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Investiture speech by Mariano Rajoy as President of the Government

Monday 19 December 2011

Mr. Speaker,

Honourable Members of Parliament,

I appear before this House to ask for your confidence under the terms of Article 99 of our Constitution.

In the prologue to my speech I wish, above all, to remember the victims of terrorism. We will always be with them. I also wish to express a sincere desire for dialogue and cooperation with the various political forces which, by the will of the Spanish people, are represented in this House. I also wish to express my respect and consideration for all those who have, up to today, formed the caretaker Government and, in particular, for its President, Mr. José Luis Rodríguez Zapatero.

Honourable Members,

The results of the elections held on November 20 clearly show that there is a desire for a change in the leadership of our nation's Government, which it falls to us to implement in accordance with our electoral promises made to the Spanish people.

I shall be explaining to you the broad thrust of the programme which the Government intends to carry out if I have sufficient support from this House.

Evidently such a programme cannot ignore either the difficult circumstances which our country is facing or the wishes that the Spanish people have just expressed at the polling stations.

The convincing nature of the election results can leave us in no doubt as to their interpretation.

The Spanish people have established a before and after. They are calling on us to write a new page in the history of our democracy.

The governmental programme which I am going to present to you reflects this great determination to restore our public life. It may be summed up in two fundamental goals. The first of these is to stimulate growth and foster job creation.

Honourable Members,

A country in which every day that passes sees the destruction of thousands of jobs cannot afford to hesitate when setting its priorities.

I therefore propose to direct all the capabilities of the Government and all the energies of the nation to putting a halt to this flood of unemployment, stimulating growth, and speeding up the return to job creation.

This is what the election results are calling for, this is what Europe is demanding, this is what Spain needs urgently, and this, Honourable Members, is the only cornerstone capable of underpinning our push towards recovery.

The creation of jobs means that economic activity will increase, that the State will recover lost revenue, that the Social Security system will broaden its base and its contributions, that pensioners can be reassured and that we can improve our education and fund our health-care system, etc., etc.

We cannot set our nation on the road to recovery without first creating the conditions which will allow unemployed Spaniards to get back to work again.

And I am not only thinking about the material benefits, Honourable Members.

When jobs are created, the country is stabilised, confidence is strengthened, there is a more equitable share of dignity, rights are reaffirmed, dreams become attainable and each individual regains the ability to manage his or her own life. When employment grows, Honourable Members, so does freedom.

Let us start here, with the most important and the most difficult issue. We must sow our seeds urgently if we want the new harvest of jobs in Spain to emerge as soon as possible.

I assure you, Honourable Members, that the Government I form, if I receive the confidence of the House, will not rest until we achieve this fundamental goal.

This is not at odds with the Government's duty to deliver on a broader range of fronts. It is obvious that we cannot ignore what is going on in the world and what we know is facing us in the future.

For this reason, the second task I referred to previously is precisely to ensure the place that Spain and the Spanish people will occupy in the world when it emerges from this crisis, which will not be the one we have known up until now.

It is very important for Spain to recover its own energy. It is very important for us to see ourselves, and for others to see us, as a dynamic society and a solvent economy because Spain is not alone in the world. We depend on others and that world is changing before our very eyes.

When this crisis is over we will not inhabit the same planet that we knew before. The rules will have changed, living conditions will have changed, the relative importance of countries and their international standing will have changed and even the way we participate in the European project will have changed.

We need to decide where we want Spain to be in the world and we need to decide how we can make an advantageous place for ourselves in a global scenario which has more players, is more competitive, and is more demanding.

What I propose, Honourable Members, is for Spain to take advantage of this opportunity we have now. We need to make reforms, yes, major reforms, but we need to make them with our minds on more than just reducing our deficit, creating jobs, correcting our educational model and assuring our health-care system.

We have to look above and beyond this; we need to think about what Spain will need, not next year or the year after, but in the next twenty years.

What I am saying is that it is not a case of trying to get back what we have lost, nor to return to where we were before, because that place no longer exists, Honourable Members. The Spain we have left behind us is not going to return, and this venerable nation will have to rejuvenate its attitude, regain its flexibility, and strengthen its structures in order to compete for a front row seat in the new world.

We have, therefore, a two-fold task before us.

We are going to show that the Spanish are capable of creating jobs, paying off our debts, and sustaining a civilised society; a society in which the values enshrined in our Constitution - freedom, equality, justice and solidarity - are not reduced to mere noble wishes or pretty theoretical principles, but truly define the prosperity we are striving for, because they form a natural part of that civilised landscape in which we Spanish wish to live.

But we also want to make a place for ourselves on the world stage. We want a place for a country with prestige, with credibility, with employment, with welfare and with opportunities.

Honourable Members,

What I am proposing requires an appropriate style of government.
It is true that the Spanish people have, in a parliamentary democracy such as ours, given us ample room for manoeuvre to facilitate the task of governing under these especially unfavourable circumstances.

The results of the elections are, without any doubt, the best guarantee that decisions are going to be taken and that they can be adopted at the pace required.

We will be able to govern effectively, what they do not guarantee is getting things right.

A majority is an excellent tool for carrying out decisions, but not necessarily the right one to design them.

Even such a generous majority as the one we have been given is not nearly enough for a task which requires the commitment of the nation as a whole, a task which every Spaniard must feel him or herself to be part of because it is the Spanish people, not the Government, who are the drivers of change, the protagonists of the reform, the agents of our recovery.

Spain's future is in everyone's hands and every Spaniard should consider it to be his or her own responsibility. The Government's job does not consist of supplanting the nation, but rather of coordinating its efforts and facilitating its work.

So I say to you, Honourable Members, there is no better tool for channelling and coordinating the nation's energy than dialogue; a dialogue which is open to everyone, inside and outside this House; a dialogue based on transparency, which will foster unity, strengthen shared goals, and facilitate the support and participation of all citizens and all their organisations.

I wish this to be, and I need it to be, the dominant characteristic of the style of the new Government because we are facing a task which involves every citizen and which calls us all to the service of that common good, which renders us all equal, which we call Spain.

This is what I propose, Honourable Members:

• To focus all our efforts on job creation.

• To reserve a place for our children in a changing world.

• And to govern through dialogue and transparency in the pursuit of shared goals.

The Government I propose forming, if I receive the confidence of this House, must give substance to the mandate we have received and do so under circumstances which, as everyone is aware, are the most difficult that any Government has faced since the restoration of democracy.

With this reminder I am not trying to minimise in the least the burden of responsibility that it is our duty to shoulder. In politics, a legacy can have no "benefit of inventory". We knew, and know now, what was awaiting us and we knew, and know now, that we will be judged on what we achieve, and not on what we try to achieve or on how we found things when we came to power.

In the diagnosis I am about to present, it is not my intention to look back or blame anybody; the election results of a month ago speak for themselves in this respect, but I think it is of the utmost importance that we share a view of where we are and why we are precisely where we are because without such an analysis we cannot design a plan to address the problems.

This diagnosis must honour a pledge which I aim to make my Government's watchword, if the House gives me its confidence: always to tell the truth, even if it hurts; to tell the truth without embellishment or excuses; and to call a spade a spade.

And this diagnosis cannot begin at any other point than the most dramatic figure which defines our economic and social situation today. I refer, Honourable Members, to unemployment. Today, after the latest figures gleaned from both Eurostat and the State Public Employment Service, the number of people looking for a job in our country without finding one is now in the region of 5,400,000. This figure represents about 23% of the active population which, unfortunately places us at the head of the European Union in terms of unemployment, with a figure that more than doubles the average EU percentage. When we add to this the fact that the youth unemployment rate is over 46%, we can get a fairly accurate idea of the dramatic nature of this situation.

The number of jobless in the last four years has risen by over 3,400,000 people. Remember, Honourable Members, that four years ago our unemployment rate was lower than the European average and that while in Spain unemployment rose, in Germany, for example, the jobless rate dropped from 7.9% to 5.2%. This increase in unemployment in Spain is mainly due to a very deeply rooted process of job destruction and the disappearance of companies and self-employment; over 2,300,000 jobs destroyed and 250,000 companies shut down.

As I have already said in this House, these figures represent, in stark terms, the true reality of the economic situation in our country.

When unemployment exceeds the five million mark, two things happen: the first, and most obvious and dramatic, is that over five million people and their families suffer the human drama which is unemployment; but, also, this massive unemployment rate impacts directly on falling consumption, the collapse of investment, the imbalance of public accounts, growing despondency in society, and the endangerment of our Social Security system.

In the last four years the number of Social Security contributors has fallen by 2,150,000 people and the ratio between contributors, people who pay, and pensioners has dropped from 2.6 to 2.1. If we are not able to break this trend, public pensions in our country will be put in jeopardy.

For the first time in the last fifty years economic activity has declined in this latest legislature as a whole by 2.3%. In other words, the production of the year about to end will be less, in real terms, than in 2007. Given that in this period the population of Spain has increased by two million people, it is clear that our per capita income has fallen by a greater percentage.

Today our economic activity is growing at less than half the rate of the European Union. This means that, unfortunately, we are losing sight of the goal that we have always pursued: to attain the levels of welfare and wealth of the most advanced countries in Europe. In fact, we have slipped back to 2002 levels. In the last quarter the Spanish economy failed to grow; in the present quarter, all forecasts point to a decline and the outlook for the next two quarters is not at all optimistic. The outlook, Honourable Members, could not be more bleak.

So, despite the stagnation of our economic growth and the constant decline in our investment, this year we have needed to draw on foreign savings in an amount which will exceed 37 billion euros, in order to offset our balance of payments deficit. It is true that if it were not for the public sector deficit, Spain would today have an ample external surplus because, unlike the public authorities whose accounts are in deficit, businesses and households already have an external surplus.

According to the forecasts of Vice-President Elena Salgado, the imbalance between income and expenses of the public authorities as a whole this year will result in a deficit of 65 billion euros, 6% of our Gross Domestic Product. This figure, although hopefully not, may be exceeded and we will know when the time comes.

So Honourable Members, with the current commitments that the Spanish Government has with the European Union, which I now take on, and if the Government's forecasts for the coming year are correct, we will need to reduce the imbalance between income and expenses for public authorities as a whole by 16.5 billion euros. That is the target, that is our pledge and we are going to stand by it: to reduce the deficit by 16.5 billion euros in 2012.

Furthermore, the consecutive public deficit of these last four years will, by the end of this year, raise the percentage of government debt over GDP to over 69%, from a comfortable figure of 36% in 2007. It is not necessary, Honourable Members, for me to point out the enormous problems that this figure represents in the current international financial climate. Bear in mind that, leaving aside Social Security expenditure, public debt servicing is, after unemployment benefits, the second largest expense item of the General State Budget. The fact that the main expense items in our Budget are those related to unemployment and interest payments on our government debt paints a fairly accurate picture of our situation.

I would also remind you of the stagnation of household consumption, (0.1% growth this year); investment is down once again in 2011 (-4.4%); the enormous inventory of unsold properties persists (in the region of 750,000), and private sector finance is becoming increasingly harder to obtain, all of which constitutes a real Gordian knot for economic growth.

Given this outlook it is not surprising that both the Consumer Confidence Index and the perception the Spanish have of the economic situation of the country, as measured by the Centre for Sociological Research, are registering such alarming levels.

Without confidence, without expectations and without finance, investment declines, as does consumption, jobs are destroyed, public revenues plummet, and a vicious circle is created which needs to be broken as soon as possible.

Honourable Members,

The serious situation I have just described is not an exercise in masochism. We are facing enormous difficulties and very demanding efforts are required of us. But we also have enormous strengths and should be aware of them because in these strengths we will find the pillars that will underpin our recovery.

Honourable Members,

Spain is the fourth country in the Eurozone and the fifth in the European Union, and we are one of the twelve largest economies in the world.

In the last fifty years only three countries on the planet have bettered Spain in terms of per capita economic growth and while sixty years ago we Spanish had 17% of the income of our US counterparts, last year the figure stood at 75%.

Whatever and however great the problems besetting the Euro may be today, we have a first class currency. Direct Spanish investment abroad represents 46% of our GDP, with leading companies in sectors as important as public works concessions, the financial sector and telecommunications.

And, above all, Honourable Members, not so long ago we were able to show our capacity to face up to challenges which nearly everybody, in Spain and abroad, thought were impossible to meet. I am referring to our inclusion in the group of countries which gave birth to the Euro in 1998, when in 1996 we failed to meet one of the requirements of the Maastricht Treaty.

This country would not have achieved those goals if Spanish society had not shown a high degree of maturity, upon which we must once again call.

Those who think that Spain will not be able to carry out the reforms it needs to succeed in the Europe of the euro have got it totally wrong. I insist, they are completely wrong, because they do not understand what we Spanish have always been capable of doing when the going gets tough: join forces, overcome difficulties, act with our feet on the ground with an eye to the future. In short, do well whatever was required at any given moment. Provided that the challenges were sufficiently stimulating, we have been able to meet them; provided that the goals were sufficiently clear, we have been able to attain them.

So, we all know what we have to do in this Legislature and nobody, whether in Spain or abroad, has any doubt about what we have to do to become a stable economy again with strong sustained growth and the capacity to create jobs and guarantee a welfare state. Spain must be part of the solution to the Eurozone problem, in order to make the Eurozone the framework for growth and job creation in the Spanish economy.

Now is a historic opportunity to get back on the track which gave us so much success in the past. Whenever Spain has had a stable economy, one open to the outside world with domestic liberalisation and competition, we have improved our standard of living.
Honourable Members,

After this diagnosis, I would like to explain the policies we propose implementing in this Legislature.

My Government will urgently set in motion three areas of reform to ensure Spain's place in the Monetary Union, completely dispel any doubts, and foster investment, create companies and generate job opportunities for our citizens.

The first area is budgetary stability. It has always been good for our economy to have our public accounts in order. Periods of growth and improving welfare in our society have never been based on deficits, excessive government debt, or invoices in drawers. Quite the opposite: budgetary discipline has always signalled the start of times of economic expansion and social progress.

In this field, we are not starting from zero. The constitutional reform approved in the past Legislature is the basis for a new way of budgeting and spending which, from now on, will apply to all public authorities. We have stolen a march on the rest of the countries in Europe. The most recent European Council has established the obligation to do what Spain has been doing for the last four months.

Now we need to go further. Therefore, the first Law we will pass, the first step of our reform, will be the Budgetary Stability Act.

Secondly, we need to bring the restructuring process of the financial sector to an effective close. While other countries put schemes in place years ago to deal with toxic assets and adjust the value of bank assets, in Spain there are still serious uncertainties hanging over balance sheets and our financial institutions find it extremely difficult, as you know, to access international funding. This has caused a greater credit squeeze in our country than in most other countries in our peer group and if our financial system is not cleaned up and restructured, it will not be possible to recover the necessary levels of credit and liquidity for Spanish businesses and households.

The third area of our project concerns structural reforms. Our economy must be flexible and more competitive. If, over time, our products and services become more expensive than those of our competitors, we will lose market share in Spain and abroad. And fewer sales means less investment and fewer jobs. We need to moderate costs and prices. We cannot allow inflation to rise above the rates of our European partners, especially with our unacceptable unemployment rates.

We will therefore put a raft of economic reforms in place, starting with the public sector, aimed at rewarding austerity, achieving greater efficiency, and avoiding duplication, following the principle of "one administration, one competency".

It is also essential to carry out an in-depth modernisation of labour legislation, with the aim of creating employment which is more stable, with greater internal flexibility within companies, and which considers training as a worker's right.

Alongside these reforms, it is essential to design a fiscal framework which is better suited to the needs of entrepreneurs, who will play a fundamental role in the country's economic recovery and who are a key priority in our programme of reforms; a programme which would not be complete without the adoption of an integrated strategy to drive the competitiveness of our economy, one which will cover all sectors of our economy, especially those with most future, including their regulating bodies, their energy model, and the necessary commitment to the innovation and internationalisation of our Spanish companies.

So, Honourable Members , broadly speaking, these are the action lines which will bring about a change in the cycle and a change in the growth outlook over the next four years. The reforms we are proposing are as necessary as they are urgent, and require the adoption of a schedule of immediate actions which the Government intends to implement with the decision, determination and the consistency that the circumstances in which we find ourselves require.

The Government's first task must be to cover a legal void and the legal insecurity created by the lack of a budget for 2012 and the explicit extension of the budget for 2011.

For this reason, in the Council of Ministers' meeting of December 30 we will pass a Royal Decree-Law on Urgent Measures on Economic and Budgetary matters. This Royal Decree-Law will include the extension of the budget and will be accompanied by a non-availability agreement. This will serve to ratify our commitment to controlling the public deficit.

Within the framework of this Royal Decree-Law, in addition to ensuring the measures required to assure the good governance and consistency of our economic policy, the Government will fulfil one of its most important electoral promises: to improve the purchasing power of pensions as of 1 January 2012. This will be, Honourable Members, the only pledge to increase spending that you will hear from me today. I insist, Honourable Members, the one and only pledge to increase spending.

Next, as soon as the European Commission, in January, announces its Annual Growth Survey, we will present our macroeconomic aggregates on which our growth forecasts will be based, and we will bring the Expenditure Ceiling to the House for its approval. On the basis of these baseline figures we will update the Kingdom of Spain Stability Programme, an essential framework for our pledge to reduce spending.

After that, once we have the definitive public deficit figures for this year, and in the light of economic performance, we will present to this House the General State Budget for 2012, before March 31.

Our idea is to make the Budget a basic tool of our economic policy. We therefore propose making a detailed analysis of each and every budgetary item to ensure that we do not overspend by a single euro. As I have just said, the only item of expenditure which is going to be adjusted upwards is pensions. All other items may be revised and, for that reason, neither can we rule out the need to adopt further budget-related measures in the future.

I also want to say, Honourable Members, that both the Royal Decree Law and the Budget share the same spirit as what will be the first major Act of the Government's economic policy: the Budgetary Stability Act, to be implemented by the constitutional reform, in which binding limits on spending and borrowing will be set for all public authorities. In this Act, the Government will assume all Spain's commitments to the European Union.

On the basis of this commitment and the consensual bases which made the constitutional reform possible, the Government will present this Act in January of next year because we want to make these rules the guiding principle behind the General State Budget for 2012 and because we believe this to be as necessary as it is urgent. If we were able to understand that need and that urgency when we put the constitutional reform in place, that is even more reason why we should do so now, now we want to make the reform effective.

Under these premises, and based on the fundamental principles agreed with the Socialist Party, the Act will cover, among other things, the following aspects:

• We will establish the criteria for the gradual reduction of the level of debt to 60% by 2020. To achieve that aim we need to take measures as of the Budget for 2012.

• The maximum overall structural deficit of public authorities as a whole will be set at 0.4% as of 2020.

• We will regulate the distribution of the limits of the deficit and borrowing among the various public authorities, and we will regulate the responsibility of each public authority in the event of their failing to meet budgetary stability targets.

Under this expenditure containment policy driven by our commitment to budgetary stability, we understand that citizens cannot be asked to make the biggest effort; rather the effort should be made by public authorities, both in the long term and with immediate effect.

Therefore, Honourable Members, we will be urgently adopting a raft of measures which will enable us to reduce costs and improve the way government works. This does not preclude, in the course of this Legislature, the implementation of an in-depth administrative reform, to which I will be referring later,  whose aim will be to eliminate inefficiencies, overlaps and duplications between Public Administrations.

The urgent measures we will put in place, above and beyond what I have just said, are the following:

• Resizing of the public sector and of the staff who work in it.
Initially, with regard to the intake of civil servants, the rate of replacement of public sector staff will be reduced to zero, except in the case of State law enforcement agencies and basic public services.

• Restructuring and elimination of autonomous region authorities, agencies, and other public entities. The Government is going to set in motion a process of simplification of the State's public business and foundation sector with the aim of significantly downsizing this type of entity.

• Reduction of governmental operating expenses by cutting back on the running expenses of the General State Administration, by the integrated management of property assets and leases, by the use of centralised procurement, even among public authorities in different areas, in order to obtain better prices, and by the rationalisation of the human and material resources at the disposal of government authorities.

Honourable Members,

I now wish to move on to a vital issue; the restructuring of the financial system.

One of the main risks perceived in relation to the Spanish economy is the private borrowing which is channelled through the banking system.

The purpose of restructuring the financial system is to make banks profitable, trustworthy and solvent.

The first step is to clean up their balance sheets; i.e., to dispel doubts regarding the valuation of certain assets, especially property assets, which are preventing financial institutions from having adequate access to the markets which, in turn, undermines the credibility of public borrowing. In order to clean up the balance sheets, two measures are necessary, among others: the sale of completed properties in the hands of financial entities and a very prudent valuation of less liquid assets (such as uncompleted plots and developments).

These measures would mean the recognition of unrealised and hidden losses on the balance sheets, making a second wave of restructuring inevitable, which would involve:

• More mergers and the redrawing of the banking map until only sufficiently sound banks remain.

• Greater capital requirements to maintain solvency.

• A change in the regulatory model governing the entities which hold their shares.

• A change in the Bank of Spain's supervisory and regulatory system, to make it more flexible and technologically advanced, in order to avoid the indecisions and snarl ups which have characterised it.

We will therefore drive the completion of the restructuring process of the financial sector in the first six months of the year, as an essential prelude to the reopening of credit flows to companies and households and thereby foster the return to growth and employment in our country.

Honourable Members,

I will now speak about the topic of reform.

With regard to fiscal policy, we propose a number of urgent actions aimed at driving economic recovery and social cohesion. I stress, Honourable Members, the idea of urgency. We are aware, very aware, that fiscal consolidation and austerity are only one part of what is needed to return to growth and employment, only one part. We are also aware that, when the time is ripe, when the economic situation has returned to normal and the country has returned to the path of growth, it will be necessary to embark upon a fiscal reform of a more radical nature, which will make the system fairer and more equitable and will include appropriate incentives to stimulate investment and savings and to help families.

Tax policy is a vital tool for driving economic growth. In this respect, we will design a tax framework favourable to entrepreneurs, SMEs and the self-employed, one which will enable them to meet their tax obligations with greater ease and convenience, and to dedicate a greater part of their profits to job creation.

Within this framework we will adopt these measures, among others, immediately:

• Offsetting of debt: We will establish a procedure for the automatic offsetting, similar to a current tax account, of any type of debt recognised by a public authority.

• Reform of the Value Added Tax: We will alter the VAT regime so that the self-employed and SMEs do not have to pay tax before they have actually collected the billed amounts.

• There will be a super-low VAT rate for the acquisition of a home, but only if it is a primary residence and with a limit on its acquisition price.

• Tax relief for employment: We will create a tax credit worth 3,000 euros for contracting the first worker.

• Reform of Corporate Income Tax: We will eliminate existing limitations on eligibility for the 20% Corporate Income Tax rate for companies with a turnover of less than five million euros. We will increase to 12 million euros the maximum turnover permissible to be eligible for the special tax regime for small-sized companies and - at the same time - we will increase the upper limit on taxable income to be eligible for the lower rate of 25% to 500,000 euros.

• We will establish an exemption for modernising a company's fixed assets. Companies will not have to pay tax on the capital gains they make from the sale of their fixed assets if they reinvest those gains, in order to encourage the use of that capital to modernise the company's own business activity.

• We will change the tax treatment of undistributed profits, so that profits used for the acquisition of new assets will be taxed at a rate ten points lower than those profits distributed to shareholders.

 Personal Income Tax reforms:

I insist, this is to begin with, we will improve the tax treatment of pension plan payments and we will restore the Personal Income Tax deduction for homebuyers.

Some of these measures, together with other specific initiatives in the field of finance, administrative processes and employment regulations, will fall under the aegis of the Entrepreneur Support Act which the Government will bring before the Lower House in the next three months.

From another point of view, Honourable Members, the Government which I propose to form views as one of its priorities a reform providing the Spanish labour market with new rules and modern institutions, in line with the global knowledge economy.

Our aim is to implement a comprehensive reform of employment on a scale to match the challenge represented by a jobless figure of more than five million, so as to guarantee a fair, secure and flexible employment framework.

Our aim is to do so through consensus with social stakeholders, although our conviction is that this reform must be implemented without delay. We have passed on to the social stakeholders our priorities with regard to labour reform. We will receive their proposals during the first fortnight of January and, where applicable, their agreements. Once these are known we will bring a Labour Reform Bill before the Lower House during the first quarter of 2012.

The cornerstones of our reform are as follows:

• Place the emphasis on job creation, job stability and flexibility within companies themselves.

• Reform the structure and content of collective bargaining, in order to ensure that each issue is negotiated at the most appropriate regional or sectoral level so as to guarantee economic competitiveness and the sustainability of employment.

• Prioritise the resolution of disputes outside the courts, so as to encourage agreement between the parties and bring about more fluid labour relations.

• Effectively implement individual rights to lifelong learning and re-skilling by opening up the training on offer and undertaking a rigorous, very rigorous, evaluation of the effectiveness of active employment policies.

• Foster the efficiency of the labour market. Among other measures we will rationalise the working calendar in order to strike a balance between the rights of workers and the competitiveness of companies. We will in particular address the costs to our economy caused by puentes [bank holiday weekends covering intervening days] by shifting public holidays to the closest Monday except for those most deeply rooted in social tradition.

• In order to guarantee the rights of workers, we will underpin control and prevention mechanisms to avoid any abusive behaviour discriminating against workers, or unjustified absenteeism in the workplace.

• We will support measures to balance professional, personal and family life, including the extension of tele-working.

• We will implement specific job reinsertion plans for those workers deciding to rejoin the labour market after a lengthy period of inactivity to care for their family.

• We will, lastly, draw up a specific plan for gender equality in the workplace, in order to combat salary discrimination between men and women.

We likewise wish to strike an agreement with social stakeholders in embarking on this labour reform, which we intend to conduct by means of a Social Dialogue Board, which will draw up a Youth Employment Plan. This plan will include both specific incentives to bring young people into the workplace, such as a reform of the vocational training system, new structures to increase the employability of Spain's youth who, the Honourable Members should remember, suffer the highest level of unemployment anywhere in the European Union. These measures will include specific incentives for the hiring of young people through improved rebates. In this regard, we will guarantee a rebate of 100% of Social Security contributions during the first year where employers hire individuals aged under 30 taking up their first job.

Honourable Members,

As we have indicated, the loss of competitiveness is one of the most serious structural problems afflicting us. We will therefore bring in a raft of reforms to increase the nation's competitiveness and stimulate the generation of added value.

It is in this regard that we propose a far-reaching reform of the public authorities, as already referred to in terms of bringing the deficit under control, to establish a sound basis for our response to the needs of citizens, while also ensuring that resources are managed in the most austere and efficient manner.

A few moments ago I revealed the components of the reform affecting the General State Administration, which we will tackle in our forthcoming budgets: the need to rescale the public sector and reduce its operating costs.

This reform will not, though, be confined to Central Government. We will negotiate an Austerity and Efficiency Pact with the other public authorities in order to apply across-the-board deficit reduction measures which in some cases have already been brought in.

It is furthermore my intention to put before the Lower House an array of regulations impacting on aspects of austerity and the sound administration of our public finances. These include in particular a strengthening of laws governing prior scrutiny and the responsibilities of public sector managers in order to ensure that they never commit to expenditure without the necessary budgetary basis.

We will embark on a reform of the Subsidies Act, which will in general do away with nominative subsidies, increase transparency in the granting, implementation and impact evaluation of subsidies, and define uniform eligibility criteria.

We will during the first quarter of 2012 present a Transparency, Good Governance and Public Access to Information Bill, as a right of citizens and a fundamental principle in the functioning of Public Authorities.

Honourable Members,

With all public authorities being called on to reduce expenditure, it is an absolute priority that we review our current public television model. I therefore wish to inform you that we will immediately bring before this House the legal reform necessary in order to allow for new management models.

If public authorities are not effective, our economy will not be competitive. Laws must serve to generate opportunities, not create obstacles. We need fewer and better laws, simpler administrative procedures with less red tape and faster turnaround times. It is not simply a question of saving money; we also need to save time.

And so in coordination with the Autonomous Regions I propose to develop a system of mutual recognition of permits and licences to remove obstacles to the free circulation of goods and services throughout the nation, along with a fast-track mechanism to resolve disputes in this regard.

Some of the strategic sectors of our economy need to be regulated, and the competitiveness of our economy depends to a great extent on their sound regulation and supervision. We will therefore reduce the number of regulatory bodies and restructure their powers, setting out a new system for the appointment of their members, with a greater role for the Lower House of Parliament. To this end, in the first quarter of 2012 the Government will present this House with a Bill to underpin the independence of these bodies and improve the regulation of economic activities.

Honourable Members,

I said earlier that urgency must go hand-in-hand with necessity. In order for the Spanish economy to gain international competitiveness, one of the key factors lies in the skills and qualifications of the greatest resource our country has in order to generate wealth: our human capital. Education is, though, much more: it is the essential foundation of freedom, equal opportunity, social cohesion and democratic coexistence.

The Spain of the future will depend on our educational system. We cannot allow ourselves the luxury of reinventing our educational model every time a new government takes office. We will therefore seek the broadest consensus in addressing the changes demanded by the current circumstances: an unacceptable proportion of early school leavers, around 30%, and extremely mediocre results in international knowledge assessments such as the PISA report. Spain, which in other fields achieves considerable international success, has no university among the world's top one hundred and fifty.

There are many things we must change:

• We need to foster in students the values of hard work, a desire to learn, a spirit of enterprise, high personal standards and responsibility.

• We must also guarantee uniform education nationwide.

• We need to improve free, compulsory education up to the age of 16, in order to reduce the early school leaver rate and improve students' skills.

• Secondary education needs a more flexible structure, with different educational pathways in accordance with the interests, motivations and progress of students.

• We will promote a three-year baccalaureate with the aim of better preparing our future university students and raising the average educational level in Spain.

As for the outcomes of the educational process, considerable improvement is required. We therefore need to implement a National Educational Quality Strategy.

We must promote Spanish-English bilingualism throughout the education system and encourage the option of trilingual education in those autonomous regions which have a joint official language.

One further requirement is to expand the use of new technologies for both teachers and students.

Furthermore, if we want our education system to be efficient, we need to pay attention to the professionals who make that possible.

To this end we must establish a national teacher recruitment system to attract the best professionals to education, rewarding merit and ability, recognising their authority and incentivising their work.

An ambitious competitiveness policy also demands a reform of our universities. We must commit to innovation, excellence and the internationalisation of our university system.

Honourable Members,

One further vital structural reform involves our energy system.
Energy policy must aim for an appropriate balance across its objectives: competitiveness, security of supply and environmental impact. Over recent years there has been no focus on the fact that energy is a sector which dictates a proportion of the costs of all other economic sectors. Energy is a key factor in the competitiveness of Spanish companies.

We must remember that Spain faces a major energy problem, in particular in the electricity sector, with an annual deficit in excess of 3 billion euros, and a cumulative tariff debt of more than 22 billion.

Electricity tariffs for domestic consumers are the third most expensive in Europe, and the fifth-highest for industrial users.

The solution to this problem, one of the most complex which the in-coming Government has inherited, cannot be a simplistic one. It is clear that tariffs cannot simply be raised, with the entire burden falling on consumers and further undermining the competitiveness of the Spanish economy, because of poor regulatory decisions; all the more if the ultimate aim is to liberalise the sector, a venture which will prove impossible unless the tariff deficit can be definitively resolved.

Unless we embark on reforms, the imbalance will be unsustainable and increases in prices and tariffs would place Spain at the greatest disadvantage in terms of energy costs anywhere in the developed world. We will, then, have to apply a policy based on checking and reducing average costs in the system, adopting decisions free of ideological dogmatism, employing all available technologies without exception, and regulating with the overriding aim of securing the competitiveness of our economy.

Honourable Members,

Assistance for innovative companies and support for goods and services sold abroad will be a priority for this in-coming Government.

As I mentioned earlier, Spain is much more internationalised than it was before we joined the Euro. Spain at present has 46% of its GDP invested abroad: 470 billion euros. Of this, almost half is in the European Union, 31% in Latin America, and 11% in North America. 30% of our GDP comes from overseas trade. Thanks to this, including tourism, we are not now in recession.

The process of internationalisation has driven not only our major companies, but now also extends to small and medium-sized enterprises, and it is in supporting the latter that public policy is most helpful. The promotion of our products, services and brands, and the defence of our economic interests, our country's trade policy, demand appropriate attention.

Support structures for innovation and the internationalisation of Spanish companies have gone years without renewal, and at the present time, with public resources in short supply, we must make the most of every euro.

Companies which innovate are companies which export, and they therefore need the same support policy. At present a company is forced to wait in different queues at different public authorities at every stage of the life-cycle of its products, while in the vast majority of cases support simply means subsidies.

We need to integrate instruments for taxation, technological support and internationalisation within one single policy, with instruments based more on sharing risks and benefits, such as guarantees, participation loans, capital stakes, financial loans, etc., with a greater focus on less mature sectors, which typically have a higher technological component, seeking to develop what are the new markets for the Spanish economy, such as Asia, the Middle East and Latin America.

I would also like to point out, Honourable Members, that tourism is our leading export industry, and we will therefore be presenting a Comprehensive Tourism Plan, establishing the sector as a priority, improving taxation and developing horizontal policies involving all Ministries with a role in this sector.

We will also boost the image of Spain as a quality tourism destination by modernising and improving the network of Spanish Tourism Offices abroad.

Honourable Members,

Another of the reforms required involves the Administration of Justice. Justice is the power which guarantees the protection of citizens' rights, but is also a vital factor in competitiveness and trust in institutions. 

According to the World Economic Forum's Global Competitiveness Report, Spain is ranked 63rd out of 142 countries in the efficiency of its legal framework for the resolution of disputes. In plain and simple terms, this has to change.

The Administration of Justice must be a modern, high-quality public service. We need to promote efficient and coordinated use of new technologies, achieving compatibility among - and this is a truly noteworthy number - the eight IT systems currently in place and which are mutually exclusive. Changes must also be made to the structure of the Judicial Office in order to ensure the uniform functioning of all jurisdictional bodies.

We likewise need simpler procedures, better developed oral hearings, a review of the appeals system and the inclusion of fast-track proceedings in civil law.

In order to reduce litigiousness we must improve legal guarantees by means of a clear regulatory framework - as I said earlier, fewer and better laws - and the professional, specialised and effective administration of justice. We will bring in a new Mediation and Arbitration Act as a mechanism to resolve disputes outside the courts, along with a Voluntary Jurisdiction Act.

We must restore citizens' trust in Justice and encourage respect for judicial independence and impartiality, with regard both to the governing body for judges and the Constitutional Court.

The reforms we will embark on are intended both to speed up and improve operations and to reform appeals for constitutional protection and prior appeals of unconstitutionality, while also further underpinning independent appointments.

I tell you now that I intend immediately, in dialogue with the Opposition, to address the pending process of renewing the Constitutional Court, along with other processes which have likewise yet to be settled, such as the Public Ombudsman, the Court of Auditors and the Board of the State broadcaster, RTE, to ensure that all these matters are dealt with within the next three months.

Honourable Members,

The ambition for reform of the Government I intend to form must also extend to the maintenance and improvement of our welfare system.

As all the Honourable Members are aware, health-care administration is devolved to the Autonomous Regions. At the State level, within the context of our competencies, we will propose a Health Pact with all political parties, public authorities and professionals involved.

In order to make the Spanish Healthcare System more efficient and sustainable, we will embark on the reforms required so as to improve accessibility, cut through red tape and achieve more efficient administration.

To this end, and in close cooperation with the Autonomous Regions, we will draw up an essential portfolio of services for all citizens through an Essential Services Act.

The definition of a uniform portfolio of essential public services will thus serve to ensure funding for the resources required in order to guarantee their delivery, allocated efficiently and in accordance with the principle of institutional fairness. This Act will require all Public Authorities to make a distinction in their budgets between expenditure corresponding to essential public services and to all others.

The Government is also aware of the need to guarantee the sustainability of the pensions system, in particular given the current downturn in Social Security affiliation and the consequent undermining of the system's resources.

Our aim is to guarantee the right to retirement and the purchasing power of pensioners, to strengthen instruments in order to effectively implement principles of sufficiency and solidarity, to restructure the tax system applied to pensions and support systems to complement Social Security.

We propose bringing the real age of retirement into line with the legal age, eliminating early retirement except in highly exceptional circumstances, and we also propose bringing an end to the abusive practice of using unemployment benefit during the final years of a person's working life as a mechanism for clandestine early retirement.

We wish to incentivise the option of voluntarily remaining in work and to make it easier to receive a partial pension payment while continuing to work.

We will, lastly, strive to make pensions more proportional to the contributions actually paid over the course of a person's working life. Furthermore, and in collaboration and dialogue with the autonomous regions, we express our desire to maintain and improve the public services, and the long-term care service.

Honourable Members,

I now wish to briefly discuss three major issues: agriculture, fisheries and the environment.

We will promote the role of the agricultural sector within our country in order to restore it to the leading position it deserves by creating a Ministry of Agriculture, one of the key objectives of which will be to draw up a National Strategy for the defence of Spanish interests within the European Union.

With regard to fisheries, we will update the regulations for adaptation to the new Common Fisheries Policy and its administrative and structural principles, in order to provide an effective, rigorous and lasting solution to the readjustment of the fishing fleet.

We will encourage, and I add emphasis to this matter, the internationalisation of the Spanish agri-food sector, an export sector that is very important to our Gross Domestic Product. We will do so by promoting the industry and helping export our culinary output throughout Europe and the world.

Honourable Members,

Spain is one of Europe's leading countries in terms of its environmental heritage. It is essential that we safeguard and improve this not only for the benefit of our own well-being, but also as the foundation for maintaining and increasing the undeniable appeal of our country.

As we must all be aware, we are facing major challenges in this sphere. Examples include forest fires and variations in water resources.

Environmental policy means much more than arguing a position at climate change summits. The disappointment of Durban is bad news for us all. Environmental policy must, above all, preserve our diversity, among the richest in Europe, and effectively address the issues of waste and air and water quality.

I will now, Honourable Members, speak briefly of the Government's foreign policy.

We are committed to guaranteeing the creation of a foreign policy model based on a vision of Statehood and of serving the interests of Spain. To begin with we will seek to establish a permanent dialogue with the main opposition party and other parliamentary groups in order to map out the strategic focus of our foreign policy over the coming years. We meanwhile wish to make foreign policy one of the cornerstones in restoring the image of trust presented by our country.

We will implement an active policy within the European Union, influencing its decisions, contributing solutions and leadership and committing ourselves to a stable euro, the basis for growth and for economic and institutional stability. We will in this regard argue for strict compliance with the Stability and Growth Pact, and actively support European economic governance.

We will establish clear and recognisable lines of foreign policy which will give Spain credibility abroad. We will propose a comprehensive approach to diplomatic, economic and cultural actions abroad, as a true reflection of our current society.

Nor will we overlook the need to strengthen our ties with Latin America and the role of the Spanish language as a vital bridge and instrument of trade. We feel in this regard that the Bicentenary of the Constitution of Cadiz offers the perfect opportunity to develop such ties, while also putting across a message of the value of culture in Spanish and the quality of our democracy.

We will embark on a far-reaching reform of the Spanish Foreign Service, in line with all the transformations which have occurred in this realm and we will strengthen the role of the Spanish Foreign Service in promoting trade by Spanish companies worldwide and in their internationalisation projects.

Allow me, Honourable Members, before I draw to a close, to state my recognition and admiration for the men and women who make up our Armed Forces. Spanish society values its Armed Forces as one of our country's strengths and one of the instruments which, at times at a huge personal cost, best helps preserve peace and security in different parts of the world.

In our Defence policy we will at all times work by means of consensus with the main opposition party. With them we will set out the essential lines of our National Defence Strategy and any action abroad in each individual case.

Honourable Members,

I have just mapped out the general lines of the programme with which I seek the confidence of this House.

I know that it is a difficult task, but I also know that we can achieve it.

It is an arduous and demanding commitment, but it is the duty which the Spanish people have entrusted to us.

It is a challenge to our determination, but it is a challenge which is worth bearing, because what awaits us at the end of the road is the satisfaction of victory against unemployment, forging our place in the world, guaranteeing our Welfare State and, above all, levelling the road for those who come after us.

I must confess that, like all responsible Spaniards, I feel particular concern for our young people.

It worries me that they believe that, for the first time in living memory, their life will be worse than their parents'.

I cannot accept the possibility of a generation in Spain losing out because they find all doors closed before them. I simply cannot.

Honourable Members,

Such a waste of wealth and energy must be checked, because it is impossible to design a future without the next in line.

I want us to be able to offer them new opportunities, to defend their rightful position in a just society and to allow them to hold onto the right to dream and to build their own future.

It will be a challenge, it will be difficult, it will be very hard work, but it will be worth the effort.

I said it earlier, Honourable Members: we are embarking on a national task, an enterprise which goes beyond the possibilities of any government, a responsibility in which I call on all Spaniards, because it is a matter for us all, and we are all needed.

I do not ask for any effort in vain. I wish to assure them that the conditions will be put in place to ensure that all their efforts and all their sacrifices will bring results.

The first condition, Honourable Members, will be for Spain to work together through enormous and cohesive efforts.

We must and will dispel anything which could muddy the waters of our harmonious coexistence.

For my government there will be no good and bad Spaniards. There will be Spaniards, all equal, all needed, all worthy of respect, all capable of assisting in our common task.

Much will be made of remaining united in our joint efforts and nothing more strongly sustains such a venture as dialogue, justice and truth. And that is what I will offer the people of Spain:

• Permanent dialogue with all the sectors of society whose contributions we call on at any time.

• Absolute justice in the distribution of austerity, which must begin with the Government itself.

• Scrupulous respect for the right of citizens to know the truth, because any attempt to deceive ourselves or to deceive others would be reckless.

I call on all, and I humbly request the support of all, while also offering to defend unity, tireless dialogue, to guarantee justice in shouldering the burden, and at all times to present the truth, of whatever hue it may be.

That is my proposal, Honourable Members.

It is an offer of hope, based as it is on the conviction that we have in place the resources, the potential and the will to forge a better future.

At times, when heavy clouds darken the sky, we may feel we cannot see beyond them, or even imagine they will ever be dispelled.

They will be dispelled.

We know they will be dispelled, because the only thing which could prevent it is our passivity. And that, I assure you, will not happen.

We are well aware that nobody intends to make life easy for us, I am well aware of that, and nobody will do what we are unable to do for ourselves.

Spain will be what we the Spanish people want it to be, and will achieve the standing which we give it.

Everything, of course, has its price: it is called effort, perseverance and trust. Our effort, our perseverance and our trust.

And that is why, because we are aware of it, that we the people of Spain will deliver, and will base our hope on ourselves, and so build a future for all of us.

Honourable Members,

We are now faced with a very thankless task, just like all those parents who conjure up food for four out of the money of two but it will pass, because our efforts will not be in vain. The storm clouds will be dispelled, we will raise our heads up high and the day will once again dawn when people speak and speak well of Spain. The day when we look over our shoulder and no longer even remember the sacrifices.

That is the portrait of our duty, Honourable Members.
I am well aware, absolutely aware, that the stage onto which I now step will not be strewn with bouquets but I am used to facing such situations.

Honourable Members, I have not come this far to seek applause, but rather to try to resolve problems.

That is my task and in it I call on the cooperation of all, and ask this House for its confidence.

Thank you very much.