Issue link: https://maltatoday.uberflip.com/i/739617
17 Muscat gets social Budget 2017 maltatoday, TUESDAY, 18 OCTOBER 2016 Saviour Balzan T his opinion is not a technical assessment of the budget, that is the task of the major audit firms that last night worked until the early hours of the morning to process the real fiscal implications of the budget. As Edward Scicluna was concluding his speech, Rai 3 was screening a documentary on the Panama papers. But that was surely not the concern of most Maltese viewers. And Muscat knows this. It appears that destiny is on his side. His press conference was held in open air, under clear skies with Castille in the background and with the pleasant faces of young Labourite supporters in the presence of old faces including a former Labour minister Charles Mangion. Fortunately the f lavour of Muscat's budget is not tax driven. Yesterday was a blitzkrieg in favour of those two sizeable segments that traditionally looked to Labour in the past for some support and solidarity. Those segments that had been crying out in the polls that they were neglected, forgotten and sidelined. As if Labour had shed its soul and mind. In the small world of Malta were salaries have exploded and foreign employees in the iGaming and financial industries are earning eight to ten times the local minimum wage, the definition of poverty has reached new levels. Rising rentals and rising costs are putting people on the edge. Especially the elderly and the low- income earners. Troubled with the criticism that the Labour government was abandoning its roots, Muscat had to act. His great gamble has however paid dividends. In the last three years he opened the f loodgates for unbridled capitalism, capitalising on growth that had not seen these islands for a long time. Much of it was intentional but there was also a strong element of luck with low oil prices and a reversing recession. In the last three years Muscat defended his Blairite approach to business by insisting that he could not dispense with money if wealth was not created. All newsrooms were yesterday invited to Castille and regaled with the budget by the Prime Minister himself. Muscat explained the points in a sombre mood, but his posse of advisers had a smirk that gave the game away. His liberal approach has been queried because his economics had nothing to do with the traditional socialist approach of his predecessors. Plagued by a public reproach and hit by a number of scandals that dented his image (but not permanently) he plodded on. Despite maintaining a lead in the polls, survey results show that his core vote, piloted by that large segment of pensioners and low income earners, questioned his f lirtation with the super rich and big business. Backed by a booming economy, bumper tourism seasons, unprecedented job creation in the private sector, new investments and revenues, government revenues have seen an upward trend. And close to zeroing of deficit. This is no mean feat and it took place with the Mintoffian zeal. This has left Muscat with monies to dispense. If we were to be cynical and look at the political consequences of the budget measures, we can safely say that this budget aims to target the core groups that I mentioned and allow them to calmly savour the fruit of the budget over a year through the Maltese presidency and the long hot summer of 2017. And then finally in October 2017, the final budget will be announced, hardly camouf laged as the next manifesto for the final run to the national election. Muscat has skilfully reshaped his look for his core electorate. This is the distrustful and suspicious scrutiny of the budget measures. However if one to looks at the proposals that impact the pensioners, low-income earners, people with disability and first- time buyers in such way that will advance their status in no small way. Among others, the budget erases taxes on pensions, introducing an incremental bonus for those who had never worked, raising the ceiling of pensions and other measures. The number of individuals targeted are allotted next to each sector, proving the electoral momentum of these measures. The numbers are staggering, for example a supplementary allowance will be extended to include single low-income earners who don't have children, with finance minister Edward Scicluna noting that increases handed to minimum-wage earners will be enjoyed by 27,000 people. 27,000 is no joke. Low-income earners are also targeted, meaning that this budget earns Muscat particular and much needed social democratic credentials. And the budget also includes small niche measures such as the launch of a Risk Investment Scheme, for investors in SMEs or in funds administered by several SMEs that are registered on alternative trading platforms, such as Prospects, on the Malta Stock Exchange. These will be entitled to a maximum €250,000 tax rebate. There will be Malta's first solar farm, and the government will issue solar bonds to raise funds for the installation of photovoltaic panels in public places. 1,000 families will also be offered a grant for PV panels. And an eco-cheque scheme will be launched among the most vulnerable people for them to upgrade their fridges, air conditioners and tumble dryers into more modern versions. Muscat's proposals on traffic are not convincing. They do not give me the impression that it will change dramatically the gridlock. The final decision that would reduce traffic would be a direct decision on the number of cars on our roads. But that together with no tax measures are not in Muscat's budget. They will also not be in the next budget in October 2017, next year the cherry on the cake will be for the middle class, the vast chunk of the electorate that he will need on his side if he is to win convincingly and resoundingly. The PN's first tweets reminded Muscat that he had done nothing to address corruption. But Muscat knows that at the very end of the day the good feel factor and financial status is what will get him re-elected in a regal manner. The budget will be difficult to confront but all these measures could easily be def lated if the government is faced with major scandal. That I believe is something that Muscat is striving to control. And mindful of the fact that people have short memories and will champion his politics in favour of the Nationalists. Troubled with the criticism that the Labour government was abandoning its roots, Muscat had to act In the last three years Muscat defended his Blairite approach to business by insisting that he could not dispense with money if wealth was not created @saviourbalzan