Last week, I presented a number of proposals for the upcoming Budget. These revolved mostly around challenges related to inflation faced by persons at risk of poverty as well as in relation to pensions and rented property respectively.
Hence, I referred to trade unions’ request for a revised and realistic COLA (cost of living adjustment) mechanism. I argued that basic items such as food should have more weight in the basket of goods as they make up for a greater percentage of expenditure of low-income earners. I also highlighted the need to refund the thousands of people who have been receiving higher utility bills through an illegal mechanism.
In my article I also referred to the need for decent increases in pensions and the need for a proper national debate on sustainable pensions.
Finally, I highlighted the need to include proper assistance to current and prospective tenants who cannot afford rent prices in a way that does not distort the property market. This proposal is even more urgent than it was last year.
Indeed, in my analysis of last year’s Budget in this newspaper (October 16, 2017), I had observed that the increase in foreign workers was resulting in increased demand for rented property, thus pushing prices upwards, and like many others I was looking forward to the publication of a white paper on rent. Eleven months later, this has not yet materialised.
Today, it is crystal clear that people living in poverty as well as pensioners who do not own property and young workers are experiencing huge difficulties in purchasing or renting property.
In my view, the government should seek to design assistance to such persons in ways that do not encourage inflation in the prices of property. An evidence-based policy design should be introduced, and I expect the government to consult expert stakeholders in this regard. The government should also indirectly assist low-income tenants by supporting salary increases and allowing smaller forms of development in line with planning rules and norms. Regulations should be enforced so that short-term lets to tourists are declared, thus indirectly encouraging long-term lets to regular residents instead.
Besides, given that the rental subsidy administration requires disclosure to landlords and possible inflationary effects on rents, the government can introduce templates of rent agreements to encourage good practices, an NSO price index to show rent prices, and other mechanisms proposed by policy experts. Easy facilities for tenants to compute utility bills in their name to avoid overcharging should be introduced, and social housing should finally be a national priority.
Malta’s Budget should also properly tackle Malta’s glaring environmental problems: surveys show people’s agreement with higher fines on abusers, and the government has the moral duty to ensure that people’s quality of life is protected.
In this regard it is important to note that some environmental enforcement regulations exist in Malta, but they are either never enforced or else have ridiculous fines, so sometimes it is worth paying the fine at the expense of the environment and other people’s quality of life.
Hence, it is about time to ensure that Malta has proper and effective enforceable fines for environmental abuses in areas such as construction, noise pollution, marine pollution and water theft. The government should also reward environmental good practices such as embellishment and tree planting and give more power to local councils to manage public land.
People’s quality of life can also benefit if government declares a national investment strategy in accessible pavements in partnership with local councils as well as ensuring that the relatively high investment in public transport (around €30 million yearly, triple the amount that was paid to Arriva) is reflected in a better service, and not in overcrowded buses and unreliable trips.
Low-income earners can also be assisted through the removal of tax on overtime, and self-employed businesses should benefit from lower tax rates in view of often impossible competition with larger companies that frequently rely on low wages.
Finally, the Budget should offer an economic vision away from Malta’s increased dependency on the sale of passports, endless construction and other short-termist strategies.
Diversification, niche markets and increased investment in research, education, training and retraining of workers would be most welcome.
This article appeared as 'Budget Economic Vision' in Times of Malta, 1st October 2018
