People living off State benefits will be encouraged to find work as Budget 2015 targets welfare dependency, according to the Finance Minister.
Edward Scicluna said benefits would not be cut but people would be offered incentives to stand on their own two feet.
The commitment forms part of the pre-Budget document released yesterday titled ‘Creating opportunities not dependence’.
“We do not want to see young people remain on welfare benefits for all their lives,” he said, noting that the welfare system had unintended consequences, such as leaving people passive and unwilling to work while fomenting abuse.
We do not want to see young people remain on welfare benefits for all their lives
He insisted the strategy would follow the positive outcome of schemes introduced in the last Budget to encourage people to work, like the tapering of unemployment benefits and free childcare for all.
The 64-page report that contains a statistical overview of key economic and fiscal indicators, maps out the government’s intentions but refrains from putting forward concrete measures.
Examples of abuse listed in the document included people who claimed to live apart to claim benefits as separate households and young people with a tendency to claim the formation of new households to be eligible for unemployment assistance.
The document was presented to the social partners at a meeting of the Malta Council for Economic and Social Development yesterday.
Prof. Scicluna said the measures would be announced in the Budget, expected sometime in November, after public consultations and discussions with the social partners.
The document says the government will be working on initiatives that will ensure individuals face “clear incentives to work and contribute to society and encourage them to steer away from dependency”. Prof. Scicluna said taxpayers would also benefit by getting value for money on the way their taxes were spent while ensuring long-term sustainability of the social protection system.
It would also focus on easing the health sector’s fiscal burden, which he described as “the number one pressure on expenditure”.
He said the public health sector was riddled with inefficiencies that would have to be addressed from a managerial point of view and by reforming certain systems. He ruled out any drastic action such as introducing a charge for free medicines.
Asked what had happened to the reform in the Pharmacy of Your Choice, a scheme by which people collect free medicine from private pharmacies, Prof. Scicluna said a team of professionals was working on it. Talks were also being held with health insurance companies to reform the current system, which saw companies paying clients who chose to undergo medical treatment at Mater Dei Hospital for free.
“The government today gets nothing from this while insurance companies pay clients who use the public health service as a thank you for not claiming expenses,” Prof. Scicluna said.
On a more general scale, he said Budget 2015 would maintain a growth-oriented strategy, ensure fiscal sustainability and strengthen competitiveness.
“We want to see a country taking on the challenges ahead with a certain level of confidence but not overconfidence,” he said.
Prof. Scicluna said he was optimistic that the deficit target of 2.1 per cent for this year would be met. The government was also expecting about €41 million in excise taxes on fuel collected by Enemalta and which remained outstanding because of cash flow problems at the energy company.
“We are expecting this revenue to reach the government when the deal with Shanghai Electric is sealed,” he said.
Addressing criticism over the increase in government employment over the past year, Prof. Scicluna insisted that although it had increased in absolute terms it was proportionally less than the previous year when calculated as a percentage of the labour force.
The document says the share of public sector full-time employment remained stable at 26.6 per cent in the first quarter of 2014 with higher employment registered in the health and education sectors.
Prof. Scicluna said economic growth was in line with projections but expressed concern about the negative inflation rate that could cause downward pressure on wages, which he insisted was not acceptable.
The key numbers
• Half-year deficit is €47 million higher than forecast.
• Enemalta has withheld €41 million in fuel taxes collected.
• The deficit target for this year remains 2.1 per cent of GDP.
• The deficit target for 2015 will be cut to 1.6 per cent.
• Real GDP is projected to increase by 2.3 per cent this year.
• Economic growth next year expected to be 2.1 per cent.
• Social security expenditure was forecast to reach €828 million in 2014.