Disconnected, bad economics

Good thing I was armed with book and laptop on budget day. My experience in the House, when the budget speech is read out, has taught me to always be ready with a boredom contingency plan. An avid budget-watcher told me that ministers and government MPs were caught on camera yawning widely. My colleagues and I had to suffer the droning presentation just as much. I wouldn't like to think how many of us would have been shown in a similar heavy-eyed and open-mouthed state had the television cameras also focused on the other side of the House.

I fast-read the budget speech which obviously took me only a fraction of the time it took the Finance Minister to deliver it, skimming over the déjà vu bits. I then looked at the estimates, which are what really matters, as the budget speech generally contains a lot of projects but, once you identify the money being voted for each initiative, another picture emerges. Some projects had been promised in the previous year's budget speech, and the one before, and the one before. They are thus mentioned yet again in the following year's budget speech because the government has failed to implement them yet. I will not bore you with the list of phantom projects as you have been hearing it year in, year out.

We then proceed to learn how the government has, again, not managed to curb its expenditure and that we will have to make up for a budget deficit three times the size of that projected by the Prime Minister last year.

The Finance Minister's budget speech also showed how disconnected the government is from the rest of society, even from the PN's base supporters. This is evident from the fact that the utilities price hike, which is worrying so many people, did not get a single mention in the marathon budget speech. For political convenience, in one fell swoop, the government is removing subsidies on utilities because of its procrastination in taking action at an earlier stage and phasing them out gradually over a period of time and at a time when there was no international recession. But that would have coincided with the second half of the previous administration, making it politically inopportune because of the approaching general election. So the government opted to perform the drastic operation in the first budget after its electoral victory, the farthest away possible from the next general election, while ignoring the elephant in the room in the form of the global recession fast approaching us. To this we have to add that the taxpayer has to pay for the government's pre-election indulgence.

This is a time when the government should be finding ways of giving citizens some breathing space and room for manoeuvre. Instead we are being milked financially dry, compounding the already bad situation by creating a domestic windstorm in addition to the international hurricane. Water Services Corporation and Enemalta will now be syphoning large amounts of money from the economy through the utility rates. How's that for bad economic management?

It's the opposite of what we were taught as undergraduate students of economic policy. While governments all over the world are endeavouring to buttress their wobbling economies, ours continues to weigh the economy down. John Keynes must be turning in his grave. On the other hand, the tax cuts presented in the budget are insignificant when seen against the money the government will be draining from the economy via the high utility bills, the excise duty on fuel and the various other measures which will certainly not help to bolster consumer spending. Thus we certainly will not be in a position to rely on domestic consumption to avoid a big economic slowdown.

Today's disconnected government - "together, everything is possible" still buzzing in our ears - has, in a few months, earned a tsunami of disapproval from a lot of citizens, with the workers' unions holding a joint protest against the new water and electricity rates.

The Prime Minister has his polls showing him the people's wrath at the economic crisis his government's bad management is heading us for; in addition to what will affect us on an international scale.

I have just spoken with an employer who told me that he is seriously considering closing down his business, which will mean dismissing around 30 employees, since with these new utility rates his profit will be zilch. As he put it, he would be "working for a government which is ignoring the welfare of its citizens just like the predator has no regard for the welfare of its prey".

Maybe the Prime Minister is complacent on this matter because the general election is still very far away, but it is people's living standards he is dealing with here. It is a shame that, for the government, only the country's political cycle is sacrosanct, even at the expense of the proper management of the economic cycle, which, as we have seen, is violable.

Mrs Dalli is a sociologist and Labour member of Parliament.