Elio Di Rupo puts his cards on the table

At a news conference in the Belgian Parliament on Monday the Francophone socialist leader Elio Di Rupo set out proposals that should form the basis of talks on the formation of a new Belgian government. In Belgium's protracted government formation process this is the first time that a major player makes his proposals public.

Mr Di Rupo said that his aim was to provide a basis for a compromise on the budget and social economic and state reforms that could lead to the creation of a new government. The formateur insisted that five big reforms were needed to guarantee the future of the country and to create 250,000 new jobs by 2015.

Public finances must be made sound. This will be achieved by savings and by generating fresh income worth 22 billion euros by 2015. The effort required will be shouldered by the federal government and the regions and communities and be the subject of negotiations. Mr Di Rupo insisted that the government would draw up a budget in which there was a balance between extra income and cuts. 37% of the savings drive would be realised through lower expenditure. 27% of the effort would be achieved through generating extra income.

Other measures and a reduction in interest payments on the national debt would make up the rest.

Lower expenditure would be achieved by reducing growth in the health budget by more than half and freezing expenditure across the civil service for two years.

"We'll split BHV" says Mr Di Rupo

Mr Di Rupo also proposed the splitting of the controversial Brussels Halle Vilvoorde constituency and judicial district. Constituencies of Brussels, Flemish Brabant and Walloon Brabant would be created with voters in the six Flemish municipalities around Brussels with special right able to vote in Flanders or in Brussels.

For Brussels the formateur suggested the creation on a voluntary basis of a transregional community to connect Brussels with its hinterland and centring on employment and mobility issues.

Brussels will receive extra funding that will be topped up by the federal state, Flanders and Wallonia.

Mr Di Rupo held considerable extra autonomy in prospect for the regions and the communities, though he insisted that this would not affect the core of Belgium's social security. The regions and communities would receive new powers worth 17.3 billion euros, especially in the fields of employment, health care and child allowance policy.

The formateur also proposed a reform of the finance law that settles the funding of the federal state, the regions and the communities. Thirty percent of the federal state's present tax income would be transferred to the devolved authorities through the income tax system. Mr Di Rupo insisted that these extra funds for the regions and communities would not be achieved by raising tax levels.

Mr Di Rupo pledged not to dismantle the index that links wages and benefits to prices and also promised greater checks on price rises. On pensions he stressed that due to people living longer the country did face a challenge in this field. He opted to concentrate on getting more Belgians to work in the 60 to 65 age bracket.

On the tax front the formateur did have bad news for the owners of shares and other financial instruments proposing increased taxation on share dividends, capital gains and speculation. Users of big company cars will be hit too as well as business class air travellers.

The nuclear industry will have to pay more for being able to keep the nuclear power plants open for longer.

Mr Di Rupo also insisted on the need for further economic reforms centring on the labour market, pensions and health insurance. Unemployment benefit will rise during the first four months of unemployment, but cut for those who remain on the dole longer. Benefit will also be more closely linked to past earnings.

In addition to the social economic and institutional reforms the formateur also held in prospect changes in the field of asylum and migration. He promised one single minister responsible for all asylum and migration issues. The justice system will be reformed and political renewal promoted.

Mr Di Rupo proposed the creation of a new ten-member federal constituency that would be elected by people across the country.  The number of lawmakers will be cut by 15%.  The senate is to become a non-permanent institution and only group senators that have not been directly-elected.

Federal, regional and European elections will be held at the same time and candidates will only be able to stand on one list.