A ‘feel-good’ budget, but at what cost?

Over the decades the budget has evolved into something more pervasive than its original purpose; governments now also avail of the opportunity to illustrate broader policy directions... things which cannot so easily be summarised in monetary terms

Traditionally, the annual Budget has always been a costing exercise by definition. It deals with the specifics of government revenue and spending, all of which can be accounted for in the common currency of money.

Over the decades, however, the budget has evolved into something more pervasive than its original purpose. Governments now also avail of the opportunity to illustrate broader policy directions... things which cannot so easily be summarised in monetary terms.

Budgets have also increasingly come to define public expectation and, to a certain extent, social behaviour. For years, Malta has grown accustomed to budgets that condition social responses, in ways that reflect a sort of benign yet punitive control on certain indulgences. We came to expect annual increments in tobacco and alcohol prices; environmental penalties to reflect the effects of our consumption of certain goods; excise hikes to finance government spending, etc.

Implicit in all this was an annually renewed social contract, whereby the public accepted imposed conditions, while simultaneously setting down its own limits of how far governments could expect to impose. As a general rule, governments which disregarded such limits have always paid a price at the polls.

From this perspective, Budget 2018 imparted a certain ‘end of history’ feel. Labour has taken the consolidated fund to a near-zero deficit: whether it’s a €21 million deficit, or €8 million in surplus, matters little in terms of a five billion-euro GDP. The government can now rely on millions from its sale of passports to the global rich, which will fill up its kitty comfortably enough.

At a glance all this is good news; but there is a flipside. Since 2013, there has been a strong narrative of ‘growth’ in Labour’s playbook. A beneficial part of this narrative was a focus on lifting up underperforming factors: for example, bringing more women into the workplace; putting more unemployed into community work schemes; using in-work benefits to lure the inactive into work; reducing poverty through grants and incentives, etc.

The flipside has been a rising growth of ostentatious wealth. Malta’s construction boom is perhaps the most garish embodiment of this strategy, fuelled in part by the high demand for office space from businesses relocating to Malta.

Of course, it is hard to argue against the seduction of foreign investment when it is such a clear driver of jobs and services, and is aiding the proliferation of so much business and real estate cash in Malta.

But scratch beneath the veneer of this feel-good society, and who can ignore the rising social inequalities that rent prices are forcing on families? Who can overlook the environmental impoverishment and the hollowing out of urban cores that defined the graciousness of Malta’s villages? Who can turn a blind eye to the unsolved problem of good governance: a problem that the 2017 election seemed to have shut inside a box, until some other scandal breaks out?

It is here that a crisis is arguably building up. From the perspective of those who are not enamoured by wealth, but only longing for a just society... what are they to do, as they witness Malta in a love affair with itself as it grows richer and bigger? There is a temptation to give up the fight for that which Malta now clearly needs: the need to bring forward a bias in favour of the environment, to put up a challenge to financially dominant industries which often call the shots with regulators on planning policies, on wage controls, or on market liberalisation.

It is here that one would expect the Opposition party to take up the cudgels on their behalf. Yet we find an Opposition that is unprepared to offer Malta an alternative narrative. For Muscat’s success is also a continuation of the economic legacy first advanced under Eddie Fenech Adami; and the PN is not interested in challenging the legitimacy of a model it once championed.

Worse, under new leader Adrian Delia, it seems to be resting on a socially-conservative ‘large minority’ to advance its electoral interests: even, as with the recent IVF misadventure, at the expense of smaller minorities.

Nor can the aspirations of people for financial capital be ignored. Years of deindustrialisation and union-bashing by the PN – having itself worshipped at the altar of IT and financial services industries – only hardened a changed working class that today seeks out Labour’s tax cuts and top-ups. Its inertia cost it its relationship with the business class; its flip-flopping on the environment rendered it forever suspect by the NGO movement.

At least Labour can be hated by this part of civil society, which knows where it stands with the government. For the PN now to revert to challenging lifestyles to assuage its social conservative core, appears politically toxic.

What’s left? The Maltese must join together to form an alternative narrative to this unquestioned playbook: it can be a union of conservatives and radicals if its message and demands go right to the heart of the people’s concerns and aspirations. But by embracing the status quo, and hoping that Labour will just fall off the crest of the wave, real change cannot be brought about.