The Voucher Social Policy Smells of Politics
01 March, 2012
The Voucher Social Policy Smells of  Politics

 

The underway electricity voucher hand out, initiated by Georgian government to alleviate population in covering electricity bills, bespeaks of the lack of social policy and smells of  politics.  To help Georgian population to pay the electricity bills that increased by 20-30% due to unusually cold winter, the government decided to distribute electricity vouchers of GEL 20 face value per each active electricity consumer household. GEL 25 million will be disbursed from governmental reserves to this end.

Distributi

on of vouchers already started on February 21, 2012 and is scheduled to be completed by March 30.

Georgian economic analysts believes the electricity voucher initiative has a political lining  as far as the year 2012 is a year of parliamentary election and all the previous voucher projects were also connected with elections to woo the socially vulnerable electorate.

Lado Papava, Professor of Economics, explains that vouchers as a tool of social assistance to population works in short period if it is applied seldom [once in several years] and not as frequently as Georgian government practices lately. In a middle-and-long-term prospect voucher includes inflation risks and its frequent use bespeaks of defects in social policy.

“Voucher is money emission in fact for certain businesses stand behind it like energy, agriculture or any other business the service and product costs of which are covered by vouchers that are financed from the state budget and it actually is additional money emission. The state budget does not envisage vouchers generally as far as it serves to discharge some critical situation alone. And in middle and long-term prospect voucher is inflationary and its systematic use is a mistake,” Papava said in the interview with Georgian Journal. “And since Georgian government addresses to vouchers systematically in last years it means that government has neither social policy nor agriculture policy. If it has had any of them no vouchers would have been needed to assist people.”

Shota Murghulia, an economic analyst with the Center for Strategic Research and Development, believes Georgian voucher-esque inclination smells by politics. He expects many more vouchers upcoming this year as a part of the pre-election campaign. Murghulia thinks the frequent reference to vouchers bespeaks of lack of the budget-making skills and reminds that the Rose government said no to vouchers when started financial reforms and built in the law that all expenses must be strongly outlined in programs.

“But then politics mixed with economics and they initiated one voucher, then another and so forth,” he said.

Actually government undertook vouchers first in 2007 – the year of the biggest economic growth of Georgia since Rose Revolution and gave GEL 50-50 worth vouchers apiece to households in big cities on gas and electricity consumption. In regions GEL 50 electricity voucher and a sack [50 kg] of flour was handed to each household – all the pre-election trick.  Then the voucherization tendency has been popping up intermittently [vouchers for fertilizers, for diesel on agriculture works etc] but by lower assistance rates and bigger time gaps.

Since 2011 vouchers became top popular.  Only in 2011 government spent 56. 679 million at average on three voucher projects to alleviate price hike problem caused by high inflation [13.5%] in winter. GEL 20 and GEL 30 worth electricity and food vouchers were emitted and GEL 20 million and GEL 31.429 million spent respectively.

By fall Tbilisi City Hall to somewhat retrieve its fault for corrupted tender of micro-bus service in Tbilisi having jacked transportation costs by 60% in the capital issued GEL 5 worth vouchers for socially vulnerable to cover transportation costs and spent about GEL 5 million.

By end-year of 2011 government decided to alleviate 800 thousand farmers by GEL 30 vouchers for financing agriculture works taking totally GEL 24 million. The vouchers were delivered in December of 2011 and January of 2012 and the expenses were built in the state budget of 2012.  Actually starting 2011 up to date government spent more than GEL 80 million at average plus GEL 25 million that will be spent on this here underway electricity vouchers.

This money might have much bigger effect if invested in due agriculture programs, economic experts believe, rather than spent spontaneously on inflation-risky initiatives.

Since one gets GEL 20 spare money it will be spent on food or any other goods of primary consumption that triggers inflation and that’s all the effect of voucher-based assistance.

Moreover, vouchers not always reach the addresser or bring any significant relief.

“Who cares for this GEL 20 assistance when my electricity bill hits GEL 90 in winter-time usually for we have no gas-supply and consume only electricity for heating, it would be bigger relief if that damn payment for sanitary service tied with the electricity consumption would  be separated as before,” Cico [who did not disclose her family name], an inhabitant of Didi Digomi district [where bigger part of residential houses built during soviet time are free of gas-supply –electricity was very cheap then] complained with GJ.

The point is that government to alleviate the problem of unpaid bills for water and sanitary service tied them with electricity supply. However unlike water that is based on fixed tariff payment, sanitary service was tied with electricity consumption and increases in winter along with increase of electricity consumption.

Murghulia agrees that separation of sanitary and electricity bills would be bigger relief and better solution of problem rather than one-time voucher that lacks clear fair grounds for  its target beneficiaries include both the socially vulnerable and millionaires all alike. The point is that according to Nika Gilauri, Prime Minister of Georgia, electricity voucher’s target beneficiaries include active consumers based on the similar principle it used past year and would cover about 1.2 million electricity subscribers as in 2011, he said on February 20, 2012.

Based on these principles the “active consumer” means a subscriber who consumes at least 200 kilowatt electricity per month during the last 6 months. This means that the voucher target group belongs to well-off and middle stratum citizens rather than needy people who save electricity as much as possible especially in regions.

“I consume just about GEL 1.50-2 worth electricity per month for I am in very difficult economic circumstances and save electricity as much as possible, and that’s why am I supposed to miss this assistance? ” Shushana Ispiriani, residing in Gurjaani of Kakheti region, asked past year to local media.

Yes, government allows to hand-over vouchers to other family on a volunteer basis but taking into account greedy nature of human being very few are supposed to hand vouchers to needy neighbor, experts fear.

As the practice shows there are problems with vouchers delivery too as some potential beneficiaries are omitted in the data base. Social Service Agency, been responsible for vouchers’ distribution technical service, did not say why.

 

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