Sociologist from Malta

Friday, November 12, 2010

Budgeting within a context

Michael Briguglio

The Times, Friday 12 November 2010

The government’s 2011 Budget has to be seen in proper context. We simply cannot keep using inward-looking “zombie” analysis as if Malta is isolated from the rest of the world.

Malta is a very open economy and highly exposed to developments in the European Union and of the global economy. Economic turmoil and uncertainty are not mere buzzwords put forward by economists of doom.

Looking at other member states, one notes that various austerity measures were taken in countries with both centre-left and centre-right governments. Some of these measures led to the sacking of public service workers, heavy cuts in welfare expenditure and cuts in public sector wages. In other parts of the world, governments ranging from state socialist to fundamentalist theocratic, from liberal democratic to nationalist populist are acting in quite a similar fashion. Hence, whether it is England or Cuba, Iran or Spain, Greece or Zimbabwe, France or Iceland, the plain truth is that austerity measures are the name of the game.

Compared to many other countries, I cannot really say Malta is in a tragic state. The United Nation’s Development Programme’s Human Development Index seems to confirm this, as Malta has climbed five places and is now in the 33rd best place to live in out of 169 countries.

Of course, this does not mean all is well in the southernmost member state of the EU. Indeed, there has been quite a lot of criticism on Malta’s Budget for 2011. Criticism ranges from the constructive to the destructive. Some populist remarks on the Budget may sell on TV programmes but lack substance.

My verdict of the Budget is that it has a mix of measures, some of which are positive, while others are rather vague. The Budget also misses out on certain social and environmental matters.

It is positive that, in a context of global economic difficulties, the government is aiming to reduce the deficit. Hopefully, the government’s expenditure programme will be more sustainable and will not suddenly change direction once the general election approaches.

It is also positive that the government shall pay workers who undergo training programmes on minimum wage and that it will make life easier for people on social assistance who choose to work. On the other hand, this should not have excluded the badly required increase in the national and hourly minimum wage. Such an increase, proposed by the Green party, unions, progressive NGOs and some experts, would have helped improve the quality of life of such workers and give them more spending power.

One also augurs that enforcement of legislation which prevents employers exploiting foreign workers is effective.

With regard to the cost of living and social benefits, the increase in supplementary and expenditure for vulnerable groups such as fostered children is a positive step. However, one would have expected more expenditure on disabled persons and the inclusion of vulnerable groups such as those with myalgic encephalomyelitis and fibromyalgia for entitlement of disability benefits.

The government’s investment in the cancer centre at Mater Dei Hospital is also welcome. However, cancer should also be confronted through better environmental policies, which at present are lacking or badly enforced. The government should also do much more to tackle costly medicinal prices, including considering importing them itself alongside importers from the private sector. Both the government and the Green party had proposed this move last year.

As regards education, one can only agree with the increased expenditure outlay. However, one would have expected the government steps up its investment in public education and childcare centres rather than in increasing already existing incentives to private schools. I cannot see why the taxpayer should subsidise the latter when it is the choice of parents to pay for the children’s education.

As for environmental policy, Malta is surely a laggard compared to other similarly developed countries. The government should take sustainable development more seriously by, for example, reactivating the National Commission for Sustainable Development and implementing the various measures proposed by the Sustainable Development Strategy. One area that surely needs attention relates to the promotion of renewable energy. In this regard, Malta does not have a good record.

A very big gap in this year’s Budget is that relating to water policy. The time has come to protect groundwater and to take serious and effective measures in this regard. As a first immediate step, all non-registered boreholes should be banned. Allowing water theft through 8,000 boreholes is surely unsustainable and scandalous. Measures should also be taken to have more water catchment structures.

As a revenue-generating and environmental measure, property speculation could have been taxed from third vacant property onwards, particularly when Malta is a perpetual building site and when a quarter of properties are vacant. This would also encourage the renting and selling of properties, which are kept vacant for speculation purposes and the use of existing buildings rather than building more areas.

Other positive measures – which were also proposed by AD – include the investment in farmers’ markets and in animal welfare. It is positive the government shall introduce incentives encouraging cleaner transport.

All in all, my verdict of the Budget is that it should be given six marks out of 10. This mark is conditional on the assumption that the positive Budget measures will actually be put into place and not simply fade away once the Budget show ends.
The author is chairman of Alternattiva Demokratika – the Green party.

No comments: