National Research, Development and Innovation Fund

Rationale

This sub-fund runs competitive grant programmes that pay firms — disproportionately small and medium-sized enterprises — to undertake research and development, increasingly in cooperation with universities.[^2] The grant model places a political officeholder, or a council appointed by one, in the position of deciding which firms' R&D projects are worth public money. That decision cannot be made well. The value of a research project is whether it produces something a future buyer will pay for; that test is run by the market, through profit and loss, and it cannot be run in advance by a grant committee scoring applications. A committee can score the application's conformity to the call's stated priorities — but conformity to a state-set priority is precisely not the same thing as value to a future consumer. What the committee actually allocates is not "the optimal level of innovation" — there is no such observable quantity — but a rent: a sum that flows to the firm best at writing grant applications and aligning its stated R&D plans with the current call. A firm that learns to win calls has an incentive to keep doing so independently of whether the funded work yields anything; a professional grant-capture capability forms, and it lobbies for the programme's continuation regardless of output. The deeper point is visible in the international comparison. Hungary already spends heavily on state-financed R&D and gets thin results. Hungary's public R&D funding channels a larger share of gross R&D spending through government and fund mechanisms than the EU average, while private business R&D remains below the EU norm;[^6] on the European Innovation Scoreboard 2024 Hungary scores about 85% of the EU average and ranks among the moderate innovators, behind Czechia.[^3] Hungarian gross R&D spending was about 1.39% of GDP in 2023, against an EU average near 2.2% and Czechia's 1.83%.[^3] The pattern is a state that funds research generously through grant channels and a private sector that under-invests. The grant channel does not appear to be converting public money into private innovation capacity; if anything the availability of grant money substitutes for, rather than crowds in, firms' own research spending. The mechanism is the one Estonia's tax design avoids: where the state taxes corporate profit and then hands a portion back as discretionary grants, the firm's rational response is to optimise for the grant, not for the product. Estonia instead taxes corporate profit only when it is distributed — retained and reinvested earnings are untaxed — so a firm reinvesting in its own R&D faces no tax wedge on that decision at all and no grant committee to satisfy.[^4] The classification follows: a programme that collects a levy from firms and returns it to a subset of firms via a committee is a circular transfer with a calculation problem in the middle. The honest reform is to stop running the levy-and-grant loop and let firms keep and reinvest the money directly.

Rationale

This sub-fund finances competitive grants for basic and applied research, including the National Research Excellence Programme, and supports research institutes and university research.[^2] The classification question differs from the Innovation Sub-fund's. Basic research has no near-term buyer, so the consumer-sovereignty test cannot be run on it the way it can be run on a firm's product-development project — basic research is exactly the activity for which "would a future buyer pay for this" is not the operative question. That does not, however, make a central grant committee the right allocator. Which research lines are promising, which teams are credible, which questions are ripe — this is information dispersed across the research community itself, held by working scientists, journal editors, and the institutions that employ them. A national council setting research priorities and a central agency scoring applications cannot aggregate that dispersed judgement; it substitutes a politically-set priority list and an administrative scoring rubric for it. The result is a research portfolio shaped by what the call rewards. The reform is not to abolish research financing but to move the allocation decision closer to the people who hold the information. Research-intensive universities and institutes are better placed than a national agency to judge which of their own research lines deserve funding; endowment income, competitively-tendered contract research, philanthropic research funding, and international grant competitions (EU framework programmes, ERC) already operate as non-state or arms-length allocators with their own peer-review machinery. The classification is Phase-Out rather than Keep because the case for a national administrative grant agency as the allocator does not survive the calculation argument — but it is Phase-Out rather than Immediate Cut because abrupt removal would strand research staff mid-project and because the replacement allocators (institutional block funding tied to research output, an arms-length endowment model) take time to stand up.

Rationale

This line does not finance research or innovation. It is the fund's surplus — the gap between the 177,200.0 millió Ft the innovation contribution raises and the ~113,000 millió Ft the fund spends on research and innovation grants — routed to the general budget. The innovation contribution is collected under a specific statutory promise: it is earmarked, and earmarking is the justification offered to the firms that pay it. The 0.3% levy is presented as a contribution to the research-and-innovation system rather than as a generic profit surtax.[^1] Once a fifth of the take is transferred to the general budget, the earmarking is fiction for that fifth. A worker following his own money should be able to see the chain close: the contribution leaves the firm labelled "innovation", and 32 billió Ft of it arrives at the Treasury labelled nothing in particular, indistinguishable from corporate income tax. The honest description is that 32,192.2 millió Ft of the innovation contribution is a general corporate surtax wearing an innovation label. The classification is not "phase out the transfer over time" — there is no protected party, no contract counterparty, no cohort relying on the surplus. The line is an accounting artefact of over-collection. It can be removed in a single budget cycle, and the correct way to remove it is to stop over-collecting: cut the innovation contribution rate so that revenue matches the fund's actual grant programme.

Rationale

The Missions Sub-fund finances "mission-oriented" research and innovation programmes — thematic initiatives in which the state designates a societal goal (a "mission") and funds projects directed at it. This is the most calculation-exposed of the three sub-funds. The Innovation Sub-fund at least funds firms whose project's eventual value the market will later test; the Research Sub-fund funds research whose value the research community can assess by peer judgement. The Missions Sub-fund funds projects selected for conformity to a state-designated mission — the allocation is doubly political: a political officeholder sets the mission, and a committee then scores projects on how well they serve it. There is no buyer, no peer-review discipline independent of the mission frame, and no observable quantity the allocation is converging toward. The sub-fund is small relative to the chapter, and its classification is obvious from the mechanism: a state body picking thematic priorities and funding projects against them is discretionary allocation with no external check. It is grouped with the other two sub-funds on the same five-year horizon.

Rationale

This line funds the agency that administers the fund — runs the calls, scores applications, manages contracts, monitors projects. It is the operating cost of the grant machinery. Its classification follows mechanically from the classification of the three sub-funds: if the grant programmes are phased out, the agency administering them has progressively less to administer, and the line phases out in step. The agency is not an independent rights-protection function; it exists to operate the levy-and-grant loop. Once that loop is wound down, the administrative line has no residual rationale. The relevant question is not whether to phase the line out — that follows from the sub-fund classifications — but how to honour the agency's employees during the transition.