The pre-budget document “Securing our future” published by the government last Saturday gives us a teaser of what this administration has in mind for the next budget. It is an important document in the sense that it gives a detailed description of the government’s policy in a number of areas and it also provides the constituted bodies, the unions and the public in general the opportunity to give their comments and suggestions in what the Prime Minister described as “an invaluable process”.

The document can be analysed from two perspectives. From a national standpoint, the document refines the government’s policy on three main pillars: the environment, education and the economy. The government once again continues to focus on the consolidation of its fiscal regime – reducing the budget deficit and public debt (an exercise that has been, on the whole, successful), the importance of education reforms, pensions and other national issues that need to be wrapped up as soon as possible.

The government is also aware that its popularity ratings depend greatly on how “pocket-friendly” the measures in the next budget will be for the public. Three years have passed since the last general election and taxpayers are starting to become impatient. There are clear signs of strain even among the most ardent of government supporters. Indirect taxation coupled with the unpopular surcharge on water and electricity bills have not earned the government any bonus points. Although this is not a “pre-election budget” it is high time that the government gives something back to the people or at least ease their burden.

The government is proposing a package of eight measures, however the implementation of the government’s plan will depend on how well the economy performs over the next two years. Dr Lawrence Gonzi made it clear that the government has to be prudent and that it cannot give handouts just to please the taxpayer.

In spite of the existing economic restraints that have been imposed on the country by the government itself and as a result of EU membership, three of the proposed measures will go a short way towards alleviating the burden on the public. These are a review of the income tax bands, the introduction of an energy benefit and a reduction in the airport tax.

The government is saying that it will lose around Lm8 million if, and when, the measures are implemented. This means the government estimates that the fiscal deficit will still be below or around three per cent of GDP and that is the maximum amount it is prepared to lose in revenue. However, this calculation is also based on the assumption that the economy will not get any further shocks over the next 12 months. Otherwise this figure will have to be revised downwards.

The same argument applies to the proposed energy benefit which is meant to provide adequate compensation for the fuel surcharge. This “benefit” will also be affected by changes in the price of fuel imports particularly if the situation in the Middle East continues to drag on and lead to distribution shortages.

It is important to point out that a pre-budget document is not the final product. The consultation process has only just begun and the government will undoubtedly be considering all feedback and suggestions before taking a final decision.

The measures proposed in the pre-budget document need to be analysed further. There are issues, especially the review of the tax bands, that the government needs to explain a bit more – how they will change, who stands to benefit and so on.

What is important is that come budget day, the government will have established clear target dates to implement these measures. And while the benefits will be welcomed by those who will be entitled to any, the government must not lose sight of its ultimate target: a strong economy.

Whoever argues that this is a pre-election budget is way off the mark. The government is not giving much in terms of cash handouts but is establishing the foundations for a stronger and better economy. That is the target on paper. How, when and if this target is reached is another matter.