In his first address to Parliament as Prime Minister, George Papandreou set out his government’s aims for the next four years but stressed that the poor state of the economy means that PASOK will have to take some tough measures.
Papandreou presented his government’s policy program ahead of a three-day debate in Parliament.
The issue of the economy dominated the agenda.
“Today we face an unprecedented fiscal derailment,” he said. “The deficit must be cut and we must start containing the public debt.”
Earlier, Finance Minister Giorgos Papconstantinou had announced that the budget deficit would exceed 10 percent of GDP this year, well above the 3 percent limit for eurozone members.
“This is the toughest moment since 1993 when another New Democracy government had handed over the country in recession and with a large debt and deficit,” said Papandreou.
“We are in an emergency situation, everyone must understand that,” said the premier. “There will need to be spending cuts at every ministry.”
Papandreou said that it was also his government’s intention to restore the faith of the European Union and its member states in the Greek economy.
However, the prime minister did not go into great detail about cutbacks, instead focusing on the money that the government will spend.
This includes handouts for low-income households, higher pensions for farmers and public sector pay raises.
Papandreou said that his government would cut bureaucracy to spur entrepreneurship and would change the tax system within the next three months.
The new scheme would be a progressive, inflation-indexed system.
New taxes will be introduced for Orthodox Church of Greece property as well as property owned by offshore companies.
Papandreou also emphasised the positions his government has taken since coming to power on a range of other issues, including transparency, health, education and foreign policy.
In his response the outgoing leader of New Democracy Costas Karamanlis said “New Democracy will support the new government, even when the measures it is proposing are not popular”.
He repeated New Democracy’s commitment to support an extension in the presidential term of the current President, Karolos Papoulias.
KKE leader, Aleka Papariga said that PASOK will follow the same conservative policies as that of the former New Democracy government and stated that “what is important is not how we will oppose you in Parliament but on what the response will be of the Greek people.”
LAOS leader Mr Karatzaferis addressed Greek foreign policy and attacked the Papandreou government for its decision to downgrade the Ministries of Macedonia-Thrace, the Ministry for the Aegean and the Ministries for Shipping and Tourism and for not including the words ‘national’ in the Ministries for Education and for the Economy.
SYRIZA leader Alexis Tsipras criticised the Greek Prime Minister for his position on social welfare and on labour relations, praised him for establishing a Ministry for the environment and expressed doubts about the new electoral system proposed by PASOK.