A Nation without deficit in a State with minimum services

For some, the country is performing well at the deficit, GDP and employment, but for others, the performance at public services, especially in the health sector, is not convincing. Both the government and the parliament will be debating this afternoon (Wednesday, 10th of July) about the state of the Nation for more than five hours. Before that, ECO decided to hear about what a political scientist, a demographer and two economists have to say as the broader picture presents a state that fails in providing good-quality public services.

“The macroeconomic indicators have shown the positive side. The economy started to grow as well as the deficit and unemployment have decreased. But we need to go further than the macroeconomic indicators”, Manuela Arcanjo, former Secretary of State for Budget Affairs in Guterres’ government, said, recalling that even in what regards to the deficit, not everything is fine. “We still have the third highest public debt in the European Union”.

Year after year, the government has managed to reach better deficits than the originally forecasted, expecting this year to be at 0.2% of the GDP and to enter 2020 with a surplus.

Arcanjo, who was also Minister of Health in one of Guterres’ mandates, adds: “let us not pretend that everything is fine”, highlighting issues the country is facing at both the NHS and transports.

“Just the fact of having an ageing population increases pressure on expenditure”, adding that the country “lacks materials, installations” and “there is a general degradation in the NHS”. About public transports, Arcanjo said, “public transports are not worthy of a country that claims to have a historical budget balance”.

NHS, the crisis that brings unity

The debate about the state of the nation will be the last of this Parliament’s mandate as it happens less than three months before the country’s general elections. The context could not be more determinant for the 226 minutes reserved for it. “There will be political demarcation from PS (Socialist Party)”, António Costa Pinto, a political scientist, says. Polls indicate a victory for PS but without an absolute majority, which will push António Costa back to the negotiation table.

The political scientist anticipates a strategy shared by both right-wing and left-wing opposition parties to diminish PS’s achievements. The selection of topics to be debate will obey to this plan. For the researcher from the Social Sciences Institute (ICS), this debate will be focused both on health, public services and budgetary orthodoxy.

Costa Pinto stresses that the debate around NHS is soothing “the cleavage between the right and the left”. “The NHS crisis also brings together the metropolitan areas and the interior of the country”.

For the political scientist, this Wednesday’s debate is the “ultimate proof of PS’s successful governance that tried to combine budgetary orthodoxy with the satisfaction of some old claims”. At this point, Costa Pinto recalls that the beginning of PS’s mandate was of considerable social peace. But no peace is permanent. In 2018, the unions issued 733 strike notices that contrast to the 488 in 2016.

An unresolved deficit

Jorge Malheiros, a researcher from the Geographical Studies Centre of the University of Lisbon and an expert in demography and regional asymmetries, denounced that other problems are even more significant than Health, being demography one of them. Despite some positive measures having been introduced by this government “to stabilise and better the life quality of immigrants”, there is still a matter of “fiscal fairness” to be solved regarding the fiscal treatment of non-residents and golden visa holders.

For Malheiros, “there is much political use for the word demography, but little has bee done”. The country needs, then, “systematised policies” and not single measures.

The researcher also highlights the problems regarding housing and regional asymmetries. Policies as the new Comprehensive Housing Act brings “hope” to the resolution of this problem, but “there is still a lot to be done”. “Mechanisms need to be implemented to verify the success of these changes”, Malheiros argues.

Regarding regional asymmetries, the researcher notes that the topic was more intensely discussed at the beginning of the mandate, but “we are still waiting for positive results”. Malheiros warns, for example, that “without a proper property registration, planning policies lose efficiency.”

Post-crisis phase has now ended

João Cerejeira, who is a Professor in Economics at the University of Minho, defended that the levels of investment “are still low”, stressing that the amount of both capital and technology available in Portugal is low as the country “still has an economy based on low salaries”.

“The lack of investment that would be productive and that would add value is determinant to understand how to increase our economic growth capacity”, Cerejeira warns.

The economist admits there were some signs of progress in employment and the evolution of migration balance, but warns that “this post-crisis phase has ended” and the labour market “is starting to give us signs of having reached full employment”. A perception shared with Manuel Violas, Solverde’s CEO, and Luís Guimarães, Polopique. Guimarães even added that “is rather impossible to lower unemployment” as the businessman believes “this is already full employment for Portugal’s standards”.