As time passes, one would expect the debate about the sustainability of our welfare system to intensify. Hopefully, it will intensify not so much through political overtones but through a better understanding of the economic and social issues involved. The point is that improvements in welfare services are seen to win votes, hence their importance from a political perspective.
On the other hand, the provision of welfare services is intrinsically linked to the level of taxation, as welfare services can only be sustained through taxation; hence their importance from an economic perspective.
The social aspect of welfare services arises from the fact that very often such services form part of a government strategy to redistribute income from those with higher incomes to those with lower incomes.
So far, the major issue of the debate has been the sustainability of our pensions system, with government seeking to achieve an element of consensus on how to reform the pensions system without penalising those that have spent a lifetime contributing to their own pensions through national insurance contributions, while ensuring that pensioners in 20 years' time or so would still be able to draw on a pension paid for by the public purse.
Another hot issue in the debate is the funding of our health service. The issue arises because doubts continue being expressed on whether our tax revenues are enough to finance the new hospital being built. The questions put forward may be understandable, but one really wonders why no one seemed to have doubted whether, with or without the new hospital, we could ever fund our health service.
Somehow, the cost of building and maintaining St Luke's Hospital never featured in anyone's mind, and even today we take it for granted. We claim that we cannot sustain Mater Dei Hospital, implying that we can sustain St Luke's Hospital. Obviously, we consider St Luke's Hospital, and the other hospitals for that matter, as a sunk cost.
Other issues related to welfare we barely speak of. Children's allowance is taken for granted as are unemployment benefits or the non-contributory pensions. One does not think about them until one feels that one needs them. Neither do most of us think of free medicines until we come to need them for one reason or another. There are also other aspects of welfare that we completely ignore, and possibly through the fault of no one.
When we speak of welfare we do not consider the various social initiatives taken by the government or by the non-governmental sector (even though partly paid by the government), be it among those that abuse of drugs, or those that have had to leave home because of domestic violence, or those that for one reason or another need some sort of support to be able to lead an independent life. The reason for this is that, in the government's annual financial estimates, expenditure on these social initiatives is not calculated when we make an estimate of the welfare gap. However, they are part of the country's welfare services as much as our health service and our pensions system, and as such need to be sustained.
It is important to appreciate what has happened over the years. Successive governments have sought to improve welfare services in their various forms by improving access to them, by creating new services, by improving their quality.
The basic concept has always been to make such services available for free, so the user and the taxpayer could never know what the service really cost. This has led to users not to appreciate their real value, and for some to abuse the system in manner as to take a benefit that they had no right to.
The answer to this abuse has been to seek to enforce the law in a manner as to ensure that only those that had a right of access to such services benefited from them. This still did not help either the user or the taxpayer to appreciate the real value of these welfare services. And if someone no longer had a right to any of such services, he would probably do all he could to continue benefiting from them - simply because they were seen to be for free and being for free means that no one pays for them. If matters were not like this, one could not explain the efforts people go through to obtain medicines for free.
We are, therefore, facing an issue not just of economic sustainability of our welfare services but also one of mentality, where what is made available for free is seen by many as being up for grabs. It is for this reason that the time has come for a rethink on the provision of such welfare services. We would still need to appreciate all social and political implications, as social and political cohesion are good for the economy. However, if we really wish to make welfare services economically sustainable in the future, we would need to look at how access to them is given.
I strongly believe that society needs to start understanding the economic value of these services. As such they cannot continue to be made available for free for those that qualify for them. We may have to start thinking of tagging a price on to them, which everyone would have to pay for, and right of access for free (fully or partially because not everyone needs to have free access to welfare services) would be done through a cash refund. This would also ensure that those government entities or departments that provide such services would need to increase their efficiency to make such services available at the lowest price possible.
It would start to help everyone recognise that there is no such thing as a free lunch and this would represent the first step in making our welfare service economically sustainable.