Reactions have started to pour in as the government presented its budget for 2023.
Malta Employers Association - A budget that is focused on short-term stability
On a macro scale, the main feature of the budget is government’s decision to shoulder increase in fuel, energy and cereal prices on businesses and consumers to maintain economic stability and price competitiveness. This is fundamental in a global scenario where many countries are experiencing rates of inflation which have been unheard of for more than 40 years.
The budget has adopted targeted approach, ensuring discipline in government expenditure whilst taking active measures to support family income without undue burdens on businesses. This appears to have taken precedence over capital expenditure.
Government is fine tuning numerous social benefits to spread a feelgood feeling among a large cross section of the population. It has announced numerous business incentives for better regulation and technical support to adopt ESG criteria in business, and also digitalisation and internationalisation.
In the current situation, government does not have much room for fiscal manoeuvrability, and for the fiscal targets to be attained, it becomes even more imperative that government exercises discipline in its spending, and to curtail unnecessary expenditure such as unproductive employment in the public sector and extravagant activities of dubious national benefit.
The MEA agrees with the Minister’s announced objective to have a viable national airline. The Association added that for such an objective to be realised, the airline must be run on a commercial basis, free from politically motivated interference.
All in all, while the budget speech addressed the immediate issues, which might be understandable in an uncertain global situation, the MEA notes that this has to has to accompanied with a longer term economic direction. This includes a clear human resources strategy which should follow the exercise of the census of skills, together with a plan for economic transformation to maximise the country’s economic potential whilst safeguarding the people’s quality of life.
MHRA - 'Strong headwinds, importance of firm hand on the tiller'
The Malta Hotels and Restaurants Association (MHRA) refers to the Budget 2023 communicated by the Minister of Finance Clyde Caruana as a war chest addressing current unprecedented global economic challenges. MHRA President Tony Zahra states, “the Government’s 600 million investment in energy represents approximately 10% of Malta’s budget and this must be the most important budgetary measure towards ensuring the continued sustainability of the tourism industry.”
MHRA notes that countries which have not been as bold as Malta in subsidizing energy costs are finding that a lot of small and medium sized enterprises are struggling to stay afloat. MHRA believes that this budgetary measure was necessary to ensure the continued good health of the tourism and hospitality sector.
Zahra also remarks that air connectivity remains the key to a successful economy especially the tourism sector where 99% of tourists arrive by air. In this respect Air Malta remains the most important channel for the industry and MHRA reiterates that the national airline must continue flying without any interruptions what ‘so ever.
With reference to the product, MHRA notes that once again reference is being made to the restructuring of the Tourism Zones Foundation for more effective embellishment and for the regeneration of tourism designated areas across Malta and Gozo. However urgent attention needs to be given to ensure a better upkeep and cleanliness level of these zones.
MHRA welcomes the investment towards the infrastructure, particularly road network, electricity distribution and water production, but notes that equally important is investment in the drainage system.
MHRA is pleased to note that works on the ITS Campus is to commence next year, as labour supply remains a critical success factor for the industry.
MHRA also commends wide ranging social benefits aimed announced and tax incentives related to emoluments of employees working in the tourism sector.
‘A fair and just budget’ - GWU
The General Workers Union’s reaction to the Budget 2023 is one of praise as it says it builds on the social improvements earned in previous budgets.
The GWU said it is also satisfied at the social aspect of the budget stating that “while other countries are still battling the economic difficulties they find themselves with, Malta is ensuring economic growth while easing the minds of everyone.”
The most important measure found in the budget, according to GWU is that of the €600 million fund to absorb the expenses of the raise in electricity and cereal prices. “Without introducing new taxes the government has kept prices low while ensuring a sustainable economy.”
The GWU also mentioned the increase in pensions, the added COLA mechanism, increase in children allowances, increase in stipend, increase in carers’ granted and tax refunds.
Praise was also given at the expected economic growth of the economy for 2023 as well as the decrease of deficit from 8% to 5.8%.
“The government is in a position to safeguard stability within Maltese families because of its hard work throughout the years. This Budget will ensure economic recovery in a time of difficulties.”
MUT satisfied with teachers' sectoral agreement inclusion in budget
The Malta Union of Teachers in a statement said that it is satisfied that the government has made reference to the new sectoral agreement for educators.
The new sectoral agreement that will start to be negotiated with the union as from next January.
The MUT said that with this electoral promise it has now become part of the Government's programme to substantial improve in salaries and working conditions for educators.
“The MUT looks forward for these negotiations can be started.”
With reference to laptops for each student in secondary school, this measure requires discussion, noted the union, both from a logistical point of view and also regarding the pedagogical use of these resources.
The MUT is also urging the government to finalise the distribution process of laptops to educators in State schools, as it “has been going on for a number of years now."
The union also welcomes the increase that will be given to government workers who fall under a particular agreement, as they will also be benefitting from financial increases, as the COLA has now reached a new height.
The MUT will be analysing in detail the financial estimates that affect the education sector and the speeches of the Ministry of Education for more information.
A budget of continuation - Chamber of SMEs
The Malta Chamber of SMEs welcomed the continued confirmation that the Government will be extending the safety net of protecting Malta from the international hikes of energy prices. This is by far the biggest threat Malta is facing at the moment.
Another positive element found in this Budget is the extension and widening of the Rent Subsidy Scheme, as proposed by the Malta Chamber of SMEs, that will help Malta mitigate the impact of freight costs. Positively noted is the work being done to tackle issues with banking services and the increased importance being given to aesthetics in the development of buildings.
Apart from this the budget is a continuation of the 2022 budget, where it concerns SMEs.
Disappointingly, the Budget fails to effectively tackle other major challenges which are choking businesses. Very serious issues have merely been given a mentioned in this Budget speech, which falls too short from the action that Malta should be taking at the moment, as a stage of implementation.
The serious employment crisis, suffocating bureaucracy and impossible traffic, merited more than simply being mentioned in this budget. These issues are seriously affecting productivity and we cannot afford to start thinking of policies now, with no solution, nowhere on the horizon.
A budget that preserves our current economic model – The Malta Chamber of Commerce
It is evident that Government is using all the financial resources it has available to maintain stable energy prices and to safeguard the spending power of lower income groups against the backdrop of persistent inflation, the Malta Chamber of Commerce said.
This is essentially a policy of preservation of our economy – with all its strengths and weaknesses. We would have liked to see more ambition with respect to sustainability beyond the continuation of existing schemes for the purchase of electric vehicles. We would also have liked to see more tangible support with respect to innovation and new economic niches that can guarantee sustainable economic growth.
It is positive to note that Government acknowledges that in spite of all the investment in roads and free public transport, traffic congestion has not improved and is therefore seeking to engage with stakeholders to limit circulation of certain service vehicles before 9am. Similarly, it is encouraging to see The Malta Chamber’s proposal for the establishment of a Board for the assessment of quality and aesthetics features of new developments taken on board. These two relatively minor proposals are examples that can improve the quality of life of people. The bulk of proposals are actually directed at maintaining spending power rather than improving quality of life. While subsidising energy and maintaining spending power is good for business, the country needs a longer-term strategy to be future-ready.
The financial projections presented rely on Government’s ability to raise funds through the issue of Government stocks and presume a modest negative impact on our exports against the prospect of a looming recession in Europe. The extent to which a recession in Europe will impact our manufactured exports as well as tourism will be a determining factor for the performance of our economy in 2023.
Arnold Cassola - independent candidate
The extra Christmas cheque for the around 80,000 vulnerable people in the country is a welcome decision and to be commended. It should be further expanded to cover other periods of the year for those who are on the verge of poverty.
The cost of living adjustment (COLA), which will rise by €9.90 for normal workers and by a €12.50 increase for pensioners, will only be covering what we have already spent during the past year. We will have to wait another 12 months before we are compensated for our extra expenses as from tomorrow.
The increase in children's allowance is also to be commended, as is the gradual decrease in children fostering allowance which, till now, was being ended abruptly. Also positive is the elimination of any means testing for people with disability, when it comes to social housing.
The increase in tax rebates for parents who send their children to sports, cultural or artistic activities is to be praised.
It is again disappointing that the minimum wage remains at its present indecent levels. This will only encourage the importation of further cheap/slave labour from abroad, rather than giving decent wages which every worker deserves. Moreover, this severely restricts the value in the increase in benefits for those taking care of people with disability, which are pegged to the minimum wage.
As regards social housing, we have not heard anything about the various delays that have been plaguing the completion of planned units, such as those in Msida and Cospicua. These delays can no longer be tolerated.
As regards the subsidies on energy, subsidies across the board independent of necessity are simply anti-social. There should be reasonable thresholds for every household that should be subsidised, but wastage should then be heavily taxed.
5 million euro extra investment in research is simply ridiculous. The investment should be increased to 3% of the GDP, as is normal in normal countries.
The possibility for people having built on public land to legalize these properties begs the question: is this just an excuse for the government to reward those who have stolen public land from us by giving them legal ownership over this public land?
Minister Clyde Caruana seems to have had a bout of amnesia. This is what Clyde Caruana said in the 2021 budget: "Mr Speaker, in line with our commitment towards the execution of the Mental Health Strategy 2020-2030, we will introduce new psychiatric drugs on the Government Formulary, complementing the range of mental health services offered in the community, and invest in the planned new hospital for acute psychiatric care close to Mater Dei Hospital".
We have not seen one brick laid in this new hospital in 2022. Today, Clyde Caruana says that in future years we will build this hospital.
What a nice airy-fairy promise! Minister Caruana, please stop taking mental health patients and their relatives for a ride.
Budget that fails to make the best use of the limited resources of our country - ADPD
The additional COLA benefit announced in the Budget is a misguided attempt to create an alternative mechanism to one that already exists and that could be updated to reflect the needs of all those who have been feeling the pinch of the cost of living increase, including those who depend on social services. This was stated by ADPD – The Green Party Chairperson Carmel Cacopardo in the first reactions to Budget 2023.
The need for the newly-created COLA additional mechanism confirms what we have been stating all along – that the current mechanism badly needs to be updated to reflect better today’s needs. For the first time the Minister of Finance is confirming that more than 80,000 people are living in poverty. While the policy of handouts Father Christmas-style has been reinforced, these individuals are not being assisted to improve their situation so that they no longer need to depend on social benefits.
Although the current geopolitical realities are undisputable, one would have expected that the Budget would have included more measures to bring about permanent changes to improve the quality of life for all.
It has long been felt that the basket of products and services on which the minimum wage and COLA is worked out needed to be revised to reflect today’s needs. Caritas’ studies have shown that the minimum wage is at least 40% less than what it needs to be. Therefore this means that low income earners cannot ensure a decent living for their families. Only a regularly revised basket, will lead to a decent minimum wage and improved pensions and social services that ensure a decent living income.
Government hard headedness in its refusal to revise the current basket on which the minimum wage is calculated is keeping people dependent on low wages and on government handouts.
It must be highlighted that COLA compensates for the impact the past year’s inflation on wages and pensions. With a substantial rate of inflation a once-a-year COLA increase is not sufficient to minimise the impact in a timely manner and the increase should be split in two – in July and January.
Basic, essential consumption of electricity should remain subsidised. Otherwise the subsidies on the consumption over and above essential use, and on fuels should be studied better. It is pertinent to point out that more expensive fuels are a price signal which can push towards less cars on our roads, with people using cars when absolutely necessary. This price signal should be coupled with more frequent public transport services, and serious investment in safe roads for clean modes of transport, resulting in a better air quality for us all.
Less subsidies on fuels can also mean more quality investment in sectors which really and truly lead to a better quality of life for future generations – more investment in quality education, and the transition to renewable energy – sectors for which only token initiatives were mentioned in the Budget speech.
The international crisis is an opportunity to tackle overdependence on cars. Now is the time to invest in roads and routes for the safe commuting of users of clean means of transport, and for priority lanes for buses. Now is the time for investment in a Bus Rapid Transit system. We should not let this crisis turn into a lost opportunity, and miss the boat once again for an improved environment which translates into a healthier people.
The judicious use of the country’s limited resources is essential for a better quality of life. ADPD – The Green Party reiterates that this Budget could have focused more on the necessary measures – social and environmental – to improve, permanently, everyone’s quality of life.
A very disappointing budget for the Health Sector - MUMN
The 2023 Budget fails to address the major crisis, which the Health Sector is currently facing.
Patients in MDH will still be placed in corridors, in the medical library and in the staff canteen since this budget failed from providing the necessary investment for such inhumane areas to be closed down.
MUMN would have expected that the Government would embark on the building new wards in MDH so that such areas will be closed down permanently. Our patients deserve proper wards when being admitted to MDH and not be placed in corridors or make shift areas with mobile toilets. Currently there are four corridors used as “wards” in MDH besides the staff canteen and the medical library. That is six areas in all, areas which are “wards” having no toilets, no showers and very difficult to deliver the proper care and maintain the dignity of the patient.
The new wards would have been the most important investment for the Health Sector and which should have been given a priority since patients are suffering and paying a high price but it is clear that this budget ignored completely the needs of the patients and the ever increasingpopulation. In this budget, the so called deficit has become more important than the lives of the Maltese people which is a great shame.
Another important issue which the budget failed to address was that Mt. Carmel Hospital, which does not only requires a massive refurbishment but such a hospital has become too small to cater for the needs of the population.
Mental Health is an important factor in any society which has been neglected for many years and seeing this year’s budget, MUMN is disappointed to note that no finances are being allocated as to actually permit Mt. Carmel Hospital to address the mental wellbeing of our society.
The budget failed also to address the shortage of nurses.
The budget then “recycled investments” that have been mentioned in previous budgets but in fact have never even started let along completed.
MUMN is referring to the supposedly:
1) New mental facilities which are supposedly to be built next to MDH,
2) Refurbishment of Mt. Carmel Hospital,
3) The new out-patients block in MDH and a new care park in MDH.
Such investments are repeated in every year, in various budget including this budget but have never taken of.
Instead, the budget focused on the new Health Centre in Poala and Gozo, which investments are far from new investments since such investments have been moving at a very slow pace for the last six years.
MUMN has no other option to label such a budget as disappointing since it fail drastically to address the needs of the patients and shows that the Government has no intention to give the Health sector the priority it deserves.
Gozo Tourism Association
This budget for 2023 was prepared during a particular time when worldwide economies are under the strains of the Ukraine war and during a period when the tourism sector is still in recovery mode from the effects of the Covid-19 pandemic.
Thus, the Gozo Tourism Association understands that this a budget that in the short term ensures the sustainability of the business activity, as well as the wellbeing of the low-income earners, pensioners and workers battling to keep up with the rising cost of living. The Gozo Tourism Association notes that the measures listed in this budget aims to cushion the economic challenges while safeguarding and sustaining economic growth.
In this regard the Budget continues to subsidise the increase in costs of the utility bills and cereals. These measures will assist not only families but will keep businesses afloat that would be otherwise crippled by rising costs. Amongst measures relating to tourism, this Budget includes a measure proposed by the Gozo Tourism Association. This measure in the form of a scheme is intended to attract long-stay tourists to the Island, particularly between the November and March period, to continue mitigating seasonality on Gozo.
Other measures affecting the Gozitan touristic sector refers to the inter-island connectivity, including the development of the rural airfield in Xewkija and the public service obligation contract for the operation of the fast ferry service between Mgarr and Valletta.
Whilst acknowledging the setting up of the Agency for Tourism Zones Development and Regeneration, the Gozo Tourism Association notes that there is no mention of the ring fencing of the eco-contribution funds collected from Gozitan accommodation for tourism projects on Gozo. Finally, the Gozo Tourism Association believes that all in all the Budget for 2023 is aimed towards economic stability on the Maltese Islands during these turbulent times for the economy.
UĦM
The UĦM – Voice of the Workers welcomed proposals on COLA for civil servants and public entity workers, but warned that with slower growth, the Budget lacked long-term vision. “At present the country needs investment in human resources. The Budget does not mention how to increase productivity to move from a quantity-economy to one based on quality and value-added.”
UĦM said there were no concrete proposals on the environment, and how to address traffic problems, increase energy efficiency, and increase public and recreational spaces for families.
UĦM said many of its proposals were ignored, chiefly the non-payment of stamp duty, double payment on Sundays for all and work-family balance measures for parents to have the right to reduced hours.