More than a haircut and shave

These last few weeks a flow of statistics from the NSO and Eurostat have shown that our public finances need more than just a haircut and shave to be in good shape. We will be deceiving ourselves if we think that the current public finance weaknesses are only temporary and mainly caused by the current world recession.

The reality is that our public finances have structural weaknesses that can only be remedied by radical surgery. The improvements in our fiscal deficit performance in the last few years were mainly a result of the privatisation of a number of state-owned entities, the elimination of subsidies, and an economic bubble built largely on public and private consumption.

These deficit-reducing strategies are no longer available. We now need to look at new more radical ways of putting our public finances on more solid ground. If we do not do this, we risk losing the benefits of the welfare state that has been built with the hard work of hundreds of thousands of workers over the past decades.

This evaluation is not based on some political ideology, be it neo-liberal or social democratic. It is based on my conviction that a country that is not creating enough wealth will be unable to make the life of its people any better. We need pragmatic economic policies if we want to guarantee the social justice that is such an important value of our society.

The expenditure side of our public finances has for too long been ignored by the managers of our public purse. Our educational, health, pensions and other social services are at risk of collapsing because the financial model that sustains them is no longer viable. If this happens, the main victims of such a collapse will be those who are weakest in our society.

Of course, we have the option of doing nothing. This is politically convenient because a political party that proposes radical change to make social services viable risks losing the next election. But burying our heads in the sand is certainly not going to ease the misery of pensioners who are already not coping on the present national pension, and of thousands of people who have to wait for years because in practice the financial pressures building up in our national health service is leading to de facto rationing of medical services.

Curtailing debate on how public expenditure can be rationalised is a sure way to anesthetise public opinion so that it will not feel the pain that comes with a realisation that we need to work harder to guarantee high-quality social services. These services come at a cost and we all know that such costs have to be financed by the taxpayer.

We are already a high-tax country and if we continue to increase the tax burden we could affect our ability to attract direct foreign investment. The solution for our structural deficit problem should not be resolved through an increase in taxation, but rather by reduction in expenditure.

There is room for substantially improving the management of public expenditure that still suffers from a combination of inefficiency, incompetence and bad practices that can range from the unethical to the corrupt. This is a prerequisite if we are to convince people that the more painful reforms are indeed necessary.

The present safety net of our social services is not saving many of our people from hitting the ground of poverty. We need to mend it to ensure that those who are weakest in our society are given a chance to live their lives with dignity.

There must be no sacred cows in what services should be reviewed. Student stipends, medical services, pensions, the national insurance system and other social services are all items that should be included in the national debate that is needed to help us define the way ahead.

The cost of doing nothing is the betrayal of those in our society who can do little to improve their situation. This is a cost our society should never consider incurring.

johncassarwhite@yahoo.com