe three times. So we’re prepared, our hospitals are prepared, our specialists are prepared and our stocks are prepared. Even at the risk of my words beginning to sound like background noise, I cannot repeat often enough that this is a virus that will not go away. So those who haven’t been vaccinated mustn’t bank on the virus going away simply because large numbers of other people have been vaccinated. Previously there was this assumption labelled “herd immunity” – which is a rather silly phrase, as we’re not sheep, but we haven’t found a better term in Hungarian, so let’s stick with it. So there was the idea that if the vaccination rate was high enough, then there would be herd immunity, and the members of the “herd” who still hadn’t been vaccinated would be protected from infection. But it’s turned out that this isn’t true: for this virus this isn’t true. There is no herd immunity, this virus isn’t going to go away, and it’s going to find everyone who hasn’t been vaccinated. So all I can say is that the vaccine works. Restrictive measures don’t work, but the vaccine does work. Those who receive the vaccine are spared an unpleasant, serious – and sometimes fatal – disease. It’s not worth the risk. The risk isn’t in receiving the vaccine; the risk is in refusing the vaccine. The vaccine works, and so I urge everyone to receive it.
Thank you. You’ve been listening to Prime Minister Viktor Orbán.