Setting the priorities in the name of a national population is daunting. It is the time for floating perspectives, fruitful discussion and insight into how a country’s guardians allocate our money.
From a societal perspective, we would all hope that this follows a fair distribution of income that respects minority rights, all the while safeguarding the interest of future generations; a financial check that engages businesses and stimulates economic growth in new niches. It is more than just a financial exercise, it sets the tone for a year’s worth of investment, the direction in which we steer our country forward.
The recent economic climate within which Budget 2022 was presented posed a unique challenge. The unprecedented nature of the COVID-19 pandemic necessitated that the government not only allocated and redistributed the nation’s income and wealth but also required the careful balancing between recovery and growth, stability and environmental longevity, societal security and standard of living.
“Productivity remains the key pillar driving the economic wheel”
As with any trade-off, conflicting views from a spectrum of interests followed the proposed spending capacity of our government, most especially following a two-year span of high expenditure and low inward revenue.
Productivity remains the key pillar driving the economic wheel, with tax incentives and refunds particularly targeted towards younger working cohorts and those having more than one part-time job. Incentives that alleviate tax burdens from the employers’ perspective have also been set into place that create a partial safety net from the repercussive effects of the pandemic.
The cultivation of new niches, through the continued investment in start-ups and SMEs, will help create a more well-needed diversified economy, most importantly, one that utilises the resources that gives us comparative advantage and stimulates a thriving business environment. Alignment between our educatory institutions and private-sector skill-set requirements remain crucial, however, this is still missing from next year’s plan.
Social justice also plays a pivotal role in the 2022 financial plan. The theme of this budget clearly merits the term “leaving no one behind”, in truly being a holistic plan to service those under all strata of our social fabric. Increased income for pensioners in particular and added compensation for inflationary adjustments will contribute to ensuring a higher standard of living.
While many would say Budget 2022 reflects a balanced and equitable income distribution, more attention needs to be provided to other more peripheral, vulnerable groups such as adults with disability, often sidelined for those with very low functionality. As such, the budget needs to be “the voice for those with no voice”, as providing the necessary initiatives and schemes that better not only their standard of living but all those who support such cohorts.
Environmental considerations take centre stage in ensuring Malta drives forward towards a carbon-neutral island by 2050 secured for future generations.
Following other major economic partners, this budget sees heavy investment in green solutions, particularly for the second most domestically polluting activity, that of transportation.
Ensuring transparency, accountability and good governance also requires significant reform mentioned in the budget, albeit more needs to be done to ensure a timely and efficient line of operation, with priorities addressed to regain our country’s credibility following the FATF report – indeed this year’s implementation of required reforms remain vital to ensuring we retain our ease of doing business.
Undoubtedly, the financial aid received from EU partners allows for a benevolent budget, following the recent economic stagnation that added to our strives in environmental protectionism, leveraging digital and investments in soft and physical infrastructure, particularly connectivity.
However, with a decrease in tax contributions and an ever-increasing level of government expenditure in recent years, one begs the question on whether this is truly sustainable.
Will the burden of such benevolence now be incurred by the future workforce who also face other significant demographic burdens such as that of our ageing population?
True sustainability requires our government to strategically plan ahead. If we want an economy that is diversified, a labour force that is relevant and highly skilled, that retains global talent, that ensures that we remain competitive on international platforms, that leverages digital and sets us as first-movers, then the time to plan for that future begins now. Let us not be short-sighted but really create a future that is just, sustainable, future-forward, competitive… a future that is prosperous.
jcamilleri@ksimalta.com