Keeping up appearances

My initial reaction to this year's budget was one of incredulity. I tried to reason out that maybe it was a question of perception. After all, truth is like a rainbow, it has many colours.

And maybe it is natural for someone whose party has been in power and dictating things for so long to embrace a rosy outlook. This is a country where people will argue forever whether a glass is half empty or half full. We seem to constantly talk across purpose. The least we can do is to acknowledge one's right of opinion, and hope to agree that we disagree.

Yet the Prime Minister, in line with his party's policy in the previous administration, would not even allow this. John Dalli's "downers" have now become almost subversive elements. As the reality of the budget exercise sunk in, it became increasingly evident that what we had witnessed was an engineered exercise in public relations. It was more than just a matter of a different perception; it was an all-out attempt at "keeping up appearances". Mrs Hyacinth Bucket would not have played the part any better.

Any malaise in our economy is no fault of the government. The real culprits this time are globalisation and the price of crude oil. Were it not for these external forces the government would be in full control and the economy on its way to recovery.

As if we discovered the impact of globalisation and the possibility of higher oil prices overnight. If the Prime Minister was so confident about the economy being on the right track, why did he admonish that we must reform "... that which must be changed, whether it relates to our culture, mindset, work practices, lifestyle and our choices and priorities". External forces have little to do with all this.

In a sense, the Prime Minister is right. Real reform is still to start. Whatever anaemic signs of economic growth we have seen in these last years will not suffice to help us overcome the structural and developmental challenges that confront us. We need to humbly acknowledge we still have a Third World economy.

Membership of the EU, and now the OECD, will not alter this basic fact. We need to build a productive base that will enable us to make the necessary qualitative leap. The European Union can be of good support in this respect. Provided we shed our concern with image, to the detriment of substance and commitment.

Having stated this, one cannot but admire the government's ability at "pain management". It all started in mid-summer with the publication of the pre-budget document which sought to open up the discussion beyond the confines of the MCESD.

Then we got the reform in the stipends. Perfectly timed, just before the commencement of the scholastic year. Perfectly tuned so as to paralyse the students' bodies by making the changes applicable only to newcomers.

This was followed with the increase in prices of energy products, announced just a few days before the budget itself. The thinking seems to have followed the following line: Talk about the need of a hefty surcharge, of up to 102 per cent. Let the people digest it and then settle for half the declared amount. Assess the situation. Gauge the capacity for people to cope with further taxation.

Declare that there will be no new taxes in the budget. Affirm war on tax evasion. Keep up appearances. Emphasise that the government is in control of the situation, that it has a vision. The economy is recovering. The government deficit is being effectively dealt with and Malta will meet its commitment with regard to ERM II.

The property sector has been registering abnormally high profits. Seek to change the goalposts. Emphasise that the government is highly conscious of the sensitivity of this sector, tax on property is being reduced and the new final withholding tax at 12 per cent will discourage gross under-declaration of the value of property. (Barely a week has passed and the government is already saying it will amend this scheme.) The banks too have been registering high profits.

Better not impose a windfall tax. Claim that such a tax will send the wrong signals to future investors. We need them to help finance our big parties... CHOGM and all that.

Undoubtedly, at first glance the budget was a good PR exercise. The only problem is that these days people judge by what they have in their pockets. The state of the economy in glowing terms only adds to the resentment of those who are struggling hard to make ends meet; to those who feel that their job is at risk. What these people were looking for in the budget was the comfort that something concrete is being done to safeguard their jobs.

Today, it is the workers at Denim Services that will be losing their jobs. Whose turn will it be tomorrow? This is not about scaremongering but about the need to be prepared. The continued spiralling of local costs will further jeopardise the survival of many enterprises. Offering some incentives for research and development will not take us far. Or do we believe that globalisation will go away? I would have expected that the government would have proposed some sort of contingency plan.

Unfortunately, the government is becoming a victim of its own propaganda machine. In essence, little has changed from previous years. The economic growth rate remains weak, the terms of trade for our manufactured exports continue to deteriorate and tourism fails to take off. The government no longer has the money to kick-start the economy. Reductions in the public deficit remain dependent on the selling of assets and other one-off revenue items and are not the result of higher taxation streams yielded by a buoyant economy.

The people deserve better.

fms18@maltanet.net