Great Expectations

In a few days time the Minister of Finance will present his second budget for this legislature. After getting his projections so badly wrong last year, everyone is hoping that this time round we will see some realistic assessment of where we are, and where we can be in a year’s time after several long months of miring in recession.

Admittedly public finances are not in great shape and this ties the hands of the Minister and limit his room for manoeuvre. Of course, the government will never admit to this reality, simply because the deteriorating public finances are a consequence of past excesses committed by the Gonzi and PN administrations over the past 10years

Yet, the country needs a budget that will instil some life in our sagging economy. Public productive investment should feature prominently, if we are to see economic growth that will create jobs. Similarly, incentives for private investment are called for at a time when both local and foreign investors seem to have lost much of their appetite for putting their money in the Maltese economy.

Tourism, for instance, needs an urgent boost of energy so that it can once again start to grow and support the creation of new jobs. Waiting for countries like Germany, Britain France and Italy, from where most of our visitors come, will not be sufficient to pull this industry from the brink of a major crisis. It is important that apart from conserving our traditional markets, new touristic sources are identified and tapped. We need to devise a new strategy that will revamp our tourist product in order to make us competitive once again.

This has to be based on a full commitment by both the government and the private sector operators in this industry to put more effort and resources in order to upgrade the services we offer to our visitors. With the added challenge of a weak sterling that makes us that much less attractive in the eyes of the important British market, this task needs to be addressed in earnest immedately so that by the next season we will be in good shape to propel our industry forward.

Our manufacturing industry also needs attention. The assault that the government made on this sector in the past year through the exorbitant increases in water and electricity bills must not be repeated, if we are to see this sector continue to contribute to our economy. The government should also heed the advice given to him by the leaders of our industries to cut red tape and appoint a super minister to whom industrialist can refer to resolve all their government related issues.

The war on abuse, corruption, and incompetence in the public sector will only become credible when the government takes concrete action to make accountability the hallmark of this administration. The VAT debacle has shaken the confidence of the public in this government’s ability to guarantee good value for the money to taxpayers.

In the few times that cases of mismanagement, corruption and abuse of power have actually come to the surface, the government has been reluctant to address with determination the issues that gave rise to such cases. Our people are tired of seeing their trust being betrayed only to be asked to make more sacrifices year after year.

It is therefore ironic that one of the few measures the Minister of Finance was prepared to announce in the last few weeks, was his intention to limit the allowances paid to unmarried mothers, as if these were the main cause of our anaemic public finances.

Also small businesses need a helping hand. I still believe that the government should reconsider its decision to lower VAT on the services provided locally by small business. These services have a high local added value, and as long as these concessions are granted for a defined limited time they can help to stimulate some local demand which at present is sagging.

In a few days time we will know whether our expectations for a pro-growth budget were too great for this government to satisfy. At a time of economic crisis doing nothing or doing very little is not an option.

We badly need initiatives that may look risky in the short term, but that can deliver the boost in economic growth that is so obviously lacking at present. These are our people’s legitimate expectations, and this is what the government should deliver

Dr Charles Mangion

Shadow Minister Finance

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