Sant calls for 'social plan'

Opposition leader Alfred Sant insisted yesterday that a review of the pensions system needed to be part of a wider "social plan" that encompassed all social services.

He said in Parliament that the so-called pension reform which the government had proposed in Parliament was only a half-baked exercise aimed solely at raising the government's revenue and devalued the word "reform."

He said the Labour Party had been following pension developments in Malta and abroad very closely. Indeed, as a government between 1996-98 it had also commissioned reports on the pensions situation.

Labour politicians, however, viewed the problem as politicians should, not as bankers or bureaucrats who were focused on particular interests. Politicians were duty bound to see problems and issues in the wider context of national interests and priorities.

The present government was repeatedly accusing the Labour Party of wanting to postpone the pensions review, making much of the fact that the party had made no submissions to the Pensions Working Group (the Spiteri Gingell group.) Yet the Nationalist Party had also not made any submissions. And it was noticeable how after the Spiteri Gingell group issued its recommendations, ministers had made it a point to keep their distance. Somebody at The Times had sought interviews with the Prime Minister and various ministers and was constantly referred to Mr Spiteri Gingell.

But was it really the MLP which was postponing decisions? The Spiteri Gingell group had made several detailed proposals, based principally on a model of the World Bank. This Bill, however, only amounted to cherry picking from that cake, adopting only the proposals to raise the retirement age to 65 and to raise the number of national insurance contributions needed for a pension to 40 years from the current 30.

Indeed, Dr Gonzi had admitted in March, not in so many words, that the economy could not cope with anything more.

The bottom line, therefore, was that this Bill would only serve to improve the government's cashflow and show Brussels that Malta was doing something about pensions.

The people, however, should not continue to be deceived. It was not true that contributory pensions would face a cash crunch in five years' time. Such a problem might only result in 2025-30 and even then, Malta would still be in a better position than many other European countries. This, however, did not mean that one should not do anything until that time.

The challenge stemmed from several issues of which the first was demographic change. There was no denying that the population was getting older and the number of pensioners in proportion to the number of workers was getting larger. But it was also true that Malta had one of the lowest worker participation rates in Europe and the participation of women was actually the lowest. Thus, raising the retirement age would not solve anything.

Another issue was the way the economy had run out of steam.

Dr Sant recalled that in the 1970s the Mintoff government decided that rather than having a pension fund, all revenues should go to the consolidated fund from where all social services would be funded.

The time was coming, however, for Malta to return to a system of funded pensions as well as a fund for health services. There needed to be a system where funding for the various social services was mapped out and everyone would know where one stood. This was something which would need time to bring about, and it needed to include everything. For while contributory pensions were not in deficit there were problems for social services in general.

One could not speak of contributory pensions without linking them to the other social services, including non-contributory pensions, but this government had embarked on what was only a superficial exercise aimed at pleasing the bankers and raising revenue, while it imposed more financial burdens on the people.

How could one consider a new pensions system without charting out a plan for the health sector? What would happen, then, if some government decided to impose charges on health services? Wouldn't that throw the pensions system off its rails?

The key to a comprehensive general plan, however, was sustainable economic growth of some four per cent.

This plan, which should enjoy broad support, should cover all social services and be linked to a timetable that would build action gradually, without burdening the people. Labour was suggesting that a new consultation process should start in 2009, and decisions would start being taken in 2010, these dates having been chosen to give the economy time to grow.

As it were, the Bill the government had moved would only result in a 30 per cent increase in the social security contributions which workers would have to make over their working life.

Concluding, Dr Sant said a Labour government would, therefore, revoke the increase in the retirement age and the increase in required national insurance contributions, since it felt that decisions on these issues should not be taken before 2011.

Other speakers will be reported tomorrow.