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Beyond the personal sacrifices it envisages, the budget must be judged eventually by the results achieved. Its target is economic renewal, recovery and growth. It aims to place the country on a competitive edge capable of attracting foreign direct investment to our shores. Its targets are ambitious and, all in all, a first step toward getting our financial house in order.
It has provided the first glances into a government determined to take the financial bull by the horns. To this extent, government keeps sending a clear message of its determination that getting the deficit under control is its topmost priority. Only time will tell whether the measures announced prove to be sufficient.
Lawrence Gonzi’s decision to remove the taking of alternative days falling on weekends for public holidays should make the country more productive and hence more competitive. To this extent the budget is good news for industry and most especially the tourism industry.
We do believe, however, that the measures announced, although positive, should have gone much further.
The main stumbling block in reducing the deficit and our achieving competitive potential remains the bloated public sector. Its cost is haemorrhaging our finances. Herein lies the country’s Achilles heel.
It is at the heart of our problems, and yet the budget fails to sufficiently address this problem.
Government must, as announced, carry out manning target exercises urgently. The policy of natural wastage, early retirement schemes and the shifting of persons from overstaffed departments to other departments where required should be carried on in earnest.
The percentage of the labour force working with the public sector remains unsustainable. It may sound Thatcherite, but there is no alternative - numbers must be reduced.
In his interview with MaltaToday, the Prime Minister insists he has every intention of reducing the public sector’s labour force.
That is good news. We would only be kidding ourselves if we were to believe that government finances could ever be set right without a substantially lower public sector.
Herein lies the necessary pain for future national gain. This is the area where government’s decisiveness will be tested most. It must be committed to introducing a scheme through which these numbers are reduced over a stipulated time frame.
At the same time Dr Gonzi must incentivise the better managed and leaner private sector to be in a position to absorb the extra personnel.
Speculation on property is yet another area which should have been tackled in the budget. This activity is the direct cause of the spiralling prices of property affecting more and more first time buyer. This perception is as true as it is socially dangerous.
The increased taxation on the use of mobile phones and foreign travel are obscene when viewed in the context of the absence of increased taxation on property speculation.
The air tax on outbound travel has placed us Maltese as the highest-taxed air passengers in Europe. How is that to help us overcome our insularity?
Achieving growth we desperately need may be compromised by government’s taxation policy.
The hike in water costs, against Government’s original pledge is a mistake. The increase in the price of public transport without any visible improvements in the service is equally misplaced.
Increased taxation will only lead to less disposable money with an ensuing, inevitable fall in consumer spending. If this is a growing trend, the country is to experience a lower level in living standards.
We must go for growth and be seen to be going for growth. The budget does not sufficiently send this message.
A culture for start-up companies also needs to be nurtured. Indeed, committing an even larger slice of the budget to venture capital activities would have helped instead of a meagre Lm900,000 spread over a number of years.
The time has come to seriously consider incentives for businesses, as were prevalent in the 60s and early 70s. This too could help ease the shift in employment from the public to the private sector. This, together with a competitive atmosphere, will help set the foundations for growth.
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