The Malta Independent 4 December 2020, Friday

The superlative budget that forgot the common good

Peter Agius Wednesday, 21 October 2020, 07:43 Last update: about 2 months ago

PM Abela’s statements right after the budget speech reminded me of my primary school and a particular school mate. He was not best company for the jealous. He had the nicest pocket, the biggest house and the fastest car. Just like Abela, he made it a point of stressing his superlative qualities. At the end of the day, that did not matter much when he had to sit for exams with the rest of the class.

On Monday, Abela threw it in our face at least six times, that this was the best budget ever, that he was handling a crisis with mastery never seen before and that this budget was better than that of former PM Lawrence Gonzi who was dealing with a ‘much smaller crisis’ referring to the 2008 sub-prime financial crises. For a moment, I thought it was Trump on CNN rather than Abela on TVM.

ADVERTISEMENT

But beyond the propaganda so effectively churned on TVM and on Labour’s own propaganda machines online and on air, is this budget so superlative as it is painted?

The answer to that rests in the context. Does it provide answers to the unprecedented threats of Covid-19 and the Moneyval report coming up? We cannot assess this budget before a thorough analysis of the context to which it should provide stimuli and answers. As a first, our people are faced with an exponential infection rate of Covid-19 together with a worrying downturn on critical industries especially on tourism as a main driver of employment and investment in Malta. Secondly, we have an infringement action in front of the highest judicial institution in Europe accusing our country of breaching the trust binding EU countries together, and an impending Moneyval degradation of Malta’s trustworthiness that, unless averted, would put thousands of high end jobs at risk.

That is the context to which I expect answers from Abela and Scicluna. Did they provide answers? Not really. The propaganda and the adjectives of biggest, best and nicest will not address the growing threats to our economy and our population unless addressed with sincere efforts underpinned by a change of direction from the top. That is maybe why indiscretions have it that this was Scicluna’s last speech.

On tourism, we have all witnessed how the summer season had to be interrupted due to the rash and perverse strategy of attracting the partygoers to careless pool parties and festa marches. That Government immaturity costed us months of precautions to contain the virus and threw thousands of investment and potential profits down the drain. Rather than being so pompous about his vouchers and mini-hand-outs, Abela should start with an act of contrition and remember that he was living the good life in Marina di Ragusa when the honourable Julia Farrugia Portelli was cooking the recipe for disaster for our tourism industry and the rest of our population.

Let us leave the recent past aside for a minute and ask ourselves, what is this budget really doing for the recovery of tourism in Malta and Gozo. As we have already witnessed, the vouchers are a simple way how to appease voters with handouts and create a short-term stimulus, but will that stimulus re-ignite our tourism sector in the medium-term? Government’s own statistics show that the vouchers 1st wave account for roughly 70% of the expense at restaurants, meaning that they provided little in terms of ripple effect to a wider spending. A smarter move affording more impact over the medium to longer term was to consider a reduced VAT rate for tourism centric regions in Malta, and especially Gozo, giving the industry a more reliable long-term stimulus to re-ignite the flavour for investment in our tourism facilities and encouraging bold marketing strategies focusing on niche tourism in particular. Other EU countries are doing just that in touristic regions including for the Azores and Madeira. More importantly, such a long-term measure would need to rest on a tourism strategy exploiting the niches lest viable with Covid-19. This approach however requires vision and strategy. Vouchers are much more within Government’s reach.

Secondly, on the reputation front, the budget fails to address the mammoth risks to our economy. Ironically, the services industry is the pillar of our economy least sensitive to Covid-19. The recently published EY attractiveness survey spells it out for Government. It’s performance is abysmal. Malta’s attractiveness for investment is the worst ever recorded in the past 16 years.

Government is indeed putting the services industry, an anchor of stability for our economy, in peril. The news this week of the European Commission proceeding with an infringement action against Malta is a dramatic reminder that eventually chickens will come home to roost. Compare government’s reaction with Cyprus. The Cypriots announced the closure of their IIP programme. Abela on the other hand blamed the Commission’s infringement on our MEPs. Yet again, government by propaganda.

The financial services and related services industries harbour thousands of reputable and hard working professionals in our islands. They ask very little from us really. A serious and fair administration of companies and governance that supports, rather than hinders, their ambassadorial efforts to sell Malta as a jurisdiction to the world. Nationalist Party administrations of the past created this goose laying the golden egg for the benefit of our economy. That golden egg, and the goose itself, risks a blow from the Moneyval report on Malta’s standing. Did this budget address any of that risk? Nothing at all.

The country’s budget is supposed to chart the way to consolidate the economy for the long-term prosperity as a public good. Instead, Abela and Scicluna announce a myriad of mini injections ensuring an instant and short-lived feel-good factor. It is probably designed to be so. After all, their main concern is to row the boat till the next general election. After that, who cares?

 

[email protected]

  • don't miss