Budget leaves sour taste

Generally speaking the budget had a good taste for the country in terms of planning for the predictable impact of a global recession but, at the same time, it brought about a very bad taste for the citizen in terms of standard of living and spending power. In a nutshell, the government was ultra-precautious in assuring a continuing, though slower, economic growth rate while maintaining control on the national deficit increase. The government has shelved the electoral promise to drastically widen the income tax bands and is hoping to trigger the domestic economic stimulus through substantial capital investment most of which is funded by the EU. Not a bad idea at all.

However, when considering our past performance in completing capital projects on time, there is little hope of achieving the set targets.

Rightly so, the government wants to protect the progress we had made in attracting foreign investment and in maintaining our competitiveness and employment levels. This is so evident in the €120 million plus which the government has allocated to the tourism industry, a sector that is already suffering from a poor season this winter.

The government has also managed to demonstrate its commitment towards sustainable development and the environment in general. The initiatives announced in the budget to encourage utilisation of alternative sources of energy, to reform the public transport and to enforce the polluter pays principle are commendable. Obviously, in order to implement such measures there is a price to pay and that is not just the additional expense for the supermarket plastic bag, the conventional light bulb or the increases in the price of car fuel. Neither the discount we would get on the purchase of a bicycle would make any significant difference in this respect!

The investment measures in education, particularly in training and re-skilling, and the initiatives designated to start-ups and SMEs would also positively contribute to the economic activity.

The main bone of contention however remains whether such measures would mitigate the international economic slowdown that is fast approaching our shores. The business community is not so confident. The family man is even more concerned.

How can we survive with a weekly pay cost-of-living increase of €4.08 and a weekly tax rebate of something like €0.58? How can we make ends meet if we get the redundancy notice or if we are asked to work a four-day week? This would be shocking news in good times let alone during the economic turmoil that we are envisaging for next year!

This budget tastes sour for one simple reason: It lacks the social dimension. There was no effective social dialogue during its preparation.

There was no socio-economic impact assessment on the proposed measures and there is no introduction of a social benefit. The element of solidarity was only directed towards those who were risking falling under the poverty line.

Arnold Cassola of Alternattiva Demokratika was right to state that "With the high energy prices and a weakening of spending power many peoples' standard of living will fall below the poverty line.

"It is imperative that tomorrow's budget includes measures to combat poverty".

The budget did not save the low-income earner or the middle class citizen from jumping into the fire. The increase in utility prices was nothing but a red hot frying pan causing burns left, right and centre! I could not believe that the government would ignore the advice and recommendations of the social partners and leading economists to spread the burden of the utility tariffs over a period of reasonable time.

The Minister of Finance did not mind extending by one year the 2010 self-imposed target to have a surplus budget. So why didn't he take on board the social partners' advice, especially now that the eurozone ministers have agreed that "Instead, the goal will be replaced by individual plans for member states on a case-by-case basis and dates will be pushed back"?

Perhaps the Finance Minister is contemplating to present a mini-budget in six months' time "should the circumstances dictate such a necessity". Otherwise, why are we trying to be whiter than white?

manuelmicallef@onvol.net