Does the budget bring peace of mind?

Budget 2019 has several positive initiatives which the government is currently promoting through its intensive public relations strategy.

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The country’s environmental challenges do not seem to be a priority for this government.

The aim of this article is to highlight shortcomings of the budget which are too important to ignore. First. Do the erstwhile positive social initiatives in the budget compensate for runaway increases in the cost of living? I do not think so. The respective compensation to workers and pensioners will likely be eaten up by tomorrow’s breakfast or one’s first outing, when one considers the increase of prices in foodstuffs, fuel, rent, utility bills and so many other goods and services.

Indeed, Malta is currently experiencing a situation where elderly persons must make extra sacrifices to cope with cost of living increases and where an increasing number of young persons cannot find the means possible to obtain a house loan or to afford rent. Surely not the best of times for such persons.

True, the cost of living adjustment is based on a mechanism which government duly follows and which government has decided to top up with an extra Euro per month. If anything, the top up is an admission that the mechanism is not realistic. Isn’t it then about time that government and social partners revise the measurement of COLA through a mutually agreed method?

Second. Does the budget provide peace of mind for people’s quality of life? Again, I have my doubts. The country’s environmental challenges do not seem to be a priority for this government, with the area hardly given a mention and with guardians of the environment such as farmers being told that their contribution to the economy is minimal.

Third, are public expenditure and revenue figures beyond scrutiny? I beg to differ. It is positive that Malta has a budgetary surplus but let us keep in mind that capital investment was reduced from 12.1 per cent to 8.5 per cent of expenditure between 2013 and 2017. Besides, official Eurostat figures show that expenditure in areas such as environmental protection, social protection, public order and housing decreased between 2012 and 2016. The latter is particularly painful when government had no problem dishing out tens of millions of Euros for dodgy privatisation deals in health and energy.

This means that government is investing less in needs which go beyond the immediate present, and which we might have to pay for at a higher cost in future years. And even where capital expenditure is hefty, for example the absorption of EU funds for road projects, one questions whether they are being used adequately in terms of quality, access, safety and encouragement of alternative modes of transport.

The question everyone is asking is: will such investment reduce traffic gridlocks, or are we just widening roads to satisfy our immediate appetite whilst not tackling the root causes of increased in traffic? What will happen once we realize that our road widening projects have not solved our traffic problems? Let us also keep in mind that accessible pavements are a basic need of so many pedestrians ranging from elderly persons, persons with disability, children and parents with pushchairs.

Public revenue also deserves scrutiny. A good chunk of it comes from the sale of passports. It is highly questionable whether this is sustainable and forward looking, especially when Malta is becoming highly dependent on this practice at the expense of sustainable economic diversification. Besides, there is a lack of transparency on how such funds are being used.

Indeed, it seems that Government’s main economic drivers are the sale of passports and the importation of third country national workers to increase economic growth. The question everyone is asking is whether this is sustainable. Such increases in numbers are contributing to the runaway increases in prices, to social inequalities and to a huge strain on Malta’s infrastructure. In the meantime, Budget 2019 says next to nothing about tomorrow’s needs in areas such as sustainable pensions, new economic sectors and innovation.

Can we rest our minds that Malta’s economic model will generate an equitable and sustainable society in the years to come? I have my doubts.