Editorial | Sunday, 02 August 2009
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No more platitudes on social security

The Today Public Policy Institute’s latest report on the sustainability of the nation’s social services is yet another warning for our society’s future, which our politicians should start taking seriously.
To frame this debate in monetary terms, the TPPI forecasts a deficit of some €192 million by 2015 because as we speak, Malta’s future economic realities are being shaped by our ageing population and a shrinking population.
By 2015, 18.2% of the population will be over 65, a percentage expected to rise to 22% by 2025. This fact alone means that Malta’s dependency ratio – the sum of children below the age of 15, and pensioners above the age of 65 – will increase, putting an inevitable strain on the funds available for social security.
As NSO figures confirm, spending on paying out social benefits increased by 40% between 2000 and 2007. Today we pay well over €572 million in benefits, while social security contributions pay €480 million. Consonant with Malta’s ageing trend, the drastic increase in expenditure is related to pensions.
How to finance this shortfall? A hint gleaned from the TPPI’s demographic analysis is through the influx of new workers. In 2007, 64% of the population increase in Malta was attributed to an increase in foreign residents in Malta. Like Europe’s own social security predicament, immigration remains one of the ingredients necessary to sustain our expensive pensions fund.
The TPPI recommends a personalised, tailor-made service to the categories of society that are mostly in need, with an aim to minimise abuse in social services or unnecessary dependence on social security. This would mean involving the private sector, and stressing the importance of value-for-money and reducing bureaucracy.
Herein lies the challenge for our political class. Take for example, another essential area of our society that is crying out for reform: healthcare.
When Opposition leader Joseph Muscat, like Alfred Sant before him, produced a Cabinet document which he claimed would spell the end to “free health for all” as we know it today, it seemed yet another death knell to the rational debate on the sustainability of free healthcare, and how to finance it.
While Muscat harried Lawrence Gonzi into reacting on this ‘controversial’ document, which discussed health financing, the prime minister came out to declare that health services will remain “free” for as long as the Nationalist Party remains in government.
This newspaper has always questioned whether the Maltese national healthcare service is actually ‘free’ after all. Certainly not for the hundreds of patients on three-year waiting lists for cataract operations, or cancer patients with anything from six to 12 months spent waiting for their test results.
Behind the boasts of keeping our national healthcare ‘free’, our national health service can only be sustained by a further increase in taxation. Our national insurance contributions are currently supporting national pensions, but the State has not yet provided a health fund to support the NHS.
One asks why taxpayers should sustain that list of free services and medicinal products, from basic medical disposables to medicine and pills, for people who can clearly afford a subsidised price on their cost? Considering the fact that private insurance firms actually incentivise clients to make use of the free NHS rather than using the hospitals covered by their private healthcare plans, it is clear the government must step in to curb this sort of ‘legalised’ abuse of the system.
The cost of Malta’s healthcare is real, and users must understand the value of the NHS healthcare before availing of the service. Like the Today Public Policy Institute’s argumentation on social security, a means tested system for certain basic services would cut down in unnecessary usage and encourage more responsibility in people who do not want to see their money wasted.
The TPPI’s warnings should be clearly heeded by both government and the Opposition, who would do worse than resist the temptation to make lofty, political declarations about guaranteeing free healthcare and an unending slew of social benefits that cannot be sustained. Malta’s future is uncertain in this regard and Cabinet should be looking into proposals that will guarantee a decent service and living for future generations.

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No more platitudes on social security


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