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INTERVIEW-Polish left says wants economic reforms if in new govt

Source: Thomson Reuters Foundation - Tue, 12 Jul 2011 13:16 GMT
Author: Reuters
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* Leftist SLD seen possible ruling coalition partner

* SLD head says public investment should drive economy

* Party proposes new audit body to oversee public finances

By Gabriela Baczynska

WARSAW, July 12 (Reuters) - Poland's Democratic Left Alliance (SLD), a possible coalition partner for the ruling Civic Platform after polls in October, will seek to raise public spending to fuel growth, its leader said on Tuesday.

Prime Minister Donald Tusk's Civic Platform (PO) is expected to retain power after the Oct.9 election, but most polls indicate it will need to team up with another party to secure a workable parliamentary majority.

Tusk has said his current junior coalition partner the Peasants' Party (PSL) is his first choice, but it is performing poorly in surveys and the two could fail to secure a stable majority, opening the way for SLD to join the government.

SLD's Grzegorz Napieralski said Poland should aim for a balanced budget, but instead of mainly focusing on reducing spending, his party would promote public investment.

"The PO government is just slashing spending, whereas we need a pro-growth, development offensive. We need to strongly promote public investments, because the money spent on that returns to the budget doubled," he told Reuters in an interview.

Some economists have criticised the drive by many European Union governments to slash spending, especially in troubled peripheral economies such as Greece or Portugal, because it could weigh on long-term growth prospects.

Napieralski also proposed creating a special auditing body to monitor public finances.

"The problems in Greece, Italy, Spain, Portugal are all due to lack of transparency in the public finances. That's why a form of politically independent control of public finances is crucial to a country's credibility," he said.

Poland, which assumed the rotating EU presidency this month, navigated relatively safely through the global financial crisis and was the sole EU member to avoid recession in 2009.

SLD supported the drive by Tusk's centre-right government to join the euro zone before the debt crisis erupted there and Napieralski said adopting the euro remained a strategic goal.

But he said the EU's biggest ex-communist state must first deal with high debt and a budget deficit of around double the EU's 3 percent ceiling, although he ruled out raising taxes.

He said SLD was willing to reform separate and beneficial pension systems for farmers (KRUS) and uniformed services but that some advantages should still apply for the two groups.

Analysts have urged Tusk's centre-right cabinet to carry out the two reforms, but difficult talks with labour unions and other social groups have dragged on for several years.

COALITION

Liberal economists, as well as some PO politicians, have blamed the Peasants Party for blocking economic reforms since the government took over in 2007, and hope swapping it for the SLD would pave the way for more action.

Others, however, say SLD's post-communist roots mean the party cannot be relied upon to back pro-market reforms.

Napieralski said he would want SLD ministers in the labour, farm and economy ministries, and at the defence or interior ministry, if his party were to join the government.

Napieralski, who hopes to win 15-20 percent of the vote in October compared to a current 9-15 percent in surveys, ruled out a coalition with the main opposition party, the conservative Law and Justice (PiS) of Jaroslaw Kaczynski.

He also said did not want a wider coalition if SLD was to rule with PO.

"Either we take the responsibility or not. I won't take part in any tri-party, or four-party thing," he added.

SLD, which lost power in 2005 amid corruption scandals, also wants state support for in vitro fertilisation, looser anti-abortion regulations and equal rights for same-sex couples.

Liberals within PO are seeking similar changes but opposition from its more Catholic members has kept the status quo in place. (Editing by Catherine Evans)

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