Budget 2020: Developers satisfied, Greens call out glaring contradictions

Budget 2020 redactions from MDA, employers, teachers, Forum, Alternattiva Demokratika, and the GWU

The Budget was met with mixed reactions from unions and employers
The Budget was met with mixed reactions from unions and employers

MDA – Budget recommendations adopted

The Malta Developers Association (MDA) said it was highly satisfied that its proposals for the Budget have been adopted by the government.

“MDA is pleased to note that the time limits of tax incentive schemes introduced in previous budgets were extended. These include the first-time and second-time buyer schemes; the incentives for those who buy property in Gozo and in village cores; and the incentives for parents who donate their business to their children.

“Other measures introduced in this budget in response to requests submitted by MDA include tax incentives for all contractors who invest in new machinery and the increase from €150,000 to €175,000 in the value of property bought by first-time buyers that is exempt from stamp duty. This will continue to help all those who decide to invest in their first home.

“MDA is also very satisfied to note the reduction on duty from 35% to 15% on contracts when property rights are ceded (cessjoni).

“MDA is convinced that the implementation by government of these measures – requested by it – will be of benefit to all its members. Moreover, the reduction of income tax on overtime is also considered as a very good incentive for the property and construction sector.”

MEA – Positive but needs long-term support

“The Malta Employers’ Association has always expressed itself against the increase in optional leave, as Malta already has among the highest allocation of leave days in the world. The day’s increase in optional leave will erode our competitiveness. The pronounced measure regarding outsourced work needs to be discussed in detail as it can create inequalities within companies.

“The investment in education is important but there should be stronger evaluation that guarantees that the country is getting an adequate return on the investment in this crucial sector, combined with an intensified effort to bridge the gap between education and industry.

“This level of economic activity needs to be supported by longer term strategies that ensure sustainability in the longer term, and which address the many challenges which the country faces, both economic and social. Chief amongst these is the demographic transformation which the country is going through.

“In spite of the low birth rate, the population is growing due the rapid influx of foreign workers which are one of the main drivers of the economic growth, but which are also partly the cause of the current development boom, traffic congestion, pollution and other undesirable effects. A balance needs to be struck between the exigencies of short term growth and long term sustainability, as it could have adverse effects on particular sectors, such as tourism and also on the general quality if life of the general population. The budget attempts to address these challenges through numerous positive environmental measures which also require sustained long term efforts, such as the shift to electric cars.

“The environmental incentives are too focused on construction, with less prominence given to other economic sectors. Another situation that needs to be addressed is the reputational damage Malta is suffering from due to the bad publicity caused by numerous scandals.

“Our current level of economic performance is heavily dependent on our reputation as a safe investment destination that will sustain sensitive sectors such as financial services and igaming. The issue of correspondent banks needs an urgent resolution, and the fall in placing in the competitiveness index, as shown in the Global Competitiveness Index is an eye opener that we can never be complacent about our successes.

“Yet the budget speech confirms this governments’ attempts to break into new sectors, such as blockchain to further diversify the economy. This diversification is one of our major strengths, considering the size of our economy.”

MUT – Not serious on education

The MUT’s proposals included: incentives for youths to move into the teaching profession; wider eligibility criteria for sabbatical scheme and related funds; non-state schools granted further help in terms of teaching resources; Council for the Profession of Teachers to have wider mandate; and further investment in school infrastructure in terms of ventilation, insulation and air conditioning/

“None of these proposals was included and the 2020 Budget was too lacking in the education sector and that instead of introducing new and needed proposals, the same initiatives that had been proposed years ago kept being invoked, such as the My Journey proposal, the Santa Lucija school hall and the Qawra primary school.

“The MUT feels that the government is not taking the difficulties in education seriously and a consequence of this are that problems in this sector are increasing.

Forum – Limited Budget

The Forum of Maltese Unions welcomed the lowering of the income tax rate for part-timers and the compensation for vacation days that happen during the weekend, “but this is a limited budget that doesn’t mention anything in terms of pending challenges that are faced by F.U.M.”

“This is a Budget that doesn’t, for example, address problems related to a lack of educators, nurses and social workers. No solutions such as sick leave for family members whose children depend on them were mentioned. The implementation of the work-life balance directive and the introduction of the family leave were not mentioned either.   

“The same can be said with regards to the extension of existing schemes that promote sustainable energy for NGOs, trade unions or the proposal for the membership of trade unions that would include the registration of a confederation of trade unions.

“FUM notes that this a limited budget that although consolidates the existing initiatives, does not create new initiatives, capital projects or measures that address challenges that we’ve been talking about all these years.”

AD - Glaring contradictions

“As expected, Government is strengthening various social benefits, including pensions. These affect in particular, rightly so, those categories which were ignored for a number of years. But government has once more failed to embark on the process of revising the mechanism used to calculate the minimum wage, in order that this reflects the real needs of workers. This exercise is now long overdue. Tinkering with income tax payable on overtime is insignificant when compared to what is really required. We need a minimum wage which reflects the real needs of workers.

“Government has almost announced the cut-off date for the importation of cars running on petrol and diesel. But it has not arrived there yet. There is no seriousness in the manner in which this topic is being addressed, because had government been determined in this respect it would have declared an immediate moratorium on the construction of fuel service stations. As an additional bonus payable to every citizen, had it been serous, it would have immediately withdrawn all operating licences of fuel stations which have not been in operation for some time. In addition, it would have halted its senseless development of road infrastructure which serves only to increase cars on our roads. The alternative to this, are measures to reduce the number of cars on our roads.

“Government has realised, at last, that it needs a ‘Green New Deal’ strategy. That is, a strategy which addresses the impacts of climate change sustainably, economically, ecologically and socially. But for such a strategy to make sense Government should first dismantle its existing strategies which are in direct opposition to a ‘Green New Deal’. It does not make sense, for example, for Government to declare the need to protect the environment but then dishes out incentives of all sorts to encourage the property market; nor does it make sense to keep to its programme of intensive development of the road infrastructure, or keep pushing for the development of a tunnel between Malta and Gozo, which only serves the free movement of more cars between the islands. Instead of grants for batteries to store electricity generated through solar panels, it would have been much better had Government embarked on a massive investment to ensure the better distribution of electricity, as this would of itself increase the potential for the generation of more renewable energy by households. The lack of effective mesures to generate more energy from renewable sources clearly shows that Government is not really committed in implementing a real ‘Green New Deal’ strategy.

“The Minister of Finance is taking everybody for a ride, when on the one hand he speaks of Gozo as an ecological island but at the same time he keeps insisting on the ‘need’ for a tunnel between the islands, which tunnel will only serve to accelerate the environmental degradation of Gozo.”

GWU – Conscientious budget for a fairer society

“The General Workers’ Union is of the belief that the wealth and economic stability that has been guaranteed in the last four years has led to the government endorsing our proposal. In the next year, the government will widen the principle of equal pay for equal work to all workers that provide a service to private companies.

“This announcement is a win for the GWU because in order for precarious work to be eliminated, changes are needed in the private sector as well.

“With equal work conditions and pay packages, including double pay on Sundays, we will start seeing wealth being distributed equally. The GWU expects the government to start discussing this measure in the coming months so that it will be implemented at the start of next year.”

UHM – Scared of challenges

“This was a Budget that got scared of the transport challenge, got scared of foreign workers and the future pensions of the current young generation. We expected these issues to be taken very seriously.

“While this union was pleased with the small one-off bonus for milk and bread, UHM expected this to be included in the COLA.

“While increasing the pension year on year, the government should also start thinking about the future pensions of our youth so they would be adequately compensated for their work.

“When it comes to social housing, UHM expects further work from the government when it comes to the project mentioned with no cut-off date established. The union welcomed the government’s apparent commitment to electric vehicles.”

GRTU – Positive budget

“The Malta Chamber for SMEs expressed its satisfaction at the 2020 Budget as a positive budget in light of a fast-growing economy. Overtime being taxed at 15% means that an employee that works full-time with a company won’t work elsewhere on a part-time basis.

“The GRTU welcomes the equity sharing scheme where the government is willing to loan up to €17,000 for the purchase of property that will be paid back without interest in 15 year’s time.

“The €3.49 COLA increase and €7 increase in pensions is valuable, creating potential for further spending.  While the GRTU looks positively upon the Budget in general, it looks forward to the government implementing our proposal of lowering the corporate tax by a maximum of 20% for small businesses to ascertain the sustainability and competitiveness of small enterprises in Malta.”

Malta Chamber of Commerce — expected strengthening of financial systems

In light of Malta's recent slippage in the World Economic Forum's Global Competitiveness Index by two places, the Chamber of Commerce expected more investment in resources to strengthen the shortcomings exposed, namely the soundess of institutions, skills, market structure and financial systems.

"The Chamber has consistently highlighted these shortcomings and continues to call for measures to ensure that key institutions in the island are adequately equipped and resourced with the right professional people to guide the country towards better competitiveness ranking required by Malta’s economic ambitions as a global player," the Chamber wrote.

"The Chamber noted that the Budget for 2020 was set against a backdrop of an economy that is performing well. From the data published with the budget, it has been confirmed that the country has continued to register positive economic expansion, relative price stability and almost full employment - all of which have generated a positive effect on the state of public finances.

"It was further confirmed by the Budget Speech that lower rates of economic growth are being forecast for 2020 and subsequent years. For this reason, the Chamber continues to champion competitiveness-enhancing measures to ensure that Malta remains an attractive proposition for investment – both local and global."