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At today’s sitting, the Auditor General Janar Holm gave to the Riigikogu an overview of the use and preservation of state assets in 2017-2018.

The Auditor General Janar Holm said that Estonia was wealthier than ever. “This year the Riigikogu and the Government have 40 times more money at their disposal to promote life in Estonia than they had 25 years ago. It has been an extraordinary development,” the Auditor General pointed out.

Holm confirmed the words of the Minister of Finance that the money was properly accounted for, and in general, the last year’s economic transactions of the state were in conformity with the State Budget Act. The Auditor General said that it could be seen very clearly that centralisation had had a very good impact on the quality of state accountancy. “Yes, it is definitely good to know in regards to our common tax billions that the papers are in order and the calculation is correct. However, it is more complicated to understand what the state spends money on and why, and how this affects the development of Estonia,” Holm noted.

The Auditor General said that the annual State Budget Act was increasingly less understandable and informative. “The content of the explanatory memorandum, and the variable quality of the information set out in them are also a problem,” Holm said. He pointed out that the understandability of the State Budget Act and the explanatory memorandum was also related to the issue of how the Riigikogu, who should be the centre for the strategic discussions of the country, could participate in the drafting of the state budget as the most strategic document of the year.

The Auditor General said that the management report, which was part of the consolidated annual report, did indeed set out the major developments in the sector, the changes in the values of indicators, and the state’s initiatives, activities and initiatives, but at the same time none of them was much linked to money or people.

Holm said that it would be reasonable to review the whole state budget strategy and the timeframe for drafting the state budget, as well as for reporting. The Auditor General said that the pertinence of the way in which information was currently presented in the consolidated annual report of the state, as well as the activity of the National Audit Office in the area of financial audits would also need reconsideration with the needs of the Riigikogu in mind.

“It is noteworthy that the state budget revenues have increased by as much as 66 per cent over ten years. The funds have increased significantly, but money is not the only thing that is needed to run a country or solve problems,” Holm said. The Auditor General pointed out that this year’s annual review of the National Audit Office did in fact discuss several problems directly concerning people which were waiting for a systemic solution.

Holm pointed out that the Estonian state was dependent on the European Union subsidies which, however, were about to decrease. “The National Audit Office has recommended to be ready for the decrease of the subsidies in good time and to draw up a relevant time schedule and activity plan,” the Auditor General said.

In his report, Holm also touched upon the state reform and the people’s expectations for the state reform.

During the debate, Inara Luigas from the Social Democratic Party Faction, Aivar Sõerd from the Reform Party Faction and Enn Meri from the Free Party Faction took the floor.

The Riigikogu passed four Acts:

Under the Act on Amendments to the Social Welfare Act (649 SE), initiated by the Social Affairs Committee, people living in social welfare institutions are able to purchase and lease technical aids at the same discount as people living at home.

Up to now, persons staying in social welfare institutions were in a disadvantaged situation compared to people who need assistance and live at home, because the law did not allow them to procure all necessary technical aids with the support of the state. Under the law in force, a discount from the state upon purchasing or leasing technical aids to persons staying in social welfare institutions was guaranteed only in the case of personal technical aids like prosthetic appliances or orthotics, but not in the case of non-personal technical aids like wheelchairs or diapers. According to the Act, as of 1 January next year, people living in social welfare institutions will obtain technical aids at a discount on the basis of the same principle as people living at home.

The initiation of the Act was motivated by the proposal of the Chancellor of Justice Ülle Madise to bring the Act into conformity with the Constitution.

74 members of the Riigikogu voted in favour of the Act.

The principal purpose of the Act on Amendments to the Railways Act, the Atmospheric Air Protection Act and the State Fees Act (670 SE), initiated by the Government, is to transpose the EU directive laying down and specifying requirements to ensure the independence of infrastructure managers and non-discriminatory treatment of applicants for capacity, and efficient competition. In addition, the rights of the regulatory body when performing supervision are specified.

The proposed amendments regarding the opening of the market for domestic passenger transport services and the governance of the railway infrastructure meet the objectives of the railway system and improve its competition conditions and efficiency. The amendments will facilitate economic growth, increase possibilities for use and the performance of the railway infrastructure, and reduce barriers and obstacles to entering the market, thanks to elimination of conflict of interest. The amendments will also ensure financial transparency and reduce regulatory costs by limiting the cost of implementation of the amendments.

The impacts of the amendment to the directive are positive on the European rail market and suitable for Estonia because we already have an open rail market and separate infrastructure managers and transport operators which ensures equal treatment of shippers. The directive gives Member States the possibility to restrict the passenger market under certain conditions, but Estonia does not consider this possibility viable and will not provide for stricter requirements than provided for by the directive, and will not implement the requirements of the directive before the date of its entry into force.

The Atmospheric Air Protection Act is amended in connection with the fact that the Regulation (EU) 2016/1628, which entered into force as of 1 January 2017, obligates Member States to designate competent authorities whose functions include granting of type-approval for internal combustion engines for non-road mobile machinery, including locomotive engines, and performance of market surveillance. Since the type approval procedures involve additional expenses for the Technical Regulatory Authority (as of 1 January, the Consumer Protection and Technical Regulatory Authority), the State Fees Act is also amended.

67 members of the Riigikogu voted in favour of the Act and five were against it.

The Act on Amendments to the Value Added Tax Act (674 SE), initiated by the Government, provides for the tax treatment of transactions associated with vouchers, and simplifies the procedure for the declaration of VAT on import on the VAT return and the procedure for the taxation of the supply of electronic communications services and electronically supplied services in the Value-Added Tax Act.

The tax treatment of vouchers has not been harmonised at EU level so far, nor is the VAT taxation of vouchers separately regulated in Estonian law. The VAT treatment of the transactions associated with vouchers needs to be harmonised at EU level, because when there are no uniform rules, both double taxation and non-taxation occur in the case of cross-border transactions.

During the debate, Mihhail Stalnuhhin from the Centre Party Faction took the floor.

63 members of the Riigikogu voted in favour of the Act and five were against it.

The Act on Amendments to the State Budget for 2018 Act (695 SE), initiated by the Government, changes the current distribution of funds, which does not change the state budget volume. Every ministry has submitted proposals concerning its area of government, where it would be necessary to direct more funds this year. 53 motions to amend the budget were submitted at first. 29 more motions to amend the budget were submitted for the third reading.

49 members of the Riigikogu voted in favour of the Act and there were twelve abstentions.

Three Bills passed the second reading in the Riigikogu:

The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and Other Acts (699 SE), initiated by the Government, is intended to establish a favourable excise duty rate for natural gas, which would be 11.30 euro per 1000 m3, for undertakings with intensive gas consumption. The favourable rate will not extend to undertakings who engage in electricity, gas, steam and air conditioning supply as a principal or ancillary activity.

As another amendment, the Bill provides for cancellation of the rise of the excise duty rates for alcohol planned for 2019 and 2020. The purpose of this amendment is to reduce additional pressure on the business in border areas, and the resulting under-accrual of excise revenue.

Two motions to amend the Bill were submitted during the second reading. One motion to amend consolidates more technical amendments prepared in cooperation with the Ministry of Finance. Another motion to amend specifies the procedure for preparing documents upon refuelling of aircraft of the armed forces, on a motion by the Ministry of Finance.

During the debate, Jürgen Ligi from the Reform Party Faction, Peeter Ernits, and Mihhail Stalnuhhin from the Centre Party Faction took the floor.

The Prevention of Unfair Competition and Protection of Trade Secrets Bill (678 SE), initiated by the Government.

Unfair competition is unfair competition within the meaning of Chapter 7 of the current Competition Act. The Bill will separate the regulation of unfair competition from the Competition Act where it does not fit in terms of system, correct the term of “unfair competition” so that it would be consistent with its English equivalent, and transpose into Estonian law the relevant EU directive on the protection of trade secrets.

The Bill will not amend the substance of the current regulation of unfair competition, except in regard to the directive on the protection of unfair competition. Provisions drafted on the basis thereof define trade secret and unlawful acquisition, use and disclosure thereof. The Bill will establish additional legal remedies for the protection of trade secrets, and the right to require compensation of non-patrimonial damage and loss of profit also in the case of claims arising from tort law.

In addition, the Bill will restore the penal liability for disclosure of confidential information which becomes known in legal proceedings, and extend the regulation of securing actions against a security in civil proceedings in such a manner that, upon securing an action, in justified cases, the plaintiff will have to pay security also to the extent of the potential damage to third persons, besides the defendant.

Two motions to amend the Bill were submitted in the course of the second reading. A motion to amend will ensure legal clarity in restricting the access to court sessions (court session in camera) or in requiring to maintain the confidentiality of facts which become known in the course of the proceedings even if the court session has not been declared closed but maintaining confidentiality is clearly necessary. Such decisions of the court will have to be formalised by reasoned rulings (i.e. not by recorded rulings), which will be subject to contestation by way of proceedings for adjudication of appeals against court rulings. In connection with the latter, it is necessary to repeal clause 385 1) of the Code of Criminal Procedure which has so far precluded contestation of rulings on the restriction of public access to a court session. Also, subsection 408 (5) of the Code of Criminal Procedure will have to provide that both rulings specified in § 12 of the Code of Criminal Procedure (both subsection (2) and subsection (41)) will enter into force as of the making of the ruling, with a view to ensuring maintenance of confidentiality of the relevant data also during the term for filing an appeal against a ruling (15 days) and while a potential appeal against a ruling is being heard. In such a case, potential filing of an appeal against a ruling will not hinder the further proceedings in the criminal matter.

The Bill on Amendments to the General Part of the Civil Code Act and the Law of Obligations Act, the General Part of the Civil Code Act and the Private International Law Act Implementation Act (627 SE), initiated by the Government, will amend the limitation period for certain civil law claims recognised by a court decision or another enforcement instrument. At present, all civil law claims recognised by an enforcement instrument expire within a term of ten years.

The Bill provides that the limitation period for claims arising from unlawfully caused damage and claims ordered on the basis of a civil action filed within the framework of criminal proceedings will extend from ten years to twenty years. For example, if a compensation for causing bodily injury is imposed to the benefit of the victim by a court judgment, then in the future the limitation period for such a claim will be twenty years instead of ten years. The aim of the amendment is to improve the legal position of obligee.

In the case of other civil law claims, for example, a claim for payment of purchase price arising from a contract of sale or a claim arising from a loan agreement, the limitation period will be ten years.

Jüri Adams from the Free Party Faction took the floor during the debate.

Nine Bills and draft Resolutions passed the first reading in the Riigikogu:

The Draft Resolution of the Riigikogu “Approval of the Consolidated Report of 2017 of the State” (694 OE), submitted by the Government.

The report gives an overview of the achievement of the goals set in the state budget, and of the financial situation, economic result and cash flows of the state.

Last year, the state budget expenditure and investments totalled 9.3 billion euro. The revenue was 9.2 billion euro. In 2017, the expenditure and investments exceeded the revenue by 100 million euro. The value of the state assets totalled 17.3 billion euro as at the end of last year, the majority of which were fixed assets. Assets in aggregate increased by 789 million euro over the year. The consolidated obligations of the state amounted to 7.9 billion euro by the end of 2017, which is 485 million more than the year before. Among them, loan obligations accounted for 2.9 billion euro, and they diminished by 15.9 million euro over the year.

The report also includes the audit report of the National Audit Office. In the opinion of the National Audit Office, Estonia’s annual accounts of 2017 are for the most part correct and reflect in all important parts fairly the financial situation of the state, and the economic results and the money flows of the concluded accounting period.

During the debate, Aivar Sõerd from the Reform Party Faction and Mihhail Stalnuhhin from the Centre Party Faction took the floor.

The Bill on Amendments to the Animal Protection Act (734 SE), initiated by the Government, will bring Estonian legislation into conformity with the relevant EU directive that regulates the protection of animals used for scientific purposes. In the opinion of the European Commission, Estonia has transposed the directive inadequately, and that has resulted in infringement proceedings. The amendments proposed by the Bill concern the carrying out of animal tests, accommodation of experimental animals, and the related duties of undertakings.

The explanatory memorandum notes that the European Commission’s remarks are mostly of a technical nature and concern shortcomings related to wording, sentence structure and the use of deficient or incorrect expressions. The Commission finds that the wording of several national provisions is not precise enough to correspond to the provisions of the directive. A remark also points out that some of the concepts, characteristics and elements specified in the directive have been defined deficiently or have not been separately defined, or explicit substantive expressions supporting the objectives of the directive are lacking in Estonian legislation. The Commission notes that some provisions have not been transposed into Estonian law. The Commission also finds that the administrative practices that are in conformity with the directive, as described by the Estonian authorities in their reply, are not sufficient for the transposition of the directive.

The Bill on Amendments to the Plant Propagation and Plant Variety Rights Act, the Administrative Co-operation Act and the State Fees Act (733 SE), initiated by the Government, will update the Act, reduce the functions of the state, and increase the producers’ own responsibility.

The Bill will simplify the system for certification of seeds so that seed producers would have the possibility to have a field inspection done in the event of a certified seed category, and to draw samples and also to analyse them in the event of all categories of seeds subject to certification. Persons who wish a field inspection, a sampling or a laboratory analysis of samples to be carried out, or to provide an abovementioned service, will have to have authorisation for economic activity.

The amendments provided for in the Bill also concern the entry of varieties of fruit species in the Variety List. Varieties of fruit species will be included among the varieties of species entered in the Variety List. Up to now, it has been possible to register varieties of fruit species, but they have not been entered in the Variety List. As of 1 January 2017, the common list of varieties of the European Union, FRUMATIS, began to be established, and in connection with that, the possibility to enter also varieties of fruit species in the Variety List in Estonia will be created.

An amendment provided for in the Bill concerns the availability of the information on seeds produced privately, and the payment of remuneration for using a protected variety to the holder. That is, by way of a difference, it will be permitted to produce seeds of certain important crops for own use, but remuneration will also have to be paid to the holder for that. Under the current Act, holders do not obtain sufficient information on seeds of varieties produced privately, nor do they receive any remuneration for the use of the varieties, and consequently also have no information or basis for implementing protection of their rights. As a result of that, the holders’ interest in the Estonian market has fallen, and therefore the newest, most productive, and most disease and pest tolerant varieties are not available on the Estonian market. In order to change the situation on the Estonian market for the better and to raise productivity, it is necessary to amend the provisions on the scope of plant variety rights with the Bill.

The Bill will increase the amounts of the state fees relating to the certification of seeds. Seed producers who use the opportunity to carry out field inspections and to draw samples from seed lots subject to certification themselves if they have a relevant authorisation for activity, as provided for by the Bill, or who avail themselves of the services of persons who hold a relevant activity permit, will be exempt from payment of state fee.

The purpose of the Bill on Amendments to the Basic Schools and Upper Secondary Schools Act (729 SE), initiated by the Government, is to create the possibility to impose sanctions on students who carry items that are prohibited in school. Schools will have the right to check students and items they are carrying by means of visual and tactile examination, and permission to check students’ lockers.

The Bill will create the possibility of imposing additional sanctions on students with the aim of ensuring a safe school environment that favours studying. It will create the possibility to impose sanctions on students who carry prohibited items in school.

Under § 44 of the Basic Schools and Upper Secondary Schools Act, schools have the obligation to ensure the security and the protection of the health of children during their stay at school. In order to ensure security, prevent situations of danger and intervene where necessary, the amendments provide for the possibility for the school to additionally impose three sanctions: first, taking custody by the school of items and substances that are prohibited under the Basic Schools and Upper Secondary Schools Act, other items that may pose a threat to the life or health of the students or other persons. According to the Bill, it will be permitted to check a student and items he or she is carrying by means of visual and tactile examination, as well as to check the closed locker used by a student by means of visual examination.

During the debate, Toomas Jürgenstein from the Social Democratic Party Faction, Heidy Purga from the Reform Party Faction and Krista Aru from the Free Party Faction took the floor.

The Higher Education Bill (725 SE), initiated by the Government, will organise and simplify the regulations relating to higher education. The Bill will increase flexibility both for students and institutions of higher education, facilitate cooperation between institutions of higher education, strengthen the links between universities and society, and enable to shape a career model that is attractive to academic workers. The Bill will not change the fundamentals of the higher education system, like tuition-free studies, extensive autonomy of institutions of higher education and the three-tier higher education studies.

The explanatory memorandum notes that the current higher education legislation was developed in the 1990s. Over twenty years, the people’s and society’s expectations for higher education have changed significantly. The legal framework must keep up with the changed needs of students – people study all their life, they move between educational institutions, level of study and countries, and expect studies to be more practical.

During the debate, Maris Lauri from the Reform Party Faction and Krista Aru from the Free Party Faction took the floor.

The Tallinn University Bill (726 SE), initiated by the Government, will establish the Tallinn University Act, which will provide for the mission, the functions, and the bases for the management and funding of the University. The Bill is connected with the Higher Education Bill.

The Bill will provide for the area of responsibility of the University in educational science, humanities, natural science and social science, as well as arts, teacher training and pedagogy. The Bill will update the management structure of the University. It provides that the Council, the Senate and the Rector are the managing bodies of the University.

Under the Bill, the University has an eleven-member Council that makes strategic decisions and involves external members and whose membership is determined by the Government for five years. Under the regulation of the current Universities Act, the Council is the academic decision-making body which does not involve external members, and members from outside the university are included in the Board of Governors whose membership is determined by the Government.

The Bill additionally provides that a managing body of the University is the Senate which is responsible for the issues of instruction, research and development. The Senate has the right to issue regulations within its competence and adopt resolutions. The Rector as a managing body of the University and the Chairman of the Senate is responsible for the statutes, the development plan and the implementation of the budget of the University.

The University is financed from the state budget, and the bases for the financing will not be changed. Compared to the current law, the Bill provides for a change concerning the founding of private schools or research and development institutions in private law. At present, it is possible to found one in the case when it is a foundation where one of the founders is the state, while under the Bill, legal persons in private law founded by the University will not be entitled to found private schools or research and development institutions in private law.

The Act is planned to enter into force on 1 September 2019. The new management model will be implemented in full as of 1 January 2020.

The Estonian Academy of Arts Bill (730 SE), initiated by the Government, will establish the Estonian Academy of Arts Act, which will provide for the mission, the functions, and the bases for the management and funding of the Academy. The Bill is connected with the Higher Education Bill.

The Bill provides for the area of responsibility of the Academy in the fields of art, design and architecture. It also points out the function of the institution of higher education to engage in art and science which also includes a specific form of research, artistic research. The Bill will update the management structure of the Academy by providing that the Council, the Senate and the Rector are the managing bodies of the Academy. Under the Bill, the Academy has a nine-member Council that makes strategic decisions and involves external members and whose membership is determined by the Government for five years. Under the regulation of the current Universities Act, the Council is the academic decision-making body which does not involve external members, and members from outside the university are included in the Board of Governors whose membership is determined by the Government.

The Bill additionally provides that a managing body of the Academy is the Senate which is responsible for the issues of instruction, research and development. The Senate has the right to issue regulations within its competence and adopt resolutions. The Rector as a managing body of the Academy and the Chairman of the Senate is responsible for the statutes, the development plan and the implementation of the budget of the Academy.

The Academy is financed from the state budget, and the bases for the financing will not be changed. Compared to the current law, the Bill provides for a change concerning the founding of private schools or research and development institutions in private law. At present, it is possible to found one in the case when it is a foundation where one of the founders is the state, while under the Bill, legal persons in private law founded by the Academy will not be entitled to found private schools or research and development institutions in private law.

The Act is planned to enter into force on 1 September 2019. The new management model will be implemented in full as of 1 January 2020.

The Estonian University of Life Sciences Bill (727 SE), initiated by the Government, will establish the Estonian University of Life Sciences Act, which will provide for the mission, the functions, and the bases for the management and funding of the University. The Bill is connected with the Higher Education Bill.

The Bill provides for the area of responsibility of the University in the areas relating to the development of rural life and the rural economy. The Bill will update the management structure of the University by providing that the University is managed by the Council, the Senate and the Rector. Under the Bill, the University has a seven-member Council that makes strategic decisions and involves external members and whose membership is determined by the Government for five years. Under the regulation of the current Universities Act, the Council is the academic decision-making body which does not involve external members, and members from outside the university are included in the Board of Governors whose membership is determined by the Government. The Bill additionally provides that a managing body of the University is the Senate which is responsible for the issues of instruction, research and development. The Senate has the right to issue regulations within its competence and adopt resolutions. The Rector as a managing body of the University and the Chairman of the Senate is responsible for the statutes, the development plan and the implementation of the budget of the University.

The University is financed from the state budget, and the bases for the financing will not be changed. Compared to the current law, the Bill provides for a change concerning the founding of private schools or research and development institutions in private law. At present, it is possible to found one in the case when it is a foundation where one of the founders is the state, while under the Bill, legal persons in private law founded by the University will not be entitled to found private schools or research and development institutions in private law.

The Act is planned to enter into force on 1 September 2019. The new management model will be implemented in full as of 1 January 2020.

The Estonian Academy of Music and Theatre Bill (728 SE), initiated by the Government, will establish the Estonian Academy of Music and Theatre Act, which will provide for the mission, the functions, and the bases for the management and funding of the Academy. The Bill is connected with the Higher Education Bill.

The Bill provides for the area of responsibility of the Academy in the fields of music and theatre, as well as for the role of the Academy in promoting the general education and vocational education in music. The Bill will update the management structure of the Academy by providing that the Council, the Senate and the Rector are the managing bodies of the Academy. Under the Bill, the Academy has a seven-member Council that makes strategic decisions and involves external members and whose membership is determined by the Government for five years. Under the regulation of the current Universities Act, the Council is the academic decision-making body which does not involve external members, and members from outside the university are included in the Board of Governors whose membership is determined by the Government. The Bill additionally provides that a managing body of the Academy is the Senate which is responsible for the issues of instruction, research and development. The Senate has the right to issue regulations within its competence and adopt resolutions. The Rector as a managing body of the Academy and the Chairman of the Senate is responsible for the statutes, the development plan and the implementation of the budget of the Academy.

The Academy is financed from the state budget, and the bases for the financing will not be changed. Compared to the current law, the Bill provides for a change concerning the founding of private schools or research and development institutions in private law. At present, it is possible to found one in the case when it is a foundation where one of the founders is the state, while under the Bill, legal persons in private law founded by the Academy will not be entitled to found private schools or research and development institutions in private law.

The Act is planned to enter into force on 1 September 2019. The new management model will be implemented in full as of 1 January 2020.

The sitting ended at 9.49 p.m.

Photos.

Verbatim record of the sitting (in Estonian) http://stenogrammid.riigikogu.ee/en/201811141400.

Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu (NB! The recording will be uploaded with a delay.)

Riigikogu Press Service
Marie Kukk
+372 631 6456; +372 5821 3309
marie.kukk@riigikogu.ee
Questions: press@riigikogu.ee

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