A balanced budget and competitiveness should be the priorities of the next government, according to a study published this morning by the Today Public Policy Institute.

The document, entitled "A Strategy for Addressing the Nation's Priorities," focuses on the key issues which Malta's political parties may wish to consider in the preparation of their forthcoming electoral manifestos.

The aim of this document, presented by Martin Scicluna, is to stimulate a public debate on the major issues facing the country.

"We live in a tough, uncertain world. A fast-moving, global market has emerged. Europe is going through turbulent times. New economic powers are rising in the east and in the southern hemisphere. We must compete to survive," the report says.

"Malta's overriding priority should be to achieve a balanced budget in the medium term by reducing the deficit by at least 0.5% of GDP each year and by complying with the provisions of the new EU Fiscal Compact. Apart from contributing towards inter-generational equity, the resulting stabilization, and eventual reduction, of the public debt burden would also strengthen investor confidence."

Since the tax burden is already high and any further increase would have a negative impact on competitiveness, fiscal sustainability can only be achieved through expenditure restraint and a reordering of spending priorities, the report says.

SOCIAL BENEFITS REVIEW

The report says that a more cost-efficient approach to the provision of public goods and services, is needed. Access to social benefits, healthcare, higher education and subsidies should be streamlined through a combination of means testing and user fees.

"A critical reassessment of the existing benefits package should also be undertaken so as to distinguish between those that truly help to combat poverty and social ills and others that are not so effective in achieving the desired outcomes."

There should also be a movement towards a 'Dynamic Social Security System' based on common responsibility between the state, business and society.

"Such an approach would involve the non-state sector more than now. It would not simply address the financial limitations hampering the current system, but also implement a common vision to shift the system away from the traditional 'safety net' concept to socio-economic 'trampolines' whereby the state guarantees assistance to the socially deprived but encompasses intrinsic characteristics 'to bounce' individuals away from social protection dependency."

"In addition, the benefits structure should be further refined with a view to making work pay and removing disincentives to enter the labour market. The next step in pension reform, the introduction of a mandatory and privately-funded second pillar, should be taken without delay."

A determined effort should also be made to curb tax evasion and to collect tax arrears.

JOBS AND WAGES

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.

Efforts to get more people to become gainfully employed must, moreover, be accompanied by measures to increase their productivity.

Apart from increasing the share of budgetary resources devoted to raising educational attainment levels,  fiscal incentives should be given to employers and workers to dismantle remaining costly rigidities in the labour market and in working practices.

Furthermore, the considerable welfare gains would accrue to the economy if the existing partial wage-indexation mechanism was modified so that increases in compensation reflected efficiency gains, rather than just past inflation. A productivity-linked wage negotiated at enterprise level should become the standard feature of a reformed mechanism.

Resolute action should also be taken to reduce administrative procedures and reduce costs at all stages of the production chain.

EDUCATION AND STIPENDS

The study says a thorough study should be undertaken to identify why the educational system has failed so many students over the last two decades, and resolute action taken on its findings.

The structure and function of the Faculty of Education should be redesigned to make it into a more practical and relevant promoter of educational development by focusing its priorities on the subjects the student teacher is studying, rather than on methodologies.

There should also be support for the concept of life-long learning through fiscal and other incentives to make it easier for those in employment to pursue further studies or practical training.

There should also be a review of the stipend system to take account of today's social and economic realities and to ensure a better match between the supply of, and demand for, specific types of expertise in the national interest.

HEALTH

With regard to the heath sector, the institute calls for reforms to ensure the long-term affordability of the sector and 'access to those who cannot afford private care.'

The report calls for better hospital management, better procurement of medicines, improved community-based and primary health-care services and health promotion.

BETTER GOVERNANCE

In a section on governance, the report proposes the setting up of a commission to review and update the Constitution and another commission led by a retired Chief Justice, to examine every aspect of the administration of justice, including means of speeding up procedures and the terms and conditions of service of members of the judiciary and the magistracy.

The changes would include clear sentencing policies, more measures to combat corruption, the setting up of a drugs court, and a reform of the prisons.

In other sectors, the report calls for the creation of more jobs in Gozo, the reduction of emissions from vehicles, clearer regulations on building height, reform of Air Malta, environmental law enforcement, better roads, greater use of the buses, a reform of Enemalta, completion of the Flood Relief project and further pressure on EU and other countries to share Malta's immigration burden through resettlement while integrating those migrants who settle in Malta.

SENIOR PUBLIC POSITIONS

The report calls for a fully transparent recruitment process for senior public service appointments, one that is based on merit under the aegis of an assertive and newly constituted Public Service Commission.

There is also a fresh calls for enactment of the Freedom of Information Act and a merging of the Broadcasting Authority and the Malta Communications Authority to recognise the practical modern reality of the convergence of information technology, telecommunications and the broadcasting media.

The report says that the directors and editorial board of PBS should be appointed by a Committee of the House of Representatives, not by government.

The report also calls for stringent regulations to ensure the highest standards of safety in fireworks manufacture.