The Malta Independent 26 November 2022, Saturday
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Some budgetary considerations

Carmel Cacopardo Sunday, 21 August 2022, 08:33 Last update: about 4 months ago

This is the time when the finance ministry gears up to prepare next year’s budget, which is normally presented sometime in October.

The Hon Minister for Finance has apparently already decided to proceed with the finishing touches to further finance clientelism in Air Malta. This is a long-term project, what they call “works in progress”. It involves sending more millions of euro in taxpayer’s money down the drain to honour political pledges made during the March 2022 general election. This is another corrupt practice, together with the distribution of cheques to every household during the general election campaign. A “fitting” monument to political clientelism.

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The cost-of-living is out of control. Most probably that the COLA, the cost-of-living adjustment to wages, salaries and pensions, announced during the budget speech will be around €10 per week. Minister Clyde Caruana states that it could be substantially more if government did not subsidise fuel and electricity bills.

The blanket subsidises of fuel and electricity bills need to be revisited in order that they are made more effective in supporting the vulnerable. In the present circumstances, it is good policy to subsidise basic use, but it does not make sense for a prolonged blanket policy of subsidies. The current subsidies are not going into the pockets of the vulnerable alone. Those who are not amongst the vulnerable can do without most of the current subsidies. Subsidises need to be focused, such that they are of help to the most vulnerable. The country does not have the resources to go on in this way for too long a time.

Some days ago, the fuel subsidisation policy was amended in order that the fuelling of pleasure seacraft was at last excluded from further benefitting from the use of subsidised fuel. This is, however, not enough. The gradual reduction of petrol and diesel subsidies would not only ease traffic from our roads and improve the quality of our air: they would also make substantial finance available for other areas.

The Chamber of Commerce has also rightfully pointed out that subsidising water and electricity bills across the board needs to be revisited. Even in this area, it is basic use which should be subsidised. Subsidising across the board signifies that excessive use is subsidised too. This is a misuse of public funds which we can easily do without.

Josef Bugeja (GWU) is spot on in insisting that the cost-of-living adjustment (COLA) should be paid out in full to all employees (and pensioners). It has to be underlined that COLA is not an increase in wages and salaries. It merely makes good for the impact of inflation on wages, salaries and pensions during the past year.

There is, however, the need for a long overdue overhaul of the income policy to make it more relevant to this day and age.

It is about time that the basket of goods and services used to compute the minimum wage and the COLA be revised, in order to ensure that it reflects today’s needs. The Caritas studies throughout the years have made this basic contribution to the debate: revising the basket of goods and services would identify a 40 per cent shortfall in the current minimum wage. The sooner this is addressed the better. On the basis of the Caritas studies, currently a decent minimum wage should be around €14,000 per annum.

The substantial inflation throughout this year signifies that the vulnerable amongst us are passing through a very difficult patch. In such circumstances, it would be reasonable to consider having COLA paid twice a year: 1st July and 1st January. This would not increase the amount due, but by splitting it in two, and bringing forward part of its payment by six months, it would reduce the burden shouldered by the most vulnerable amongst us.

We are still waiting for the Hon Minister of Finance to honour his commitment made this time last year, to address the cost-of-living impacts on the vulnerable through some special mechanism. We are still waiting, unfortunately, as the Hon Minister is more preoccupied in servicing clientelism at Air Malta.

 

Carmel Cacopardo is Chairperson of AD PD

 

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