The Finance Minister is clearly trying to dribble for where best to kick start his 2010 Budget. He is doing so by giving bits of information regarding what it is that he intends to propose in presenting the estimates of income and expenditure for the coming year.
Without any ambiguity he has said what he will not do. He will not propose a review of the COLA mechanism. Statutory wage increases will remain in place; any change will have to be proposed and agreed upon by the social partners in the Malta Council for Economic and Social Development.
Nor will the government be assisting employers by bearing part of the cost of living increase payable from January 1. Employers will have to pay out an extra €6 or so per week to each employee themselves, as is the practice.
Putting forward more negatives, the Finance Minister said he would not be announcing (further) cuts in income tax rates: with revenue falling short of his estimate by around €80 million this year, said the Minister, it was not the time to forego revenue.
The Opposition quickly countered this approach. Labour has been tactically trying to raise expectations by saying that, by the government's own talk, wages and social benefits should be raised, not least to help workers and pensioners cope with the cost of living. That is what one expects the Opposition of the day to say. But there is more to it than that.
The real truth is that the government's fiscal policy, as devised by it, is in tatters. One of the main planks in the Nationalist Party's electoral promises was to slash income tax such that most people would not pay a top marginal rate higher that 25 per cent. That would save 10 cents in the euro earned by the bulk of the upper-middle and higher income groups.
Various economic observers, including this columnist, warned that was a rash promise - the government finances would be badly affected. There were other priorities. The Prime Minister, who was then still also Finance Minister, disagreed. Cutting income tax, he declared, actually increased the exchequer's tax take.
Even if he were correct, the public finances were already in no state to suffer lost income. The underlying structural deficit was already showing signs of strain early in 2008, not least because the government was not as strict in controlling spending as it had been in recent years. An approaching election almost invariably affects erstwhile resolve. The Finance Minister is now turning the Prime Minister's theory on its head. For, if cutting income tax really stimulated revenue, now surely is the time to do it, with revenue declining sharply and the budget deficit widening despite an unwise brake on capital expenditure.
I am surprised the Opposition let the government get away with this one. Another negative by the Finance Minister is being treated far less kindly. He intends targeting the benefits paid to single mothers to change inbuilt inducement to not to go out to work. He put that one very badly and is getting deserved flak from all quarters.
The Finance Minister must trim recurrent expenditure where possible. To do that he has to review the whole social benefits system and consider means testing, as well as to increase efforts to stamp out abuse - not just by some single mothers but by any male or female beneficiary and taxpayer. To announce a singling out of single mothers was crass.
The government has problems. Many are due to the recession, which could be around in our islands for longer than the International Monetary Fund thinks. Some problems are of the government's own making, through past policy changes and present action. The rise in the deficit is not really being caused, certainly not more than fractionally, by assistance to selected manufacturing companies which could benefit medium term if they are given a short term helping hand.
The fiscal issues are more fundamental, and justify a thorough review of state recurrent expenditure. Such a review is not best done by calculated dribbling and dropping of tit-bits. The Finance Minister needs to rethink his strategic approach.