The Sunday Times 20/8/07
Given the time frame for the general election, the next Budget is most likely to be more generous than previous budgets under the current Nationalist administration.
Nationalist governments since 1987 have been characterised by contradictory yet successful alliances forged between different social classes and groups, such as big business and certain categories of workers. Powerful business interests like land developers were given more opportunities to strengthen their hold on the Maltese economy, yet at the same time various parts of the universalistic welfare state were retained or strengthened.
However, due to the increasing influence of neo-liberal ideology and fiscal difficulties of the state, Malta has been experiencing a spate of privatisations and trimming down of various parts of the welfare state. What political repercussions will this have on the Nationalist government?
In the next Budget the Gonzi government will most probably try to be generous to the social groups that are most likely to have considerable electoral weight. These would include not only traditional Nationalist voters and backers but also voters who give increasing importance to certain concerns, such as the environment.
The biggest challenge of the Nationalists would be to convince people that their standard of living and quality of life have improved in the past few years. Indeed, many social groups, including low and middle income earners, are facing tough realities due to low pay, high loan payments, and other reasons, frequently resulting in stressful situations to the detriment of their quality of life.
From a leftist perspective, the next Budget should be based on social justice and should introduce measures aimed at bringing about a more equal society.
The Budget should introduce measures to safeguard the rights of workers who are facing harsh realities due to neo-liberal policies, such as privatisation and due to increased competition, resulting in little bargaining power for trade unions and individual workers.
The Budget should tackle problems faced by various categories of workers by introducing measures such as an increase in the minimum wage. The minimum wage per hour concept would also help workers, such as part timers. Income tax and other taxes should be adjusted to give a relief to low and middle income earners, who are bearing the brunt of most taxation.
On the other hand, the state should increase taxation on the wealthy, property speculation and companies making windfall profits, such as banks and gaming companies, thus resulting in more public funds, which could be used for social purposes.
In this regard, the state should ensure the financial sustainability of social welfare systems and free healthcare - in turn, this is linked to the economic situation of the nation within an increasingly globalised scenario.
The welfare state should be strengthened to compensate persons for the inequalities and hardship brought by capitalist realities. Certain social groups are vulnerable to various inequalities and therefore need protection from the welfare state. Social benefits should not be seen as the be-all and end-all of the welfare state, as in certain instances, the creation of opportunities, increased social inclusion and proper guidance are more important forms of social investment. Yet social benefits remain an important pillar of the welfare state, especially when people face financial hardship. Of course, this does not mean that abuse of benefits by some claimants should be tolerated.
Means-tests should be avoided as much as possible, as these can result in stigmatisation of claimants, poverty traps for low paid workers who experience a small rise in their earnings (given increased liability to higher taxation and insurance contributions, together with loss of entitlement to income-related benefits), loss of earnings for middle-income earners (as is the case with children's allowance) and increased insecurity and complexities when the labour market is becoming more deregulated and is generating employment income that is insecure and unpredictable.
The housing sector is another area which deserves close attention in the Budget. More public funds should be invested in affordable social housing. The state should have a stock of rented properties aimed at low-income groups rather than just building properties to be sold at subsidised prices. The state should also subsidise bank interest rates for social purposes.
A hasty liberalisation of the rent laws should not be considered before a holistic national plan on housing is carried out. Such a plan should ensure that the most vulnerable social groups would not be threatened by evacuation. Perhaps the State should consider safeguarding the social housing rights of persons living in properties rented before the 1995 liberalisation by giving a compensatory yearly supplement to owners of such properties.
Yet one must emphasise that the current discussion on rent law reform is being blown out of proportion by some, to the exclusion of social groups such as low- and middle-income earners, young couples and persons moving towards pensionable age with no property.
As regards education, it is commendable that Government investment on post-secondary and tertiary education is on the increase. Official European statistics show that Malta is at the bottom of the list of EU countries when it comes to students' participation in these educational sectors. Hence stipends are an essential tool.
However, the government should also increase investment to benefit social groups that are facing harsh realities, including secondary school-leavers and aging workers with little or no skills or education levels. Sociological studies show that Malta's selective educational system, based on streaming, has much to blame in this regard. One should also keep in mind that persons with low educational levels are also further disadvantaged when it comes to accessing various opportunities in education.
Culture should be given more importance in the Budget. While certain cultural elites benefit from various opportunities, others do not. The help given by the state to the latter should increase, for example through further subsidisation of cultural activities of a non-commercial nature and through the development or provision of cultural centres for such activities.
As regards the environment, one cannot stop emphasising that this should be given priority in the Budget. An important instrument in this regard is ecological fiscal policy based on the polluter pays principle. This requires proper distinction between polluting products and others.
More funds should also be invested in public transport. In this regard, subsidies remain essential, whether or not the system is characterised by a state monopoly, private monopoly or a liberalised system. Subsidies ensure that non-profitable routes are catered for.
The Budget should provide people with opportunities and incentives to enjoy a higher standard of living and a better quality of life. Yet, beyond neo-liberal demands for a smaller welfare state, the truth is that certain social groups require direct assistance from the state, since otherwise the risk of increased poverty and social exclusion will increase. If a more equal society is aspired for, such assistance should be provided by the state, in its plurality of forms, ranging from financial assistance, to increased opportunities and incentives.
Trimming down of the welfare state will only result in more inequalities and more motivation to abuse, as has happened in various societies that opted for such directions.
If equality and social justice are to be aspired for, then the welfare state should be universalistic in scope, while meeting the particular needs of different groups of people.
Mr Briguglio is public relations officer of Zminijietna - Voice of the Left.