Policy Statement by Federal Chancellor Gerhard Schröder in the German Bundestag „Courage for peace and courage for change″:

»Mr President, Ladies and gentlemen!

Given my responsibility for the future of our country, I have chosen a double motto for this policy statement. It describes what is at issue today:  Courage for peace and courage for change.

We must summon up the courage to fight for peace as long as there is yet a spark of hope that war can be avoided.

And we must summon up the courage to ask ourselves and our country to implement the changes now that are necessary for our country to reclaim a leading position in Europe’s economic and social development.


Both internationally and nationally, the situation is highly tense. The Iraq crisis is burdening worldwide economic activity, which is already in an unstable condition.

Furthermore, Germany is suffering from slow growth, the causes of which are among other things structural.


Non-wage costs have reached a level at which they have now almost become unbearable for employees. And on the employers’ side, they are an impediment to creating new employment.

Investments and consumption have fallen drastically – not least because during the past three years approximately EUR 700 billion were literally destroyed at the German stock markets.


In this situation, politics must take action to restore trust. We must improve the basic conditions for more growth and employment.


Today, I would like to present to you item by item which specific measures the Federal Government is convinced it must take and implement


–      to stimulate economic activity and consolidate the budget

–      to create employment and boost the economy

–      to ensure social security in old age and during illness.


We will cut state funding and promote individual responsibility, and we must ask all individuals to make an increased effort.


Our guiding principle will be:

We can only distribute what which we have previously earned.


All elements of society will need to make their contribution: employers and employees, liberal professions and pensioners.

No one will be permitted to opt out.

We will have to make a massive joint effort to reach our goal. But I am sure that we will reach it.


However first, ladies and gentlemen, the dramatic international situation requires that I speak a few clear words with regard to the Iraq crisis:


In the past days and weeks, the Federal Government has still further stepped up its efforts to find a political solution to this crisis.

Together with our French friends, Russia, China and the majority of members of the Security Council, we are more than ever convinced that the disarmament of Iraq can be achieved by peaceful means.

The reports of the weapons inspectors show that Iraq is now cooperating better and more actively under the pressure of the international community.


The destruction of the Al-Samoud missiles is a visible sign of real disarmament. This proves that inspections are an effective instrument.

There is still a possibility of resolving this conflict peacefully.

With an expanded inspections regime, we can achieve sustained and verifiable disarmament.

And that is why we were and are right to insist on the logic of peace instead of entering into a logic of war.


Iraq must completely and verifiably disarm under international supervision – so that the economic sanctions which are afflicting above all the Iraqi people can be loosened and in the end lifted.

Those are the conditions under which peace and freedom can prosper.


We will only be able to completely assume both our responsibility and our determining role in a multi-polar international order based on peace and the rule of law and within a strong, united Europe.


The role of Europe in international policy is at stake here. As is the independence of our decision-making in the world of tomorrow.


We will only be able to preserve this role and independence if – in Germany as well as in Europe – we become increasingly flexible and demonstrate greater solidarity and strength with respect to economic and social policy.


Ladies and gentlemen,

Europe is more than the sum of its institutions and more than the common internal market.

Europe is an idea to which we feel committed.

Europe is the idea of a united continent that has overcome wars and nationalism. Today, Europe can by all means also be an exporter of peace and stability, justice and opportunities for economic development.


Germany makes its contribution to this, also in financial terms: We provide a quarter of the European Union budget, and every year we contribute approximately EUR 7 billion more to the EU budget than we receive. This makes us by far the Union’s largest net contributor.


We accept this not only because Europe is based on the conviction that cooperation is better than confrontation.

We also accept this because together we can strengthen our European social model – which is based on participation rather than on the unbridled primacy of the market – so that it can weather the storms of globalization.

Together with our partners, we can and must make our contribution to help bring about a recovery of world economic activity.

We must ensure that the macroeconomic risks do not derail the entire world economy, especially to the detriment of the poor and poorest in this world.


In addition, it is also necessary that the states of the European Union that can act as an economic engine cooperate more closely and take joint action specifically in industrial policy.

Germany, France and Britain have embarked upon this path.

For example, we are currently making joint proposals that aim to ensure that the shipbuilding and chemical industry have a future in Europe.

For industry is the foundation of our economy. That is why we must improve the competitiveness of European industry.

That is the fundamental idea of my joint industrial policy initiative with President Chirac and Prime Minister Blair, which we will discuss with our partners at next week’s summit in Brussels.


Ladies and gentlemen,


I have already mentioned it as my motto:

Courage for change.


In order to live up to our German responsibility in and for Europe, we must ourselves be prepared to undergo internal transformation.


The world is changing at incredible speed. We are feeling the effects of this in our everyday lives, our families and our customs.


The alternative option is clear:


We must either modernize, and do so as a social market economy, or we will be modernized by unreined market forces that pay no respect to social aspects.

The structure of our social welfare system has remained practically unchanged for 50 years.

In some instances, for example, regarding labour costs, instruments of social security are today even resulting in the creation of new injustices.

From 1982 to 1998, non-wage costs rose from 34 to nearly 42 percent.

Today, the restructuring and renewal of the welfare state has become indispensable.


Ladies and gentlemen,


There is no doubt about it: We have one of the strongest national economies in Europe. However, we also have greater burdens to bear than others.

Every year, the old Länder transfer four percent of their gross domestic product to the new Länder. This amounts to EUR 75 billion annually.

No other country in Europe is facing a comparable challenge. But we are glad to meet it. For unity is a great gift to us Germans. The fact that we are able to implement our reconstruction programme in the east is impressive proof of the solidarity of people in the whole of Germany and of what they are capable of achieving.

It shows that Germany has the strength to meet great challenges.

Today, we are again facing such a challenge. And that is why we must once again mobilize this strength.


Ladies and gentlemen,


In the past years, this government has introduced many reforms. With capital-based private pension funds, we have erected a second pillar next to the pay-as-you-go basis for pension insurance.


And we have adopted a tax measure programme with several steps that are now being implemented one by one; these are reducing the tax burden on citizens and companies by a total of EUR 56 billion.


We have modernized society in the areas of energy and family policy, as well as through the Immigration Act.


We have increased our investments in research and have begun to improve the conditions of school and preschool education.


However, we have come to realize that these steps are not enough. And above all that we are not adapting our structures to the changed conditions fast enough.


People want to see clear decisions being taken rather than a skirmish over government responsibilities. They want the focus to be on making advances for everyone rather than the realization of individual interests. And above all, they want the burden to be distributed in a just fashion.


Our Agenda 2010 programme contains far-reaching structural reforms and offers incentives for boosting employment, consumption and investment.

It will help ensure that equity is maintained between the generations and help strengthen the foundation of our state.


Ladies and gentlemen,


I promised to outline to you one by one the measures we are planning. There are three main areas.


The first concerns economic activity and the budget.


The dramatic economic situation forces us to create a new balance between consolidation, impulses to stimulate economic activity and reducing the tax burden.


It would be an unjust and egoistical path if we were only to reduce the burden on those who are active today and thereby place a burden on the next generation by running up debts.

This would be a reorganization at the expense of those who come after us. That is exactly what we will not do.


For this reason, we will adhere to our goal of budget consolidation and to the framework agreed on in the stability pact.

However, this pact cannot be interpreted in a static sense. It allows leeway for reacting to unforeseen events.

Phases of economic weakness should not result in a pro-cyclic policy. We must also maintain the option of reacting to strong downturns in the world economy that result from international events.

This is an opinion shared by others.

The spring Summit in Brussels will give us the opportunity to consult with our European partners on how our economic policy in Europe can be a suitable reaction to this unusual situation and the – still preventable – risks arising from other dramatic developments.


Ladies and gentlemen,


The Stability Pact and European responsibility may not however be used as excuses for inaction: even in the present international climate new impetus for growth must be provided, in the interests of both private investment and public investment, especially by local government.

We have an obligation, precisely in times of low growth or economic stagnation, to keep public investment at a high level.


The Federation is living up to its duty: investments earmarked in the federal budget have increased this year to 26.7 billion euro.


We will also enhance the financial strength and investment ability of local government for the long term. In the past years the local governments have worked hard to provide the necessary services despite their lack of funds. The Federal Government is aware of the difficult situation in which the municipalities find themselves. Together with the Länder, it thus intends to sustainably expand their financial scope.


We therefore want to implement the following measures:


Firstly, for the immediate relief of the municipalities the Federal Government intends to release them from their obligation to contribute to the fund for flood victims. This will increase their income by around 800 million euro.


Secondly, the Act to reduce tax concessions and the introduction of final tax will create additional revenue of around one billion euro, hopefully during this year.

I take this opportunity to ask the CDU and CSU, in the interest of the local governments, not to block the passage of necessary legislation!


Thirdly, from 1 January 2004 we will free local government from the burden of paying recipients of public welfare who could work. This means that the Federal Employment Service will in the future be responsible for up to one million welfare benefit recipients.


Billions of euros in the municipalities’ budgets will thus be freed for other uses. And they will have the leeway to decide how to use them, for example to invest in child care.


This arrangement will not however free the local administrations from their responsibility to do everything they can to ensure that people find work or employment.


Fourthly, the Federal Government will reform municipal finances as of 1 January 2004. A commission is urgently working on realizing the reforms.


These will centre on a rejuvenated trade tax, which will provide local government with a steadier revenue and give it greater responsibility for its own affairs.

The contours of an agreement in the commission are already discernible. I am therefore confident that we will, as planned, have its proposals on a permanent boost to local finances in good time before the summer recess.


The Opposition will once again be able to show if it wants to play along or stand aside.


Fifthly, we must mobilize an investment volume of 15 billion euro through the Reconstruction Loan Corporation:


–           seven billion for a programme of investment by local government,


–           and eight billion more for private-sector housing improvement.


The local government programme is designed for longer-term projects in the field of water and sewage, waste management and local and social infrastructure. This programme will provide work for the construction industry and craftsmen. It will directly benefit the citizens and employees of small and medium-sized enterprises.


The Federation will provide refinancing on attractive terms from its own funds for the years to come.


The attractive interest rates and conditions already offered to local authorities in areas with particular structural problems and above-average unemployment will be considerably improved yet again.


This will lead to noticeably more investment.


I have to say that this will not be some short-term programme to boost economic activity that will blaze briefly and then die. We will not take on new debt nor will we raise taxes.

This programme is the necessary supplement to our structural reforms on the supply side –which I will come to immediately.


The two approaches are interdependent: without structural reform any boost to demand will fizzle out. Without boosting the economy from the supply side the reforms will fall down flat.


That is why we are tackling the issue from both angles.


We will, as planned, fully implement the next phases of the tax reform to reduce the tax burden by around 7 billion euro on 1 January 2004, and by a further 18 billion euro on 1 January 2005.


The starting rate of tax will be reduced from 25.9%, as it was in 1998, to 15%, and the top band will be lowered from 53% to 42%. We cannot afford to do more.


We will additionally introduce final tax on interest income and will make it possible for people to transfer money invested abroad back to Germany without being punished.

But for this controls are also needed. They should be non-bureaucratic and effective. We are ready to discuss their form with the majority in the Bundesrat.


But everybody must be able to rely on the fact that no other goals are being pursued. We will in future levy a tax on capital gains. In this way capital itself can remain tax-free.


Ladies and gentlemen,


Work and the economy are at the heart of our reform agenda.


A dynamic, growing economy and high employment figures are the preconditions of a healthy welfare state and a functioning social market economy.

We will not abandon the goal of giving everyone who can work and wants to work the chance to do so.


We have opened up the labour markets to new forms of employment and entrepreneurship. We have launched the “Capital for labour” programme.

We have improved the conditions for placing unemployed persons in new jobs. And we have found a new balance between the rights and duties of job seekers.


We are in the process of reorganizing the Federal Employment Service to enable it to fulfil its primary task – that of placing the unemployed in jobs.

The Federal Government however expects progress to be much more visible and quicker than has so far been the case.


In the past months we have made great efforts to increase labour market flexibility:


–           We have removed the red tape connected with temporary work and have enhanced its status so that businesses can easily find the qualified workers they need.


–           We have greatly reduced the social security charges that come off low-paid jobs with wages of up to 800 euro per month.


And we will do yet more to significantly improve these framework conditions for tackling unemployment.


Our system of job placement is one of the least developed in Europe. In days of full employment this did not matter, and since that time we have permitted ourselves to discuss the issue for twenty years without correcting the underlying problems.

We have now undertaken the necessary reforms. But it is up to the firms who have vacancies to fill to make use of the new schemes.


We have extended the period for which fixed-term contracts of employment may be concluded, with no time limit at all for people over 50 years of age. We hope this will help older unemployed persons to re-enter the labour market.

But we cannot hire everybody ourselves. That is up to the people who demanded these measures.


I expect you to now make use of these new measures. Finally make use of the options that you yourselves called for – instead of permanently making new demands.


We are already going further than ever before. We will take steps beyond the Hartz reforms to open the labour market, to discourage moonlighting and to increase our efforts to ensure that enough training places are available.

But it must be clear that although we have worked fast to legislate on the Hartz proposals, it will be some time before the effect of the reforms is felt on the labour market.


Our solution cannot be to simply abandon our active labour market policy, above all in the east German Länder, before the new structures have been established. That is not what we will do.

Therefore the second labour market in eastern Germany will have to remain, as it will too in other particularly disadvantaged regions.


Ladies and gentlemen,


We cannot just improve the conditions for business and the labour markets. We also have to think about our welfare system and ask ourselves if such assistance really helps? Does it foster integration into the working world and into society?


I do not accept the idea that people who can work and want to work have to go to the social welfare office, while others who might not even be available to the labour market can claim unemployment benefit.


Nor do I accept the idea that people with the same readiness to work should be given different levels of financial assistance. Successful integration cannot take this form.


We therefore need a one-stop agency to provide all relevant services. This will increase the opportunities of those who can and want to work.


For this reason we are going to merge unemployment assistance and welfare benefits.


To be precise, we are going to merge them at a level equal to that of the present welfare benefits.


By so doing, we are also doing more for the people from whom we need to demand more. We are for example putting an end to the practice that caused long-term unemployed persons to lose all entitlements to transfer payments when they accepted a job.


For this reason we will leave long-term unemployed persons who start a job considerably more than the current 15 % of their transfer for a set period.


This is a clear message to those people in our society who have been unemployed for more than twelve months.

However, in the future nobody will be allowed to live off the community: if you refuse to accept a reasonable job, you will have to expect to face sanctions.


Ladies and gentlemen,


We are also reforming those parts of social and labour law which have in the course of the years become obstacles to employment.


But here, too, I have something to say up front:

Protection against dismissal, as an inherent part of our social market economy, is not just a social achievement, but also a cultural one.


It was not the law of the jungle and unscrupulous hiring and firing that made our country strong.


Our country was made strong by confident employees motivated not by fear but by the will to work with honest employers in order to make something, to achieve something.

But we are aware of the tremendous changes taking place in the foundations of our economy.


We therefore have to make changes, even to protection against dismissal, to make it less unwieldy. This is especially true for small firms with more than five members of staff.

We must lower the psychological barrier that such small firms must cross before they employ someone new.

In addition, we will introduce an optional severance arrangement for employees who are dismissed for operational reasons.


In such cases the employee should be able to choose between suing for reinstatement or accepting a statutory severance package.


Lastly, we want to alter the way in which companies use social criteria to decide which employees to make redundant so that even in times of economic hardship the most productive employees can keep their jobs.


Instead of applying fixed social criteria such as age or length of service, the priorities should be agreed between the employer and employees’ representatives directly.

This will provide a more reliable basis on which businesses can plan and will make it easier to hire new people.


We are pursuing this goal with another measure, too. To help start-ups in particular, we are going to double the maximum length of a fixed-term contract of employment to four years.


Start-ups will also be exempt from compulsory contributions to craft guilds and to chambers of industry and commerce.


Ladies and gentlemen,


Our strategy for greater employment is completed with measures to eliminate moonlighting, which is still on the increase at a rate which should shame us all.

Of course it is a moral dictate in the name of solidarity to ostracize people who do work on the sly. But it is also a dictate of economic reason.

We have already begun to counter this practice by making legal employment more attractive through the Hartz reforms.


Ladies and gentlemen,


Big companies and major concerns are important for our economy. But the engine of growth is and remains small and medium-sized companies.


Small and medium-sized companies are however particularly affected by high ancillary wage costs and bureaucratic regulations.


Therefore we are going to greatly improve the position of small companies. We will radically simplify tax law for micro-firms, reduce accounting obligations and dramatically cut their tax burden.


With the Small Business Act we will improve the conditions for people starting up on their own.

People who set up their own business and so create jobs for themselves and for others have our recognition and political support.


It is not right that new entrepreneurs and many smaller firms now have to spend more time talking to their bank managers than developing and marketing their products.

To solve this problem we are improving the conditions under which small companies can take out loans, for example with the “capital for labour” programme and so-called secondary loans, which can be treated like equity capital when assessing creditworthiness.


It is also important that we give medium-sized businesses the chance to build up their equity capital. Legislative proposals are being elaborated on this subject.


We will modernize and streamline German law on the craft sector, so that there are again more start-ups in this field, thus creating sustainable jobs.


I want to mention three particularly important points:


Firstly, in those areas in which the quality assurance provided by a Master Craftsman’s Certificate is particularly vital, such certificates must be retained.


These include all areas in which inferior work could present a risk to the life and limb of others, such as installing heating systems and gas appliances.


Secondly, we want to make it easier for hard-working and experienced craftsmen to develop their own businesses. After working for ten years they should be entitled to set up on their own.


Thirdly, the boss of an independent firm must currently possess a Master Craftsman’s Certificate himself, a requirement that does not exist within limited liability companies. In the future it will suffice if he employs a Master in his firm. This relaxation, too, will increase flexibility and facilitate start ups.


Ladies and gentlemen,


Labour law and collective agreements together form a detailed set of rules for labour relations in Germany. This creates security.

But the system is often not as flexible and differentiated as need be in a complex economy competing internationally.


Given the economic climate and the situation on the labour market, those responsible, legislators and social partners alike, must make use of the scope they have to make it easier for businesses to hire new employees.


To this end it is vital that options are written into the collective agreements in order to give individual employers and their employees the leeway to foster employment and create secure jobs. There are already a host of successful works agreements in place.

These have created jobs and training positions and have increased the competitiveness of the firms.

It is however always the case that works agreements concluded under this opening clause to secure jobs and a particular location require the agreement of the parties to the relevant collective agreements.


But it is also clear that dogmatic inflexibility is just as unhelpful as aggressively attacking the collective bargaining system. We do not need more self-righteousness to solve our problems, but more creativity.

Appropriate arrangements must be made in the collective agreements to create a more flexible framework. This is the challenge for the social partners – and their responsibility.


Article 9 of the Basic Law makes independent collective bargaining a constitutional right!


But it also obliges the social partners to assume responsibility for our economy and society. Thus nobody may put individual interests above the interests of society as a whole.

I expect the social partners to forge in-company alliances, as is already the case in many sectors. If this does not happen, legislation will have to be passed.


But I want to make myself very clear on the question of the labour market:


We will not encroach on the right of co-determination. Nor will we abolish the regional col­lective agreements.

Regional wage levels create the same conditions for competition in an industrial sector. They give the firms and the employees security to plan ahead, compelling them to pursue a steady increase in productivity.


And what is more: without courageous and responsible works councils many companies would no longer be in existence today.


Particularly in difficult times, it is works councils and trade unions that play their part so that companies can continue to operate.


Of course, the unions have to move forward and reform.


But they have done so much for prosperity and social security that the insults from the ranks of the CDU/CSU and the FDP are ahistorical and nothing short of a disgrace.


And perhaps I ought to remind the Opposition once more that the vast majority of business failures are not the responsibility of the Federal Government or the trade unions but rather the result of blatant commercial and strategic mistakes at management level which often enough are “rewarded” with cash settlements to the tune of millions.


There has to be movement and renewal in our entrepreneurial culture, too, ladies and gentle­men.


Together with the employers’ associations and the chambers of industry and commerce, we have fought for the retention and extension of the dual training system which many countries in the world rightly envy us.

With various promotion programmes, the Federal Government is ensuring that young people are given the chance to train and work.


But now we are again lacking some 110,000 in-company apprenticeships which the Federal Government cannot create.

A third of all companies engage in training, many actually exceeding their own needs. But 70% are shirking their social responsibility.

A social market economy depends on the premise that entrepreneurial responsibility is not restricted to producing good turnover figures.


Entrepreneurs also bear social responsibility. This responsibility can be seen first and foremost in commitment for those who are on the threshold of their working lives. This is a central pre­cept of economic ethics.


Ladies and gentlemen,

We are creating the prerequisites for more growth with our Agenda 2010. Growth allows businesses to honour the deal we struck: All those seeking an apprenticeship have to be given one.


I expect businesses to honour this pledge. If not, we will have to resort to a legal regulation in the next year.


You know I am not in favour of a training levy. But without a lasting improvement in the readiness to provide training the Federal Government has to act.

We for our part will not, however, stand idly by, rather we will remove existing hurdles.


Those who are prepared to train young people must not be denied the opportunity because they do not fulfil certain formal prerequisites.

Therefore we will change the relevant regulations in such a way that everybody who has run a company for at least five years can also provide training.

Young people have the right to new opportunities and we have to keep granting them this right.

But the other aspect of this right is the duty to accept reasonable offers.


Ladies and gentlemen,

Solidarity, the protection of the weaker and insurance against the risks of life are not just enshrined in the Basic Law. They are, at least to my mind, the foundation of our society.

It is not just in recent weeks that we have been witnessing a wholly nonsensical discussion as if we were facing the alternative of abolishing the welfare state or keeping it the way it is.


Those who ask the question in this manner have already lost.


Yet it is obvious that a society such as ours can only have a good future as a modern welfare state.


In a society in which the age structure, the type and length of employment but also cultural diversity change so dramatically cohesion can only be guaranteed in the form of a welfare state.

But we have to stop continuing to burden only the labour factor with the costs of social wel­fare benefits that serve society as a whole.


There can be no doubt that we will make considerable savings by restructuring the system and reducing bureaucracy.

But it will also be necessary to cut entitlements and benefits which are already today over­burdening the younger generation and which are thwarting our country’s chances for the future.

The people working in factories and offices expect us to reduce the burden of taxes and levies.


We will lower taxes, as promised, from 1 January 2004 and again from 1 January 2005.


And through our measures to renew the social security system we are lowering non-wage labour costs.


Inter alia by limiting unemployment benefit to a period of 12 months for people under 55 and 18 months for those over 55.


The reform of pension insurance in 2001 was the most important pension policy decision since the introduction of dynamic pay-as-you-go pensions in 1957.


By the end of last year, 3.4 million policies had been taken out in individual pension schemes, and some 2 million in occupational pension schemes.

Given the 35 million employees we have in our country, this amounts to 15% after just one year.


As it turns out, however, we were both too pessimistic and too optimistic in our assumptions.


Too optimistic as far as employment trends were concerned.


Too pessimistic about the development of average life expectancy which is happily increas­ing constantly.

For these two reasons, it is necessary to make further adjustments to pension insurance. In so doing, we have to respect the principle of securing pensions and keeping contributions afford­able.

But that also means that we expect additional proposals from the Rürup Commission as to how to adapt the pension system.


Ladies and gentlemen,

I said that all have to make a contribution.

Therefore a new freeze has also been imposed on the salaries of the federal ministers and state secretaries.


Ladies and gentlemen,

There is barely a policy field where people have such high expectations and at the same time harbour such concerns as the reform of the health service.

Nonetheless the reform of statutory health insurance is the most essential element of domestic policy renewal.


Because only through reform can we secure the  high level of medical care for the future.


There can be no doubt: our current system of statutory health care with more than 70 million members remains very efficient. The quality and the standards of the German health service remain exemplary in the world.

But we cannot ignore the critical signs. The gap between the revenue and spending of the statutory health insurance schemes is widening further.


The strategy of cost-cutting has reached its limits. 20% of costs are caused through excessive or inappropriate treatment. This is something we are all familiar with, we all can think of our own examples.

We will initiate change in the interest of the patients, even though the German health service is more ossified and in the grip of lobbyists than almost any other sphere of society.


We should all be driven by the following:

The feeling of shared responsibility has almost disappeared in the health service. Many are following the principle of rapid, unthinking access. A self-service mentality has replaced the feeling of solidarity.

Thus I say:

A rethink is needed on the part of all players. Unemployment is after all not the only reason why income is dropping.

Medical progress that is of course to be welcomed will drive costs up further in the health sector. Furthermore, the number of older citizens is continuing to increase. They pay less into the system on average and yet have to avail themselves of many more services.

Other societies were or are in a similar situation. The clear alternative emerges:

Either we ignore the development leaving us only with the option of cutting medical services or introducing an age-dependent system of allocating treatment.


Or we resolve to engage in reforms that keep the asset of health affordable for all.


The first route is not one we want to take. We are abiding by the principle that all receive the medical care they need regardless of age or income. This is what people expect from us. They want to keep hold of the solidarity principle in health insurance.


However we need to drastically change course to renew the health service.

Some of the necessary measures are being fleshed out in the competent federal ministry.


The Rürup Commission will present its proposals on financing by May.


We will only be successful if two goals are undisputed: the high quality of health care and cost-conscious behaviour on the part of doctors, health insurance schemes, clinics, pharmacies and pharmaceutical companies but also the insured themselves.

The state thus has to help rid our country of ossified structures. And it has to allow and pro­mote more competition in the system.

Expensive monopoly structures have to be overcome.


The contractual monopoly held by the associations of statutory health insurance physicians is a case in point. It has become obsolete. We will finally enable the health insurance schemes to conclude individual contracts with doctors.

Conversely, a system with 350 different health insurance schemes also needs to be modern­ized. This number will have to be reduced.

We will push here for the creation of manageable and efficient structures.


Quality assurance will be the second major resource that we have to exhaust.

Quality assurance is one of the key aspects of a genuine reform of statutory health insurance. But without clear standards, quality is hardly possible.

We will revise the catalogue of services and cut certain services.


We have to determine what is in future to be part of the core area of statutory health insurance and what is not.


There are proposals out there to stop health insurance funds paying for dental prostheses or even dental treatment as a whole.

To this I can only say:

We already have a system that rewards regular dental check-ups. Nothing is to change there. I do not want a situation where teeth once again betray social status.


The call for excluding accidents occurring during free-time activities from the catalogue of services of the statutory health insurance funds also raises serious problems.

I doubt first and foremost that a clear delimitation between suffering caused by illness and that caused by accidents is possible at all.

Nor do I understand why sporting accidents should be subject to special compulsory insur­ance. We would penalize all popular sport with such a measure, an activity that helps promote good health and prevent illness.


But sport is also very important for the development of children and young people.


Private provision for sickness benefit is a different matter. Here we have a clearly defined set of costs that will remain manageable in the future.

The cost burden for the individual will thus remain minimal. Treatment which is medically necessary is unaffected.


Furthermore we will have to do here what we did with the structural reform of pensions:

Relieving statutory health insurance of the burden of paying for a number of non-insurance benefits. These include for example maternity benefit that has to be financed from general tax revenue.


The public dispute on cost-sharing and non-reimbursable portions of medical expenses is also hard to comprehend. We have had forms of cost-sharing for a long time in our system.

They serve as a steering mechanism and encourage the insured to act in a cost-conscious man­ner.


Particularly as far as the responsibility of the citizens is concerned, we should use instruments such as staggered doctors fees and partial non-reimbursement.


People with low incomes, children and the chronically ill will be exempt.


The recognition finally has to gain ground that health policy cannot be restricted to curing illnesses as they occur, rather has to make prevention a priority.

It is not just the state that bears responsibility here, but also doctors, health insurance funds and the insured themselves.


We ought to gear ourselves to the model provided by Scandinavian countries which have managed to cut costs in the health service through systematically promoting health-conscious behaviour.


It seems to me that we have not fully exhausted the potential inherent in a modernization of communication technology in the health service.

The electronic health card and the electronic patient file are projects that are ambitious not just in the technical sense but ones which we want to have fully operational by 2006.


They will also help to avoid costly duplicate and multiple medical care and to increase the quality of treatment.


By implementing the proposed regulatory and structural measures we will be able to push health insurance contributions below the 13% mark.


Ladies and gentlemen,

I have presented Agenda 2010 to you.


I have tried to describe what we have to do to overcome our difficulties and to develop Ger­many’s strengths anew.

Our country has vast potential that we can tap by working together.


Today we are making demands of society. But we are doing so to be able to give the people new opportunities. Opportunities to develop their capabilities and to yield maximum perform­ance. We can create these opportunities for ourselves.

That means first and foremost: opportunities for education and investment in research and development, in short, in knowledge and possibilities for the future.


Other countries have shown us that far-reaching structural reforms have to go hand in hand with increased investment in education and research to be successful.


But in no comparable industrialized country does social background have such a decisive influence on education opportunities as it does in Germany.

It is scandalous that the chances of a young person from the upper echelons attending gram­mar school are six to ten times higher than the chances of someone from a working-class background.

It is scandalous that one in four foreign pupils drop out of school school.


And the people can no longer understand why we are getting caught up in arguments over competences rather than facing this huge national challenge.

We know the solutions. We need new approaches to pre-school education, we need more lan­guage classes for foreigners, we need teachers who have time to deal with children’s individ­ual difficulties.


We need to offer all-day schooling that really taps the pedagogical advantages of this type of education. And we need, not least, renewed interest in science and mathematics.


Precisely because we need all this, I will invite the Minister-Presidents of the Länder to an education summit before the summer break.


Ladies and gentlemen,

We will only be able to maintain our prosperity level if we invest more in education and research in this difficult economic situation.


Therefore we successfully adopted a new course in research policy in the last legislative term and increased the budget of the Federal Ministry of Education and Research by some 25%.


This year we had to be less generous due to cost considerations. This must not continue.

Therefore the Federal Government will send out a signal in the current difficult economic situation and increase the budget of the Max Planck Society and other research institutions by 3% again in the next year.


Ladies and gentlemen,

The events of the last decade and a half have forced us to change the way we look at ourselves and at the world.

I have outlined the compelling conclusions for our country today in Agenda 2010.

We have a bounden duty not to thwart the chances of future generations of living in a peaceful and just world through our entrenched approach. This is why we today need courage for change.


Our country has to become a beacon of hope in Europe once more.


The know-it-alls in the associations, parties and in some media are already working on putting forward new demands before the demands already granted are implemented.


To them I say:

Not all the problems we face today emerged only yesterday. Not all solutions that we are today debating can be up and running tomorrow.

But I am determined to no longer allow problems to be pushed away because they seem all but insurmountable. And I will no longer tolerate solutions failing in the face of special interest groups.


Let us remember what has made our country strong: diligence and creativity, solidarity and the courage to create a good future.

Let us work on achieving this together.

Thank you.«


Policy Statement by Federal Chancellor Gerhard Schröder in the German Bundestag “Courage for peace and courage for change”, Berlin, Friday, 14 March 2003; Translation of advance text