Malta’s Budget for 2018 has some good proposals, but these are not enough to counter the growing precariousness and the selling of the country’s common good. The Budget also does not offer an alternative vision to Malta’s growing dependency on economic sectors which may be unsustainable.
The Budget offers some adjustments to workers and pensioners. Apart from the €1.75 weekly cost of living adjustment and €2 weekly increase in pensions, there will be some other refunds and increases and initiatives. The government will also retain its welfare-to-work scheme which encourages people to seek employment rather than being dependent on welfare benefits. I agree with the philosophy behind this scheme, but I also believe that it should be accompanied by more determination to combat precariousness.
Indeed, various work sectors are being characterised by not so good working conditions that affect workers’ quality of life. Besides, the influx of foreign workers is depressing wages and conditions in various sectors.
The influx of foreigners is also resulting in increased demand for rented property, thus pushing prices upwards. The government will be publishing a white paper to tackle the rent market challenges, and it is also offering initiatives and responsibilities to property owners. The government is also extending investment in social housing as well as the first-time property buyer scheme and complement it with a similar scheme for second-time buyers.
A question that immediately comes to mind in this regard is whether the government is willing to introduce measures to ease the pressure on persons living in rented property. Rather than the new middle class promised by Joseph Muscat, Malta is experiencing the expansion of a new precarious class of persons who have to make huge sacrifices to make up for the increase in the price of rent. Why didn’t the government increase assistance to such persons?
As regards traffic, the government is committed to improve Malta’s infrastructure, building new roads and extend initiatives for alternative modes of transport. So far so good. But judging by road construction currently in place, it seems to be the case that pedestrians and cyclists are being treated as inferior species. One would also have expected more ambitious proposals such as putting a metro and new pedestrian/bicycle links on the national agenda.
As regards the environment, there are no proposals to safeguard residents and communities from the negative impacts of overdevelopment. Water management has been politely sidelined from the script.
On the other hand, the government is committing itself to extend waste separation and to revert to the incineration of waste – without hinting which sites are being considered for this. It will also step up fines for littering and dumping. The latter proposal can only be taken seriously if the government steps up enforcement.
The various measures proposed by the government should be analysed within its own financial situation.
In the first eight months of 2017, revenue from taxes increased by €180.7 million and reached €2.3 billion, courtesy of Malta’s economic growth. Non-tax revenue increased by €80.4 million and reached €284.1 million.
On the other hand, total government expenditure increased by €150.9 million and reached €2.553 billion.
Recurrent expenditure increased by €157.9 million, but this was, in part offset by lower interest on public debt (€5.3 million) and a €1.6 million decrease in capital expenditure. Is this sustainable, particularly when the government’s recruitment of staff also includes the employment of people in return votes rather than real need? The government’s lack of transparency in this regard does not help things.
Of particular interest during the first eight months of 2017 was the €33.6 million increase from ‘Fees of Office’, which mainly refer to Malta’s sale of passports, the Individual Investment Programme. This programme is shrouded in secrecy, with the government doing its best to dodge questions being made by the Opposition, the press and civil society. Will the government explain in detail the revenue expenditure streams related to it?
Last but not least, Budget 2018 does not seem to offer an economic vision away from Malta’s dependency on construction, financial services and the sale of passports. This is a far cry from Joseph Muscat’s talk of putting the economic cycle before the political one.