The budget has come and its effects will not go away so quickly. Assessing the debate so far, one wonders whether this budget shall be remembered more for the decision not to allow public holidays that fall on a non-working day to be added to the vacation leave; or for the decision to increase the price of kerosene to that of diesel; or for the decision to impose a surcharge on the electricity bill to cover partly for the increase in the international price of fuel; or for the decision to increase bus fares by five cents.
On the other hand, one hears very little of the wide range of incentives that are being made available to business to invest in a number of activities; or the increase being made in expenditure on education; or of the crackdown which is being made to cut out social benefit fraud; or of the efforts being made to protect the environment; or the measures being taken to cut back on government expenditure and reduce the deficit; or the capital expenditure that is being made with the direct financial contribution of the European Union and Italy; or the support being given to the agricultural sector.
None of these items made the headlines because the expectation seems to be that we should enjoy all these benefits but we should not be made to pay anything for it.
Public perceptions start to become an important part of the equation. For example, none of those that have criticised the budget have stated that the government did not increase taxation, other than on things like cigarettes. None of these people stated that the extra money that consumers have to pay as a result of the budget measures, such as the surcharge on the electricity bill or increased bus fare, shall not be ending up in the public coffers, but shall be going directly to third parties.
The owners of public buses shall be receiving the monies arising out of the additional bus fare, while international fuel suppliers shall be getting the monies collected from the surcharge on the electricity bill. Yet, the public was made to feel that the government continued to tax further the consumer with the consequence that the public feels that this was a tough budget.
The perception of the general public is that this budget may hinder rather than stimulate economic growth. The results of the survey published by The Sunday Times last Sunday is ample proof of this.
That survey essentially showed that most of those interviewed did not believe that the measures that were taken to stimulate economic growth and jobs shall deliver the desired results.
Some might feel that this is a lack of trust in government. In effect it is not because none of the incentives announced in the budget indicate that there would be direct government investment in the economy and that it would start to take on once more an operating role, rather than the regulatory role it has been taking in recent years.
On the other hand, these survey results say quite a lot about the perceptions of the public about the business sector. And what they say is not at all positive. The continuation of the process of privatisation of companies in which there is government shareholding requires private sector investment for it to be successful.
The job creation that is expected to occur from the stimulus that is being given by a number of fiscal incentives requires private sector investment for it to really occur. It is the private sector that must transform the impact of the effective reduction in the number of days off from work into increased competitiveness and, therefore, higher productivity and higher output.
Most of the constituted bodies representing both the business sector and employees have recognised that this budget demonstrated a serious effort by government to seek to face head on the challenge of eliminating wasteful public sector expenditure while seeking to achieve economic growth. It is really up to the private sector now to take up this challenge and exploit the opportunities being offered to it. There is agreement that we must create new economic activities and increase what we have.
There is also agreement that the activities towards which the new investment incentives are being channelled are activities in which Malta can excel. Hence the moral pressure that there is on the private sector to stand up and be counted.
Employees have essentially given from their time off, apart from having to foot a higher electricity bill. This is their contribution. The contribution by the private sector should be the risk which it is willing to take by investing further in our economy.
We need to remove the perception that our private sector is today only capable of investing in property development which provides quick returns, but is willing to come forward and invest in productive activities that create jobs economic wealth in the long term.