12 November 2003

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Toon this week: Second thoughts on taking the plunge

One step too short

The announcement that talks about pension and welfare reform have resulted in a decision to postpone has come as a great anti-climax. Following an unusual three-day retreat with most of the important social partners the last thing expected was a postponement.
The Drydocks agreement has not proved to be all that is was cooked up to be. To what extent our yards will be subsidised is unclear, and questions rightly raised about the Drydocks ability to compete with stiff competition from rival foreign docks, remained unanswered.
No doubt the three days at the Mgarr hotel served some useful purpose and greater understanding between the social partners will serve us in the future, but that was not all the public was expecting.
The partners at the meeting have been instructed not to speak about the details of the discussions to the media, but it had already been leaked that the government will introduce a three percent consumption tax. The exact form the tax will take and which products or services will be affected remains, however, unclear. Strangely it has also been reported that such an increase will be offset by a one-time payment to offset its effect in the first year.
That would seem to mean the creation of excessive administration, which Malta can well do without, and begs the question as to whether a tax can be designed and aimed at achieving the desired effect without needing a payment to compensate.
The government is also said to be in favour of increasing the pensionable age to 65 over the coming years.
It must be said that no administration tried to take on Drydocks, health, welfare, pension reform all at once, and judging from what has happened in countries larger than ours, this is no easy task. But on the other hand the problems we suffer in those areas did not appear overnight and it must be said that it was virtually this same government that allowed the problems to grow to astronomical proportions and never took steps to rectify the situation.
Exactly why all those that met in the relaxed calm of Gozo decided on a postponement remains unclear. One of the major official reasons for the postponement was that a World Bank report on pension and welfare reform would be in government’s hands come January 2004.
It would have helped if it had been explained what the report could do to assist us to reach an acceptable solution, because it must have appeared obvious to everyone that whatever the World Bank says our pension and welfare problems, including the unsustainable health sector need reform.
Malta need not rely on a World bank report for ideas and the postponement can only serve to put our already unsustainable welfare position in a more precarious state.
Minister John Dalli has over the years gained himself a reputation of being decisive and unafraid to push forward unpopular measures. While it has been noticed that John Dalli may not have been that enthusiastic about Drydocks agreement, he was in Gozo.
The general impression, however, is of a government that is hesitant. A government that has set itself tasks but does not have the gumption to take those decisions that have been hanging like a dark cloud above us, clouds that will bring rain, but with the hope that they will really usher in a new spring in the long term.
The government seems to be able to take itself to the edge of the shoreline, but can’t get itself to take the plunge. Mr Dalli has not only a reputation to uphold but also a much awaited reform.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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