Cautious, prudent and… clinically precise?

On Monday, Tonio Fenech announced a whole series of budgetary allocations in capital expenditure on various projects and initiatives: many of which were greeted by the standard (and, it must be said, rather monotonous) thumping of desks as a show of collegiality among his parliamentary comrades-in-arms.

Ironically, however, Fenech casually explained during the reading of the budget that he was only able to make certain investments this year because of a shortfall of at least €143 million, out of a projected expenditure of €446 million announced in last year's Budget. This figure remained unspent throughout the year, as the earmarked projects it was supposed to finance were either postponed, or simply failed to materialize altogether.

In this particular instance, many of the untapped funds come directly from EU sources. Fenech himself outlined exactly where and how such allocations were missed out on throughout 2011: for instance, the Transport Ministry failed to take up €58 million in EU structural and cohesion funds; while the equivalent 'lost' sum for the Office of the Prime Minister was €20 million.

Elsewhere, low take-up of EU funds manifests itself across the full spectrum of government ministries: €27 million less spending by the rural affairs ministry; €21 million less in structural funds intended to finance the construction of the ICT faculty at the University of Malta by the education ministry; and another €12 million shortfall in projected expenditure by the health ministry, also in structural funds. The list goes on.

Nor is this a one-off occurrence. Indeed is often the case that a project announced in one year's budget, will fail to use up its allocated sum by the time the next budget comes along. This in turn raises a few immediate questions regarding many of the initiatives announced by Fenech on Monday. Seeing as some of these will invariably be financed by monies previously allocated to other projects which have never seen the light of day... what guarantee does the general public have that this year's projects will not similarly be postponed, or simply fade away into nothing?

How much of this year's declared capital expenditure will likewise remain unspent, until carried over into Budget 2013? And more pertinently still: was this windfall the result of a fortuitous concatenation of events? Or had Tonio Fenech all along anticipated his government's failure to make full use of these funds, as part of a charade that has (to be fair to the present finance minister) been standard practice for decades, regardless of which party is in government?

As charades go, the play-acting in this instance would involve the deliberate allocation of funds to certain projects - as a rule, amid much fanfare and thumping of desks - full in the knowledge that the money would not be spent, either in part or in full.

If indeed the result of planning, one has to concede it is a rather ingenious ploy. The pattern it suggests is one whereby the finance ministry is allowed - perfectly legally, one might add - to keep a reserve of cash in hand in order to finance the promise of future projects: something not only does help generate expectation on a nationwide scale, and give governments something to thump their desks about every November or so... but much more cogently, it also allows finance ministers a little room to manoeuvre when it comes to making economic projections of their own.

But admittedly, we have drifted into the realm of pure speculation. Let us, like many modern economists, give the government the benefit of the doubt, and assume that the intention to spend those monies is and has always been genuine. What use does government intend to make of these funds? The picture that emerges in answer to this question is one which blends masterful political engineering with a clearly definable economic direction... two elements which on their own would be enough to justify the faith Prime Minister Lawrence Gonzi has placed in Tonio Fenech for so long.

Many of the individual promises seem to target specific segments of the voting population with clinical precision... and of course it is hardly surprising that these happen to represent segments that have been particularly vociferous in their recent criticism of government policy: pensioners, middle-income families who have borne the brunt of so many controversial decisions (eg, the utility tariffs) and above all, the vast swathe of small businesses, so hard hit by many of the government's past decisions.

All things told, it is virtually impossible not to view Budget 2012 as a series of decisions taken by in conjunction with the Nationalist Party's core strategy group, with an explicit view to accomplishing two major political goals: to reignite enthusiasm among its own grassroots; and also to sweep the electoral carpet from under Joseph Muscat's feet - Muscat having made no secret of his intention to woo the middle class vote ahead of the next election.  

Naturally, this same clinical precision with which the PN has homed on its electoral target suggest that this may indeed be the last budget before going to the polls. Either way, however, it also illustrates the political skill that has translated into 20 years of nationalist administrations: a skill that marries the party;s own exigencies, with the convincing ioutward semblance of political prudence and direction.