Issue link: https://maltatoday.uberflip.com/i/205575
9 Budget 2014 maltatoday, TUESDAY, 5 NOVEMBER 2013 Reactions to Budget 2014 The drive towards free healthcare centres is aimed to get entice women into the labour market currently happens today. The government also intends to devolve the administration of health clinics to local councils to "maximise the service" offered. Opening times of the Birkirkara health centre are being extended. The government reiterates its commitment to ensure free health care for everyone but will achieve this aim by working hand in hand with private sector. The health budget is set to increase by 9.3%. The most urgent issue is the stock management of medicines and reforming the Pharmacy Of Your Choice Scheme. The government intends to publish the John Dalli report on Mater Dei, which includes revelations, which "should shock the tax payer". The report is set to include proposals which will be discussed to achieve consensus on the future of health services at Mater Dei. The Budget reiterates the Labour Party's commitment on the problem of patients in hospital corridors but does not propose any way forward on this issue except for the creation of 68 new beds in 2015. The Budget reserves strong words for the existing free medicine schemes but contains no concrete solutions except for hinting at a white paper to be issued at a later stage. A chemotherapy service is to be introduced in Gozo. For the first time the government is recognising Myalgic Encephalomyelitis (ME) as a chronic condition. The government is considering a specific condition to analyse the needs of people suffering from this condition. The government will also invest in equipment to freeze certain rare blood types to avoid cases where the government would have to import blood at a much greater expense. Pensions The budget makes no reference to the introduction of a second pillar pension – a mandatory mechanism through which employees and em- ployers contribute an additional sum to ensure the sustainability of future pensions. The Budget only refers to a working group which will set a strategy to address the sustainability of the pension system. Curiously these will be based on the recommendations made by a similar working group issued in 2010, which specifically referred to the need of a second pillar. The government also reiterates its commitment not to increase the pension age. The government will also initiate a process through which "over a number of years" the national minimum pension will be equivalent to 60% of the mean national income. The only concrete incentives mentioned in the Budget are fiscal incentive for voluntary third pillar pensions. These incentives for private pension insurances will cost the country €1.5 million. A regulatory framework will also be introduced for this sector. The government will allocate €210,000 to exempt elderly persons and disabled persons who employ a carer from paying national insurance contributions. Housing scheme The government aims to address social housing needs by incentivising the rent market. It laments that it inherited 3,000 applications for social housing while only having 48 disposable places. The Housing Authority will also enter in to a Public Private Partnership to build more apartments aimed at home ownership schemes for low income earners. The Authority will also sell a number of shell and semi-finished apartments with a subsidised rate. No indication is given where these new buildings will be constructed. The government is also committed to conduct maintenance works in existing housing estates. Disabled persons The allowance for disabled children is set to increase from €16.31 to €20 a week. 815 persons will benefit from this substantial increase. The Budget abolishes inheritance tax on the transfer of property by disabled persons. The budget refers to studies which are being conducted with reference to the electoral promise to give peace of mind to parents of disabled children who are concerned about what will happen after their death. But no concrete details are given on the implementation of this long-term policy. A guardianship service for people with intellectual disabilities will be introduced with the aim of preventing abuse on this vulnerable category. € 900,000 are being allocated to increase placements in day centres for disabled people from 200 to 600. Gozo The allocation for the Ministry for Gozo will be increased by 8%. No details are given to specific incentives for investment in Gozo, which will be introduced at a later stage. The National Office of Statistics will open a branch in Gozo. The Budget reiterates the government's commitment for the development of yacht marinas and a cruise passenger terminal in Gozo. It also announces the commencement of the construction of a new law court in Gozo. In collaboration with the Gozo Curia, a home for the elderly will be developed instead of Dar San Guzepp. Culture and sports A scholarship scheme will be introduced to encourage athletes to become professionals. Footballers will be used as role models for children to encourage them to read. €200,000 will be allocated for the establishment of a Malta Dance Company. €150,000 euros will be allocated to help local band clubs. The government will allocate €1.6 million for the celebration of the 50th anniversary of Independence Day and the 40th anniversary of Malta's republican constitution. €1 million will be invested in the formation a film co-production company. The budget promises that this will open a new chapter in the local production of films and thus enhance Malta's competitiveness. MPs' salaries Cement has gone up from €17 to €27 per 1,000kg The government will honour its electoral promise to ensure that MPs are paid pro rata according to their attendance. It also reiterates the commitment to reconvene the constitutional convention, which is expected to change Malta's constitution. The remit of the commission for equality will be extended to the safeguarding of human rights. A workers' right charter will also be issued at some stage. CONTINUED Cassola also called on finance minister to publish the Auditor General's report on the verification of budgetary projections. Cassola said AD saw the opening of childcare centres, the concept of 'making work pay' and the proposals for youth guarantees and apprenticeships as positive. But he said the budget overall lacked a clear focus and that much of the speech had spared details on the proposals, even concrete proposals. "In some areas there is no clear direction. An example is where authorities and government commissions are involved, where instead of simplifying the government is complicating matters. In a small country, instead of consolidating its authorities, the government is spreading out its resources with new government organisations. An example was the creation of a national authority for aviation, which will once again be severed from Transport Malta," Cassola said. Another contradiction was that the protection of the coastline had earned a mention in the budget whilst the government appeared intent on protecting the land squatting of the Armier boathouse owners. "The government mentions the monitoring of air quality but at the same time it will increase the traffic to Valletta and reduce the payment on car registration." Cassola said that any measures that would increase traffic to Valletta were a sure sign that the government was intent on not providing a proper public transport system. "There is no mention to encourage alternative transport, or ideas how to improve the public transport system." Cassola also said that while taxes for those who earn the most will be cut, persons with a disability who earn a miserable pension of less than half the minimum wage had been ignored. "At the same time, the minimum wage will stay the same, when entire families live in poverty." Economists: government 'in control of the economy' JAMES J. PISCOPO ECONOMISTS and experts to whom MaltaToday spoke to after Budget 2014 had words of praise for the first budget under a Labour government, saying the finance minister's projections were credible, realistic and positive. Economists Alfred Mifsud, Lino Briguglio and Karm Farrugia said the fact that the minister was an economist by profession made a clear difference with the past. In comments given to MaltaToday, Lino Briguglio said the only negative side of the budget was the increase of indirect taxes that will affect most the working class. "But there are numerous other schemes intended for the working class – such as the reductions in utility tariffs – that will compensate for the indirect taxes. As an economist, I believe that Scicluna knows what he has to do for the economy to move forward. This budget will also send out a message to foreign investors that Malta is a safe place to put their money in," Briguglio said. Asked about the projections of a 1.7% economic growth, Briguglio said this was a realistic forecast considering that economic growth in international markets is minimal, and in some cases even negative. Of the same argument was economist Alfred Mifsud who expected economic growth to be greater than the conservative estimate of 1.7%. "Economically speaking, this budget reached its aims for both this year and the next one. This is positive in order to avoid interference from the EU authorities. This was an important priority. The budget also includes interesting proposals that will likely increase the government's expenditure but also the economic capacity," Mifsud said. Economist Karm Farrugia said he was surprised at the scale of the budget's realism, saying Malta had not had a similar budget for years. "This budget was so positive that the government could have used it just before the next general election since it leaves such a feel-good factor. This is also the result of having an economist of Edward Scicluna's calibre at the helm. The projections are so credible that the EU extended the deadline to next year to reduce deficit below 3%. Malta is aiming for a 2.7% deficit, which is comfortably below the red line." Farrugia said the government would then go on to reduce the deficit to around 2%. "As a result, this budget served to show that finally we have a government that is in control of the economy. That is a very positive sign," Farrugia said. The budget was also well received by stockbroker and Finco director Paul Bonello, who said he was pleasantly surprised at how well thought-out the budget had been. "Ultimately, the budget is a balancing act. It's like walking on a tight-rope; with the revenue at your disposal you have to plan for the next year without endangering the economy. It was clear that this was not a bookkeeper's budget or an accountant's exercise to make ends meet. This was an economist's budget with numerous positive amendments and few negative ones. The increase in taxes will discourage workers," Bonello said. He also welcomed the fact that there were no populist measures that could ultimately harm the economy. Comparing this budget to others presented by the previous Labour governments, he said that in contrast with the past this budget incorporated the element of social justice, without being antagonistic to business sectors. Auditor and PKF partner George Mangion observed that Malta still needed to borrow €650 million in order to balance its books, saying he was disappointed that the electoral promise of simplifying bureaucracy was not given much importance. "Bureaucracy is a problem in every country that affects the rate of competitiveness. This should have been addressed: first you have to clean up your own stables before you increase the funds of government's agencies such as Malta Enterprise and Finance Malta." Mangion described as positive the decision to re-launch the MicroInvest scheme and the setting up of a financial ombudsman, saying the latter was "much needed as an independent surveillance over MFSA after the shameful La Vallette and Fantasy Tours cases."