Budget: Economic vision or lack of it

The much-awaited budget speech was delivered last week. However, the much more awaited solutions to the serious challenges our country is facing have not been forthcoming.

The budget had a number of measures targeting specific pockets of the society. However, these can be described as small cosmetic measures which hide the much more serious problems the country is facing and which a sizeable chunk of our population is feeling.

The budget will make no difference to those who cannot make ends meet. The budget also delved into issues which in my opinion are not budget material. For example, it is already worrying enough that the government did not keep its promise of building a new school each year but why should the government feel the need to say that maintenance works will be carried out in schools? Is not this obvious?

The budget had to tackle five main issues, which it did not.

It had to address the serious poverty issues which a number of people are facing such as homelessness, living in garages and families who cannot afford to pay rent or buy a basic decent property. To be fair, a number of proposals have been put forward but their effect will not be enough to sufficiently address the issue. The number of people living in financial poverty has increased in the past five years.

According to statistics, 26% of pensioners are in poverty or at risk of poverty. The increase in pension announced in the budget will only partly address the daily increase in the cost of basic products such as bread, milk products, energy costs, medicines and other daily needs.

We also have to ask ourselves if the way the economy is growing is sustainable. Can the economy continue to grow mainly as a result of an increase in population? Is this the way we want our economy to grow? Is it possible for a country, the size of ours, to sustain economic growth just by an increase in population? As pointed out by stakeholders and unions, the government has no comprehensive strategy to cater for the socio-economic impact of such a phenomenon, including investment in the necessary physical and social infrastructure to make such growth sustainable.

The budget has also failed to address the cheap labour issue. It is unfair for Maltese workers having to compete with non-Maltese workers who are ready to live and work in below standard conditions.

It is important that our economy grows but not at the expense of our environment. Unfortunately, a lot of damage has been done. The builtup areas are increasing with Malta being the EU country that is most suffocated with buildings. The waste problems have ballooned with Malta having the poorest record among EU member year, a new tree will be planted for every vehicle imported into Malta. The question here should also be: how many trees will be pulled down next year?

Another issue is that economic growth cannot be achieved at the expense of our reputation. The economy’s performance depends on a number of sectors but two sectors that stand out and which a Nationalist Government has worked very hard to develop, are the gaming and the financial sectors. Reputation is of utmost importance for these two sectors since companies working in these areas will only invest here and more importantly remain here if Malta is held to be a reputable jurisdiction. Therefore, as a country we cannot afford to be put in blacklists and to be given warnings by the European Commission.

Finally, the budget had to ensure social justice so that everybody benefits from economic growth. It is positive that the economy grows but more important than that is that the economic activity is fairly distributed. In Malta the ratio of economic activity transformed into wages and salaries is 46% as compared to 54% operating profits whereas the European average is much more tilted in favour of wages and salaries.

The budget should have laid down the long-term economic vision for the country and the investment needed in education to reach this long-term vision. It looks like we will have to wait for another year.