How do parliamentary parties spend state funding?

For two years now, as the six lucky parties that passed to the parliament in 2014 are able to get several dozens or even hundreds of millions of hryvnias a year from the state budget. According to the Eidos Center, which is an executor of the EU project on informing citizens about political parties’ financing, due to state financing, the amount of parliamentary parties’ expenses increased 16.5 times compared with 2016. How do they utilize the money and what is included in the list of favourite spending of parliamentary parties?

After the introduction of party funding from the state budget, they receive millions on a quarterly basis in support of their statutory activities, the definition of which is not envisaged in the legislation. This gap still causes a number of not unfounded fears about party abuse, namely, the spending of budget funds not on the development of party structures (development and maintenance of branches, salary payment to the secretariat, training, etc.), and the withdrawal of funds through fictitious contracts, the enrichment of persons close to the party, which in the long run could undermine the whole framework of public finance and the goals set during its introduction.

This assumption looks especially threatening, if you look at the amount of expenses, which increased 16.5 times compared to the beginning of 2016: Thus, for the first half of 2016, the parties, which only worked at their own expense, spent UAH 14.2 million, while, in the first half of this year, this sum reached UAH 235.5 million.

1_881
Funding of political parties from the budget

In addition, there are two more quarters ahead and the traditional “drain” of funds at the end of the year: a legal prohibition to accumulate funds received by the party from the state after the end of the reporting year and the need for the refund of unutilized money transforms the last quarter into a complete “shopping marathon”. Therefore, 2018 has every chance to become a record for spending.

However, it is positive that even with the vagueness of legislation and actual permissiveness, political forces spend the money during the last quarters on the goals that really should contribute to their development and ensure the stable work that for us – the citizens – is a so-so guarantee once to see the formed political system and not a new list of projects before each elections.

What did the parties spend the money for over the last six months?

1_106
Costs of all parliamentary parties for the first half of 2018

The TOP 5 of all party expenses for the two quarters of 2018 are as follows: propaganda, maintenance of branches, salary, office rental and tangible costs.

All these items of expenses are mandatory for the normal functioning of the party, since they demonstrate that, at the end of the day, some of the parties (currently those getting “carrot” from the state) show their offices and officers, finance activities of their representative offices outside of Kyiv and pay all the related expenses (for example, stationery, insurance, water expenses, electricity consumption, etc.). The amount of expenses that can hardly be reasonably substantiated is reduced on a quarterly basis: as, for example, UAH 1.2 million spent by Batkivshchyna in 2017 for the payment of travel services: booking hotels, air tickets and VIP room rental. Or UAH 302 thousand, which Radical Party of Oleh Lyashko spent on buying raincoats.


Propaganda

The approaching presidential and parliamentary elections significantly affected the costs of party propaganda: for the second year in a row, this item of expenses is on the leading positions. In 2017, the party spent UAH 103.03 million, which was 22.7% of their total expenses, for publishing and advertising of various kinds of advertising. These expenses remained almost at the same level in the first half of this year, having reached UAH 52.6 million and 22.5% of total expenses.

4_224

The undisputed leader in propaganda was Batkivshchyna, which spent UAH 24.8 million on it or 47% of total expenses. Obviously, the New Course of Yulia Tymoshenko cost so much for parliamentary parties. The second place goes to the Self Reliance association, which spent UAH 9.9 million for propaganda, which was 18.9% of all party’s costs. However, Self Reliance does not almost buy direct advertising, spending money on the production of its own newspaper Union Self Reliance, the cost of which includes not only printing, but also distribution costs, as well as the production of their own radio and television programs, in particular Self Reliance.Country.

The third place is held by the Radical Party with UAH 7.6 million (13.4% of total expenses).

The smallest amount of money for advertising was spent by People’s Front of Arseniy Yatsenyuk making UAH 999.6 thousand – which is indicative for this political force: starting at almost UAH 34 million in 2016, the party was limited to UAH 23 million in 2017.


Maintenance of branches

The second place in terms of spending for the two quarters of 2018 is the maintenance of regional branches, on which all parliamentary parties spent UAH 48.6 million. Paradoxical is the thing that only two of the six parties represented in the parliament practice this form of spending: The Petro Poroshenko Bloc and the Opposition Bloc.

5_154

So, Solidarity, which introduced the “fashion” for transferring money to the regions, spent 55% of its total expenses this year, and the Opposition Bloc spent slightly less – 44%. This financial strategy of the parties, on the one hand, characterizes them positively, since decentralization of budget funds will help develop party culture on sites and promote greater localization of their activities at the local level. On the other hand, funding the branches helps the parties in practice overcome the legal prohibition to keep non-utilized budget hryvnias: showing them as the costs to support their structure and “withdrawing” them from the cash account from the treasury, they can legally accumulate them for subsequent periods.


Remuneration and office rental

During the first two quarters of the current year, the parties spent more than UAH 72 million on the rental of premises and remuneration of their officers, while all the parties without exception show both the presence of offices and legal officers. Accordingly, it is now possible to state that the phenomenon of widespread “volunteering” (as, for example, with the Opposition Bloc, which for a long time operated only using free assistant volunteers) has been overcome.

3_359

Consequently, as can be seen from the reports, the parties conditionally fulfill the requirements of the law and do not go beyond the common sense in terms of expenses. Another thing is that today the percentage of advertising spending itself holds an extremely large share in total expenses, which is forecasted not be reduced in the electoral year of 2019. However, we have virtually no area of budget spending on the item, which is called “expert expenses” in international practice: it is about organizing educational events, conducting sociological research, qualification improvement of officers, holding public events, seminars, round tables and forums. Unfortunately, such costs are rather an exception.

At the same time, the parties continue to slowly, but still move in the direction chosen back in 2016 to build a genuine party system. We can only wish them good luck not to get out of this way.

This publication is issued with the support of the European Union and the Centre for Democracy and Rule of Law (Strengthening RPR Coalition Project) within the framework of the Raising People’s Awareness about the Financing of Political Parties as a Pledge to Reduce Political Corruption in Ukraine Project, which is being implemented by the Eidos Center. The content of this publication is the sole responsibility of the Eidos Centre and in no way reflects the views of the European Union or the Centre for Democracy and Rule of Law.

Kateryna Davydenko, Zamira Saidova, Eidos Centre

The article was originally published on Glavcom

Advertisements