Mak­ing sure that the coun­try's new wealth reaches ev­ery­body

Malta Independent - - BUDGET 2017 -

On tak­ing of­fice in 2013 the in­com­ing gov­ern­ment found an econ­omy in dis­tress.

The coun­try had been placed un­der an Ex­ces­sive Deficit Pro­ce­dure by the Euro­pean Com­mis­sion as var­i­ous en­trenched chal­lenges af­fected the sus­tain­abil­ity of its pub­lic fi­nances and its po­ten­tial growth. Macroe­co­nomic im­bal­ances per­tain­ing in par­tic­u­lar to the fi­nan­cial sec­tor and pub­lic fi­nances were iden­ti­fied among the main ills that af­fected the Mal­tese econ­omy. In 2012 the an­nual deficit reached 3.5 per cent well above the EU bench­mark of 3.0 per cent, while the na­tional debt as ra­tio of GDP amounted to 69.9 per cent.

In 2012 the unem­ploy­ment rate was 6.3 per cent while labour par­tic­i­pa­tion rate was at 65 per cent. Short­com­ings in the labour mar­ket in­cluded the fail­ure to max­imise the is­land’s hu­man cap­i­tal, ad­dress skills gaps and es­tab­lish im­proved links with ed­u­ca­tion and train­ing. In or­der to raise the fe­male par­tic­i­pa­tion rate and fa­cil­i­tate the in­te­gra­tion of women in the labour mar­ket, the Com­mis­sion rec­om­mended that af­ford­able child-mind­ing fa­cil­i­ties be made avail­able.

The Com­mis­sion also ex­pressed con­cern at in­ad­e­quate re­forms in pen­sions and healthcare and re­garded the en­ergy sec­tor as posing a sig­nif­i­cant chal­lenge to the com­pet­i­tive­ness of the Mal­tese econ­omy.

Not one to shy away from a thorny sit­u­a­tion, the Labour Gov­ern­ment im­me­di­ately launched an eco­nomic re­cov­ery plan and suc­ces­sive bud­gets were aimed at mea­sures that would con­trib­ute to­wards eco­nomic re­gen­er­a­tion.

The first bud­gets of the cur­rent ad­min­is­tra­tion pro­moted sta­bil­ity and con­fi­dence and launched mea­sures aimed at a new eco­nomic en­vi­ron­ment con­ducive to in­vest­ment and em­ploy­ment and to higher dis­pos­able in­come lev­els. Dili­gence and work were rewarded and en­cour­aged; in­come tax rates were low­ered; tax cred­its and ben­e­fits were in­tro­duced; free child­care fa­cil­i­ties were launched; vol­un­tary pen­sion re­forms were rolled out; and en­ergy rates went down.

Re­forms in the so­cial wel­fare sys­tem pro­vided a set of in­cen­tives in­clud­ing in-work ben­e­fits to re­duce wel­fare de­pen­dency while pro­mot­ing an en­abling state. As­sis­tance was also ex­tended to first time buy­ers.

Be­tween Jan­uary 2015 and Au­gust 2016 the num­ber claim­ing unem­ploy­ment as­sis­tance and so­cial as­sis­tance de­clined by over 3,300 claimants. Most of these are now in full em­ploy­ment con­tribut­ing to their pen­sions through na­tional in­sur­ance while oth­ers have taken ad­van­tage of the ta­per of ben­e­fits and moved into em­ploy­ment.

By and large these mea­sures have been a suc­cess. As the coun­try ex­pe­ri­enced sig­nif­i­cant eco­nomic growth un­der the cur­rent ad­min­is­tra­tion, na­tional in­come rose by 15 per cent and em­ploy­ment lev­els in­creased by 13% while house­hold dis­pos­able in­come went up by 28 per cent. Labour par­tic­i­pa­tion rates have

in­creased from 61.6 per cent in 2011 to a fore­cast of 68.2 per cent in 2017 while the unem­ploy­ment rate has fallen from 6.4 per cent in 2011 to 4.9 per cent in 2016.

The 2017 Bud­get that was an­nounced by Min­is­ter for Fi­nance Prof. Ed­ward Sci­cluna on 17 Oc­to­ber 2016 sought to build on the re­sults of pre­vi­ous years and fur­ther strengthen the Mal­tese econ­omy by a wider range of in­cen­tives to en­cour­age more work­ers to join the labour force. The Bud­get rec­og­nized the need to en­sure that our young peo­ple will ac­quire the nec­es­sary skills set to meet the needs of the Mal­tese econ­omy; im­prove ac­cess to fi­nance for en­ter­prise; and fur­ther strengthen and im­prove the in­fra­struc­ture.

Be­sides seek­ing to ex­ploit to the fullest pos­si­ble ex­tent the full po­ten­tial of the Mal­tese econ­omy, the 2017 Bud­get con­firm the gov­ern­ment com­mit­ment to pros­per­ity with so­cial jus­tice. This is in fact the un­der­ly­ing ra­tio­nale of the bud­get ex­er­cise for 2017 – the need to pro­mote wider so­cial jus­tice among sec­tions of the pop­u­la­tion that are un­able on their own to par­tic­i­pate in the on­go­ing devel­op­ment process. This in­cludes pen­sion­ers, low in­come work­ers, dis­abled per­sons and re­cip­i­ents of so­cial ben­e­fits.

Gov­ern­ment is con­fi­dent that on the back of a buoy­ant econ­omy it can meet these de­vel­op­ments with­out any un­due strain on its over­all fi­nan­cial po­si­tion.

In ad­di­tion to the weekly rise of €1.75 an­nounced in the 2017 Bud­get to cover the in­crease in the cost-of-liv­ing for Oc­to­ber 2015 to Septem­ber 2016 to all em­ploy­ees, pen­sion­ers and those on so­cial ben­e­fits, the main mea­sures to ad­dress the sit­u­a­tion of pen­sion­ers in­clude tax ex­emp­tions on pen­sions up to €13,000 over a two-year pe­riod; a weekly in­crease of €4 to mar­ried pen­sion­ers on the na­tional min­i­mum pen­sion; and an ad­di­tional set-off of €200 to hold­ers of a ser­vice pen­sion which is ex­pected to reach 5,000 ben­e­fi­cia­ries.

The Bud­get 2017 makes pro­vi­sion for re­form of the car­ers al­lowance which in­creases from €105 per week to €140 per week while the car­ers al­lowance in­creases from €76 per week to €90 per week. This would al­low our ci­ti­zens to con­tinue to live in their own homes and in their com­mu­ni­ties. The Bud­get also seeks to in­crease the dis­abil­ity al­lowance while ex­tend­ing el­i­gi­bil­ity to am­putees.

The Carer at Home pro­ject is also be­ing ex­tended.

The ex­tended in work ben­e­fit paid to fam­i­lies with one earner is also be­ing im­proved from €150 per child to €350. In the mean­time el­i­gi­bil­ity to the ex­tended in work ben­e­fit also means that more fam­i­lies will be­come el­i­gi­ble.

Ad­dress­ing the work­ing poor the gov­ern­ment is also ex­tend­ing the Sup­ple­men­tary Al­lowance to low in­come fam­i­lies so that more fam­i­lies be­come el­i­gi­ble to the ben­e­fit.

The pro­vi­sional es­ti­mates show that low in­come fam­i­lies el­i­gi­ble to both the ex­tended in work ben­e­fit and the sup­ple­men­tary al­lowance will seek their in­comes im­proved be­tween €5 and €9 per week ac­cord­ing to the num­ber of chil­dren

With re­gards to the hous­ing sec­tor, the Bud­get 2017 pro­vides for the dou­bling of the rent sub­sidy to vul­ner­a­ble peo­ple with aim be­ing that of dou­bling the num­ber of ben­e­fi­cia­ries to 2,800. Fur­ther­more, rent ad­just­ments for gov­ern­ment-owned premises for 2010, 2013 and 2016 are be­ing with­drawn and the amounts al­ready paid by ten­ants are be­ing re­funded.

Other mea­sures that fea­ture in the Bud­get 2017 in­clude a re­vi­sion of the means test and the in­tro­duc­tion of more re­al­is­tic thresh­olds for the el­i­gi­bil­ity of per­sons for non-con­trib­u­tory ben­e­fits. The re­form of the means test means that more se­nior ci­ti­zens will now be­come el­i­gi­ble to free medicines un­der the pink card.

In ad­di­tion there is the launch­ing of a gov­ern­ment sav­ings bonds for pen­sion­ers at more at­trac­tive rates than those cur­rently avail­able on the mar­ket to en­hance their in­come lev­els.

The Bud­get also makes pro­vi­sion for an al­lo­ca­tion of €8 mil­lion for the launch­ing of a new fund for the set­tle­ment of past griev­ances mainly re­lat­ing to pen­sions rights and claims of for­mer em­ploy­ees of a num­ber of pub­lic sec­tor or­ga­ni­za­tions. The fund will be ad­min­is­tered by a board that will carry out the nec­es­sary con­sul­ta­tions and es­tab­lish pro­ce­dures on which re­quests by ag­grieved pen­sion­ers will be con­sid­ered.

Other mea­sures that are planned to be un­der­taken in the con­text of the Gov­ern­ment’s com­mit­ment to build a more in­clu­sive so­ci­ety in­clude the launch­ing of a so­cial fund to ad­dress the qual­ity of life of stu­dents in dif­fi­culty by means of sports and cul­tural ac­tiv­i­ties; the in­tro­duc­tion of a respite ser­vice for car­ers who pro­vide as­sis­tance at home to in­di­vid­ual de­pen­dants; the con­tin­u­a­tion of the Soċ­jetà Ġusta pro­ject aimed at hav­ing 10 small homes in the com­mu­nity for per­sons with dis­abil­i­ties; the con­tin­u­a­tion of the pro­ject REACH in Naxxar to pro­vide dif­fer­ent pro­fes­sional ser­vices to a wide range of per­sons in­clud­ing per­sons with dis­abil­i­ties; and the es­tab­lish­ment of the Ċen­tru Sigur għaż-Żgħażagħ Bniet.

In the hous­ing field 2017 will be wit­ness­ing the con­struc­tion of the first units in the so­cial hous­ing pro­ject es­ti­mated to cost some €50 mil­lion while the Hous­ing Au­thor­ity will be launch­ing a six-year pro­gramme for the in­stal­la­tion of lifts and for im­prove­ments in 211 houses in var­i­ous res­i­den­tial es­tates through­out the coun­try for some 4,400 per­sons, in­clud­ing 1,200 elderly ci­ti­zens and 200 per­sons with dis­abil­i­ties.

The Gov­ern­ment is con­fi­dent that on the ba­sis of this wide-rang­ing pro­gramme it will be able to fully hon­our its com­mit­ment to en­sure that no Mal­tese cit­i­zen will suf­fer from any form of eco­nomic de­pri­va­tion or so­cial ex­clu­sion in the years ahead.

This is a paid ad­ver­tis­ment

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