It’s Budget day again

Monday will be yet another budget day. The budget speech should not just be an accounting exercise or one in which we are told how the country is doing economically and citizens check whether there is going to be an increase in taxes. It should be more than that.

The budget should also give more than an inkling of the administration’s long-term economic policies. In short it should tell us where we are heading to. It could also spell disaster as the last mini-budget in the UK did. But that is another story.

Joseph Muscat’s economic vision is still the driving force behind Malta’s economic push. Now we are realising that we cannot keep relying on imported foreign employees, leading to a dramatic increase in population without which the ever-expanding Maltese economy cannot subsist.

Clyde Caruana, the minister responsible for finance has realised as much and had asserted that Malta must seek to find another economic model. We cannot keep on building hotels and opening restaurants that cannot survive without foreign workers, who send most of their earned income to their families in their country of origin. The aim of our tourism sector was to provide jobs for the Maltese and foreign currency for our economy. All this has gone to the dogs.

Now many Maltese shun work in the hospitality and catering sector which cannot exist without foreign employees. We have several other economic spheres that are in the same situation – the construction industry, the waste recycling sector and the healthcare sector come to mind. These important economic sectors are providing jobs for foreigners, with Malta’s infrastructure being stretched by the constant increase in population. We have lost the plot.

The Malta Employers’ Association (MEA) proposals for Monday’s budget hit the nail on the head by adopting the slogan: time to sober up. One cannot but agree with the MEA that is insisting for a stronger direction on economic transformation in a manner that steers the economy towards more productive, higher value-added and sustainable activities. Even so, the MEA proposals on the issue of labour supply and shortages are very vague.

On the other hand, in its 2023 pre-budget document, the Malta Chamber seems to accept that we cannot do without third-country nationals, insisting that, once approved to work in Malta, such employees should have access to the free labour market, with a work permit that is valid for three years.

Earlier this month, Clyde Caruana admitted that the time is up for the economic model that has driven Malta’s growth since Labour returned to power in 2013.

In a speech in which he announced the launching of a new skills survey to gather more details about the skills and talents of the Maltese population, Caruana admitted that the economic model that saw Malta register a sustained growth and a 25% increase in population in less than a decade is one that cannot be sustained in the long term.

I look forward for the budget to expand on what economic model Clyde Caruana thinks Malta must adopt. I feel I will be disappointed, and we will be told nothing but more of the same. I will not be surprised if he says the model cannot be fleshed out before the results of the skills survey are in hand.

I think that this new economic model is at the moment only in Clyde Caruana’s imagination as it has not actually been fleshed out by him and his experts and therefore I doubt whether the budget speech will give more than a vague clue about the ideas that have to be taken on board by the Ministry of Finance in its search for this new model – unless Malta will be just returning back to the economic model adopted by the Gonzi administrations. In my opinion, although Gonzi’s careful policies helped him to steer Malta safely in a worldwide economic storm, Malta has to think afresh.

I may be a pessimist, but I somewhat feel that this year’s budget will not be giving details of a new sober and well-thought-out economic model that Malta must adopt.

It will be vague... but one must not forget that the devil is in the details.

Politics all’Italiana

Those who thought that Giorgia Meloni was elected Italian Prime Minister on 25 September must have surely been disappointed to learn that consultations on the formation of Italy’s new government were initiated by President Sergio Mattarella only this week.

Meloni led a rightist bloc comprising her Fratelli d’Italia party, Silvio Berlusconi’s Forza Italia and Matteo Salvini’s Lega Nord to a general election victory last month. The victory was the result of an agreement between these parties to run as one unified bloc, against a split vote on the left.

A significant amount of blame for the left-wing loss has inevitably fallen on the campaigns run by the parties, particularly that of the Democrats led by Enrico Letta. While the Movimento Cinque Stelle successfully portrayed themselves as the party of the poor and the south, the Democrats ran an overwhelmingly negative campaign, offering themselves as the only alternative to prevent a far-right government.

“The choice is clear, it is us or Meloni,” Letta said more than once. Their manifesto even referred to her by name. That just boosted Meloni’s popularity!

According to the Italian constitution, President Mattarella has to consult with all the main political party leaders before he can invite the election winners to form an administration. On Wednesday, Salvini was quoted as saying he expected the new cabinet would be sworn in some time between Saturday and Monday and that it would formally take office on October 26 after winning an obligatory vote of confidence in parliament.

But despite the right-wing bloc winning a convincing majority, behind-the-scenes negotiations to put together a Cabinet have proved more difficult than expected, with Berlusconi, in particular, reported to be furious over Meloni’s refusal to satisfy his demands over key posts.

On Wednesday, Meloni insisted her new government would be pro-NATO and fully a part of Europe. But the new government that will replace the one led by outgoing Prime Minister Mario Draghi will immediately face rising inflation and concerns over energy supplies this winter.