Election games hinder business decisions
There is more than a touch of surrealism in the determination of the Minister of Finance to steam ahead with the preparation of the Budget for 2013. All over the island billboards are signalling that the election campaign is round the corner, with the election possibly to be held some time in November.
In that scenario, the minister is unlikely to have time to present the Budget, much less to begin to execute it in 2013. But the surrealism might be a ploy to give the Opposition the impression of a relatively early election. The government may be planning to present the Budget in October, thereby setting forth a plank for its electoral platform, with an election to be called shortly afterwards to take place in January.
I do not recall an election being held in January in recent times. But political calculation will be about winning or losing, not about sticking with tradition conditioned by the seasons.
This scenario is possible. It would allow the government to state its claim, to present an economic survey loaded with data about actual or perceived economic successes. Even more than that, it would allow the government to state what new proposals it has in hand to help the economy to grow and to distribute the fruits of higher growth according to the principles of social justice.
The Minister of Finance has pledged that he will not be presenting an election budget. These are the words of a politician, not a corporation’s chief financial officer. Even if the minister really tries not to put forward audacious proposals, he will be pushed by his peers. The Prime Minister, for one, is not about to pass by an opportunity to project great expectations. Other ministers too, though of lesser weight, will put forward their electoral colouring.
The minister will not have an easy task to be serious and to reap the political wind at the same time. He will also have the burden of explaining why promises were not always fulfilled. The main promise concerns income tax. The Prime Minister and the Finance Minister had undertaken to slash it during 2012. Warned about the potential loss of revenue, they had argued that, on the contrary, the proposed adjustments and cuts would increase revenue. That was one of the promise’s objectives.
The promise was not redeemed. Not only that, but the Prime Minister and the Finance Minister now say that they couldn’t risk a drop in revenue, in the context of the objective to continue to increase the structural budget deficit. That shift in explaining how the proposed tax cuts would work is akin to blatant deceit. The government, primarily Lawrence Gonzi and Tonio Fenech, are hoist with their own petard and Fenech will not be allowed to get away with that.
Another unfulfilled commitment concerns pensions. In seven years the government has done nothing to prepare to introduce the proposed compulsory second pillars. It claims that the economic situation does not permit the implied cost. That contrasts with, and contradicts, the mantra that we have never had it so good, that the Maltese economy is one of the best performing in the European Union, if not the whole world.
The government has not even put forward proposals to facilitate the introduction of the voluntary third pillar.
The Minister of Finance is likely to gloss over such failures and to focus his speech on actual or pretended achievements. But the Opposition will not let him forget them. Nor will that part of the media which is not subservient to the government’s wishes.
This political bubble is not good for the economy. Business people want the political uncertainty within the government’s own ranks to end. Given the closeness of the term of office of this government, they want political decisions to end the further uncertainty caused by the Prime Minister’s tactic of creating a guessing game about the election date.
That game is not hindering the Opposition, which by now must be prepared for the election as much as it ever will be. It hinders business people who need to take decisions in stable conditions.
Such games can be costly and are only suited for those who can afford them. The business community cannot. I would venture to say that much of the business community does not really care who wins the general election. Business people know that, aside from the rhetorical attack of the two sides on each other, whoever wins will strive to improve economic conditions, in particular to attract new investment, local as well as foreign.
Hopefully whoever wins will also be ready to re-examine the segment structure of the Maltese economy, which includes high fliers, certainly, but also sectors and business people who cannot keep their head above water.
The election cannot come soon enough to permit the new government, whoever mans it, to concentrate on these tasks, rather than on infantile and wasteful wars with billboards.