Government needs to address market failures in upcoming budget – Caritas Director
● Redistribution of wealth, rent regulation, ensuring good quality of life for low-income earners among top expectations for upcoming budget by various key members of civil society
Helena Grech Caritas Director Leonid McKay believes the government needs to address market failures especially in the rental market.
The Malta Independent on Sunday contacted various key members in civil society to hear what they think the government should focus on in the upcoming budget. Finance Minister Edward Scicluna has already spoken of budget measures to improve infrastructure, fight tax evasion, health, education and some form of rent regulation.
Chiefly, Caritas believes that the government should focus on the redistribution of wealth in order to tackle income inequality.
“For us [Caritas], this is an opportunity to focus on distribution of wealth. Under the current economic circumstances, the economy is experiencing a robust economic growth and Caritas Malta anticipates a budget where redistribution of wealth is a top priority.
“We want to see wealth spread in a more just way, in a way where the lowest income earners feel an improvement in their lives. Indirectly, we are addressing income inequality.
“It is a principle we really believe in. We assess the budget from a ‘Caritas’ point of view, on how will it affect disposable income to the most vulnerable.
“In our reaction to last year’s budget, we said that this is giving a voice to the little man and is the first step. We are expecting the second step – this is when there is focus on these policy areas: social housing – allocating a large budget to social housing, market failure in the commercial rent market, an increase in non-contributory social benefits.
“Government has the obligation to redress market failures, with concrete solutions for decent and af- fordable housing in the commercial rental market.
“Non-contributory social benefits which ensure that those people who cannot work receive adequate benefits that are calculated on a basket of essential goods. It is not just wages that have to be adequate, but also the social benefits. Some people literally cannot work, and they need a decent income.
“There are others who are on social benefits, because for some reason it does not pay them to work. There is a tapering system that is already present; we hope this remains in place as it helps incentivise them to go out to work.”
Alleanza Kontra l-Faqar chairman Charles Miceli also spoke about rent regulation. He went a step further saying that there needs to be some mechanism where a contract entered into by a tenant and a landlord covers a period of years, and within that time the rent can only be increased by, for example, a cost of living adjustment.
He said that this would give peace of mind to many families who struggle to get by.
“Wages need to be reviewed, as well as benefits especially for pensioners. Government needs to carry out an exercise, like Caritas did, to find out how much a single person needs to exist, and pay out benefits/pensions based on this.”
University lecturer and academic Dr Marie Briguglio
A vocal activist against increased congestion and the prioritisation of vehicles over pedestrians, Briguglio had this to say:
“Every year, the budget presents us with a wonderful opportunity to stimulate some economic activities and to tame others. There are some obvious areas where the market has under-performed: provision of public infrastructure, creation of open recreational spaces, community activities, housing for lower income households, catering for healthy lifestyles.
“This is where the government should be spending money, giving incentives. But there are also some areas where the free market has overdone it: cars, construction and congestion.
“Governments have not only systematically failed to rein in certain activities but, on the contrary, have often stimulated them through hidden subsidies.
“It is high time that the number of cars on the road is reduced (sensitively designed circulation, congestion, parking charges), and obstructions (encroachment charges), and to complement this with incentives to walk, cycle, work from home, stay local, car-pool or bus-it.
“The use of taxes and charges, grants and subsidies are not just a way for government to collect and redistribute income from rich to poor, but also a way to steer the economy away from over-heated, polluting, extractive sectors towards sectors that give us quality of life in the short-term and sustain in the longterm.”
Caritas Director Leonid McKay