Editorial

Just before STMicroelectronics announced plans to cut its workforce at the Malta plant, the Prime Minister and his colleagues were striking high notes, emphasising that the islands' economy was still holding its own in the face of the turmoil hitting so many countries today. However much some may now downplay the likely impact of the planned job cuts at ST, the shockwaves of the recession are already reaching the islands' shores, with employer organisations calling for quick government action to ease the impact.

As if this were not enough, a new European Commission report is flashing red lights in a number of areas in the islands' economic reform programme. The problems may not be altogether new but, taken together with the measures the government is being called upon to take to meet the impact of the recession, they present a formidable task.

Giving an overview of the progress made in the national reform programme, the Commission starts off with some compliments, saying, for instance, that the programme "shows ambition in addressing Malta's challenges and demonstrates a good level of synergy and policy integration". The Commission adds that, given the ambitious plans, it seems more necessary to link these visions to the current situation, to give detailed timelines and quantitative targets for implementation and to develop clear monitoring and eventual tools.

From then on, the language becomes more direct. Paraphrased, it feels there ought to be greater consultation; the proposed healthcare reform measures seem inadequate; and there is also need for greater control mechanisms to restrict growth in spending. It pinpoints six challenges for Malta: fiscal consolidation, healthcare reform, regulatory environment, diversification of energy dependence; educational attainment and early school leaving; and lifelong learning.

The government had originally planned to balance its books by 2010 but it has now put off the target to enable it to give the economy a financial stimulus. Two main reasons are usually given for the rise in the deficit last year: the rise in the price of fuel needed for the generation of electricity and the amount forked out to finance the early-retirement scheme for dockyard workers. The Commission gives another factor: a higher-than-planned rise in the public wage bill, in particular in the healthcare sector.

It is precisely the healthcare system, and its sustainability, that seems to require greater national attention than it gets today. It is all very well for the country to have a state-of-the-art hospital, but is it sustainable in the long term? In the Commission's view, while the planned changes would allow for better resource utilisation and contribute to expenditure savings, the proposed reform measures seem inadequate. It points to the need of a more ambitious reform as the new national reform programme does not foresee any additional measures to support the financial sustainability of the system.

Social Policy Minister John Dalli has a hard nut to crack but, with the determination he invariably shows in pushing through work that needs to be done, he could make headway in the reforms that are needed to put the healthcare system on sound financial foundations.

There are many other points in the report worth serious consideration, but financing the healthcare system ought to be pushed to the top of the national agenda.