Estonian CIO Taavi Kotka – ‘A Vision for Government in the Digital Era’

– Welcome, everybody, and Taavi, welcome to the Department of Communications. Thank you. – The camera actually takes from here. You should come. – I’m glad you know what we’re doing. – I have done this TEDx part. You have to sit in the green spot, the red spot like, yeah. – Before we get started today, I would like to
acknowledge that this event is being held on the traditional lands of the Ngunnawal people. I would like to acknowledge the traditional owners and
custodians of the land, and play my respect to their
elders, both past and present. This morning, we are certainly privileged to have Mr. Taavi Kotka, the
Chief Information Officer for the Ministry of Economic
Affairs and Communications in Estonia. Estonia is one of the
world’s leading e-governments with technology platforms
that encourage transparency while maintaining privacy and security. And they’ve been designed to be adaptable, anticipating future technologies. And we’ve got a lot to learn
in Australia about that. Estonia is a founding
member of the Digital Five, otherwise known as D5. And the D5 is a network
of digital governments working to strengthen the technology and digital economic sectors. Mr. Kotka comes to government after a successful startup career, and was named the European
CIO of the year in 2014. Please join me in
welcoming Mr. Taavi Kotka. (applause) – So hi everybody. It’s lots of people. I expected only a camera
and a couple of kangaroos (laughter) because it’s so early in the morning. Yeah, I come from Estonia. It’s very far away from here, a small country in Europe. But just a couple of things about myself. Yes, I’m the Government CIO,
not just the Ministry CIO, so my job is to dream and to figure out what should be next big thing for Estonia. What should we do with
IT and communications, and so I am the blah, blah, blah guy. The rest have to work. But my personal background, I’m software engineer. My education, my profession,
my hobby, everything, I have done the whole life
is software engineering. I’m doing my PhD in Computer Science. I have a Master’s in Computer Science, so yeah, full of IT. And the startup I did,
I was part of a team who built up the largest
software development company in our region, and I ran the company for 11
years, and then I retired. I did exit. I sold my shares. And I got this non-competition clause, so I can’t compete in private sector for certain period, and Estonian
government noticed that. As it’s a small country,
we’re all relatives. (laughter) You should know the same with Tasmania. (laughter) So yeah, we all meet each other at every wedding and funeral. And the Minister of Economy
asked me to join the government, become the Government
CIO, and I have to say, first of all, I said, “No,” of course. In Estonia only handicapped
person works for the government. All the healthy men,
they should do real work. That’s the mindset, the
attitude in Estonia, but now I’m like a kid in a
candy store or a toy store. I have loads of money, and I have full political support, and I can do whatever I want to do, because IT is complicated, so nobody understands it. (laughter) If you go to the Cabinet like, “Oh I had this new great idea, “like e-residency.” “Oh, okay, let’s do it.” (laughter) We did e-residency. It went through the Parliament, 80 votes in favor, zero against. So all everyone, “Yes, we have to do it.” And the journalist went afterwards to the parliament member asking, “Did you actually understood
what you did at the moment?” “No, but it looks good.” So that’s the thing. You can do crazy stuff in Estonia. That’s great. And yeah, thanks Europe for the title. Yeah, I ended my entrepreneuric
career basically in 2012. I was lucky enough to earn enough money so I can afford working
for the government. So, yeah. If somebody wants to talk about digital and single market
strategy for Europe later on, then I can comment on that also. I am one of the special advisors for Vice President
Ansip who is responsible for this development in Europe. (mumbles) So, okay, let’s stop talking about me. Let’s talk about Estonia. So, that’s Europe if you don’t know. Most probably smaller than Victoria State, but yeah, that’s Estonia, the green one. And it looks small, but
it’s actually extremely big. That island here, second largest, actually bigger than Singapore, and the country itself, it’s bigger than Denmark, for example, or Belgium, or Holland, or Switzerland, land-wise. So land-wise, it’s a big country. People-wise, extremely small, and they all speak funky language. Actually, it’s not funky. You are this part of the world, okay, it’s more for New Zealand people, but in the Lord of the Rings book, there is a language of
elders, and that language was invented looking at Finnish language, and Estonian, Finnish, same language, so yeah, we do that
blah, blah, elders talk. (laughter) Yeah, so if you want me to say something or write you something in that language, I can do that. But that picture, that slide basically explains the basics, why
Estonia is like e-country. The name is E-stonia, so
it’s basically stone age, but with slightly E. Estonia’s as old a country as Finland, almost 100 years. Was established in 1918,
and the beginning was great. We were like kinda before
US during the thirties. There was no drinking law in US, and kinda they just send
spirits across the border. We did the same with Fins. And we became extremely rich, instant inflation, richer
country than Finland before second World War, or even Norway, but then Soviet occupation
came for fifty years, and that stopped our
development for fifty years, and we had to start again from scratch, basically from scratch in 1991. If I say scratch, you can’t believe what it is
to live in communist society. Just to one example,
none of my generation, or who are older than
me cannot say a sentence that, “Like my
entrepreneurial father said,” because during Soviet Union time, there was no entrepreneurship. So I am the first entrepreneur
of my whole family. So my sons now can say that, “My entrepreneur father said.” So that was invented,
discovered, from zero in 1991. In the Soviet Union, nobody has property, so basically first ten
years, everybody tried to earn their first million, to build their first house
and all of that stuff, so it’s a slight different starting point, but what is important is that, you want to prove
yourself, Estonia wants to carve that position, what we
had before second World War as a very developed and advanced country. We have very good education systems, the best, not the best,
the second-best in Europe after Finland. And yes, and we do IT. And we do IT because it’s
a huge amount of land, not too many people. Basically half of the
nation lives in the capital, so the rest is living in countryside, which is market failure region, basically. It never reach four person
per square kilometer. And if you have four person
per square kilometer, it’s obvious that you can’t
serve those people physically. It’s impossible. You have to push them
to use digital tools, self service, et cetera. And if it’s not done, the
government will notice that. It’s also private sector who notice that. There can’t be bank office in
every small town or village, so lots of things, what
we have been doing, we have been doing together
with private sector, be we both have the same needs. And we started it basically 20 years ago with all this stuff. And key for all this
development is that sentence. Trust your engineers. And what I mean by this
is that for example, if we want to build a bridge in the city, it’s a political question. Where should we build it? But after we have decided,
okay here should be a bridge. After that, it’s an engineering question, and politician doesn’t interfere anymore, because it’s decided,
it’s settled, just do it. The same in medicine. You don’t argue with your doctor that, “No, no, I think you
treat my knee wrongly.” You don’t argue with your doctor, but in software engineering,
somehow politicians think they can interfere, but software engineering is as complicated as building a bridge or
to do the knee surgery. And our politicians, they understood that since the beginning. Why I say that is, doing
these kind of strong IT forms, for example, giving everybody an ID card, or forcing people to use e-school or e-prescription, it takes time. It’s not like that you can actually implement it with couple of years. It might take, for example, writing out our ID card,
making it actually valuable and working took seven years. It’s the only one parliament session. It might be like several times, but it’s very important that when you start something, before it matures, you
need to keep it on track so you can’t freak out. And what we see in many countries that during the reform,
politicians freak out, and then they turn it down. With Australian card, for example. But I didn’t do that example. So, yeah. I’m proud that our government and parliament, they trust the engineers, even if they don’t understand it. That’s the e-residency thing,
that was just an example. They didn’t understand it, but it looks good, and let’s do it. So if I talk… If you talk about Estonia, we are the only nation who uses digital signature nationwide. What it actually means is if you approach any Estonian
with paper contract, they look you suspicious. “Why you do that? “Why you use this un-efficient and non-economical friendly method? “Do you know how many trees was cut because of your contract?” (laughter) If you can send document digitially using your email, why you don’t do that? And over in Estonia, they
have this national ID card that was introduced around 13 years go. We copied it from Finland, because they invented the technology, actually, they copied it from Sweden, but that’s how it goes. Norway invents something,
Sweden copies Norway, Finland copies Sweden, we copy Finland, Latvia copies us, and that’s how it goes. But the problem is if you
have copied everybody, and you have everything up and running, there’s nobody to copy from anymore, so we have to start inventing,
like that’s a problem. So also they… We have this ID card,
and that’s number one document in Estonia. What it means, it’s number one? Passport is voluntary. If you don’t want to travel to Australia and people know where your whereabouts, like I was coming from Eastern Europe, just couple days in Australia. Most probably after Krakow or something. (laughter) So that’s a mandatory document. Everybody has to have it, no excuses. That was our innovation on
top of Finnish innovation. They didn’t do it mandatory. It was just, if you want you can have it. And if you do it this
way, nobody will take it, so Finland is 5.6 million country, and only less than
100,000 have the ID cards. Basically, a total failure. Most probably, we have near future, more e-residents from Finland that
are using the same cards, but issued by Estonian government, even though the Finnish
card actually works in our system also, becuse
it’s a 100% Fin technology. I just used the card for demo. We actually use mobile ID. So everything we do, we do with this. It’s the same functions
you have in this phone. And another reason why Estonia perhaps to use IT is this. So this is our summer. (laughter) Okay, I’m exaggerating. Like eight months every
year, it’s like this. Really bad skiing weather. Children are not allowed to go to school if there is more than minus 23 Celcius. If it’s less than 23, no excuse. Just grab your stuff and go. (laughter) If you need to walk,
like two miles long, run. So yes many days, the
weather is extremely bad, and it’s actually good to sit inside. And thus we are far north, at the same latitude as Alaska. It’s normal that during
long winter nights, it’s basically dark. The sun is only up for six hours, then we stay inside in the room, and if you spend all days
and nights in your room, what you do? You program. That’s why we are so good engineers. (mumbles) Most of computer scientist
from Soviet Union actually came from Estonia, so that’s the historial background. But yes we do create stuff. Do you want to see how
voting looks like in Estonia, how certain people vote? So I need to change the
screens, just a second. Let’s see what we have here. Oh! From the voting page,
they download application, and that’s me. They put the card in the reader, they push PIN one, login. Now the system says that that’s me. That’s my official name, and that’s my digital name. And we are proud of our digital name. You are not ashamed of your name, right? If you don’t like it, change it. But you shouldn’t be ashamed
of your digital name also. It’s a very important thing here, because you don’t have digital names. And that’s one of, I think, the biggest obstacles
why you can’t develop to this e-society. It’s not a political thing. It’s an engineering thing. In engineering world, you
need objects to be unique. Then you can connect
data with that object. And Taavi Kotka, it’s an ordinary name. In English, it’s David Eagle. So, there might be many people who are named David Eagle, John Smith. So you need unique identifiers. That’s why your Apple ID
or your Gmail is unique. Because to be sure that you are the one who gets the e-mail. So everybody has to have the personal ID. So if I’m talking about ID card, card is not important. You can use fingerprints,
whatever username how to get in. What is important is that
everybody has a unique identifier. The code. That code. In Estonian case, it includes my sex, my birth date, my region
where I’m coming from, my control number. And Japan will start using the same thing next year as there are a little
bit more of Japan’s than… We have 11 digit number. They will have 12 digit number, and they will become the
first superpower nation who issues that, and I think it gives them a huge advantage compared to countries who doesn’t have that. You. (laughter) So let’s go back to the voting. So what I did, I just logged in. I’m checking that yes, it’s me. So then I proceed. Those are the candidates, all blood animals. Let’s take this one, select. That’s the candidate I
selected, now I vote. Vote basically means I sign. And that’s it. It goes to Estonia and check
if the signature’s valid. Viola, I voted. So basically, you can do it, I’m in Canberra, and I’m participating in Estonian elections. I’m at bed. Whenever I am, I can participate. I can vote, and voting period lasts five days, because if it’s like once, then I can put a gun in your head and say, “Vote for me.” Now what I do is, okay. You put the gun now. I give you a gun, you point to me like, “Vote for me.” Vote for you. Oh, okay. And then you leave, and I vote again, and I
vote again, I vote again, I vote again, I vote again. One lady voted 648 times. We sent police there to
check if it’s a cybercrime. The lady opened door. Police ask, “Why you vote so much?” “You have a problem with that?” No. You can if you want. Yeah, okay, sorry. So, you can vote as many times as you want and only the last vote counts, so ahh. (laughter) You really thought we are what, idiots? No, we smart nation. Not so smart as Singapore, but still. So that was voting. And this way Estonians vote
already more than 10 years. It’s not just a new thing we discovered. This is because we have
this basic stuff in place, and everybody has a card,
everybody has a chance. Most of the people still
actually use old method because they like it. They like the way, on
voting day you dress, and you put your tie like that. And then you go and do it like… Or if you want to write on a voting paper that they’re all idiots. Yeah, with e-voting, you can’t do that. Before that, if you put
that selection there, everybody checks that, so. In e-voting, you have to
actually choose somebody. But in paper voting,
you can spoil your vote. Just one example. The digital signature thing
works in the same way. You see it’s my desktop. If I do right-click
here, that’s in Estonian, but it means sign digitially. The file, that Word file
goes into the container for about a day to unload
the application from Estonia, so internet is slow here. Sorry about that. One core principle, if you push some people
to use some service and e-service, one core principle has to be that the country has to have the best internet available. It wasn’t Singapore who
covered the country with 4G. It was Estonia. And three operators providing
3G all over Estonia. In central Tallin, in the capital, or in the bloody forest, you get at least 50 megabits download over the phone. And that’s huge problem, because nobody wants fiber anymore. But I want them to actually
have fibers at home. Because the bandwidth is limited, and when the internet of things develop and more and more machines need to be connected in the internet,
we need the bandwidth. So we have a government
program at the moment because internet is
human right in Estonia, so the program that will finish in 2017, half is done already, that it can’t be further than one mile from every household with
fiber, ultrafast fiber. So the last mile up to the
guy, or up to the farm, have to do that, if they do a nano-network over there, or they actually
do their own cable up to them but the backbone, we have to be no further than one mile. And so that’s government thing. So this is the container. What it means is I can actually add anything into this container. So I can add their, like, let’s see, there’s a PDF file. I could add other kind of file here. I could have music
file, picture, whatever. And then I sign it. The signature goes to Estonia
to validate if it’s okay. As you see, I’m using the same tools, the same tools like I was with the voting. That’s extremely important. People don’t use
government tools too often. And we have combined
these government tools with private sector tools, so actually I can login into the bank
exactly with the same tools. And if I can login into any portal with the same tools, I get used to it. Because user experience,
even for elder people. “Ah, okay, that I know. “Okay, yeah ,PIN one I remember. “That’s in my left pocket. “And the PIN two is in my right pocket.” Yeah, so. And I signed, and it’s valid, as you see. And this is not valid only in Estonia, it’s valid all over Europe. Digital signature is equalized with physical one since 1999. And so for example, we can go to any court in Europe and the court needs to accept that document. It might be a problem
for them to open it up, but it is legal. Well, it’s good. I just did one example. Let’s assume that I have to do a contract, business contract with
you, and I’m in Estonia, and you are here in Canberra. If you do it on paper, I print it out, I sign it, I invite a courier, like FedEx, DHL, whatever you have
here, pay 200 Euros. most probably. (coughs) I’m sorry. Send it to here, takes at least one week. You open it up, you sign
it, you invite a courier, pay 200 Euros, and it goes back. And we have spent 400 Euros, which is like 600 locals here, for a contract. Instead, I just signed, as you saw, take less than a minute. If I hit that link, Send Container E-mail, the e-mail client opens up, basically Outlook opens up. It will become an e-mail attachment. I send it to you as an e-mail. You open it up, the same container, you put your signagture, you click the same link, and it goes back. Less than five minutes, signed. Cost, zero. So, that’s why we are
pushing this in Europe. That’s why our society uses it, because zero cost, ultra fast. And environment-friendly. Yeah. So those are just couple of examples of the solutions, but my point is that every… And like, if I do a bank transaction, I use this. I use this PIN one to login. If I want to confirm the bank
transfer, I use the PIN two. It’s your signature. So I’m using the same tools everywhere, and that’s extremely important. Then especially elder people, or people who don’t
use computers so often, they get used to it, they know, “Okay, I can do that. “I can always do PIN one and PIN two. “That’s easy for me. “I have learned that, I understood that.” So going back to the presentation. Let’s see what happens here now. Ah! So, we talked about elder people. The second important thing… First important thing was everybody has unique
identifier and ID card. That was the first thing. Everybody has access. Second thing, the communication has to be very good. I mean, like, internet everywhere has to be very good. Third thing. Everything needs to be connected. And I will answer the Big
Brother issue later on. But if I say connected, what it means, for the people, it will be normal. If something happens with you, let’s say in Western Australia, you break a leg. Sorry about that. You are treated. The hospital takes X-ray
pictures, everything, but you live here in Canberra. So after a week here in Canberra, you went to a doctor to re-examine your knee, or leg. Would be nice to know
what they actually did with you in west side. Would be normal. But always the data travels with you, because you are the owner of the data, and that’s a very important point. Data belongs to the person in Estonia, not to the government, to the person. And I, as a person decide who sees that. It’s mine to decide. Would be nice, right? To do that you need to start working. You need to force hospitals
to share information. They can only share information if you have a unique identifier, because if you don’t have it, do I know who the John Smith is now? No. So it’s not only like
digital signature or voting, it’s basically everything. Like, in healthcare, in
education, everywhere. It’s an engineering thing. It’s not a political thing. So that’s how we present it. All the blue cylinders
are government registries. There are more than 900 of them, and in every country, basically
the number is the same. Because in the digital world,
countries are same size. It can’t be that Australia is 20 times larger than Estonia, so
in our hospital system, we only have patient registry, and the next step is symmetry. Because we are small country, and we can’t afford a system. But you, as a large country, you need much more functions than we do. You can do the operations and treatment and everything that we can’t. Looks silly, right? Now, our hospitals works exactly the same way like your hospital. You just have more hospitals, Or you have like… Basically, you’re talking about the same Excel table, you just have more rows, but attributes are the same. We both have names, we
both have passports, we both have using services. The cost per transaction is actually higher for us than for you. So it’s actually for us,
it’s actually a luxury. For you, it’s a commodity. So there’s no excuse
that you can’t do that where like, “Oh, you
are the small country.” I’m like, “What’s your excuse?” You’re the large one. Cost per transaction’s so small. Why can’t you do it? Today, in the time of cloud, it’s only scalability issue. Takes less than three minutes to increase the power, the performance of the server 10 times, 20 times. Just adding clicks, how many
servers you want to buy. There’s no excuse that you can’t do that. Or Estonia can’t do that
because you are small. You actually have way better platform, but everything’s connected. Also private sector
companies, if they want to. That’s a picture that
we use for politicians. The real picture is like this. (laughter) Why you laugh? (laughter) So all the green dots, all the green dots are
registries or applications, and all the black lines are connections between those systems. And actually, it looks like spaghetti, but I’m really proud of this picture. We have full understanding
of what happens here. All the dots are registered. All the attributes and tables inside those green dots are registered. I know what kind of data
this green dot is keeping, and what kind of data
that green dot’s keeping. And if they share data, I know what kind of data they’re sharing. I can’t see every transaction, but I know why they have this link. And I also know if I have to remove this, or replace it, what will be affected. I know that. My team sees those transactions in consolidated way, so there’s no one administrator in the system. We just see that, “Okay,
here is unusual pattern. “We should interfere.” We see ten times query increase, what’s the reason? If there’s a cyber security problem, what’s the reason? But that’s the only thing we see. We don’t see that Tom asked information about Ann. We can’t see that. It’s extremely powerful. There’s no one
administrator for the system that actually sees all the systems. There’s no one that type of guy. It’s fully 100%
decentralized architecture. So what it means is every house, every ministry, takes
care of their own stuff. Even cyber security. And if one green dot fails, let’s say for example that
hackers can get in here, okay, they can get part
of the information, but only that part. They can’t get further,
because those links are only for certain purpose. I mean, like there’s only limited data. For example, let’s say
that this is car registry, and this is insurance registry, and now you are here
in insurance registry, and then start pumping
information from car registry. Already unusual pattern. We see that, and we close it. So extremely good. And I was proud this year
in Mobile World Conference in Barcelona, I was staged
together with Intel CEO, and VMWare CEO. They have started to talk about it. All the corporations should
build their system the same way because the old concept basically puts firewall around your systems, and you think you’re safe. You are not. So the old concept is
that if you get through the firewall, basically
everything is open. That’s bad. In our case, we have firewall
around every green dot. So if you getting
anything, it’s not enough. And if you want to take this system down, theoretically, it’s possible, but you have to design more than 800 different cyber attacks,
because all those systems are built with different technology. We use custom software a lot. Some of them use Oracle databases. Some of them use four square. Some of them use Java, some
of them use Microsoft Tools. So you never know. And if you wanted to take it down, you need to start designing
different type of attacks and designing 800
different type of attacks. Theoretically possible, practically, no. So that’s why the thing that NATO has the Cyber Security Excellence Center in Tallin, it’s not a coincidence. It has a reason. So the people who
actually figured this out already like 20 years ago,
extremely smart people, and we’re proud they did that. But, for politician, this. This picture is actually misleading. The ones who are, know anything of programming, it looks like a service bus. It isn’t. It’s point-to-point connections. If this point needs to
talk with that point, they have direct connection. There is no like, there is no X-route they’re going through. That’s the picture is misleading. Don’t be fooled. So but okay. You put this in place,
but still government institutions, we all
are the silos right now. I don’t work with Ministry of Culture. They’re all idiots. You know that feeling. You have the same. Actually, I like the
Ministry of Culture people. I have a problem with
the Ministry of Justice. (laughter) So how do you force them? And this is extremely important when you’re building
this information society. In many cases, normal
person doesn’t understand why you need to push this
or that kind of thing. The thing that Finland
offered the ID card voluntary, “If you want to jump in, please.” And like, they don’t. You have to force them. In most cases, Estonia uses system or method, innovation through pain. Pain means that to make it better, you have to feel some
pain in the beginning. For example, we forced all the schools to use e-school, a communication platform between a teacher, school,
parent and student. And it was year 2002, not 2015, 2002. Go back 13 years. Imagine elder people using IT. Most of the teacher elder
people, like using IT. “Do I really need to
put all the kids here? “And topics, I can’t even see that.” Yes, you have to. “You can’t push me!” Yes, I can. (laughter) “How?” I don’t pay you. “Okay.” (laughter) So the whole implementation
took two months. And the hard one, like, I mean there was some resistance, but the headmaster basically
refused to pay out the salaries before the grades are inside system. And the best one, they suffered two months and then it was done. The same with this. Basically introduced a law that the government can ask information from the citizen only once. We call it once only policy. The ones who are more active with Europe you know that in digital
single market strategy there is also once only policy. That same principle
should require in Europe. It’s not easy to to, because Europe has the same problem than you. If you don’t have that unique identifiers, it’s really hard to do once only. But we introduced the law here. Only at development, and
you can see the jump. So what it means is that certain type of information can be located only in its original place. Passport information can be only kept in population registry, nowhere else. If any need that information,
you will go and ask. That’s the thing. You will go and ask that information, and you get back, but you can’t store that information in your system. That’s again why the communication has to be so good, up and running. Because the system doesn’t work if you remove part of it, important part. So, and now it gets even better. And also, the society likes that. I mean, like, they like the thing that currently you have to run every paper to one ministry, and
then to another ministry, and then a third ministry, and why? I mean like, I already
gave it to one ministry. Just ask it from them. And they like that. They start demanding it, and that actually improves the system by itself. So now we reach most
important question for you. Big Brother. I always like, when I’m
in Anglo-Saxon country, I always like this part. You can’t do this because the government becomes Big Brother. You can’t trust our government. The government has historically shown that if he has all the data,
it might cause problems. It’s okay that US government
will have all our data. That’s fine. That’s totally fine, but
our government, no way. This thing knows more about my health than myself, my doctor, and my government. This thing knows like very secret stuff. You can’t imagine what
I have done with this. I can’t imagine what you have done it. And it’s all known, but
not to your government. And you trust it. You use it. This doesn’t have GPS. This has. Contacts server after every 30 seconds. Where are you? If this company wants to sell your data to the third person, nobody knows before they do that. Google definitely does it. They sell your information
to the marketing purposes. How you control it? You can’t. You have to trust them. And we all do. Raise your hand if you
don’t have a smartphone. No hands. So (mumbles) (laughter) Start trusting your government. So, how we do that? How we build this trust? We put big person in charge. So we basically become
your own Big Brother. Not your own, but your
government Big Brother. So by law, all information, for example, all the patient records, can
be accessed by any doctor. Okay. If you access this information
without any reason, we will put you in jail. I’m sorry, I’m just doing another example. So the thing is that
if you ask patient data without reason, you get… Okay, you will be released
instantly off this job. You can’t do your job anymore. And if you think about it, if you’re a doctor, you
have studied seven years to become a doctor. Then you do four years practice. So you waste 11 years of your
life on selling something. And now you want to sneak somebody’s data and it’s discovered, and
you get instantly kicked out from the system. You have to start from scratch. Is it worth to do that? Okay, let’s say if the
newspaper pays a lot, maybe it’s worth. So if you pass this
information to third person, three years in jail. You have to get really well paid. So I will show to you how we control it. I have to switch screens again. And we have patient portal. Sorry, it’s in Estonian. I haven’t built it in English version. I will just… It’s a log book. I click now. Mmm, internet! So what it means, I can see in that date from that hospital, my data was accessed. Alright, that was the doctor. And if looks logical for me, I know that on that date,
I had an appendix surgery. So, okay, yes they had to access my data. It’s normal. That one. That’s my cardiologist. Yes, I visit her. Okay. This one. That was the guy who actually surgered me. The appendix, but it happened… No, sorry, it happened actually year less. Sorry, I’m in the wrong year. It was Spring 2014. It was Spring 2014, but here
is something in November. Basically, I already have a point. Why he accessed my data in November. I was in that hospital in May. And this is the guy who
doesn’t have an excuse. The thing happens what
I just explained to you. But the guy saved my life,
so I don’t go after him. And it actually says that he
did some kind of documentation, so it’s end of the year, most probably he missed something and
need to correct something. It’s fine. But you get my point. I can do the same with police data. I can do the same with any data. I can turn to any register holder and ask, “What you collect about
me, who can see that? “Who has seen that?” And the same rules. After work, jail. The same rules apply to everybody. So now you start controlling it. You start controlling the whole system, and people like it,
and people are starting to trust our government,
and we have reached in the situation at
the moment, for example where companies give
all their transactions that are more than a thousand Euro, all those transactions, they give this information to government, because this helps government to control that VAT and tax frauds. Because companies want to have transparent and fair business environment
with everybody’s equal. That nobody’s cheating
with taxes and stuff. Everybody wants to be honest. And there are still some cheaters. And to reach, for those cheaters, the only way is that
everybody gives out the data so we can match the connections, and if the connections
match, everything okay. If the connection doesn’t
match, there’s a cheater. And it has helped improve
the situation significantly. VAT tax is the second largest income for Estonian government. We have been able to improve that income more than 12% during last year. So imagine. We basically have like cleaned all the black market
out from the government, from Estonia, only
thanks to people’s trust and the entrepreneur’s trust. You can’t understand it,
but let’s think about it. Let’s assume that you have
some kind of lumber company, and you buy and sell lumber. And what if I get your information from Tax and Custom. I know now if all the partners, I know from whom you are buying. I know to whom you are selling. I’m taking a loan, and I’m
offering to your partners 10% for the deal. I basically steal all your customers. I subsidize this for one year. You’re out of business, and now I’m rising the prices in a way
I can pay back the loan. So easy it would be to
push you out from market. You already okay with that actually now. You’re trusting banks. Bank have the same information. They do the transaction. They know. You are trusting banks, so can you trust your government? It goes back to that point I just said. You trust this, and of course government has to earn it, but you
should trust government, because if you trust government, if you have those terrific tools in place that engineers need, you can create, enormously great stuff. And to make another example, if you have all the business transactions, you have full understanding
of your economy. Not anymore on yearly
basis, like you do now, but you have that
understanding on monthly basis. So basically, you can run
future prediction models on top of this data and then
have these kind of things that for example, with 80% probability,
if you don’t do nothing, in East Estonia, in chemical industry, during next six months,
we will lose 1,000 jobs. And not only that 1,000
jobs we are losing, that we are losing , like
this like subcontractor gets hit, that subcontractor gets hit. That will be a disaster of that region, because they are only employer, so we can do something, or
at least we can be prepared, and offer solutions six months ahead. So without reacting to
the things what happens, government can start to be proactive, but that’s the point. That’s the new type of challenge. It needs totally new type of people. And the current way with the politician has never done anything
else than being politician, you’re not good enough. Those tools become so powerful that this needs very
experienced people to run them. And it demands all
totally new type of people to be the management of the country. You can see this happening in Singapore, because they run the country,
basically like a company. But we can do the same thing in our type of countries. If you have this trust from a citizen, they trust data to you, and you actually can be a better manager. Of course, it needs better
people than we have now, but that can be improved
through the elections. So, agenda. What matters, it’s not confidentialty. The thing that okay,
we can’t have ID card, we can’t do this number,
because it’s Big Brother, and we don’t trust the government, and we all understood it’s most valuable maybe 20, 30 years ago,
but it’s a relic now. It’s not confidentiality. Its control that matters. And it’s sad that I only got one hour, because I had like, I had 43 slides, and I am on slide 15 now. (laughter) And I actually wanted to
talk about e-residency more. You have only exactly one hour, or we can do ten minutes more? Ten it is. So I will pass many things. I mean, I don’t talk about, I had the goal that every e-service has to be so that if it’s used, it takes less time to use
that service than boil an egg. That was a goal, and we ended
up with ridiculous stuff. I mean, you can actually open up a company with 18 minutes. And we were so proud, world record. Company with 18 minutes. Basically, you have idea, you can have your company and bank account on the same day, you can start working. And after everybody actually gets sober, you’ll think like, “Oh, who
needs company with 18 minutes?” Figuring out the company
name takes a year. Okay. So if you’re working so easy, the votes are actually get started. If it’s so easy to create the company, it’s very easy to make a fraud. And that’s why UK actually demanded that in Europe, you should be able to open up a company with less than 24 hours. Then they went back and said, “Okay, we have 18 minutes, “and the result is this, that people “start cheating with VAT, and the only way “how we can fight back
is that those companies “have to give you all the information.” Only then you can fight back. Is your society willing
to give the data to you? Obviously, the answer is
no, so it’s different. But I’m not talking about that. Jump, jump, jump, jump… That’s important. We have no legacy policy, so there can’t be any government system that is older than 13 years. So even if it works,
doesn’t care, rewrite it. You have to think about it. It’s a bloody smart idea. According to OCD, Estonia has the best e-health systems in the world. Those systems were built in 2004. Those things invented, okay, actually Microsoft
invented them in 2002, but Apple copied them in 2007, so let me be clear there. But people habits are changing. Our family doctor, here’s the baby. Okay, let’s weigh it. I put the baby on the scale, okay. Stay. Okay, weight. Stand up, please. Yep. That’s the current tools. Instead, like, “Weight, 4.5. “Height, 54.” Voice recognition, easy. Hands-free. People like to use these kinds of tools. But if you stay and keep staying, and like okay, yeah I built
this stuff in seventies, it needs to be here, like,
and for next century. And like ridiculous. We all understand that. And also, we’ve looked at cost side. And Estonian IT budget, all the salaries, all the innovation money, everything, all the maintenance cost, 50 to 60 million Euros per year. Million, not billion. M, mmm. Million. I just heard like the Victorian department wrote off like one
billion on some project? I could run 20 years of
Estonian IT for that. Okay, no, no. Not 20, you’re Austrialian, so 15. So if everything is digital, it actually gets really interesting, and that’s why I’m saying
I’m kid in a toy store. If everything’s paperless,
if everything is digital, it creates new type of
challenges and opportunities. You know, we have a
quite strange neighbor. (laughter) I mean like, and it’s not Latvia we are
talking about, or Finland. It’s another neighbor. And they equate in Russia as you know, and they have occupied
us 70 or 80 years ago, and you never know what’s
there in their mind. They just officially have
said that they want to, okay, restore the Great Russia again. It also includes Alaska, so I don’t know what they’re going to do. How they’re going to get that back, but they started from
Crimea as you remember. You have your own personal
touch with Malaysia here. So you never know what happens. And when the Crimea went happened, we were actually sort of concerned, so we thought, can we actually
run a country from the cloud? Even if the country territory is occupied? Think about it. We have e-election, so
location independent election. Estonians all around the world can elect. Parliament can work
location-independently. Cabinet can work location-independently. Court system can work
location-independently. Tax system, location-independently. So if everything is location-independent, who needs location? Theoretically, it’s possible. We started to work with that idea, and we invented a new concept. And whoever knows Liam Maxwell from UK, Liam helped us here a lot, I mean, I give his team has been very supportive with us, and we
invented data embassies. So embassies for data. Currently, you know, embassies for people. But now we can imagine
that inside UK’s type of data center, there’s iron
cage, and that iron cage there are computers, and those computers have diplomatic immunity. Think about it. So basically, we are like Lord Voldemort in Harry Potter movie, putting ourselves in different places, like. But we are the good ones, of course. I mean like, yeah, you never know. Yeah, and of course there is
a problem you always face. But it’s the same thing
like with the phone. We already trust that model, so why bother? And if your territory is occupied, that’s the last thing you care. So what it means, I mean like, we can runt he country from the cloud, and what it also means is that there will be more and more countries in the world who actually
doesn’t have territory. There’s actually one
country in United Nation that doesn’t have any territory, and it’s recognized by
124 other countries. Not by US, and I don’t
know about Australia, but 124 countries have
recognized that country. Do you know what country it is? No. Go on. It’s Knights of Malta. Yeah, not the easy answer. But if you think about, for example, ISIS. It’s not a good example,
but it’s a good example to reflect what happens,
what will start to happen. What’s the territory of ISIS? Is it Syria? Is it Libya? Is it London? You don’t know. And that’s what’s the thing, what you see in information society. People are getting more and more clever. The head of IBM in Europe is Australian. Guy lives in Europe,
but he’s an Australian. So it always matters
what you feel in here, not so much where you actually are. And it’s normal that people travel, and one year they work here, one year they work there. It’s important how they feel here. And that’s why you see ISIS-type, or okay, on the positive side, for example if Silicon Valley wants to
create their own country, yes you can. It’s like Jews before country
of Israel was born in 1948. They managed, they acted as
a nation without territory. So it’s actually possible. It’s not something illusional,
or like it can’t happen. And this gets really interesting. If you remember, Estonia
is 1.3 million country, but we want to restore
our historical shine, so we want to be something good, something big, like Sweden. (laughter) Okay, from music point, we never compare to ABBA of course, but can we be 10 million country, like Sweden? And yes, I took this challenge
as an engineering problem. How can I do, as an engineer,
how can I do 10 million? First of all, you have couple of choices. You can do babies. Basically, you start
producing more babies, and that’s how you
increase your population and get more customers, and get more wealth to your country and to your people. That’s one way, Egypt increased their population
1.5 million every year. So, poof, one Estonia. Poof, one Estonia. Poof, one Estonia. Yeah that’s possible. That’s a solution. So I went to my wife… (laughter) Those are actually my children. So I went to my wife, saying, “Okay, I have this plan.” And she says, “Door is there. “Come back when you don’t drink anymore.” (laughter) So that wasn’t the plan. So the second thing,
how you can solve this, and how many countries,
including this country have solved this, is immigration. You just bring in more customers. Let’s call them customers, because they actually increase your economy. The latest report I saw from US, immigrants increased last, it was growth more than five percent. Without illegal immigrants, the head of their taxes says that there won’t be any other country in US without illegal immigrants. So they are needed. Germany, France, Sweden, they all actually benefit from that. They bring in good people. Yes, there are among them also, there’s a radicals, but they
just bring in more people, and that’s the basic of
the economical growth. And there’s a problem. Nobody wants to come to Estonia, because again, latitude
is 59, so it’s dark. Lots of suicides and you drink only like, that’s the only way help get warm. No, I’m kidding. But on the same latitude,
there is Sweden and Norway, and even if the ones who
are actually are willing to come to hard conditions, if you have like Sweden and Norway, it
has loads of social benefits. No benefits. So it’s was quite easy choice where to go. They must probably try
to go Sweden, Norway. And you have limit how many immigrants can come to Estonia. It’s 1,200 every year. That limit has never reached. So that’s just to express the situation. So even there is a huge
immigration problem in Europe and yes, we will have
our quota of how many we have to accept, and we are
glad to accept them, et cetera but most probably they don’t stay, because of the tough conditions. So if Mohammed doesn’t want
to come to the mountain, the mountain has to go to the Mohammed. Now we are able to serve
Estonians all around the world Already know. Person in Silcon Valley
participates in voting, participates in taxation, anything. Making part of their society. If it wants to express his
ideas in political, please. I mean you can be part of the
community in its true way. So. Invented new status called e-residency. That’s the beauty. You can start being part of our society without actually moving to Estonia. So you want to live in
Tonga or in Australia, fine. If you want to run your
business in Europe, and this is important. Not Estonia, Europe. All the countries in Europe are equal. So if you have your company in Estonia, it’s European company. If your bank account in
Estonia, European bank account. So all transactions very smoothly. All document exchange, everything, like you are inside Europe. You are like the same. So free movement of data
and labor and everything. So voila. You can run your European business just being here in Australia. And this is not tax haven. So we don’t want to copy Luxembourg or like Switzerland, or
any of those tax paradise. We actually want to conquer the world slightly different way, through the, how do you say, positive service. The thing is that if
you don’t use our roads, if you don’t use our healthcare system, you don’t use our educational system, you just use some electricity,
you run your stuff on our service that you pay for, then why we should tax you? There’s no way why we should tax you. But you are Australian tax residents, so your taxes should be paid here. Sure, right, that’s the truth. So what we want to
achieve is to physically with one click, you create,
you get an e-residency, and with one click you create a company. The second click, you
create the bank account, you’re up and running,
and you do your stuff. You sell in Europe, you do your stuff, you provide your service in Europe. The money that lands in a bank account, Estonian bank and Estonian Tax and Custom takes care of that money in a
way that the IRS in Australia, the tax in Australia,
tax department Australia is happy, because they get the tax. So you are happy. You have hassle-free tools in Europe and you can focus on
whatever you’re good at. So basically if you’re drummer in a band and you play in different bands, you know everything about drumming, but you know nothing about accounting. Fine, we take care of that. But you still can be an honest citizen, not hiding your incomes
somewhere in 80 places. And you just enjoy the
benefit that’s so hassle-free. You don’t have to do anything. It’s taken care of. That’s the environment we would like to provide to the
world, because trends shows that more and more people
become freelancers, so they actually provide
the service globally. Business statistics
estimated that by 2020, 40% of US labor force will be freelancers. They are good at something, but not good at accounting
and all that stuff. And we take that hassle away. That’s the dream, that’s the vision that we are fulfilling. And they run this project, have a startup and the start has been extremely good. We basically started
with B-dal last December, but then you have to come twice to come to Estonia to get the card. Now you don’t have to come to Estonia, but so we basically started
with May we can say. So the first three months, we got more than 5,000 paying customers. And more than 20,000
is in the waiting list. Problem is that you have to see Estonian officer, because
we take fingerprints. We do the face recognition,
we take fingerprints, and we do copy of your passport. And closest embassy to you is Tokyo. There will be in Sydney. So that’s the point I’m making. It’s just not reachable for everybody. In Africa, they only have one in Cairo. So in Asia, we have one in
Beijing, in Tokyo and New Dehli, and okay Ankara, also. That’s Asia. So what we see here is
there’s an interest. There are positive trends that we like, and yes, there is a
potential that we can grow because it’s a digital growth. It’s not a physical growth. Like Facebook grows their users, so it’s digital growth, it’s scale able that we can reach 10 million people, if you worked off this and if
you still trust this vision. But what you’re kinda
gonna see in you future is that there will be many countries, like Singapore, Dubai, whoever
offering this e-residency. That will be a normal thing. And that’s will be the normal thing that you are Australian citizen, you are the Australian taxpayer, but for certain purposes, you have Singapore e-residency, Estonia residency. Singapore because, I don’t know, for financial services. Estonian one because of European presence. And use all the tools, and use
all the signatures and stuff. You can all do that here. So the life will change. You will start living in a place you like, in Barcelona, in Rome, like
wherever you like to live, and you run your business
where it’s suitable for you, and still be a like
normal, honest citizen. That will be the dream of Estonia, that whole the world should look like. So if you know this picture, Uber, the world largest taxi
company owns no vehicles. Airbnb, the world’s largest accommodation, provides almost no real estate. And let me present, the world largest country
has only 1.3 million physical residents, citizens. That’s our dream. And thank you for having me here. And this was my presentation. And see you soon. (applause) – Taavi, that was absolutely fascinating. Thank you for joining us, and I’m sure those people that are working with the Digital
Transformation Office agenda have got a lot out of that. We’ve got a long way
to go in this country. I hope you’re meeting with the
Digital Transformation Office and espousing your… – My plane leaves at one, so. – And fascinating around the trust issue. I found that very interesting, because fundamentally where we failed in this country, was
getting that level of trust. – Just to be clear, it’s not, that trust is not the only Estonian thing. All the Scandinavian
countries, like Denmark, Norway, Sweden, Finland, our neighbors, Latvia and Lithuania, they all have that. So it’s not just an Estonian thing. They all have that, and for example, in Estonia, we keep some things secret. For example, private
sector income’s a secret. My salary as public sector officer, that’s of course has to be public, but the private sector is secret. But it’s open in Finland, for example. Everybody knows how much everybody earns, and it creates jealousy,
and we thought that okay, that might not be,
that might be too much. But that trust is not only in Estonia, so all the Nordic has shown that that transparency and trust can lead into good stuff. – Well, ladies and
gentlemen, please thank Taavi for joining us this
morning, and fascinating. We haven’t got time for
questions, unfortunately, but amazing presentation. Thank you for coming. – Thank you. (applause)

Stephen Childs

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