The main issue in preparing this year’s budget speech must have been how to tackle the country’s economy in the wider context of the credit squeeze and consequent financial turmoil in the world.

As entire countries tottered, what was jettisoned aboard were what were previously thought to be unassailable dogmas which had ruled the roost at least since Reagan’s presidency – that governments must get out of the economy and denationalise practically everything, and balance the budget.

Had the world chosen to tackle the 2008 crisis with this rigid approach, it would most probably have caused far greater pain than the world is feeling now and in the months to come as country after another succumbs to recession. That, historians say today, was the mistake committed by America (and the rest of the world) in the 1930s after the Wall Street Crash.

On a local level, Malta suffered more than its neighbours in the 1970s and 1980s recessions precisely because its government then adopted this rigid and austere approach.

Today’s received wisdom is that the right way for governments is to invest and invest thus undercutting the impact of recession. And this is what the government is proposing in next year’s budget, even if it leads to the postponement (by a year, the government says) of the balanced budget.

In all, the government will be ploughing in e890 million, a quite considerable sum given Malta’s small economy.

Some would have preferred the government to do, as it promised in the election campaign, a series of tax cuts but the government argues that this could have led to people putting the money in banks (not a bad thing at all, but most probably people would have bought imported items) whereas direct investment provides jobs and stimulates the economy.

This was then a budget of courage, of trust and belief in the Maltese worker who, through his hard work, can and will overcome the negative impact of the international recession.

Over the past weeks, the constituted bodies have been debating the government’s basic decision to pass on to consumers the real impact of oil prices. The figures published by the government yesterday show that the 2008 structural deficit, targeted at e68 million shot up to an astounding e200 million, possibly a European record. But the government is quite right when it points out that e56 million are being spent on a one-off, the shipyards, and a further e55 million were spent by the government in subsidies to Enemalta due to higher oil prices over the past year. Clearly, this is a situation which cannot be allowed to continue. Of course, the higher electricity rates will hurt but we, as a country through our taxes, were paying for whatever we were not paying as consumers. Conversely, higher prices should lead to less consumption and the continued conversion of the Maltese to all kinds of energy saving.

As for industry, apart from the capping mechanism, the government is proposing a series of aids to industries rather than continuing with the previous system of just subsidising industry’s consumption of energy, at a cost to the nation.

We cannot find fault with the government’s proposals regarding car registration, although people had far bigger expectations. The question will remain whether the car prices will still be far higher in Malta than in other European countries.

The government’s proposals regarding changes in Income Tax are, quite frankly, a sop. Once the government was not in a position to fully implement what it promised in the election campaign, it made no sense to give this very small and pale imitation.

Equally very difficult to accept is the reduction in excise duties on spirits at a time when alcoholism and binge drinking are undermining the young generation. And the very funny proposal that sees licences for sweet water swimming pools go up from e2.43 to e4 while those for sea water swimming pools go up from e58.23 to e100!

A year after the opening of Mater Dei Hospital, the country waited, in vain, for more details how an expensive-to-run hospital is going to be fully manned. Nor are there any details on the reform in primary health care. And not a whisper on the pharmacist-of-your-choice scheme.

One welcome item in the speech stated that those who have been registering for work for over five years will now have to do 20 hours of compulsory community work. This is a welcome innovation but the country expects the government to act more to counteract widespread social fraud.

Will this be enough to ward off the coming tsunami of worldwide recession? At the moment of decision the government chose to invest rather than retrench, even though frankly the money to be invested comes mainly from EU funds. What is now to be seen is whether the government is actually able to drive forward this promised investment in the quickest time possible, considering that even in the recent past Malta was not exactly a world champion when it came to spending the EU funds well and profitably.