Yesterday’ budget was a surprise because the Minister of Finances had very clearly implied that economic challenges are restricting government expenditure in his budget preparatory press conference.
What changed since then?
Obviously nothing and the Labour government wanted to surprise the press an the public to project big headlines.
So here it is. The solution has been found. The secret sauce has been revealed. The Labour government’s plan is to fund populist measures such as the €1000 yearly super-bonus from third-country nationals. The total new amount of tariffs imposed on third-country nationals, including on their work permits and their driving licenses should rake in according to the government up to €600 million.
Let’s be absolutely clear. We have been very consistently the only news outlet addressing public finances in a serious manner, providing consistent objective and technical analysis as opposed to other press outlets who simply copy paste statements and follow up with misinformed opinions.
So let me make it very clear. From a technical perspective, this new fiscal policy makes sense and is the correct one. If the government wants to reduce the number of third-country nationals in Malta and transition into a high-value economy rather than an economy based on mass consumption, the solution is to increase the cost for hiring them.
This is not the issue however. The issue is that Labour is spending money on populist measures to sustain its popularity instead of spending money to solve our structural problems. Labour is being technically right on one hand, and extremely reckless with the other.
With €600 million the government can build a new power station and solve our energy crisis. It can use that capital as a base to seek more public funding from the markets. Constructing a new power station would provide us with cheaper energy, and enable us to produce cheaper electricity, reducing our dependency on foreign-imported energy, reduce electricity bills and effectively serve to help unwind the pain and the debt on our books.
Instead, the Labour government is giving out this money away.
The Finance Minister is not being challenged about this. Yesterday, we posed him a question about these issues and the Finance Minister did not reply: instead the question was taken on by the Prime Minister as if he wanted to ensure that the right answer was given. He insisted that the priority is for subsidies to remain to keep electricity prices low while the transition off energy subsidies by structural work and investments is clearly not a priority.
The Minister remained mum. Fiscal and macroeconomic sensibility has gone out of the window. We are levelling up the consumption economy full speed ahead with even more government largesse.
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Historian and Publisher
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