Budget 2017: Our economic crescendo
Dr Cardona is the Minister for the Economy, Investment and Small Business
The government has worked ceaselessly to fulfil that call. Malta, today, in the span of just three years is a very different country than it was back in 2013. On the brink of an excessive deficit procedure, drastic macro-economic imbalances, downgrades and minimal deficits, a Labour government has radically changed the socio-economic horizons for this country.
The government’s mission can be personified in the budgets tabled in Parliament throughout this administration. We have followed a roadmap and taken effective decisions that strengthened the Maltese position economically right from the start. With a focus on lowering our deficit and strengthening our businesses, we have alleviated the many misgivings business owners had, and a public that was disgruntled and weary, with no real change in years.
In 2012, our economy was growing at a rate of less than two per cent Now our growth is outstripping our economic neighbours’ at 6.3 per cent in 2015. We have beaten our own conservative deficit target of 1.1 per cent for 2016, bringing it down to 0.7 per cent, and public debt will be brought down to a significant 63.3 per cent. Lowering income tax has had a domino effect as it gave people the incentive to work, leading to higher productivity and economic growth. We dealt with building an attractive tax regime, reduced the price of electricity, saved Enemalta, overcame the huge issue of outof-stock medicines, supported young families with the firsttime buyer scheme, and changed the way Maltese look at their own country and its potential.
Economic growth has provided more jobs, business expansions and stability. Indeed the latest EY Attractiveness Survey published just a few weeks ago showed that more than half of the companies responding to the survey are planning some form of expansion of their operations. With this economic boom, such a turn-around comes with great responsibility – to maintain, as much as possible, this momentum, while also addressing other issues that impact the quality of life. Education, the environment, traffic congestion and health and social inequality are issues we will keep on addressing. While the strong incentives and legislations that we have set in the past have cemented our current stability, the way forward is to look at the bigger picture and distribute our new wealth responsibly.
Which leads us to our crescendo of Budget 2017. It is a hands-on shake up of the current social situation that addresses the less fortunate and means a radical change of life for thousands of families. We have addressed the cost of living and the minimum wage. Pensions have been increased for the second time in 20 years, and carers’ allowances have been increased significantly. Individuals living with disability have been short-changed in the past and we are remedying that.
Notably, the Budget has been welcomed by many social partners, including Caritas. Caritas’s report earlier this year outlined a harsh reality which, despite the wide-spread optimism, demonstrated that the voices of low-income families were not being heard enough and addressed. In the wake of the Budget, Director Lenoid McKay was quoted as saying that the voice of the weakest in society is finally being heard. I agree whole heartedly with Lenoid in that this Budget is ‘just the start.’
A social budget does not mean it does not provide also for business. This budget, like the previous ones presented by this government, has continued to provide ample measures that embrace the new realities businesses face while improving the current business environment. Whilst strengthening the government’s goal of diversifying our economy with new projects in the pipeline – such as the Maritime Hub and the Logistics Hub, the Budget for 2017 has also set out incentives to position Malta as a start-up hub.
Malta has an edge for startups, not only because of its ideal climate and environment, but also in increasing their chances of success. The same amount of seed capital invested in our country would last three to five years more than in other renown locations for start-ups such as London and San Francisco, USA. However, starting capital remains one of the biggest hurdles for up-andcoming businesses. The introduction of the Seed Investment Programme provides investors choosing to support start-ups with tax credits up to €250,000. New graduates from post-secondary institutions who open small businesses can also benefit from an exemption in audits in their most vulnerable and arduous first two years. An innovative new €25,000 grant for those aspiring individuals that come from a somewhat deprived background and find obtaining capital even harder was also announced.
Following intense but fruitful consultation with stake holders and with the public in general, the Shop-Opening Hours Bill will soon be introduced, following the drafting of the necessary legal notices which are currently being prepared. In preparation for the introduction of new shop opening hours the government also consulted with the Ministry for Social Dialogue, Consumer Affairs, and Civil Liberties so as to ensure that rights of retail employees continue to be safeguarded following the introduction of such new opening hours.. Throughout, this process my Ministry also took a decision to abolish most trade licences, saving 30,000 businesses, €70 to €1000 annually. The government is committed to reducing bureaucratic procedures even further so that opening a business in Malta will take less than a week.
Gozo is also predicted to benefit from more economic growth. Unemployment levels in Gozo have fallen, and more job creation has given Gozitans the opportunity to work in their own back yard. We have set our hearts on making Xewkija a digital hub, and a €3.2 million second fibre optic link between Malta and Gozo will continue to make Gozo more attractive for digital business.
How such a change can be described as merely cosmetic is beyond me. If anything, this Budget shows how far we have come. Can more be done? Of course, and we are planting the seeds for sustainable change as we go along. Malta is not the same place it was three years ago, and we are fulfilling that call for change. Change will continue to take place as part of a strategy this government has committed itself to address the growing and changing needs of our population, and creating a level playing field for all those who wish to engage in it. A strategy which is echoed in all the changes and is now leading to truly sustainable prosperity.