Sanchez Calls “Great National Dialogue” In “España 2050” Modernisation Plan

The Spanish Prime Minister, Pedro Sánchez, has enveiled España 2050, the most ambitious modernisation plan in recent Spanish history.

The key objective of the plan is to improve vital areas of national policy such as the environment, education, health, pensions, employment and taxes to make Spain a leading competitive economy.

At the official enveiling of the 675-page document he called for “a great national dialogue on the future of Spain” to “decide what kind of a country we want to be 30 years from now.”

The Prime Minister said that the investment in education and improvement of academic results is “Spain’s biggest challenge.”

The decline in student numbers due to Spains falling demographics will enable the state to increase per pupil spending from the current €4,880 to around €9,640 which would place it in the upper tier of OEDC countries.

The increase in financial resources will allow for an improvement in academic results as well as a 20% increase in the number of school leavers who finish their compulsory education with more than the basic secondary school diploma.

Currently some 17% of pupils leave education at 16 compared to an EU average of 10%.

The plan underlines the government commitment to reducing the countries carbon footprint with lower greenhouse gas emissions as well as the planting of forests and creating carbon sinks with the aim of reducing carbon emissions by 23% by the end of the decade.

In order to further this in the years to 2050 the country will need to reduce “certain types of consumption” as well as “to correct its negative externalities,” of transport.

The plan proposes new taxes for diesel and petrol vehicles and the introduction of “green taxes” on some types of consumer products.

In addition the government will study the phasing in of a “a frequent flyer tax or the introduction of taxes on plane fares depending on the distance to the destination,” with the expectation of a flight ban on where the same distance could be covered by train in two-and-a-half hours.

This would encompass all the major high speed rail AVE destinations such as Sevilla, Barcelona, Madrid, Valencia and Malaga.

The report recommends raising health spending from 5.7% of GDP to 7% over the next decade which would bring it into line with the European average and provide the resources for an ageing society which by 2050 see 1 in three people in Spain over the age of 65 and a national life expectancy of 86 by 2050.

This in turn will require changes in the healthcare system’s model to be “more focused on chronic issues,” as well as the need to enhance the funding for  Spain’s caregiving system, which currently receives only 0.8% of GDP to around 2.5% by 2050. The plan also envisions letting citizens choose between care at home, at an outside facility or a mixed system as in many developed countries.

One chronic issue not addressed is how to reverse Spain´s population decline which is expected to fall further over the coming decades. Indeed one UN study shows it plummeting by 2050.

This combined with the ageing population, will have a profound effect on the prosperity of the country – not least on the provisions for future pensions.

By 2050, there will be 1.7 people of working age for every pensioner, compared with 3.4 today which will entail that “the pensions system will have to overcome the triple challenge of assuring its financial sustainability, offering adequate income to retirees, and guaranteeing equal treatment for all generations.”

The smaller workforce will mean the need to seek greater flexibility in the labour market with the aim of increasing the proportion of women and people over 55s in the job market.

Sanchez raised the possibility of reducing  the GDP share of pension spending, by changing the “way pensions are calculated” though this is unlikely to fill the gap in tax revenue committed to pension payments.

The plan sets out a goal to raise the states share of tax revenues from 35% of GDP in 2019 to 37% by 2030, 40% by 2040 and 43% by 2050 by expanding taxable income bases, reducing tax benefits, and reforming the present self employed system.

The plan also addresses the need for corporate tax reform as well as tackling Spain´s large hidden “black” economy” through greater coordination among tax agencies and greater information exchange with central and local governments.