Budget 2011 � �Oui � la r�forme!�

Published on the Malta Independent¸ issue 31 October 2010


Malta’s Budget for 2011 was presented in Parliament on Monday as pouring rain pelted down with unprecedented fury. Yet we did not take to the streets protesting as they did in France and Britain¸ so only torrential rains wreaked havoc by flooding this small island. An undertaker is sure to make it to the Guinness Book of Records for having his store of unfinished coffins floating merrily away in the torrential storm waters. Certainly an omen of the post budget blues. But why complain when we look at how other Europeans have been protesting against budget reforms while we in Malta grin and bear our crosses.

There were no police in Palace Square using tear gas and water cannon against rampaging young people¸ as was the case in Lyon. In France¸ strikers continue to protest the pension reform plans of President Nicolas Sarkozy¸ a key part of his reforms designed to reduce public expenditure. As a result¸ these strikes brought about a shortage of oil and petrol around the country. The Interior Ministry said police had a tough time battling the worker blockade of three major fuel distribution depots. No strikes were planned by motorists against the latest hike in fuel prices announced this week.

True the French government stood fast in proposing budget reforms (long delayed) in Parliament on a Bill raising the retirement age to 62. The French government – not unlike us Maltese who are heavily in debt – says raising the minimum retirement age from 60 to 62 and overhauling the money-losing pension system are vital to ensure that future generations receive any pensions at all. Paradoxically¸ there has been no mention of pension reform in the 2011 Budget presented by the Minister of Finance¸ although it goes without saying that the national deficit does not account for the shortfall on pension funds. According to David Spiteri Gingell¸ the guy who has worn so many hats under this administration¸ the low fertility rate and higher life expectancy have turned the pensions issue into a veritable time bomb. Six years ago¸ his working group had proposed a three-pillar system: the first pillar¸ which is the two-thirds government pension with several proposed changes; the second pillar¸ where people will be obliged to put some savings into a private pension scheme; and an optional third pillar proposing tax incentives to encourage people to save in other pension schemes.

According to a National Statistics Office publication entitled “Malta in Figures 2010″¸ live births between 1958 and 2009 went down by almost 50 per cent¸ with more than 8¸000 births in 1958 plummeting to the present figure of 4¸143. This translates to a birth rate of 10 per 1¸000 people¸ while the death rate last year was 7.8 per 1¸000¸ with 3¸221 deaths¸ bringing the population down by 1.5 per cent to 412¸970 compare to 413¸609 in 2008. But protesters need not worry nor take to the barricades since¸ according to the government¸ a team has started tackling the pension reform. Platitudes galore and the Prime Minister who said the government will be considering whether the time is ripe for some fine-tuning¸ particularly with regard to the introduction of the second pillar. His comments came last June at the end of an EU summit in Brussels¸ following a report by the European Commission which urged the government to introduce with “urgency” reforms in the pension and healthcare sectors