A Budget that targets social justice

The Budget for 2017, presented yesterday, was based on the advice: if it ain’t broke, don’t fix it.

The Budget needs to be seen within the context of the previous ones presented by the Labour government, which had been aimed at stabilising the economy and government finances, generating jobs, reducing disincentives to work and discouraging welfare dependency.

It includes a few measures – like excise duty on construction materials and on non-alcoholic drinks – aimed at increasing government revenue but the income will be minimal. Clearly, the government believes the economy is working well enough to turn its focus “downwards”, as Finance Minister Edward Scicluna put it when briefing the media.

This time, the focus is on lower income groups, with €23 million being dedicated to broad categories like thousands of pensioners and small pockets of disadvantaged people, such as amputees.

Before heading off to present the Budget to the President, Prof. Scicluna spent a considerable amount of time explaining these measures to the media but skimmed quickly through his presentation slides on capital projects, without naming a single one.

It was probably because time had run out but it was inadvertently reflective of the ministry’s approach, focused on those who had not benefitted from the economic growth and prosperity.

Prof. Scicluna made it clear that the middle-classes had benefitted from measures in previous Budgets – like the provision of childcare services and the increase in wages – and that these were still enjoying them. He also listed the various foreign investments from around the world that were announced this year, saying that, clearly, Malta’s competitiveness was not a drawback.

He also referred to the upgrade in Malta’s credit rating by Standard and Poor’s last Friday to A-, which he described as a “dream come true”.

The rating had been downgraded in January 2013, just a few weeks before the election.

The economy is evidently working much better and does not require a huge input, as was the case last year and also this year to create jobs, resulting in record economic growth. In fact, apart from a handful of projects, like the fast ferry between Gozo and Valletta, an international school at the Mtarfa Hospital, and a breakwater in Marsamxett, there were few grand gestures or vanity projects, with €361 million being spent on capital expenditure, mostly ones already announced last year or under way.

What there was were dozens of measures to ensure that those who did not benefit from the economic growth would feel that they were getting at least something in their pockets.

The Budget also attempts to solve the grievances of certain categories of workers, like former Electricity Board employees and police officers who are owed overtime, allocating €8 million a year for seven years to sort them out once and for all.

Given that the social measures announced yesterday add up to just €23 million of the €4 billion expenditure, one can hardly call this an election Budget. However, the initiatives taken may prove to be enough to whittle down the embarrassing numbers of those at risk of poverty and social exclusion – given by Eurostat yesterday at 90,000, or 22.4 per cent of the total population as of 2015.

In the preamble to the Budget, Prof. Scicluna noted that many people in Malta were now taking economic growth and financial stability for granted. The Budget for 2017 is a stark reminder that there are still many who have yet to have a better feel of the good times.


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