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Prime Minister Viktor Orbán’s speech at the Regional Digital Conference

Good morning, Ladies and Gentlemen, Commissioner, Deputy Prime Minister, Dear Guests,

I wish to extend a particularly warm welcome to the representatives of the states of the Visegrád 4. For us, this is a highly important framework for cooperation – not only because we seek to combine our individual strengths, but also because we learn a great deal from each other. I am convinced that the primary reason for this region’s success is that the leaders and businesspeople of these four countries are happy to learn from each other. For instance, we Hungarians are happy to learn from the Poles in relation to the family policy which they have very courageously introduced recently. We admire and respect the Czechs – and try to follow their example – for keeping the tax wedge as low as it is. And we also receive a great deal of inspiration from our Slovak friends, as they were the first in the region to seek to enforce a flat, pro rata policy on taxation.

Ladies and Gentlemen,

Here we are considering digitalisation – yet another topic on which we have much to learn from each other. Digitalisation is both an enormous opportunity and a major source of threat. Therefore, as a political leader, I say that we must use it well. We have come here today to survey the opportunities and the risks. The key word today in Europe is competitiveness. Europe’s competitiveness is diminishing, while consequently that of others is increasing; this trend has been in progress for years. We prime ministers of the European countries – let’s call us the European Council – have not yet found a solution with which we could halt the decline in our competitiveness at a European level. I am convinced that competitiveness means three things simultaneously: we need competitive sectors, and we are going to talk about this today; we need competitive businesses; and we need competitive workers. Neither the issue of competitive businesses nor that of competitive workers are on the agenda at our conference today. Let me briefly mention, however, that at yesterday’s Cabinet meeting, after a proposal from the Finance Minister and earlier consultations with employers, we decided to lower corporation tax in 2017 to single digits: a nine per cent corporation tax rate will apply equally to small and medium-sized enterprises and large corporations in Hungary. In the last few days we have also done a great deal with regard to competitive workers: the Finance Minister is close to reaching an agreement with the trade unions and employers on a significant increase in the minimum wage. I have asked the Minister to “pull out all the stops”, and to seek to raise the Hungarian minimum wage to as high a level as businesses can reasonably sustain.

Ladies and Gentlemen,

In the interest of a competitive work force, we are even making efforts to introduce dual vocational training on the German model. If we achieve all three things at once – if we find competitive sectors, if we make our businesses competitive and our workers competitive – we can halt the decline in European competitiveness.

Ladies and Gentlemen,

Our topic today is the problems of the competitive sector. When I met the Honourable Commissioner here in Budapest six months ago, we spoke about how Hungarian and German economic cooperation could promote the cause of the European digital agenda. At the time perhaps it was he who mentioned that while we have European-level strategies, and also national-level strategies, we do not have regional ones. What if we tried – and the V4 is an appropriate medium for this experiment – to also create a regional dimension? The implementation of this idea is beginning today. On the one hand, we see that the European Union’s global position is not improving; on the other hand, however, every cloud has a silver lining, and Central Europe – or let’s say the V4 – has become one of the pillars of European growth, as well as one of the EU’s most promising regions. I looked at the figures from the first six to seven months of 2016, and these confirm what I have just said. The V4 has a total population of some 64 million; while the Poles number around 60 million worldwide, only 40 million of them live in the territory of Poland, so I count them as a nation of 40 million. In the first six months of the year, this region with a population of 64 million conducted healthy trade with Germany worth EUR 128 billion. By comparison, during the same period, trade between Germany and France amounted to EUR 86 billion, while trade between Germany and the United States was EUR 82 billion. One can therefore clearly see that the volume of trade between Germany and the V4 is a great deal larger than the volumes for German-US and German-French trade. This indicates that undoubtedly there is great potential here. And we haven’t even mentioned Austria.

Ladies and Gentlemen,

Over the past two decades, the countries of Central Europe have recognised that we can all be more successful if our horses pull together. Now, too, the task which awaits us is to jointly build the future of this region. We convened this regional digital summit for the very purpose of discussing the questions which the digital revolution asks of our societies. I am convinced that the lessons to be drawn from the US presidential election also confirm the relevance of this goals, because digitalisation and globalisation are terms and phenomena which have become intertwined. And we are well aware – as we have just witnessed – of the great shock on the other side of the Atlantic caused by concerns about globalisation. If today the benefits and opportunities of the digital revolution are only confined to certain regions, to certain economic sectors, companies and groups, and at the same time deindustrialisation intensifies, there will be major social resistance to globalisation, and also to digitalisation. We must admit, Ladies and Gentlemen, that the digital revolution not only has the potential to create silicon valleys, but also rust belts. We political leaders are therefore tasked with the mission of wisely managing and controlling the processes which inevitably accompany digitalisation, and turning them to our benefit. I believe that today the Central European region, the countries of the V4, face a historic opportunity. After the difficult integration of recent years, it seems that here at last is an opportunity to finally escape our own shadow. This region’s potential for growth is enormous; in this region we have not built welfare benefit-based economies and societies. We have built, however, work-centred economies and work-centred societies. And now we are facing a digital revolution. Now we are the ones who must answer the question of what we shall do with the opportunity which digitalisation has opened up for our region.

Ladies and Gentlemen, Commissioner,

When we started piecing together our own digital strategy, we began to understand how quickly we would have to jump onto the speeding train of history. We must immediately face two challenges: an economic challenge, and a social challenge. I am convinced that in this new era created by the digital revolution we are going to be either the winners or the losers: we shall either pull away from the pack, or fall behind. That is where it will be decided how much we can transplant digitalisation to our production processes. This cause will be furthered by the agreements and memoranda of understanding on infrastructure, business cooperation and start-ups being signed as part of this conference.

Ladies and Gentlemen,

I agree with the Commissioner’s statement that for Central Europe the production of cars represents one of the shortest paths leading to the digital era. We have heard that nowadays a car is no longer simply a product: a car is something which connects us together, and which also symbolises the past century’s European – and indeed global – engineering achievements. Cars are also among our most important export products. In the Visegrád countries alone, three million three hundred thousand cars are manufactured annually. Experience shows that the automotive industry mobilises the most R+D funding, encourages innovation, and creates hundreds of thousands of jobs. The future of this sector is decisive for all the Central European countries. Today a number of signs indicate that the production of cars may be – or perhaps will be – the engine of the digital economy. Manufacturers and developers, researchers and teachers, mayors and factory executives are today drawn into a single community of interest by new production environments, unprecedented forms of interconnectivity, the ever more autonomous experience of driving, new types of engine, test courses, smart cities, and the need for a new statutory and ethical environment. The role played by the production of digital cars will determine Central Europe’s position in a changing world. I am convinced that the production of cars will also have a positive, galvanising effect on other sectors. Digitalisation will take place in every area of life – be that the energy sector, agriculture, tourism, health care, the creative industries or construction.

Ladies and Gentlemen,

We political leaders must assist this process by opening up the other sectors of the economy to digitalisation, in addition to the automotive industry. We have a strategy for this with sub-chapters which feature the digitalisation of agriculture as well as, for instance, a digital start-up strategy; we are happy to offer this knowledge, and the fruits of this effort, to anyone who is interested.

Ladies and Gentlemen,

In preparation for the digital era, another challenge which we must rise to, however, is how to use this opportunity: in other words, whether we shall be able to turn the achievements of the digital world to the benefit of the whole of society, while at the same time filtering out the negative effects which tend to accompany digitalisation. To put it more succinctly: whether we will be able to turn digitalisation to the service of the public good. The number one task is to ensure that no one is excluded from the opportunities offered by digitalisation: that no one is left behind, at the side of the road. We must create the conditions which ensure that the digital world is available to every one of our citizens. As far as infrastructure is concerned, Hungary is doing well, including by European standards, and over the next year or two we shall be doing even better. Alongside the reduction of VAT, the free Wi-Fi services and digital welfare packages which are available in Hungary will enable us to take the benefits of digitalisation to every corner of Hungary.

At this point, Commissioner, I must digress slightly. In Hungary the general rate of VAT is 27 per cent. We are planning to reduce this to 18 per cent from 1 January 2017. At present the European Commission does not accept this. Furthermore, in January 2018 we want to reduce this rate from 18 to 5 per cent. This runs counter to the European Commission’s intentions, and so I would like to ask you, Commissioner, to represent us in the Commission, and to seek to ensure that VAT on digital services is reduced everywhere in Europe – or at least in those countries which commit to this path, such as Hungary. The Commission should not seek to keep it high on the basis of some logic of equalisation, but should allow us Member States – if our budget permits and this makes sense in terms of industry policy – to set a lower rate. I respectfully ask the Commissioner to argue for digital services to in effect qualify as one of today’s basic utilities. At first hearing this may sound like an exaggeration, but it is not: these services are just as important as milk and bread. Cheap access to digital services is essential for a successful life. Our goal, Ladies and Gentlemen, is that not a single student should leave the Hungarian education system without digital literacy skills. In this respect we still have a great deal of work to do.

And finally, Ladies and Gentlemen, we can only turn digitalisation to the service of the public good if we are not only able to use the opportunities inherent in it, but are also able to eliminate the associated risks and threats. We cannot avoid mention of the threats our children are exposed to, and therefore a digital child protection strategy forms an integral part of our digital strategy. We must protect our children from dangerous and harmful content on the internet, and we must prepare them for using the World Wide Web in a healthy manner which creates things of value. In this context, perhaps I should also mention cyber security as a priority area. While clearing the path for digitalisation, we must always remember the need to minimise the national security risks arising from it – because national security risks do exist. We should deal with these risks, and find answers to the challenges. Digital security and digital sovereignty have geopolitical significance and will continue to do so. If it is true – and I think it is – that data is the raw material of the 21st century, then we European leaders must be ready to store, manage and protect European data in European clouds. This is fundamental to the national security interests of European countries.

Ladies and Gentlemen,

And here we must talk about one other negative factor. There is a mountain of predictions and projections indicating that hundreds of thousands of jobs could be lost as a result of digitalisation. As far as I can see – and I hope that this meeting confirms this for us – there is a chance that newly emerging opportunities will lead to at least as many jobs being created as are lost. This will not happen automatically, however, and job creation will not automatically make up for the number of jobs which must be lost. I am therefore convinced that the state, employers and employees must combine their efforts, because only together can they guarantee that everyone who wants to work can find their place in the new world of work.

Honourable Commissioner, Dear Guests,

As you can see, Hungary and our region are ready – and indeed willing – to play a proactive role in ensuring that digitalisation – as a key challenge related to the European Union’s future – is not a problem, but an opportunity and a chance for us all. We are now, however, at the beginning of a long, untrodden path, for which we don’t even have reliable maps. One of the important milestones on this path will be Hungary taking over the presidency of the V4 in July 2017; digitalisation will occupy a prominent position among our presidency’s priorities, as they say in Europe. I therefore offer the V4’s cooperation to the Commissioner during Hungary’s presidency in the year ahead. Already at this point in time, together with our German and Austrian partners, we can enter the competition of digitalisation with confidence. We can take the first steps towards becoming successful. We should have the courage to be brave, as the future has already begun. You can rest assured, Commissioner, that we are working for this future to continue here, in Central Europe.

Thank you for your attention.