A budget of realities

Opposition spokesmen often claim that the Nationalists had left a high budget deficit in 1996. I distinctly remember how Labour Party leader Alfred Sant and his finance ministers had gone on and on for months about how badly the country was managed before they were returned to power and how well they would bring the economy around to addressing this issue.

The undeniable fact is that two years down the line, when Labour was voted out of office in 1998, the budget deficit was practically double that in 1996! So much for hot air, and if Dr Sant's performance in the last Xarabank programme is anything to go by, with his "playing about with things", I doubt whether any potentially new Labour government after the next elections would again last more than two years.

A budget should reflect reality, not perceptions. I am a firm believer in reality. For me, the search for truth is an absolute value. Budgets should be yearly accounts that reflect the real state of the local economy with respect to the world economy, so that all may take account of developing economic and political realities and react accordingly.

Many look at the budget as a simple exercise to see how their personal pockets are going to be affected but the majority, those who believe in solidarity, know that developments in the world are bound to affect us, one way or another. It is important to keep in mind too that we now form part of the EU and that we no longer have a free hand in the type of budget we can present as we are bound to stick to positive criteria.

Once again, the deficit has been brought down substantially, from Lm94 million in 2004 to Lm76 million this year, a decrease of Lm18 million. In other words, the deficit has been slashed from 5.1 per cent to four per cent. The projections for next year, God, pandemic and oil price (in that order) willing, is that the deficit should go down to Lm55 million, that is 2.8 per cent, and the year after that, to Lm50 million.

We would then have accomplished one of the Maastricht criteria for European Union financial convergence, a budget deficit of less than three per cent. A deficit means spending more than we earn, which in turn means having to borrow money. This naturally involves servicing the loans made and the eventual repayment of such loans, which means less money for public spending.

Reducing the deficit is tough for all of us but it is being done in a way that affects people as little as possible. The buffer to reducing the deficit is being made up by the growth in our economy, which in real terms this year is close to two per cent, a rate that is better than that in many countries in the EU itself.

At five per cent, unemployment is also at its lowest level in 10 years. Incidentally, according to figures given in a reply to a parliamentary question I had put, the highest was in 1998 under Dr Sant's lot! Not bad when we are as yet only in the second year of membership in the EU. I would like to see Dr Sant and his team perform better than that.

Our main economic objective should now be to join the euro, which we plan to do in 2008. Economic realities are pushing us to join this currency as soon as possible.

Extrinsic factors, such as the pandemic flu and the price of oil, are beyond us. We are doing what we can to shore up for the former, while the solution to the latter remains elusive.

We must change the way we consume goods by making consumption more renewable and cheaper and by changing our mentality and way of life. Many measures announced in this budget, environmentally and energy-wise, should go a long way towards mitigating this fact.

The social factors shielding the poorest members of the community from the full thrust of economic change and exigencies are still in place, as are the excellent initiatives consolidating the educational potential of our citizens. Education and flexibility are two factors that can greatly help check unemployment!

The PN is well on the way to making our membership of the EU a success story. Keep in mind that according to Aristotelian casuistry, nothing comes from nothing, and our spring is being achieved with hard work and promising visions.

The first five years of EU membership are always the hardest for any nation state. Can the Labour Party and its preferred social partner, the GWU, perform better with their outmoded and confused policies and overwhelming socialist/classist philosophy still ruling the roost and minds of their present leaders? Definitely not!

Dr Asciak is a Nationalist MP.