Issue link: https://maltatoday.uberflip.com/i/747633
14 IT is often remarked that the party in opposition has an automatic ad- vantage over that in government, in the sense that it is free to criti- cise or make proposals of its own... without (immediately) having to put its money where its mouth is. The Nationalist Party has cer- tainly availed itself of both op- portunities to the full. Describing Budget 2017 as a 'budget without vision', the Opposition has vari- ously argued that the social meas- ures do not go far enough... with shadow finance minister Mario de Marco adding that not enough was done to attract 'new centres of eco- nomic activity' to the island. The PN also published its own proposals in a number of docu- ments leading up to the Budget. But this indirectly points towards an intrinsic problem that the Na- tionalist Opposition can't seem to shake off. Having occupied the government itself for so long until March 2013, one might legitimately ask why the former Nationalist administration never implemented any of its own proposals when it had the chance. More specifically, some of these proposals have opened the PN to charges of 'flip-flopping'. Only two weeks ago, Simon Busuttil was cautious about committing himself on the minimum wage. This week, he pledged to raise the minimum wage if elected. The following day, he suggested that the issue should be discussed first at the Malta Council for Economic and Social Development. So isn't there some truth to the flip-flop criticism? PN deputy lead- er de Marco doesn't think so. "The issue at stake here is wheth- er we want an economy that serves the people, or to accept a situation where economic interests of a few rule above all else," he begins. "Up until last year's budget, the Labour government was ridiculing anyone who dared suggest that the eco- nomic wealth being generated was not percolating to all levels of so- ciety. Despite clear warnings that society was splitting in two – the haves and have nots – the Labour government refused to admit that segments of society were facing in- creasing difficulties in making ends meet..." The gap between the two is be- coming wider as those on lower income are struggling with ris- ing costs, especially food costs, he adds. "It is indeed ironic that after only a couple of weeks from the presen- tation of the so called Social Budg- et, we have seen the formation of a coalition of no fewer than 14 organisations, proposing a gradual increase in the minimum wage. Their proposal merits considera- tion. This is what the PN is stating. It merits serious consideration be- cause we cannot allow the current situation to persist. And by current situation, I refer of course to fami- lies being unable to live on their income..." Faced with mounting pressure, the government had to acknowl- edge this problem. "In all fairness, it did attempt to address it in this year's budget. But the attempts fell short of expectations. This is not just the opinion of the Opposition. It has also been expressed by the Alliance of Pensioners' Associa- tion, the GRTU and the Chamber of Commerce. The latter two fo- cused their criticism particularly on the excise tax introduced in this budget on a number of essen- tial items. This tax is going to hit hard on the lower income groups and increase costs on businesses, including SMEs..." All this is well and good, but it doesn't really address the issue of Busuttil's U-turn on the minimum wage. De Marco however counters that it is the Muscat's government that is flip-flopping on the issue. "On the one hand you have the Prime Minister now saying – after the Budget has been presented – that he is willing to consider raising the minimum wage. On the other hand you have Minister Scicluna stating sardonically, in his inter- view with you only last week, that 'there is life without a minimum wage'; and that the imposition of a minimum wage is 'a government intrusion'. Needless to say these mixed messages coming from the government make it evident that it is not only out of sync with the needs of ordinary families, but also out of sync within itself..." What are de Marco's own views regarding the minimum wage? He mentioned the GRTU and the Chamber of Commerce earlier: both argue that it would dampen employers' ability to remain com- petitive... "Wage costs are not the only costs that can affect competitive- ness. The Malta Employers Asso- ciation, GRTU and the Chamber of Commerce pointed out that the energy bills faced by enterprises in Malta are too high – indeed still amongst the highest in Europe – as is the cost of fuel. The introduction of levies on a wide range of prod- ucts is also going to impact nega- tively on competitiveness." The Malta Developers Associa- tion, he points out, has also come out in favour of an increase to the minimum wage. "A demotivated workforce will not do wonders to our ability to compete. And if we continue to move towards a situation where the income earned by segments of our population is not enough to meet the most basic of needs, then we are going to end up with just that: demotivation. So in reply to your question, I would say that we need to approach this discus- sion with an open mind and look at the bigger picture. That bigger picture includes making sure that our youth are trained to take on jobs that earn more than the mini- mum wage." Speaking of last week's inter- view with the Finance Minister: he argued that rent control would be a government imposition, too. De Marco himself (unprompted) raised the issue of rental inflation as one of the issues affecting the social divide. So what is the PN's proposal to mitigate property in- flation? "The Opposition dealt with the issue of increase in rents and mortgages in its Pre-Budget docu- ment. Our construction and prop- erty industry is going through a boom period, which – while being good news for those who oper- ate in this sector – is a problem for those wishing to buy or rent property. Families on lower in- come are more likely to rent than buy. However, they are now being faced with a situation where rents have doubled or even tripled over a short period of time. The gov- ernment made the situation even worse last year by raising the rent of social housing properties. In our pre-budget document, we sug- gested two measures. The first was the reversal of the increase in so- cial housing rents. The second was for the government to improve the rental subsidy scheme to help lower income families who rent from the private sector. The gov- ernment included both these pro- posals in its budget. One needs to see whether the subsidy is going to be sufficient to meet the increase in rent..." But on the issue of direct gov- ernment intervention, de Marco finds himself in concord with the Labour government. "We do not agree with a policy of rent control in respect of privately owned prop- erties. Government intervention of this nature will lead to inefficien- cies and abuse. We would rather see mitigating measures aimed at helping those in need to make up for the inflation in rent and prop- erty prices, especially for first time buyers..." So far, the focus has been on the social dimension of the budget. But what also emerges from Budg- et 2017 is a confirmed government policy to turn Malta into an eco- nomic base for the world's high- est-worth individuals. Meanwhile, in the PN document 'An Economy For All', Simon Busuttil is on re- cord stating that he doesn't want Malta to become 'a playground for the rich.' What does that mean, exactly? And wouldn't it also be fair to say that Malta's tax imputation sys- tem – which was inherited from past Naionalist governments, and which grants generous tax refunds on dividends to foreign sharehold- ers – has already made Malta a playground for the rich? "Malta has evolved over the years into a reputable financial services jurisdiction. Our attractiveness in this regard, contrary to what many believe, is not based solely on our favourable tax regime; but also because we have a robust and efficient system that is capable of handling this delicate line of work at par with, if not better than, most other on-shore jurisdictions. I em- phasise the word 'on-shore'. We are not an offshore jurisdiction, and we are bound legally to act in the most transparent manner. As a party, even from the Opposition, we will fight with every means pos- sible to defend an industry which was built over the past years with great foresight and against many odds. An industry which now ac- Interview By Raphael Vassallo maltatoday, SUNDAY, 6 NOVEMBER 2016 A demotivated workforce will not do wonders to our ability to compete. And if we continue to move towards a situation where the income earned by segments of our population is not enough to meet the most basic of needs, then we are going to end up with just that: demotivation The Panama debacle has thrown an unwanted spotlight on Malta, and the Prime Minister's handling of the situation limited our ability to fend off criticism. But fight we must; and fight we will, through solid arguments that show that onshore fiscal jurisdictions have served Europe well in the past DEMOTIVATION TAX JURISDICTION A Budget over the