George M. Mangion¸ PKF Malta. April 2012

There has been heated debate in Parliament of late discussing the budget implementation measures. Both sides of the House argued that a great deal needs to be done to maintain and possibly improve our standard of living in these difficult economic times. The euro crisis is not over and¸ as a tiny island in the Med¸ our leaders have to stop bickering among themselves and focus on a sustainable plan to surmount the obstacles facing us.

Introducing the debate on the Bill implementing the budget measures¸ Minister for Finance Tonio Fenech said that despite the crisis the government took a cautious approach on how to solve various problems. Most expected a subsidy on spiralling energy prices but this would have only been a palliative without permanently solving the long-term viability of Enemalta. The harsh reality is that as oil supplies must be paid for at escalating prices¸ the government took steps to subsidise about 30¸000 families to shoulder the burden arising from higher charges. As always¸ the top priority was securing sustainable jobs and no amount of debate will alter the hard truth that most neighbouring countries are struggling with record levels of unemployment. Therefore¸ amid criticism from the Opposition that the budget failed to attract new investment¸ Mr Fenech insisted that¸ in his opinion¸ the budget strategy succeeded by incentivising jobs¸ boosting the economy and creating an environment that was attractive to investors¸ despite current difficulties. The government’s ultimate priority was to safeguard employment¸ industry and businesses¸ so that the social framework could be sustained. Parliamentary reports show that the government had invested¸ over a four-year period¸ more than €42 million in various initiatives to help over 560 industries to procure new machinery¸ to develop export markets or establish contacts¸ or to invest in Research and Development¸ innovation and E-business. One may well comment that €42 million is such a paltry sum when shared between hundreds of beneficiaries. It looks more like a joke and definitely more effort is needed to cut waste and redirect any savings reaped to where our mouth is.

Granted that rhetoric in budget speeches comes easy to the Treasury advisers who draft them¸ and we have heard all too often that the budget is intended to boost the economy¸ offer incentives for industry and SMEs¸ extend assistance to the tourism industry and boost economic activity in new sectors¸ such as the ICT industry. In truth¸ each year the good intentions get mired in bureaucracy and excessive red tape slows down progress even though the good intentions are laudable.

Here we notice that much fanfare has been made of government agencies who announced with aplomb the introduction of initiatives – such as giving €300 a year to every elderly person living at home¸ various schemes to help SMEs and the one-year tax exemption for mothers returning to work.

Malta Enterprise (ME)¸ which was created by merging three former agencies¸ the Institute for the Promotion of Small Enterprises (IPSE)¸ the Malta Development Corporation (MDC)¸ and the Malta External Trade Corporation (METRO)&ced