Bud­get 2017: Our eco­nomic crescendo

Malta Independent - - DEBATE & ANALYSIS -

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.

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