Prime Minister questions the adequacy of pensions

Prime Minister Lawrence Gonzi told Parliament yesterday that the pensions reform unanimously approved four years ago had reached the time for review. While the government would be involving World Bank experts to move forward, the real challenge was not the pensions' financial sustainability but their adequacy.

Answering questions by the opposition after a statement on his attendance at the European Council's meeting held earlier this month, Dr Gonzi asked whether the capped ceiling on the highest pension would be adequate within 10 to 15 years. The fact that Malta did not need to freeze or reduce pensions did not mean that one should not be concerned.

Earlier, Dr Gonzi said that Malta had to work to reach three out of the five targets mentioned in the Council's conclusions. The government was drafting realistic targets to be reached by 2020. Such targets would be announced at the opportune time.

Although the employment rate was growing fast, it was not at the same pace as that of Germany. Malta had to work to reach the 75 per cent of people in employment between the ages of 18 and 65.

On women's work participation rate, he said that this was on the European average for the under-30s but was still facing problems for working women above that age. The Budget had taken measures to address this issue and an increase had already been registered.

Dr Gonzi said that the fact that Malta's compulsory education ended at 16 years of age and pensionable age was reached at 61 created statistical problems, and exact comparisons on the work participation rate could not be made with the European average. According to the EU, those retiring at 61 were considered as unemployed or inactive.

He disagreed with the opposition's views on early retirement, saying there was a significant difference between early retirement schemes and voluntary retirement programmes, the latter implying that workers found other jobs or were still seeking employment. This was the case with dockyard workers, many of whom had found jobs in other sectors.

Dr Gonzi said that the opposition's economic theories had not changed since the 1980s, and Labour still believed in subsidising such enterprises as the dockyard instead of encouraging and incentivising human resources towards sectors with growth potential.

The government had subsidised the dockyard for seven years according to a plan, agreed to by the GWU and Labour representatives, which had specific aims and which was approved by the EU. Many of these aims had not been reached for a variety of reasons, inducing the government to take the necessary decisions because the dockyard was costing the government millions of euros. The opposition had criticised the government for these decisions and for reforming the transport sector, which was being upgraded.

There was a great difference in the economic strategies applied by the government and those applied by the opposition. Dr Gonzi said that if Malta were led by Labour, the country would be facing serious difficulties. The government's economic strategy exploited the country's potential, encouraging people to engage in commercial and economic activities which gave results and which gave workers dignity through work.

The Prime Minister said that legal migrants who had a work permit had to enjoy the same rights as others. There should therefore be a system where workers, even those who were vulnerable, were not exploited.

Dr Gonzi dealt at length with the issue of poverty. He said that one had to put more focus on the report published in January, which made an analysis of those Maltese who were living at the risk of poverty, than on the social inclusion and poverty report which focussed on perceptions. Different strategies had to be applied in both cases. He said that the European Council did not speak of this.

However, the report confirmed that Malta had a social networking system which was effective and had led to a drop from 30 to 15 per cent of those living at the risk of poverty. He said that this issue should not be politicised.

The Prime Minister spoke on the issue of abortion, adding that the Nationalist MEPs had voted against the social inclusion report because of the one page therein which favoured abortion. These MEPs had had the courage of conviction to vote against, contrary to what two Labour MEPs had done.

On a point of order, Opposition Leader Joseph Muscat said that if one applied the same spin, then the Prime Minister had been agreeing to abortion when he voted in favour of the millennium goals which included abortion. Malta had not even made any reservation like the Czech Republic.

Dr Muscat said he was convinced that both the government and the opposition were against abortion, but the spin by the government side on the two Labour MEPs was not credible and had gone out of control.

Continuing, Dr Gonzi did not agree and said that the two MEPs had voted in favour of a report which specifically favoured abortion, while the millennium goals, paragraph in the Council's report did not mention abortion anywhere. It was the opposition which was spinning the issue.

As regards budgetary consultations demanded by the European Commission, he said that Malta's position had not changed. Parliament would be retaining its sovereignty and no-one would be imposing anything on the country's Budget. One had to understand that the country's economy depended also on those of other countries, even those not in the EU. Malta therefore had to support measures which encouraged economic stability.

Dr Gonzi declared that Malta agreed to a bank levy as long as it was applied and accepted equally. But there was no agreement on taxing bank transactions because that meant a direct tax on consumers. Bank levies had been introduced in the UK, and the French Finance Minister and the German Chancellor had agreed separately from an EU level.

Referring to Frontex, he reaffirmed that Malta and Italy did not accept the Frontex rules and would not participate if things did not change.

He disagreed with the points raised by Alfred Sant (PL), adding that the former leader of the opposition was still against Malta having joined the eurozone.

Concluding , the Prime Minister said that the government's strategy on the 2015 vision was reaping results, moving forward in the financial services and pharmaceutical sectors.

The government administered the Budget according to the priorities marked in this vision. The Finance Ministry had also earmarked two other sectors with potential growth, these being the creativity industry and turning Malta into a logistics centre for activities.

Answering questions on EU sanctions against Iran, Foreign Affairs Minister Tonio Borg said that these did not go against the country's neutrality clause. Malta had a right to take a stand in international circles.

The European Council only identified the specific areas and approved the titles. The details of the sanctions would be discussed in July by the Foreign Ministers' Council.