It is by now an indisputable fact that the Government’s recently announced budget was welcomed by all in our society. And with good reason. Many were anticipating that at the very least, given the circumstances, the narrative of the budget would change from that which we had grown accustomed to.

People may have anticipated that the wage supplement was going to be extended. Given its previous success and its past propensity for keeping businesses afloat and safeguarding jobs, not to mention the quality time it provided for thousands of families during such a turbulent time, the voucher scheme has been lauded by many as a lifesaver. Consequently, it was only natural that many were hoping for another round of vouchers. Most were positive that the Government would continue with its commitment to rebuild Malta’s road infrastructure.

However, no one expected that tax refunds would increase by half. No one was anticipating such an increase in children’s allowances. No one was thinking that the in-work benefit was going to be so generously increased, or that there was going to be a hefty increase in supplementary allowances.

Pensioners may have expected to receive the cost-of-living-allowance. Few would have believed they would end up with a three-fold increase in their pension.

A previously unheard of €100 million boost to disposable income during a pandemic is not the standard fiscal response. That Government continues to support nearly half of private sector wages through the COVID-19 Wage Supplement is not an everyday occurrence; an event that historically is unprecedented even for much wealthier countries.

The much-lauded Danish approach which everyone wanted us to emulate was phased out in August. The Danish finance minister was quoted as saying, “we put a responsible end date to the temporary aid packages”. The Dutch and English schemes that we had been told were so much more generous than those of Malta are also heading towards the exit door. These schemes, for which many had high praise indeed, are to fall by a quarter of the original, projected amount in coming months. In the United States the weekly supplement to unemployment benefits was allowed to expire.     

We have been unambiguous and transparent from the start. This economic challenge is not a sprint. This economic challenge is a marathon. Against this unprecedented backdrop we designed fiscal programmes to withstand the test of time. We knew that we could not afford to distribute indiscriminately at the start, at the very real risk of then having to cut back.

We were also acutely aware that we needed to reserve enough financial resources to be able to prepare our economy for the recovery phase. If nothing else, the pandemic has starkly flagged the importance and to need to make our economy more future-proof.

The pandemic has accelerated the very urgent necessity of a more digitalised economy. We need to refocus economic activity towards sectors that are less affected by the pandemic.

After the Budget speech, the Prime Minister was quite clear. We need to bolster sectors such as manufacturing, which have shown undoubtedly their resilience during this challenging time, rapidly stepping up to the plate and successfully adapting to the then current demand.

It is for this reason that this Budget delves into more detail within the largest industrial infrastructure plans ever announced by a Maltese Government. A package of €450 million in projects which will lay the future foundations of our new economy and bolster our existing one.

Life Sciences, business incubation, a new centre for SMEs, a logistics hub, more facilities for airplane repair. The list goes on and on.

Industrial development and the digital transformation of our economy are however just two elements of this Government’s vision. We are also committed to be part of the green economy revolution that will help us win the battle to stop climate change.

Over the next few years, we have to change completely the way our transport system works and seek alternative, cleaner ways of travelling. We have to consign to the past the concept of waste. Everything needs to be used and re-used. Our energy system needs to continue transforming itself.

This wholesale transformation of our economy will not come cheap. But we cannot wait further. There is no more time to waste. This budget is a great first step towards our future.   As a Government, as we did in other times we will stand with our families, hardworking workers and businesses to pursue with our one ultimate goal, that of protecting businesses and safeguarding jobs.

Budget ’21 will serve as a testimonial of Malta’s economic innovative agility and flexibility to adapt to extraordinary circumstances and take advantage of all presented opportunities. But more significantly, Budget ’21 will continue to instil the all-important trust and confidence in our people, our citizens, businesses and families who ultimately are assured, that even against all odds, even in times of great upheaval, the Government will unfailingly be by their side.

 

Silvio Schembri is Minister for the Economy, Investment and Small Businesses