The welfare system is in need of an urgent revamp and delaying it will be detrimental to future generations, according to the former Central Bank governor.
“The state of public finances is not ideal and we need to ensure a good return on the amount we are spending on the welfare system. The longer we postpone making it sustainable, the greater the cost to be borne by future generations,” Michael Bonello said.
He was speaking as a member of the Today Public Policy Institute at the publication of a strategy document addressing the country’s priorities, including a call to revamp the welfare system.
“We must switch from subsidising goods and services indiscriminately to assisting those who really need it; switching from the safety net system to the trampoline concept, which will help people bounce back into the labour market rather than provide cash handouts, which solve the problem temporarily,” he said.
Mr Bonello stressed another point included in the document: the need for an overhaul of the country’s political system.
“We need to review our two-party system, maybe one day we get to a point where political parties cannot continue peddling budget-busting initiatives for popular support...”
He added: “A time will come when the electorate will question empty promises. Everyone knows health care cannot remain free for all until kingdom come, so why do you keep promising it?”
Institute director general Martin Scicluna said the document was meant to stimulate public debate on major issues. The document – released just weeks after a Caritas report proposed raising the minimum wage to help thousands of families at risk of poverty – will be presented to the three political parties.
The document does not propose any solutions but, rather, highlights the areas that need examining.
There are about 35,000 households at risk of poverty and something like 6,000 single-parent households.
The report says that a more cost-efficient approach to the provision of public goods and services is needed. Access to social benefits, health care, higher education and subsidies should be streamlined through a combination of means testing and user fees.
It suggests introducing tax incentives to encourage greater use of private health and medical insurance as well as improved hospital management to reduce the duplication of resources and shorten waiting lists.
The report says that incentives built into the social benefits and taxation systems should be further refined and targeted to encourage more adults, particularly women and the elderly, to enter the labour market.
It also goes into tax evasion and the collection of more tax arrears and calls for a determined effort in this direction.
On education, the report says that a thorough study should identify why the educational system failed so many students over the last two decades.
It proposes a review of the stipends system to ensure a better match between supply and demand for specific types of expertise in the national interest.
The report applauds recent efforts to update the Constitution and suggests setting up a high-level commission to examine every aspect of the administration of justice, including ways to speed up court proceedings.
On Gozo, the report proposes the setting up of a specific branch of Malta Enterprise to focus solely on investment promotion there.
It urges the implementation of the Freedom of Information Act, enacted in 2008, and a revamp of libel laws.
It suggests amalgamating the Malta Communication Authority and the Broadcasting Authority and proposes the appointment of the state television’s editorial board through a parliamentary committee rather than just government.