Pre-budget document (?) (2)

Once again we are being given the political spiel by the Gonzi Administration that public finances have been put on the right track. Good. We have been supplied this assessment every year at about this time, just before the budget for the following year is announced...every year that is since 2003, when it was loudly trumpeted during that year's election campaign that public finances were already sound. It turned out not to be so. Following the expulsion of former Finance Minister John Dalli from his ministerial fief, we were regaled once more with the saga of how public finances were to be cleaned up.

Throughout, the Gonzi Administration played the game of pretending it had somehow inherited a financial mess for which it was not at all responsible. Where this inheritance came from was never clearly identified. Sometimes we got ludicrous versions as to how all the problems originated from the Labour government of 1996-1998. It shows the level of contempt with which PN apologists treat public opinion that this excuse still gets repeated.

In any event, now we are there, according to Prime Minister Lawrence Gonzi. The EIB system would not have accepted that Malta fully joins the eurozone unless they were convinced that government revenues and spending are aligned with the Maastricht criteria. The experts in Brussels and Frankfurt have actually said that much. They put in a good defence for the Gonzi Administration's financial performance when the technical staff at the International Monetary Fund showed scepticism and tried to punch holes in the Malta government's presentation of public financial outcomes. That is now water under the bridge.

Prime Minister Gonzi and his acolytes have brightly proclaimed that we are there. Public finance has been put on a sound footing. Let us rejoice.

Even so questions still arise. On the doorstep, my colleagues and I are meeting people who tell us they cannot make ends meet. Whether coming from the middle or lower income classes, they complain about the burden of taxes. Higher prices have persisted for them as order of the day.

The PM and his apologists insist that things are improving. They point to what banking and credit monitoring institutions, among others, say about the state of Maltese finances and the economy. The problem here is that most families are saying something quite different from what the technical analysts proclaim.

Which version of reality should one believe: that of the financial "experts" or that being experienced by "ordinary" families? Fiscal rectitude is all for the good but if financial imbalances that are being addressed resulted directly from what the present Administration decided to do or not do in the recent past, citizens rightly fail to be impressed. Why should they have to pay for the mistakes of the Gonzi Administration while the big financial institutions are still making hay?

The question makes sense. Not least because the PN administration tries to play the game of wanting to know how Labour's projects for the future under the Plan For A New Beginning that we published this past summer are to be financed. Our answer is simple. We set action priorities. Financing will be organised according to eurozone rules, in line with the set priorities.

Niggling queries about how truly the deficit has been reduced remain nevertheless. I have had businessmen in my office who claim that while they have finished projects the government contracted them for, and while they have been paid a part of their dues, they have been fobbed off for the rest of their payments. Not before this January can they be paid, so they were told; the available allocations under the 2007 budget are exhausted. Other importers have stated that, under their contract terms, payment datelines were increased by the government to an unprecedented five months after delivery (at their cost) but that even these terms are not being honoured by the government.

If true, these are not the signs of a financial system that has been restored to health. Let us however take as fact that the financial situation is good again, for that is what the Prime Minister and his Parliamentary Secretary for finance tell us. On that basis then, it is about time for the government to give back to the people what the government took from the people. The truth is that burdens on families by way of taxes and government-induced costs have risen extremely steeply under Dr Gonzi's stewardship. Open and disguised price hikes have further darkened the situation.

Beyond what the pre-budget document says, and independently of whether the 2008 budget is to be considered as an election one or not, the Gonzi Administration should go for extending strong relief to ordinary taxpayers.

Among the measures to be launched, there should be: a wage increase weekly of Lm 1.5; a reduction of the utilities surcharge by half; removal of the departure tax; some reduction to the levy on the pension of elderly inmates at St Vincent de Paul and other similar government institutions. These would hardly be considered electoral giveaways. They should be seen as natural follow-ups to the claims made by the government day in day out.

They would also bolster confidence in the government's other claim that the introduction of the euro will inflict no further inflationary hardships on families.