The budget for 2013, presented rather lately than usual, represents one of the final major acts that this administration will undertake.
Irrespective of the fact that the budget was shot down, this year’s budget took place in rather surreal atmosphere. Nevertheless, its purpose should still have been that of addressing the bottle-necks in our economy and to give a general direction through the use of fiscal policy. To a certain extent, this could possibly have been achieved from a general point of view, but it certainly felt much to be desired from the perspective of Gozo.
The issues concerning Gozo are all very well known. We are talking about a lack of investment, sluggish performance in tourist spending, scarce employment opportunities, and low public sector productivity. The least one would have expected is some form of mitigation if not concrete measures on how to start tackling these chronic short-comings. Unfortunately, the budget offered very little in this regard.
Some positive measures were nevertheless present and this should be praised. The setting up a local employment development unit made up of Malta Enterprise, the Employment and Training Corporation, and the Ministry for Gozo makes a lot of sense. So is the new scheme promoting domestic tourism. However, setting things up and announcing new schemes is barely enough. What really matters is the drive and resources put into these new structures and scheme and the above all the political will to push them forward.
Apart from these two measures there was nothing new worth mentioning in connection with Gozo. The rest consisted of recycled material about slipways and eco-Gozo while there was a brief reference to bring back-office work in Gozo without presenting how this is to be achieved.
A cursory glance at the financial estimates offers some interesting insights. The capital expenditure is projected to increase to €17.3 million up from €15.3 million for the current year. This is mainly underpinned by an increase in capital expenditure related to EU structural funds which are projected to increase by over €4 million. However, this item of expenditure tends to be optimistic, historically speaking, with the actual expenditure consistently turning out to be less than projected. In fact for 2011, the most recent year with which a comparison can be made, capital expenditure turned out to be 21% lower than that projected in the estimates.
At a more disaggregated level, capital investment for industry incentives will be cut by 14% while investment in education and road construction and maintenance will decrease by 21% and 10% respectively. The largest cut in capital investment is reserved for health; with a drop of almost €1 million and this at the same time that the budget speech is telling us that “we will continue to invest in the Gozo General Hospital with the aim of introducing chemotherapy…” No wonder, then, that the health system in Gozo is in much bad state.
With regards recurrent expenditure, most of the expenditure will go towards personal emoluments, that is wages and salaries for government employees. Indeed, for every euro cent by the Ministry for Gozo, over eighty cents will go towards this item. Both expenditure under the operation and maintenance and that under the programmes and initiative will remain broadly unchanged from last year.
Looking further into the expenditure items, it can be noted that expenditure in overtime will again be reduced, this time by more than 12%. This follows a similar cut for 2012. This reduction in overtime is clearly a government policy but you can bet your last penny that you will not find it in any pre-budget document or budget speech.
It is also of interest that the expenditure in utilities, in other words water and electricity expenditure, will be reduced again for 2013. While in 2011, the total expenditure on this item amounted to €2.18 million, the amount budget for 2013 is €1.7 million, a reduction of over 20%. This is a bit confusing considering that the rates have gone sharply during the last years. Looking a bit more carefully at the figures provided, it emerges that the cut in utilities expenditure will mostly be achieve from cuts in the expenditure falling under the Permanent Secretary Office. This is rather vague, but probably will serve its purpose since it is very difficult to justify cutting in electricity bill in the health or education. The way out of this mess will be a familiar one, that of leaving the bill unpaid for the whole financial year!
Anton Refalo is PL spokesman for Gozo