As summer kicks in, the civil service falls into half-day mode and the political parties start to reduce the momentum, looking forward to their hard-earned summer holidays, there is usually very little happening to rock the so-called political boat.

Parliament is expected to rise for the summer recess next month, but while debates in the House will be put on hold for a few weeks, the debate in the media, among the constituted bodies and civil society may surprisingly pick up pace and generate considerable interest over the summer.

In the coming weeks, the government is expected to publish its pre-budget document, wherein Dr Lawrence Gonzi will be laying the foundations for the real budget some time in November.

The pre-budget document is more than just a tool to send out feelers among the social partners and other organisations. It is a clear indication of the government’s intentions over the next 18 months and, more importantly, it is the Prime Minister’s best weapon to start talking about hot issues and even hotter solutions to some of the country’s major problem areas.

What can we expect the government to come up with in this document? It is very difficult to predict the contents; however, it is not that difficult to define the boundaries and limitations that the government will have to impose on itself. The budget is nothing but a balancing act between what the government wants to do and what the government can do.

Dr Gonzi and his Cabinet of Ministers would be more than happy to be in a position to implement a series of changes to our health, pensions and taxation systems. They would love to give local businesses a wide range of incentives that not only boost competitiveness but create jobs and economic growth in one fell swoop. However, economic realities (and those political) make life much more difficult than it appears in theory and on paper.

From a macroeconomic perspective, the government is obliged to work within the parameters of the Maastricht Criteria. With the deficit expected to fall below the three per cent of GDP mark this year, Dr Gonzi will need to maintain fiscal discipline in 2007. What will be of more concern to the government, however, is the rate of inflation. At just over three per cent, it can prove problematic early next year when the decision whether to allow Malta to join the euro will be taken.

So what amount of room does Dr Gonzi have left to manoeuvre in? The government will certainly be announcing some changes to the taxation regime. Tonio Fenech, the parliamentary secretary, hinted this week at changes that will help business to become more competitive. It would be interesting to see if the government can afford to cut down on its revenues and revise the tax bands in the coming budget. The pre-budget document should help to answer this question.

Pension reform is another area that has long been debated but never really acted upon. The government knows it has taken too long to come out with a strategy and with two years to go before the next election, this may be the last real opportunity to implement decent reforms. The introduction of incentives to encourage people to take out private health insurance and complementary tax breaks could be on the cards.

Health reforms are always neither here nor there. The separation of one’s national insurance contribution, with a percentage going towards health care alone, has been mooted before. Extending this idea to offer reductions in the NI to those taking our private health insurance could be explored further in the pre-budget document.

The tourist industry, privatisation of government’s remaining assets, the manufacturing sector, R&D initiatives, and the use of the EU’s structural funds, are issues that need to be addressed in the pre-budget document.

What we should not expect are gratuitous handouts or pre-election gimmicks. While there may be room for some unexpected goodies, these will still be given within strict fiscal limits.

Whatever the contents may be, the pre-budget document will be dissected by everyone. Then the debates will begin.

This summer is not going to be that quiet after all!