Editorial

There are a number of areas where, one logically presumes, political consensus should prevail. Only last Friday the Bishops of Malta and Gozo appealed to party leaders to remove the subject of relations with the European Union from acute political controversy and to deal with it objectively and in the best interests of the nation.

This holds true not only for foreign policy generally, but also for other areas like education, rent reform and, particularly, pensions reform. Apart from the fact that in such a small island such consensus is perfectly logical, we simply cannot afford the luxury of changing policies on such matters with every change of government, wasting time, energy and resources in the process.

The need of consensus on pensions reform was stressed in a memorandum to the Prime Minister and the Leader of the Opposition drawn up by the newly-formed Alliance of Pensioner Organisations (APO), made up of six associations representing some 15,000 pensioners between them.

The APO rightly points out that Parliament has reached consensus in other important areas, specifically referring to the financial services legislation passed in 1995, to prove that consensus on pensions reform is also possible. It even quotes the present and the former Finance Ministers on the desirability of such consensus.

The aims of the APO are to ensure that any pension reform will not make the position of present and future pensioners worse than it is now, and that existing anomalies - most notoriously that created by pensions given to MPs - are removed.

These are perfectly legitimate objectives; however they must be seen in the context of the urgency with which the pensions problem - which is growing more serious by the day - needs to be addressed. Unfortunately, with a general election looming in about 18 months` time, the likelihood of any radical decisions in this area, even if both major political parties are involved, grows fainter every day. Yet it is precisely radical decisions that are called for if the country is not to be faced with an impossible burden.

Again unfortunately, the urgency of the problem seems to escape some major players like the Labour Party and the General Workers Union - the island`s largest - who fail, or pretend not to realise that the longer a meaningful reform is postponed the greater the pain the country has to suffer.

The simple fact is that with current demographic trends, namely a constantly declining proportion of contributors to beneficiaries mainly because of a lower birth rate and longer life expectancy, the present system - even if capped, like National Insurance contributions, at an increasingly unrealistic ceiling (fixed in 1981) - is bound to break down.

Government has long recognised the urgency of pensions reform and had set up a National Committee on Welfare Reform which after almost two years had produced a draft report which, rather than as a point of departure, was taken by some of the players as a fait accompli. Matters have been at a standstill since the resignation of the chairman, former Central Bank governor Anthony Galdes, last November, apparently following Finance Minister John Dalli`s statement in his Budget Speech about Government`s intention to separate National Insurance contributions into their pensions and health components.

Indeed, the future of the commission itself seems unclear. So a priority should clearly be to revive it and possibly give it a target date for the presentation of a final report: Social Policy Minister Lawrence Gonzi told The Malta Business Weekly last week that the government will announce a decision on the commission "within the coming days", saying that within the next six months "we should have a concrete proposal to put to Government".

In its memorandum the APO, justifiably eager to safeguard pensioners` existing rights, and to ensure they will not suffer any drop in their standard of living, suggests including such safeguards in the Constitution and the appointment of a Pensions Ombudsman.

It is felt, however, that any such provision should only be couched in general terms, without entering into specifics. After all, other countries have shown the way to a successful pensions reform, and it is increasingly pointing towards a tripartite solution, involving a basic state pension, a mandatory private pension scheme, topped up with a voluntary pension scheme. But this does not mean that other solutions are not possible, with or without state intervention.

One thing is certain: while, in the national interest, pension reform must be tackled with the utmost urgency, pensioners should in no case be worse off than they are at present.