Portugal in 2024 Risks and Opportunities – Why António Costa was a knee-jerk reformer

Journalist and TV commentator Sebastião Bugalho says that Portugal’s future governments need to change tack and make serious reforms at a lunch organised by the International Club of Portugal. But when 40% of the population is on the breadline, that’s easier said than done.

The Portuguese journalist and TV commentator Sebastião Bugalho, who has enjoyed a meteoric rise on the local media scene at the tender age of 28, although a conservative, is not one of those people who discredits the successes of a government in power whose political persuasions he might not wholly subscribe to. However, he does give them a grilling when only half the job is done.

The journalist, who I have no doubt has future political ambitions, admits that Portugal today is a “country that has more equitability in public transport, more employment, a better qualified youth, better access to school books, a lower public debt and annual deficit which is “all good and all true” in defence of the government’s eight-year record

And that is indeed “good” because the essence of a good journalist is professional impartiality; to criticise when necessary, but also give credit when credit is due, for how else can the media — the fourth estate — hold our elected representatives and public servants accountable; heaven knows we certainly need it with the weak band of politicians and dysfunctional judiciary at all levels this country is saddled with.

And as a foreign citizen, who has adopted Portuguese nationality, I say this in all respect. Indeed, my own nation of birth, the United Kingdom, has seemed hell bent on copy-pasting all of the worst features of Portuguese political life over the past decade and transposing it on steroids onto its own in recent years: corruption, unaccountability, political scandals, cronyism, inefficiency and a collapsed social pact reflected in a series of teachers and health care professionals strikes.

But there was also a greater contrast between the expectations of Portuguese citizens and what they receive from the State said the journalist who has worked for newspaper ‘I’ and ‘Sol’, and is a columnist for Observador and Diário de Notícias.

“There is an increasing disproportionality today in both public services and tax and the contributions to Social Security and the pensions people expect to receive, as well as the investments that are made — both material and temporal — in academic education, and the wages received compared to the upfront investments made by the State” pointed out the journalist who has worked for TV stations TVI and CNN Portugal, and currently writes for Expresso and is a commentator for SIC TV.

Sebastião Bugalho expressed the view that today it no longer pays having a Masters degree or PhD in terms of the (financial) expectations that the person had when they signed up for the course, and this was increasingly clear for both the left and right wings of the political spectrum.

An NHS in crisis

And a reporter who used to write articles about former guest speakers at the International Club of Portugal and referred to journalism as the “most attractive profession in the world” (It is, but I know many who would not elect to choose it again today as a career path had they known when they were younger at just how undervalued in terms of payment and in the eyes of society that the trade has become) added that one of the most glaring causes of this disproportionality between expectations and reality was in the Portuguese NHS (SNS).

“We are a European democracy in the 21st century were a pregnant woman on entering a hospital doesn’t know where she will have the baby, if she’ll be able to have the baby or not, and a what time the delivery will take place in the hospital and in decent conditions.”

Instead, Portuguese tax payers were paying increasingly more for the NHS for it to serve increasingly less people. (I think given that Portugal can’t afford an NHS in its current form, that is an unspoken part of any government’s plan — to push those who can afford it to go private, while running the existing services down and making a hostile and badly paid environment for doctors and nurses to work in, which indeed is why they are fleeing to the private sector or working abroad)

Bugalho gave an example of Portuguese émigrés who despite holding a Portuguese passport and national health number will now, from 2024, have to pay some fees for treatments in Portugal on the SNS because they are not tax resident in Portugal. (Depending on your point of view this could sound quite fair since they are not contributing towards national taxes and social insurance contributions until you realise they were forced to leave Portugal in the first place because they couldn’t get a job that paid a viable salary)

To solve this problem, without having to “reinvent gunpowder” Portugal needed to focus on growth and have the courage and initiative to make economic reforms.

However, after eight years in power, he asked how Prime Minister António Costa could beg the opposition to “build the new airport so he could have a public works project to show before leaving office”.

Apart from a general inertia, there had been some success in terms of political stability thanks to an absolute majority with António Costa not loosing one electoral act since becoming prime minister. This was “remarkable”, but Portugal had not, as he said, achieved European average growth, neither in terms of cohesion, nor compared to those countries that had been under the troika during the sovereign debt crisis, and it was against these that Portugal should be compared to economically.

As to taxes, when the government says it is close to the EU average, it forgets that the tax effort is not. “We are the seventh highest country in the EU when it comes to tax effort”. Neither was there a balanced relationship between tax payer contributions to the State and what citizens got back in terms of public services.

Bugalho said that the brief diagnosis he had given in four minutes in his speech had been made by other political parties across the board from conservatives, liberals, and even Marxists.

“There is a deep dissatisfaction with a number of things after eight years of the PS in government, or even since Portugal entered the euro currency in 2000. (…is he suggesting Pexit one wonders?)

“There was an expectation in the 1990s that we would get to the front platoon, but 28 years later and we haven’t,” said the journalist at the event which was also attended by his former colleague, the journalist, author and media celebrity Judite de Sousa who was the Deputy Director of News at TVI and also worked until 2022 at CNN Portugal.

Reforms – reactionary not proactionary

At issue for Bugalho is the government’s reaction to crises rather than proaction to deal with issues that are longstanding ones. Of course, this is easy to say when no government, either PS or PSD has had the courage to undertake drastic reforms that would imply effectively slashing or dismantling the sacred cow of the NHS or splash out the €3Bn needed to build a new airport at Alcochete. This government has chosen to reduce public debt rather than invest heavily in either reforms or public works – much as the British government has done. The rest – housing, health and education – it has simply tinkered around the edges of problems rather than resolving them. So, Bugalho suggests a change in direction.

“If we want to achieve this ambition we have to change direction to reach it, and to do so we have to overcome our fear of reforms. It is interesting that what he (Costa) chose to do concentrate on when leaving his post is the thing he said he wouldn’t do — undertake reforms. He understood, probably too late for himself, that his most important legacy was not as a conservative (i.e., non-reformer), but the opposite in terms of public accounts; reducing public debt and balancing the books”, explained the ultra-conservative who was chosen by the former leader of the CDS party to form part of the party’s list of candidates in the legislative elections in 2019 standing as an independent.

However, the problem was also the relationship his Socialist ministers had with these reforms – reforms that would naturally be attributed to the centre-right, making him equate somewhat with New Labour and Blairism in the UK in the 1990s. (When asked about her greatest achievement, Margaret Thatcher famously answered, “Tony Blair and New Labour”)

In Bugalho’s opinion, the Portuguese prime minister’s failure to change direction over three terms in office was a “fatal error” which is why he had not secured such a “great place” in history in terms of his legacy.

Instead he looked at reforms as an knee jerk reaction to a crisis and in Bugalho’s opinion that’s not real reform.

You could make a comparison, admittedly on a much huger scale, with Russia’s last Tsar, Nicholas II who made reforms such as extending voting rights and allowing the setting up of a Duma or parliament, not because he wanted to, but because he had to in order to avert disaster.

António Costa’s reforms he referred were in regard of the aftermath of the widespread forest fires that plagued Portugal for a decade (and have no been completed) or the reformulation and streamlining of the country’s immigration service. (also not completed effectively)

Reforms to decentralise the Internal Ministry and Portugal’s police forces also are also incomplete. The reform of the SNS was a “good and bold initiative” despite it being unable to solve a number of problems the health service has, and will continue to have, and came about as a knee jerk reaction to a crisis in obstetrics, while the housing reform only arose because of a full-blown housing crisis.

Instead, reforms should be well thought out, and done in times of political stability, not during and in reaction to a crisis, but to avoid future ones. “The government did not have the initiative to solve the problems before they turned into a crisis”, he said.

And pointed out: “We have a situation where we have a treasury under control, but at the same time we have a political system in tumult. We have a paradox with a government whose accounts are balanced, but a political system that is not”.

All of this was taking place against a backdrop of international uncertainty, and which was a huge disadvantage to an unstable Portuguese democracy he said, referring to the rise of the populist far right party Chega which is now attracting a significant vote from a young electorate.

Jobs and social state under threat

Sebastião Bugalho pointed out Portugal had been faced with a pandemic, two wars, and inflation not seen in 30 years at a time of political uncertainty a home which “obviously undermines democracy to the advantage of its main competitors”.

“As we face 2024, we don’t have the political stability to assure investors, our allies, or our partners. This was reflected in recent polls that showed that the Portuguese did not want absolute majorities, but also do not want the main political parties to make coalitions with minority parties”.

Next year would also be the year in which the most people on the planet will have ever voted (4Bn) against a backdrop of more floods, droughts, forest fires, and a labour market that has shown a remarkable resilience, but is uncertain of the impacts of artificial intelligence on that market.

“AI in the next decade could be more disruptive to the labour market than inflation which might be interesting for economists but for the general public and politicians might prove a challenge.”

“We are a poor country and all of these changes have very tough consequences and pernicious effects. We have 4.5 million people living on the edge of poverty and this new paradigm brings new challenges for public and political decision makers”, he said.

The great difference between 1995 (when he was born) and 2023 was that we are living through a pre-pivotal paradigm shift when society could not yet foresee the results of these changes, but a moment in which it was possible to see what might happen.

One thing was certain, the end of cheap money was a reality, with a return to low or negative interest rates unlikely. Neither was it likely that high inflation, which had granted Portugal budget surpluses, would last forever either.

EU enlargement to include Eastern European and Balkan states would also have an impact on Portugal’s welfare state as development and cohesion funds shifted to the new member states.

“The idea some politicians have that the period of fat cows and the luxury of political inertia we have had over the past eight years continuing, either for the left or the right, is a false one, and we need to realise this,” said the journalist.

In other words, Sebastião Bugalho concluded that the only way to retain the social state was by reforming it, while the current political inertia and situationism could not continue, and both the main political partners (PS and PSD) would be forced to reform. The question now is how?

Text: Chris Graeme Photos: ICPT

L-R: Manuel Ramalho, President of the ICPT, Judite de Sousa, TV journalist, and Sebastião Bugalho, TV commentator and journalist.