The middle-class budget

Michael Briguglio

The Nationalist government’s proposed Budget for 2012 is something of a mix, with a number of positive proposals, yet with its shortcomings, too. Beyond the economic framework, the Budget also has political implications.

The fact that Malta’s deficit is decreasing is welcome. Of course, one augurs that the projections do not lose track for electoral purposes, as was the case prior to previous elections. Deficit reduction is essential for a sustainable economy. Such an economy would also require giving top priority to the need for a shift towards renewable energy and sustainable usage of water, which, I am afraid to say, have not been given priority in the Budget.

As an EU member state, Malta is required to have 10 per cent of energy coming from renewable sources by 2020. Yet, the government persists in introducing sporadic initiatives rather than holistic policies for renewable energy use. The plain truth is that dirty fossil fuels will keep rising in price while increasing pollution in the process. The only guarantee for clean energy and stable prices comes from renewable energy, which creates green jobs in the process.

As regards water, the Budget misses out on the urgent need to stop the illegal extraction of water through unauthorised boreholes. Such extraction is forcing the Water Services Corporation to rely heavily on reverse osmosis and is, in itself, a contribution to the rates that are charged for water.

As regards property, notwithstanding the positive proposal for incentives to rehabilitate dilapidated buildings in urban conservation areas, the government has once again failed to introduce a tax on property speculation despite the increase in vacant property and the lack of affordable housing for low and middle income earners.

But, as has been commented by many, the Budget has various positive proposals, particularly through social welfare and economic incentives.

The government’s attempts to encourage more parents to join the labour market are welcome.

The proposal to extend maternity leave, proposed by the greens and others for years, has finally come to be, after being opposed by the same Nationalist Party. Having said that, we would have preferred an extension of maternity leave to 20 weeks and for two weeks of paternity leave, as proposed by the European Commission. We believe that this should be fully paid.

The opening of more childcare centres is also welcome, yet, one must emphasise that not everyone affords to use them. It would have been more socially just to give higher tax refunds for such facilities rather than for private schools.

The proposal to give tax refunds to parents and the increase in children’s allowance are welcome. Yet, the tax refund scheme is socially regressive as it rewards high income earners more than those with a low taxable income. In itself this symbolises the strategic orientation of the Budget. It is clear that the Budget aims to target middle class categories, ranging from professionals to the self-employed, through various incentives.

From refunds for private schooling to guarantees for small businesses, the Budget makes it clear that middle-class categories are being prioritised by the Nationalist government. Low and low-middle income earners will not be experiencing as much improvements through the Budget.

The government could argue that 30,000 low-income families are being subsidised with regard to utility bills and that there are a myriad of welfare schemes for such groups. True, but the fact remains that middle and high income earners will benefit more from the tax cuts and incentives on offer. For example, the government once again did not have the courage to increase the minimum wage beyond the cost-of-living adjustment, despite the hardships faced by low income earners. If such a measure is coupled with increase in productivity, it would not be inflationary.

Concurrently with the Budget, the PN updated its principles, attempting to discard its confessional image. The PN is now speaking on the need to recognise current realities in family life, including divorce and same-sex couples. Last time around it was the environment, but, three years after the 2008 general election, it is clear that big business, contractors, hunters and the like still have disproportionate influence in environmental politics.

Where does this leave the other political parties?

The Labour Party’s response to the Budget has been uninspiring. Instead of recognising that we are living in a context of global economic and environmental crisis, Labour has chosen to criticise everything.

Even though Joseph Muscat has put forward some commendable proposals, which were originally proposed by the Greens (such as recognition of civil unions, the need for the government to combat precarious employment and an increase in parental leave), many other proposals are vague or populistic and will only help fuel unrealistic expectations.

Examples include Labour’s pledge to lower utility tariffs and the attempt to scaremonger on a €2.36 increase in national insurance contributions, which is essential to finance pension funds in an aging society. The plain truth is that if the pension system is left untouched, public funds will simply not suffice for pensioners.

To the contrary, AD calls a spade a spade and does not shy away from praising and criticising accordingly. We also do not shy away from presenting concrete proposals, even at the risk of not sounding popular.

From a strategic perspective, I believe that an important challenge is to convince voters that, despite the PN’s modernisation process, we are the only party with a clear and unequivocal commitment for progressive civil rights, fiscal responsibility and environmental sustainability and that our contribution as an extra-parliamentary party will only be amplified if we have parliamentary representation.

AD in Parliament will be a value-added for a modern, secular and sustainable Malta. Coupled with our election in next year’s local council elections, this will help do away with the “wasted vote” dilemma.

Michael Briguglio, a sociologist, is chairman and spokesman for economy and finance, Alternattiva Demokratika – the Green party.

The Times of Malta