25 November 2004

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The good news and the bad news

Year after year, the budget speech is earnestly awaited. Analysing the budget speech year after year reveals a mixture of rhetoric and hard nosed proposals. Year after year targets are set and many of them remain a far cry from being met.
The Prime Minister’s speech was a sombre affair. There were very few signs for growth, and there were very few refreshing statistics.
The aims outlined by the PM were neither startling nor surprising.
With deficit at Lm98 million, we are still miles away from heaving a sigh of relief.
There is the underlining message that government will drive against tax evasion. Some new measures such as the ‘VAT registration on accommodation under construction’ appear innovative but in reality will only lead to those building and speculating registering themselves as the VAT recipients. We sincerely hope that this will not be the case.
The budget does not give a complete impression of continuity, but in many ways it is as Alfred Sant said - a continuation of the of the Fenech Adami and Dalli government.
From a holistic point of view, the adjustments for holidays falling on weekends makes sense to industry in general. The realigning of the electricity and water tariffs too. But will all this help consumer confidence?
This is a government facing an uphill battle when it comes to applause.
It knows that it must improve its revenue flows and, on the other hand, it is conscious that it cannot continue to eat into the middle class.
There is much emphasis on environment in this budget, surely a direct influence of the Minister of Environment.
The intentions here appear more concrete and positive, but one has to see if the proposals outlined in the budget will be followed constructively.
It is good to see that education is being retained as a priority and that research and academia is being advantaged and incentivised.
There is a lot in the way of good intentions in the budget, but little in the way of structured designs to promote investment.
A new privatisation drive appears to be outlined, notably at Malta Dairy Products and MIA. There are others in the pipeline. In the appendixes one can see that the idea of privatising Maltacom and Bank of Valletta is still on the books and is being actively considered.
The weeks ahead until Christmas will lead to a bitter autopsy on all the budget proposals. It will be the usual tit for tat.
This time however, many people are no longer willing to excuse a government that has overstayed its time and continues to give the impression that the present state of affairs has nothing to do with its policies and strategies.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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