I really don’t blame them as this is the fourth budget in a row that the government has promised them the same Houdini schemes and incentives which never materialise. Now you see them and now you don’t. The GRTU seems to have now lost all hope that the finance and economy minister will one day put his money where his mouth is – if, by the looks of it, he has any money left at all.

Indeed this is the third budget of this legislature that the minister is milking the Maltese cow again. He is chasing revenues everywhere and where he has increased expenditure he has simply robbed Peter to pay Paul by reducing expenditure in certain ministries and increasing them in the education, health and tourism portfolios. This means that he is also double-crossing some of his cabinet colleagues to appease others.

But the real issue that this budget has not addressed is the internal market. It is a fact that despite the improvement in the global economy as well as in the national economic situation, the internal market is still very much depressed due to spiralling costs and a lack of consumer confidence.

Indeed economic growth was not registered across the board but was limited to the financial and banking sectors that recorded strong growths mainly due to a rise in profits. Although this is a positive development, profits in these sectors are in the main exported abroad as companies operating in these sectors are mainly based overseas and therefore have little if at all effect on the real economy.

Also exports have been improving and contributed to economic growth as the situation in economies abroad has improved and orders are on the rise again – even though levels are still far from satisfactory and there are lingering doubts as to whether Malta has the competitive edge to carry on increasing growth in this vital area of economic activity.

But other sectors are still struggling and they are sectors that are intimately attached to the internal market – indeed the retail, wholesale, construction, real estate and manufacturing sectors showed little growth, while agriculture, fishing, quarrying, transport and communications actually showed decline. No wonder that the economic growth reported is not trickling down to families as I had pointed out in a PL statement a month ago.

With the internal market already depressed it was expected that the budget would include measures that would help stimulate economic activity, certainly not stifle it. But what we got was another postponement of the promised income tax cut, which has so far deprived families of €140 million in their pockets, a rise in excise tax on fuels (consequently on VAT too), and the removal of the energy benefit.

The utilities rates have remained untouched – thank God for that as they are already excessively high – but this would mean that families and businesses will again have no reprieve from the hefty rates in the short to medium term. Moreover the tax increase on cement does not augur well for the construction industry which is doubtlessly in the doldrums. Hundreds of jobs have already been lost in this industry and this new development can threaten other jobs that so far have survived.

This is definitely not good news at all to families notwithstanding the Prime Minister’s assurances that they are all doing rather well. It comes as an offence to their intelligence when the Prime Minister speaks so loosely and so superficially about the current economic state of affairs.

But it is also very bad news for businesses. They are already dealing with government induced costs and reduced consumer confidence affecting their sales and profitability. They certainly cannot afford to face a longer period of stagnation. Small businesses in the services sector will be the first to take the brunt of the new austerity measures, but from what I hear the larger operators are likely to follow suit.

It is to their merit that employment was not drastically affected during the worst of the economic downturn. Realising that their best investment is in the skills of their human resources they weathered the storm resisting the temptation to shed jobs.

It is to be seen whether they can resist for a longer period...

Dr Gulia is the

Opposition’s Main

Spokesman on the Economy and the Self-Employed