A state of the nation speech

In some respects the budget 2015 speech was not a financial estimates address but a state of the nation speech. It outlined the intention of Joseph Muscat’s government to implement its electoral programme. Indeed, yesterday the government launched a document to emphasise that it had implemented 80% of its budgetary proposals from 2014.

The budget is reported to have been the personal work of the Prime Minister and his closest advisers, with little input from his cabinet ministers.  It will not be easy to criticise this budget.

It was a long speech – the longest ever, observers could say, going deeply into unnecessary detail.

There was a marked difference from the uncalled-for tone on single mothers and the actual welcome measures that the government has in mind to ameliorate their status and their income. The tone in fact panders to prejudice, namely when Scicluna stated that being ‘a single mother is not a profession’. But this probably has more to do with the finance minister’s presentation style.

The budget was strong on proposals to encourage the employment and integration of disabled individuals, including by addressing an age-old obligation (1967) for companies to employ 2% of their workforce from this segment of the population.

From the social perspective the budget favours those families who have children, and have a low income (€11,900).

There are also innovative and concrete proposals for vocational training, especially for those under 23.

Tax refunds and direct contributions were frequently mentioned in the budget.

There are a number of vague subjects, such as several decisions to be based on white papers, dealing with the tunnel or bridge to link Malta and Gozo, and so many other discussion papers, varying from the setting up of a carnival village to the opening hours of schools.

There are small increments in the excise for mobile telephony and car insurance, and no measure that targeted directly any particular sector other than those who may have a swimming pool, where the tax is based on the volume of water in the pool. In this case the tax for domestic pools is €4.60, and higher for commercial pools.

One has to see whether the contribution of around €50 million from the IIP in 2015 is decisive for the fiscal success of this budget.

The government has responded to lobbies by offering certain concessions, which include the phasing out of the eco-tax for electronic goods, the reduction of transfer tax in property from 12% to 8%, a public consultation for the airstrip – incredibly described as a rural green airstrip – and various other considerations.

There are interesting proposals to ease traffic congestion, such as encouraging car pooling, the use of private transport for schoolchildren and encouraging the purchase of bicycles.

A surely green measure is the fiscal incentive to return plastic and aluminium containers, a measure that will improve the separation of waste.

The government is also taking head on the private clinics and the one and only private hospital with the intention to set up Medical Plus Malta, which will allow private practitioners to carry out additional ‘weekend’ operations at the state hospital, Mater Dei, with no preference or cost to the patient. 

This will lead to a cut in hospital waiting lists by using the underutilised operating theatres. The intention to use the Gozo hospital to serve as a medical hub for medical tourism underlines the government’s intention to create revenue streams.

The budget is peppered with private partnerships, from a parking lot in Birgu and Bormla to the maintenance of roads.

The days ahead will surely lead to further discussion and scrutiny of the budget and a more profound examination of the accuracy of the estimates and targets being proposed.