Spain squeezes education, health care

20th April 2012, Comments 0 comments

Spain's cash-strapped government Friday approved reforms to scrap free medicine for pensioners and charge students higher fees, aiming to save an extra 10 billion euros ($13 billion) a year.

The reforms tread on sensitive ground since Prime Minister Mariano Rajoy had promised to safeguard pensioners' purchasing power while cuts in health and education have already sparked street protests.

Health Minister Ana Mato and Education Minister Jose Ignacio Wert announced the reforms after a weekly cabinet meeting as the latest efforts to stabilise Spain's public finances, a big source of concern for the eurozone.

"Healthcare needs certain reforms to guarantee its sustainability," Mato said. "We know that for some citizens it is a difficult reform and demands sacrifices, which we want to be fair ones."

Traditionally Spaniards do not pay to visit the doctor and only pay part of the cost of medicine, with an exception for pensioners who currently pay nothing.

Now pensioners will have to pay 10 percent of the cost at the pharmacy, up to a maximum of 18 euros a month depending on their income. Spaniards in employment will see their contribution rise from 40 to 60 percent of the cost of the medicine.

The government said three billion euros will be saved through education reforms, allowing regional governments to expand class sizes by 20 percent and raise university fees to an average 1,500 euros from 1,000 euros.

Spain's 17 regional governments account for more than half of all public expenditure because they are responsible for funding health, education and social care.

But in the past months, many regional governments have struggled to pay suppliers, leading to unrest among chemists and power cuts at schools.

By seeking savings in these sensitive sectors, however, the government has sparked a backlash.

The healthcare reform is "a change to the model of the national system, which will gradually degrade and which seeks to dismantle the public health system," said the opposition Socialist Party's health spokeswoman, Trinidad Jimenez.

As for the education measures, "no country has ever overcome an economic crisis by reducing equal opportunity among the young," said the Socialists' leader, Alfredo Perez Rubalcaba.

The central government is demanding the regions submit plans by May to cut their public deficits -- the shortfall in revenue to cover spending -- to 1.5 percent of total economic output this year from 2.94 percent last year.

Those that fail to do so could be forced to cede control of their budgets to the central government.

The country as a whole has promised to shave its public deficit to 5.3 percent of gross domestic product in 2012 from 8.5 percent last year.

"We all have to make an effort," Rajoy said Thursday. "There is no money to cover paying for public services."

The government in March announced the most austere budget in Spain's post-Franco period, with spending cuts and tax hikes worth 27.3 billion euros, to cut the deficit and reassure international investors.

"The spending cuts announced today are sending a strong message to jittery bond markets that Spain is now prepared to target previously ring-fenced health and education spending," said analyst Raj Badiani of IHS Insight.

"This is likely to be a forerunner of ever deeper health, education and social spending cuts with the government striving to meet the near-impossible (EU) budget deficit target of 3.0 percent of GDP in 2013."

© 2012 AFP

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