Gonzi’s mantra: from ‘safe hands’ to ‘feet on the ground’
Prime Minister defends ‘realistic’ budget from the scepticism of ‘unrealistic expectations’
Raphael Vassallo
The middle class might be heaving a sigh of relief, but only because the hammer blow was lighter than expected.
It is an annual conjuring trick which the Nationalist party – unsurprisingly, after two decades’ worth of practice – has all but perfected into a fine art-form: how to manage public expectation in order to defuse popular discontent.
After months preparing the general public for the Budget from Hell, an upbeat Finance Minister Tonio Fenech yesterday unveiled his government’s revised economic plan to turn the current national deficit to a surplus: not in 2010 as originally projected, but in 2011.
Mollified by a host of indirect taxes skilfully disguised as “eco-contributions”, and a number of incentives cleverly aimed at high-income social brackets such as yacht- and swimming pool-owners, the immediate reaction among the previously incensed social partners was: “Oh well, it could have been a lot worse”.
And as Lawrence Gonzi stepped forward to address the media after Fenech’s three-hour delivery, he displayed the tired relief of a master magician after a difficult, but successful sleight of hand.
“Responsibility, sustainability, solidarity”... this was the magic formula which ultimately did the trick. But while Gonzi was as convincing as ever, there was visible apprehension in his face, and his tone came across as altogether more apologetic than triumphant.
This much was evident from the Prime Minister’s selective quoting of the European Commission’s report on Malta, published hours before the budget speech was read in Parliament.
Pre-empting any reference to this potentially awkward document, Gonzi highlighted two of the factors the Commission held responsible for the glaring miscalculations in the previous budget’s prognostications. Conveniently, these happened to be the only two outside the government’s immediate control: i.e., the skyrocketing price of crude oil between June and July (a price we continue to incur because of hedging agreements, despite the present drop to an all-time low of $65 a barrel); and the early retirement schemes offered to Dockyard workers as part of the ongoing privatisation process.
There was, however, a third factor: the explosion in government expenditure on wages, especially in the health sector, in the first months of the year. A reference to the government’s unfettered pre-election spending spree? Not according to the Prime Minister, who deflected the question with a series of platitudes about collective agreements dating back to 2005.
But predictably, the blame for the general scaling down of a number of rash pre-electoral promises – most notably, the revision of tax-bands, which in practice proved far more modest than we were led to believe – fell squarely on the current international economic crisis.
Pointing out how countries much larger than Malta were currently experiencing economic contractions on account of the global credit crunch, Gonzi drew solace from the fact that Malta’s economy, while growing at a considerably slower rate than that projected a year ago, is nonetheless still growing. Whether it will continue to do so in future depends entirely on how Malta is affected by the shrinking of markets upon which our economy depends... a harsh reality, in the face of which Gonzi tried (with debatable levels of success) to exude confidence.
But the bulk of the Prime Minister’s concern involved the audible scepticism with which his assurances on the utility hikes were received. Asked directly whether the tax bands revision would suffice to cushion the inevitable impact of a steep increase in tariffs, an altogether less convincing Gonzi invited the media to be more holistic in its appraisal of Budget 2009.
The budget, he claimed, is intended to achieve progress and ensure stability on a long-term basis. Referring to numerous eco-initiatives such as a re-introduced eco-contribution on plastic bags, and rebates on photo-voltaic systems and solar-powered water-heaters, Gonzi was cautiously optimistic that when all factors were weighed in the same basket, the Maltese taxpayer would eventually come out on top.
But details were in short supply. At one point, Gonzi was asked to expand on Fenech’s announcement of a €500,000 exercise in cost control of the national health service. Replying in broad and unspecific terms, the Prime Minister explained that the exercise was necessary to ensure that taxpayers’ money was well-spent, and that the resulting service was as efficient as possible.
However, it remains unclear whether the cost controllers will also look into the viability or otherwise of certain expensive individual health services, currently offered for free. Nor was there was any reference to the health service’s biggest financial black hole – the unwieldy national medicines bill.
In the final analysis, Lawrence Gonzi appeared to be reaching out across an invisible divide to a general public which has clearly lost some of the trust it so manifestly placed in him last March. “Responsibility, sustainability and solidarity” may have been the title of the budget document presented yesterday; but the message imparted by the Prime Minister was another.
From “a safe pair of hands”, the anatomical reference is now “a pair of feet planted safely on the ground”.
