Right perspective on the economy

Branding the Finance Minister an amateur, as the Labour leader did, for the government’s failure to meet budgetary targets in the first five months of the year is indicative of the Labour Party’s muddled thinking. Expenditure may be up but should not the party wait until the year is out before it embarks on such cheap political gimmicks?

Clearly, the PL is in such a high mood that it believes it can be convincing in any attack it levels against the government. The problem is that it is not being convincing, as its criticism over the budgetary targets shows. Its rashness shows that the party is only interested in putting the Administration in a bad light, using whatever arguments it can come up with to do so. But this is unlikely to impress the intelligent voter.

On the contrary, it is likely to backfire. Equally politically rash and opportunistic were one or two comments made by trade unionists at a breakfast meeting held by the Finance Ministry the other day in the run-up to the publication of the pre-Budget document.

When the minister, Tonio Fenech, had finished arguing that, despite the “statistical recession”, exports, employment and wages had continued to rise, one trade unionist remarked that if the situation was not that bad, the government should then give back some of the money it had siphoned off from the people in the next Budget.

Another trade unionist, seemingly taking the cue without giving the matter a second thought, suggested that the government ought to fulfil the electoral promise to cut the top income tax rate to 25 per cent for those earning up to €60,000.

Labour, too, had for long been aiming its arrows at the party in government for failing to honour this pledge, made in the last phase of the last general election when, some often argued, the Nationalists should have had a good inkling of the recessionary difficulties that were on the way.

Well, if this were true, then, yes, the party should not have made the pledge, but all political parties, without exception, fall to the temptation of making grand promises at election time, one reason for the sharp drop in the people’s trust in politicians. Politicians are apt to do practically anything in their bid to remain, or to get to, power, including, for instance, the offering of jobs in government-owned places that can least afford additional manpower.

But to go to back to the issue over the pressure being put on the government to honour its income-tax cut pledge, those making it are surely not taking the national interest into consideration. Exports and employment may be up and economic reality may be different from what the figures showed, as the minister put it, but does this justify closing both eyes to the economic situation elsewhere?

It would be the height of financial and political irresponsibility if the government were to listen to such calls or, equally bad, be tempted to honour the pledge for its own political advantage closer to the election. True, the recession may be a temporary blip, as one observer remarked, but the general situation on the continent is still difficult and Malta would be foolish to think it can escape the impact.

It would, therefore, be utterly unwise if the country were to relax its efforts to meet the Budget deficit target, reduce the national debt and remain competitive enough to withstand the heat of the financial turmoil in Europe.