Prime Minister Viktor Orbán’s preliminary address to Parliament
15 February 2016, Budapest

(You can turn the English subtitle on by clicking on the “captions” icon at the right bottom of the video.)

Mr. Speaker, Fellow Members,

I have asked to make a preliminary address today because the National Assembly was last in session on the week beginning 15 December, which was around two months ago. It is only right that on behalf of the Government I should report to my fellow Members of Parliament on some of the most important issues: primarily those which required decisions during the parliamentary recess. And so now I will briefly report to you on the final figures for the last financial year, the start of the 2016 budgetary year, a few important decisions which were made since the last session of Parliament, and on the most recent developments regarding modern-day mass migration – including its international context, and especially Hungary’s defence tasks.

Mr. Speaker, Fellow Members,

The budget for 2015 came to a close at the end of the year. The budget deficit was 2%: minus two per cent. This is an excellent result and I congratulate the Minister of Finance, especially in view of the fact that in 2009 the Hungarian budget deficit was twice that. It was more than twice that in fact: 4.6% – minus four point six per cent. Any country in Europe would be happy with such an improvement. I suggest that we Hungarians should not be satisfied with it, however, because although the deficit may have fallen as a ratio of economic performance – as a proportion of GDP – it is still growing in nominal terms. Halting nominal deficit growth will eventually require a “zero-based” budget, meaning a budget in which we do not spend more that we generate, or in which we generate at least as much as we spend. If the goal is the reduction of debt, meaning government debt, then the annual budget cannot result in a negative balance.

Ladies and Gentlemen,

With regard to government debt, by the end of 2015 we succeeded in reducing it to 76% of GDP, compared to 84% in mid-2010. Such a reduction in government debt is an excellent performance within the European Union, bearing in mind the fact that in most countries it generally increases. The decrease in government debt deserves recognition and we must maintain it. In addition, this is also a question of honour, because, after all, government debt relates to how much debt we leave to future generations: in other words the debt burden pressing down on the shoulders of our children and grandchildren, when we are no longer here. So this is a political issue, but also a question of honour.

As for unemployment, the rate in Hungary was 11.5% in the spring of 2010, and it is no wonder that the situation was so desperate. At the close of the 2015 financial year this figure stood at 6.2%. This result is also significant, since the reality behind this figure is that last year the number of people working in Hungary was the highest it had been for 25 years: 4.2 million people. This is the key issue in economic policy, and the basis for everything: if there is work, there is everything; if there is no work, there is nothing. In recent years the Government has set in motion every instrument of job creation without exception, such as reducing taxes, reducing bureaucracy and creating special forms of employment – in particular work within the Start Programme.

Another important figure relating to the end of the 2015 financial year is the economic growth figure for the whole of 2015, which was 2.9%; the final quarter saw growth of 3.2%. This result puts us among the frontrunners in the European Union. Hungary performed well above the European Union average level of economic growth.

So in summary, I can tell you that in 2010 the Government set about leading Hungary out of financial bankruptcy and debt slavery. The data shows that its efforts have been successful and the instruments chosen have been the correct ones; we have successfully renewed Hungary, Hungarian reforms are working and we can now set a new goal for 2016, which is the development of middle-class standards of living. If we add to all this, Ladies and Gentlemen, the fact that the foreign trade balance posted a surplus of EUR 8.1 billion, which if I am reading the figures correctly is a new record in the history of the Hungarian economy, then we can say that the development of middle-class standards of living already has solid financial foundations. If I add to this the fact that in 2015 the level of foreign investment in Hungary was somewhere between five and six billion euros – and I believe it was closer to six billion – then we again have every reason to be confident. If I recall correctly, since 1990 a total of some eighty billion euros in foreign investment has arrived in Hungary, of which five to six billion was invested last year alone.

As for the launch of the 2016 budget, perhaps you remember that in the budget debate we said that the budget’s goal is to enable everyone to take a step forward. Perhaps my fellow Members of Parliament remember that there was heated discussion on whether it is a good idea to adopt the budget for next year on 1 July and whether it is possible to plan six months in advance with sufficient clarity. For the moment – and based on the figures for the first six months of this year – it would seem that this is a planning method which we can continue to apply. And so the goal of the 2016 budget continues to be to allow everyone to take a step forward; to this end we are applying three strategies: tax reduction, home creation and the strengthening of families. As far as reducing tax is concerned, we have cut the level of personal income tax by one percentage point from 1 January 2016. This means more money – an average of some thirty thousand forints per person per year – left in the pockets of 4.2–4.3 million people.

We have also introduced a reduction in VAT, although admittedly an experimental one. There is always great debate on whether VAT reductions would leave a hole in the budget, and if so, how large I would be. We have decided to cut VAT on pork from 27% to 5% as of 1 January, and at the end of the first quarter – or perhaps after the second quarter – we will see what effect it has had on the budget.

We have also reduced VAT on new homes from 27% to 5%. According to our calculations, the 2016 budget will be able to support this.

As for reinforcing families, from 1 January 2016 we have increased the family tax allowance for families with two children, which between 2016 and 2019 will double, beginning with an increase to 12,500 forints per child in 2016, compared to 10,000 forints in 2015.

I hereby inform the House that negotiations on the minimum wage have come to a successful conclusion; employers and employees have come to an agreement. They have set the minimum wage at 111,000 forints and the skilled minimum wage at 129,000. Given that the minimum wage has increased and there is no inflation, and adding in the effects of the reduction in personal income tax, this results in a 5% wage increase in real terms; in Hungary there has not been a 5% real increase in the minimum wage since 2002. And so I would like to congratulate employers and unions for coming to this agreement.

I would also like to inform the House that there have also been pay rises in relation to jobs within the Government’s sphere of responsibility. Pay is an area which we can never be fully satisfied with, and nobody – whether giving or receiving pay rises – will ever be fully satisfied. This is rooted in mathematics, as no matter what the number, there is always someone who can name a higher one, meaning there will always be cause for dissatisfaction. Regarding the level of pay rises, however, I can tell you that we have reached the limits of the Hungarian economy’s loadbearing capacity. This means that following an increase of 30% last year, the armed and police forces are each due to receive further increases of 5% in each of the next two years, there is a 15% pay rise for higher education professionals, and the Government has given teachers a pay rise every year since 2013. Teachers were the first to receive an increase in salary, and this was not only for economic reasons, but also for moral and trust-related reasons, because all of us – and Hungarian people in general – trust teachers, and this is one of the reasons we are prepared to entrust them with what is most important to us in life, namely our children. We support the current negotiations and we will strive to come to an agreement with the teachers. In January 2016 12.8 billion forints was spent on the variable salaries of healthcare workers, which will be distributed among doctors and nurses. Junior doctors will receive an extra 151,000 forints, while this year general practitioners will receive the same pay rise as they received last year. And if we are able to move forward according to plan, then from 1 July 2016 we will also set the public servants in motion and implement an annual increase of 30% for local government office employees, with a further 5% in each of the next two years. These all appear to be pay rises, but I would like to tell you that in the Government’s view they in fact represent the reinforcement of families. And I would like to make it clear that in line with the performance of the Hungarian economy today, this is the level of pay increase which we can responsibly undertake to provide.

The home creation scheme is a measure which both supports families and promotes economic growth. In recent weeks the Government has determined four elements on which we have made several decisions. In the interests of promoting home creation we have reduced the level of VAT on property to 5%. The family home creation allowance – otherwise known as CSOK – has been specifically detailed and increased with two new decrees. We would like to establish a national home creation partnership to complement building societies, though specialist consultation is still needed on this; in addition to this, we have begun the simplification of construction procedures, and we hope that the effects of this will soon be felt. The Hungarian government’s standpoint on home creation is that what must be supported and what needs to be supported is enabling Hungarian families to buy their own homes. I would like the issue of home creation to also become a national issue here in Parliament, because although there have been disputes both here in Parliament and in public life in general, over the last five years we have nevertheless managed to turn quite a few issues into national issues – such as supporting families with children, job creation or the reduction of household utility charges. I would be glad if supporting the home creation system was added to this list. Just so we know how far behind we are, there are currently four times as many new homes being built in Poland per ten thousand population than here in Hungary, while in the Czech Republic the figure is three times as high.

In summary, Ladies and Gentlemen, I can tell you that 2015 was a successful year, and we have laid the foundations for further economic success in 2016. The greatest challenge in 2016 will not be of an economic nature, but of a security nature. And we have duly arrived at the issue of migration.

Ladies and Gentlemen, Mr. Speaker,

Let us remember that in 2015 Hungary was under siege from migrants. Every day thousands of people crossed the border illegally. Chaos, upheaval, crime, acts of terrorism and fear: this is what modern-day mass migration had brought to Europe; this is what the migrants have brought to Europe. I can report to the House that Hungary managed to close ranks in time and succeeded in protecting the country. The Government acted and Parliament adopted the necessary legislation. I respectfully thank every single Member of Parliament for regularly voting to adopt the laws which were required to protect the country over the past year, and I ask that my fellow Members of Parliament consider –with due diligence and regardless of party affiliation – the further legislative changes which are required to protect Hungary and prevent acts of terrorism, and I ask that you support them. Here we must stop to thank the police, the armed forces, the Counter-terrorism Centre and its personnel. We must also express our gratitude to our partners in the Visegrád Four, because Slovakia, the Czech Republic and Poland stood by Hungary while all of Europe was criticising us. They made it clear that protecting Hungary’s southern border is not an issue of Hungarian domestic politics, but is in the interests of all Central Europe – and in fact the whole of Europe. Thank you to our regional allies and friends for their support.

Ladies and Gentlemen,

As a result of the above, I can tell you that Hungary is now one of Europe’s most stable countries. Perhaps we should also stop to say a few words about European public opinion. To me it seems that, first of all, European public opinion has succeeded in shrugging off censorship. Well done, congratulations! It has emerged that on the subject of Hungarian border protection policy many more people on the continent agree with Hungary than disagree with it. Today Hungary’s standpoint is the standpoint of the majority of people in Europe, and Europeans cannot understand why their governments are not doing the same as Hungary’s government is doing.

Mr. Speaker, Respected House,

What can we expect in future? In this regard, what I can tell you is that the European Commission’s Humanitarian Aid and Civil Protection department and the United Nations both issue regular reports from which we can forecast the amount of migration pressure we will be under in the coming year. From this we can see that there are currently 19.5 million refugees in 33 countries, in addition to which there are some 38.2 million internally displaced persons – making a total of some 60 million people. With regard to internally displaced persons, the number in Iraq – people who could set off for Europe at any moment because they are already in a state of displacement – is some 3.2 million. The number of such people in Syria is 6.5 million. There are 435,000 in Libya, 2.5 million in the Sahel region, 2.1 million in Nigeria, 2.55 million in Sudan, 1.7 million in South Sudan, 3 million in the Democratic Republic of Congo, 1.61 million in Pakistan and 1 million in Afghanistan. These are the countries in which tens of millions of people are already in a so-called state of internal displacement. At any moment – if faced by offers from people smugglers – they could come to the conclusion that, instead of fleeing internally, they should instead try to emigrate, and set out for Europe. It is therefore clear from the global situation that migration pressure on Hungary will increase in 2016. Meanwhile Europe is defenceless and weak. Brussels’ policy for handling the migration crisis has clearly failed – and not just in the eyes of Hungarian citizens, but now also in the eyes of European public opinion. And the even worse news is that Brussels and the European Union not only lacks the capability to protect itself, but also the will to do so. This is the situation as it currently stands is that there will be a European Union summit in Brussels over the weekend, and I can tell you in advance that Brussels still wants to allow illegal migrants into the territory of the European Union, and is in fact planning to actively transport them here: to allow them in, to transport them here, and then to distribute them by force. This is Brussels’ crisis management plan. This is a plan which the Hungarian government does not accept; the Hungarian government opposes this plan and will oppose its implementation. The Hungarian government’s position is very simple: for us, the most important thing is that we are able to protect the security of the Hungarian people, and we are convinced that it is our duty to prevent ourselves from being forced into accepting people whom we Hungarians do not want to live alongside. To this end we have mobilised Hungarian society; this is because the Government’s determination is important, and perhaps even worthy of recognition, but in itself it will not be enough to counter the adoption of the compulsory resettlement quota, such is the pressure which Hungary has been subjected to in recent years and which it will continue to be subjected to in future. And so we must mobilise Hungarian society, and we have collected signatures: the signatures of 1.8 million people, who have called on the Government to continue its policy of opposing the compulsory resettlement quota.

Ladies and Gentlemen,

I would like this issue to join the above mentioned list of national causes. I therefore ask the House not to view this issue from a party-political angle, but to try to develop a national standpoint; let protecting Hungary against the compulsory resettlement quota be a national issue. The summary of this short description of the current state of affairs, my Fellow Members, is that this year in Brussels we will need diplomatic, legal and political defence, while on our southern borders we will need military and police defence. This is one of the reasons I have ordered the reinforcement of the existing border security fence and the provision of the capacities required for the construction of new sections of fence if required.

Ladies and Gentlemen,

The most important task for 2016 is to preserve the security of the Hungarian people, Hungarian families and Hungarian settlements. Brussels must comply with international law and respect the will of individual nations. If we succeed in achieving this in 2016, then we will be able to state that 2016 was also a successful year.

Thank you for your attention.