Germany and other EU states hiding pensions costs
by Justin Stares
Germany is imposing austerity on other member states while refusing to come clean about its own hidden pensions liabilities, say MEPs. PublicServiceEurope.com reports on the European Parliament's decision to pull out of talks on new European statistical standards
Germany was accused of double standards on Thursday following a breakdown in talks between European Union member states and the European Parliament over the disclosure of information on national and regional public accounts. An alliance of four member states led by Germany vetoed a law designed to force governments to be more transparent on contingent liabilities, in particular pensions, triggering suspicions among parliament negotiators that potentially damaging debt figures were being deliberately hidden.
"Germany doesn't want to report the figures," says Sharon Bowles MEP, the British Liberal Democrat who led negotiations for the parliament. "They haven't got a handle on what is happening in the Länder." Germany is in no position to take the moral high ground with other member states if it is not prepared to open up its own books, Bowles told PublicServiceEurope.com. "It is no good them getting cross with Spain about what is happening in the Spanish regions if they cannot deliver themselves," she adds.
Prior to the 2008 crash, tackling the pension liabilities generated by Europe's ageing population was considered one of the top priorities for lawmakers. But since EU leaders switched into crisis fire-fighting mode, the issue has all but disappeared. "Germany is imposing a lot of austerity in the name of greater integration," Bowles continues. "But in the field of statistics, this is not the first time that they cannot produce what is appropriate. We think they should lead by example. Many countries could have significant pensions liabilities".
The other three countries in the so-called 'blocking minority' - a group of countries with enough votes to veto a decision in the European Council of Ministers - are France, Italy, and Portugal. "Italy has a significant aging population," says Bowles. "They are on watch and we want to know the liabilities." France is said to "suffer from a surfeit of secrecy", while Portugal is said to have "problems all round". The parliament's negotiating team decided to break off talks when the Danish EU presidency reported on behalf of the council that there was no agreement on the reporting methodology. The presidency and parliament were meeting in a "trilogue" - a behind-closed-doors forum where agreements are stitched up and then presented to the public. "The presidency came into the trilogue at 8.30 and told us that the four countries had blocked the agreement," says Bowles. "We told them off roundly and harshly".
While unable to negotiate a compromise, the Danish presidency was nevertheless reported to be favourable towards the parliament position. "In some countries statisticians can be really secretive," Bowles explains. "It really gets up our nose". The issue was all the more galling for parliamentarians as member states had agreed to report on contingent liabilities a part of separate "six pack" legislation on fiscal governance. "In the council directive on the six pack, they signed up to sending this info on contingent liabilities but now they are trying to wriggle out of publishing the pensions data", said Bowles. "The natural suspicion is that you want to hide something." Behind opposition to a common statistical methodology was fear that public figures would allow comparisons, she says.
However, MEPs had not given up hope that the German government would see the error of its ways and relent. "We want to shake their tree," says Bowles, who recalls the "disastrous consequences of statistical cover-ups in Greece". Giving the impression that governments were hiding liabilities was labelled "highly irresponsible behaviour" when they were talking of the same time of a banking union, the Liberal Democrat MEP reveals in a statement: "While this afternoon EU finance ministers will be discussing ways to solve the crisis, member states are simultaneously refusing to release key data on public liabilities linked to pensions and bank bailouts, making it difficult to believe that future banking union talks can succeed." It seems Greece was not the only member state to have been caught hiding behind an opaque screen, the culture of smoke and mirrors extends even to the mighty Germany. We should all be very worried.