Monday, November 26, 2012


Portugal debates future of welfare state
By Peter Wise in Lisbon
Armando Costa, 73, is waiting for an outpatient’s appointment in one of the seemingly endless corridors of Hospital Santa Maria, a huge 1950s building on the edge of Lisbon, teeming with medical staff, orderlies, the sick and their families.
The retired business manager could afford private care, but prefers crowded, noisy Santa Maria because of the quality of treatment on the national health service. As well as social security contributions, patients typically pay a small amount. “I’ll be charged a few euros today, but I’d be happy to pay more,” he said.
How much the Portuguese are prepared to pay for public health, education and welfare services has become the focus of national debate after warnings from Pedro Passos Coelho, the prime minister, that the country’s economic future depends on root-and-branch reform of what the state provides.
But redefining the state’s responsibilities is highly contentious for many Portuguese, who see universal health care and education, free or subsidised at the point of delivery, as fundamental achievements of the 1974 revolution that overthrew 48 years of dictatorship. The government’s opponents fear it wants to destroy the welfare state.
The country has to choose between higher taxes or fewer state services, Vítor Gaspar, finance minister, said. “There appears to be an enormous divergence between what the Portuguese believe the state should deliver and the amount of taxes they are prepared to pay,” he told parliament recently.

Taxes have already risen substantially. The 2013 budget, the toughest in living memory, includes income tax increases of about 30 per cent. Mr Gaspar described the tax rises as “enormous” . Designed to keep Lisbon on track with its €78bn bailout programme, they are the latest in a series of austerity measures that have pushed Portugal into its deepest recession in 40 years, with record unemployment reaching close to 16 per cent.
A sweeping review of the state’s role is due to be completed by March and is required by Portugal’s international lenders – the so-called “troika” of the European Commission, the International Monetary Fund and the European Central Bank - to generate an additional €4bn in spending cuts over the next two years. “About two-thirds of public expenditure goes on social transfers and employment,” said Abebe Selassie, the head of IMF’s mission to Portugal. “But benchmark indicators show a lot of inefficiencies in the way social spending is targeted.”
In this environment, means-testing charges for state health care and university tuition has moved to the top of the political agenda as the centre-right government struggles to discipline public finances.
Attempts to increase charges come as many complain existing rates are already too high.
At Lisbon University, a short walk from Santa Maria, students said many families could no longer afford annual tuition fees of about €1,000. They also argued that the economic crisis meant state spending on education was going to waste. “I have just spent six years studying to be a lawyer,” said Fabiana Silvestre, 26, “but there are simply no jobs in Portugal.” She and two fellow students plan to emigrate to Macau. “We won’t be putting back what the state has invested in us,” said Catarina Lopes, 24.
Medical fees more than doubled in January. The cost for using emergency services, for example, rose from €9.60 to €20, partly to discourage people with minor ailments from going to hospital. The number of people seeking emergency treatment has since fallen by 10 per cent.
“Paying more for better services would make sense, but not just to keep things as they are,” said Cidália Juste, 52, an unemployed clerk who was accompanying a sick relative at Santa Maria. Another outpatient, an 82-year retired shop worker with a monthly pension of just under €400 who did not want to be named, said state medical fees were already too high.
Mr Selassie said the stage was set for “an open debate in which political parties and social partners can reach a consensus on what levels of spending and taxation the country wants”. But the prospect of political agreement looks remote.
The prime minister, said António Arnaut, a member of the opposition Socialists and a founder of the national health service, is bent on a “neoliberal project to destroy the welfare state”

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