The House's Constitution and Justice Committee

While the government seeks to gather widespread support from Congress and civil society around its proposal to overhaul Brazil’s pension system, the press has revealed that the studies used to justify the reform proposal have been made confidential by the Ministry of the Economy. In practice, this means that all the material which could be used to convince members of the public of the need for the reform, are inaccessible to everyone bar authorized civil servants.

The move has been criticized from all sides, even by members of the government’s base, coming as the latest episode in what has been an altogether shambolic attempt to pass the pension reform.

Opposition senator Randolfe Rodrigues, who once dubbed the government as a “spectacle of incompetence,” claimed that the measure to keep the pension reform studies under lock and key shows that “the truth is the government’s real enemy.”

</span></p> <p><span style="font-weight: 400;">Meanwhile, members of President Jair Bolsonaro&#8217;s Social Liberal Party (PSL) have also joined in, claiming there is no reason for the studies and reports to be made confidential.</span></p> <p><span style="font-weight: 400;">The seal was discovered when reporters from newspaper </span><i><span style="font-weight: 400;">Folha de S. Paulo</span></i><span style="font-weight: 400;"> filed a </span><a href="https://www1.folha.uol.com.br/mercado/2019/04/governo-decreta-sigilo-sobre-estudos-que-embasam-reforma-da-previdencia.shtml"><span style="font-weight: 400;">request</span></a><span style="font-weight: 400;"> via Brazil&#8217;s Access to Information Act to see the studies which provided the foundation for the pension reform bill. In response, the newspaper was told by the Ministry of the Economy that it had drafted technical studies, but they are of &#8220;restricted access due to being preparatory documents,&#8221; in other words, documents used to draft a future bill.</span></p> <p><span style="font-weight: 400;">While jurists debate the validity of making preparatory records confidential, this case goes beyond that as the bill in question has already been submitted by the government.</span></p> <p><span style="font-weight: 400;">Rodrigo Maia, the Speaker of the House of Representatives and the ultimate gatekeeper of the pension reform, claimed the measure was &#8220;rushed&#8221; and probably not appropriate. He also stated that the seal would necessarily have to be broken before the bill is analyzed by the Special Committee, which is tasked with analyzing every point of the reform proposal, in detail.</span></p> <p><span style="font-weight: 400;">&#8220;On the day the special committee is set up, this information must be open or there is no way that work can begin,&#8221; he declared.</span></p> <p><span style="font-weight: 400;">Senator Major Olimpio, one of President Bolsonaro&#8217;s closest allies in Congress, declared on Monday that the statistics, studies, and reports would be made available as soon as the pension reform bill is approved in the Constitution and Justice Committee (CCJ) of the lower house. Mr. Maia confirmed this, stating that pensions secretary Rogério Marinho pledged to release the documents on Thursday.</span></p> <p><span style="font-weight: 400;">While the pension reform has a reasonable level of support within Congress, politicians have shown their frustrations in recent months due to a lack of statistics and studies to help them defend the proposal. The pension reform is an altogether unpopular measure, affecting the social security benefits of millions around the country, and many members of Congress feel the government is throwing them to the wolves without any good arguments to defend themselves.</span></p> <p><span style="font-weight: 400;">One of the main complaints is that although the Ministry of the Economy claims its reform plan will </span><a href="https://brazilian.report/money/2019/04/02/investors-optimistic-pension-reform-volatility/"><span style="font-weight: 400;">generate savings of BRL 1.1 trillion over ten years</span></a><span style="font-weight: 400;">, the administration has not revealed a breakdown of how much resources will be freed up by each individual change.</span></p> <h2>Pension reform: the story so far</h2> <p><span style="font-weight: 400;">After an arduous journey, the pension reform bill is set to pass its first hurdle this week: approval in the Constitution and Justice Committee (CCJ) of the House of Representatives. While this comes as good news to the government, it is only a preliminary step and the reform process is already severely delayed. </span></p> <p><span style="font-weight: 400;">The CCJ vote is set to begin on Tuesday, although in all likelihood the bill will be approved in Wednesday&#8217;s session, as a result of the committee&#8217;s disarray.</span></p> <p><span style="font-weight: 400;">When the reform bill was submitted, two months ago, analysts from BTG Pactual set about tracing their forecasts for how long the proposal would take to pass through their lower house. Their optimistic estimate had the bill being approved in the CCJ at the end of March, while their most pessimistic outcome was for the proposal to pass in the committee on April 15, seven days ago. Extrapolating this gloomiest scenario, the bill would only gain full approval in the House of Representatives in December, which would be potentially fatal for the Bolsonaro government.</span></p> <p><span style="font-weight: 400;">As if the delay was not enough, the proposal is set to pass this first phase with amendments made to four aspects of the bill—which is unprecedented in the CCJ, a committee which is solely tasked with analyzing the constitutionality of legislative proposals.</span></p> <p><span style="font-weight: 400;">The four amendments concern changes proposed to the payments of the FGTS severance fund, alterations to the rules for the compulsory retirement of civil service employees, the determination of specific jurisdiction to analyze pension cases, and one provision which would give the government the sole responsibility to promote changes to the pension system.</span></p> <p><span style="font-weight: 400;">The opposition plans to these amendments to demand more time to analyze the bill, which would delay the vote even further in the CCJ. However, their chances of doing so are remote.</span></p> <h2>What&#8217;s next in the reform process?</h2> <p><span style="font-weight: 400;">If the pension reform is approved in the CCJ this week, it will move on to the so-called Special Committee, which is tasked with analyzing the merit of the proposal in minute detail. The process is considerably longer than the CCJ, and early indications show a lot more changes will be made to the reform proposal.</span></p> <p><span style="font-weight: 400;">Approval in the CCJ this week would see the Special Committee set up on May 7. The bill will need to be analyzed for a minimum of 10 committee sessions before a final report can be issued.</span></p> <p><span style="font-weight: 400;">Markets fear that the government&#8217;s lack of organization will lead to the reform bill being watered down considerably before finally coming into force as law. Indications from financial agents suggest that the overall savings of the proposal must remain above at least BRL 500 million in ten years.

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PowerApr 23, 2019

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BY The Brazilian Report

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