The Nationalist Party’s pre-budget document goes beyond proposing the right tactical moves to help the country’s economy recover. Of course, at present, no one knows when this may become possible. Vaccines are not yet a sure thing and even then the effects of the pandemic on the economy will remain toxic for some time to come.
Budget documents are meant to take a look at past performance, highlighting successes and failure. These documents also propose short-term initiatives to address immediate issues that affect the economy. But especially in times of crisis, the narrative should look into the future and make strategic reflections on where the government should be looking to steer the ship of state.
Undoubtedly, the 2021 budget is being planned in an abnormal economic climate. This is complicated by the fact that our open economy makes our successes or failures dependant on how other countries perform in the coming year.
The PN’s pre-budget document focuses on four key issues that underpin the economic and fiscal planning that needs to be in place to make success more likely.
Safeguarding employment is crucial for the social as well as economic wellbeing of the country. Every country is putting this objective on top of its recovery plan.
The importance of the SMEs sector in the Maltese economy makes it necessary for the government to extend and enhance the support measures for small businesses to stay afloat and retain as many of their workers as possible.
A stimulus to demand has eased the pressures on those industries most affected by the onset of COVID, including the hospitality and catering sectors. The PN’s proposal to renew and extend the stimulus to also include other sectors makes sense.
The culture industry, for instance, needs all the support it can get to survive. ‘Quality of life’ is not just about material wealth but also about opportunities to exchange ideas and enrich the mind.
The fourth issue that the PN document focuses on is the need to recalibrate the economic strategy that was showing signs of stress long before the onset of the pandemic. The sale of passports, for instance, has produced a significant short-term cashflow in the government’s coffers but has been one of the many elements that have damaged Malta’s reputation.
The future of the tourism industry remains wrapped in uncertainty. The emphasis on mass tourism to reap more benefits from this economic activity may prove increasingly unsustainable in the coming years as a result of the health issues that have gained importance in the COVID period.
The first round of support measures introduced by the government to minimise the effects of COVID on the economy will come to an end soon. The second set of measures to be announced in the budget for 2021 need to include initiatives that support sectors critically important not just for the economy but also for society as a whole.
The importance of young people being able to acquire a property as a first step to set up a family cannot be over emphasised. The PN proposal for an extension of stamp duty reductions to first-time buyers of property in 2021 will help strengthen the commitment to support families.
Likewise, support for the independent media houses will ensure that they continue to make their vital contribution to the democratic process in our society.
Rather than accuse the opposition of plagiarism in their pre-budget document, the government would do well to acknowledge the importance of challenging the sustainability of some aspects of its economic strategy.