“So what is in it for me?” and “How will it affect me?” These would be typical questions tomorrow evening. However, as has been custom in previous years, we will not be in for major surprises. Gone are the days when, on the eve of budget day, the Minister of Finance and senior civil servants clustered together in some dingy office, totally cut off from the outside world, to protect ‘state secrets’ about new taxes, possibly an increase in the price of tobacco and alcohol, or a five mills reduction in the cost of tinned tuna or whatever!

With the publication of the pre-budget document in June, and the discussions with stakeholders – including representatives of employers and trade unions, among others, that followed – it is not too difficult to envisage what’s in store. We have to face tough challenges and make hard choices.

In recent years, Malta has slowly but surely put on what Thomas Friedman calls “the golden straightjacket” of economic globalisation and we have now become fully connected to this global economic system. We have so far been able to reap the benefits of such an economic order, but now that the system is suffering, even if recovering, we have to bear the brunt. Managing Malta out of this economic crisis is the non-enviable task of the Minister of Finance

Jobs remain a

foremost priority

The Prime Minister has repeatedly stated that the protection of existing jobs and the creation of new ones remain a foremost priority. During the year, a number of companies ran into difficulties and the government intervened to avoid redundancies. The jobs of at least 2,500 workers were saved, while about 2,000 new jobs were created.

We are not singing praises – not with 7.1 per cent unemployment that may even rise to 7.5 per cent next year. However, it is important to note next year’s projections of unemployment figures in the other 27 EU countries, which may be as high as 10.9 per cent from the figure of 9.4 per cent for 2009: 10.4 per cent in Germany, 10.7 per cent in France and 9.4 per cent in the UK. Increases of 11.5 per cent are also envisaged in the eurozone.

The projections for Malta are not the most encouraging ones, but the fact that we are still attracting the interest of foreign investors is most encouraging. Only real investment creates jobs.

Controlling the Deficit

Of course, government intervention to save jobs costs the public coffers millions of euros and, even if justified, will impinge on the country’s deficit. Admittedly, Malta’s deficit has increased to around four per cent instead of the projected 1.5 per cent that was originally targeted, but apart from the millions spent on saving jobs, unemployment and economic difficulties in other European countries have affected our exports and tourism. Then there are other important factors, such as the early retirement scheme for shipyard workers and the price of oil which, at $80 a barrel, is currently twice the price it was six months ago.

While restricting certain areas of government spending, and making efforts to curb abuse, we cannot compromise the welfare of our society, so controlling the deficit will remain a priority, although maybe to a different degree.

Each and every one of us should have realised by now that no government is able to not increase taxes or utility prices, to reflect their real cost, while at the same time investing heavily in infrastructure and services. Something has to be sacrificed: we simply cannot have our cake and eat it.

The Opposition will once again revert to its age-old battle cry of government’s wasteful spending. To suit its partisan needs, it will also pin excessive spending to corruption. It will do its best to create the illusion that, were it not for these two factors, the government would not need to put the people through any sacrifices. It feels like deja vu! One wonders if this trait of following Sant’s old tactics will be pursued if and when Labour is back in government.

A budget addressing

the needs of the moment

Tomorrow evening, Tonio Fenech will present his budget based on an understanding of the current situation and a clear vision for the future. He will be realistic in his measures and optimistic about the outcome.

It is normal and understandable that this budget, like every one before it, will generate its fair share of controversy. Nonetheless, with ‘a new political season’ in the air, one would expect a mature and genuine discussion – a genuine debate which, unlike all the ones before it, will not be characterised by philosophies of doom and gloom.

It is imperative for everyone to pull together.