€192 m deficit forecast by 2015
Think-tank calls for means testing
The Maltese welfare system could be running a deficit of €192 million by 2015, a think-tank has calculated, urging a radical reform.
Welfare should be regulated by a dedicated body and there should be means-testing across the board, The Today Public Policy Institute has recommended.
In a report, the think-tank pointed out that, despite the gap between contributions and ex-penditure, the system's sustainability was ensured through the injection of funds derived from government revenue and not contributions, which already amounted to 50 per cent of the total collected throughout the year. But if the government's contribution remained unchanged, there would be no surplus of funds beyond 2011/2012 and by 2015 there would be a shortfall of €192 million.
In 2000, expenditure on the two-thirds pension was equivalent to 24 per cent of the funds from social security contributions. By 2015, expenditure will be equivalent to 81 per cent of funds generated by social security contributions, or 54 per cent of total funds, mainly due to a shrinking contributory base.
The think-tank's report does not provide solutions but simply stresses on the importance that the issue needs to be discussed sooner rather than later.
Asked why the report had no concrete solutions, the document's lead author, former Bank of Valletta chairman Joseph F.X. Zahra said there was no "magic wand solution" and that the institute aimed at looking into the values that should guide the reform.
The role of the think-tank was that of "crystallising ideas", he said.
The report, entitled The Sustainability Of Malta's Social Security System, called for greater interaction between the public, NGOs and the private sector.
Mr Zahra said Malta's social services system was unsustainable in its present form because the country had a universal system. There was no distinction between those living on the minimum wage and those who were very well paid. He said the regulator would determine a means-testing formula and assess people objectively on a regular basis.
"We've been talking a lot about means-testing but we need this now because we cannot continue having people depending on the social services system when they can afford to pay for services rendered. These are the reforms we are talking about. Let us rekindle an objective debate on the issue and take action," he said.