Reality Knocks

The Malta Independent

Reality Knocks

Promises come cheap. They impress, gain votes and power. Unfortunately we lack the culture of obliging our politicians to explain how they intend to fund their easy promises.

Time however is an unforgiving judge.` The creditworthiness of those who go easy on their promises meets its fate with the passage of time. The Lm100 million EU funds has become a sickly joke. It irritates the many that voted out a Labour Government after two years. They regret swallowing the bait, hook, line and sinker that freezing of our membership bid for the EU was making the country forfeit such easy revenues.

Reality has knocked this mirage flat on its face.` What`s more offensive is that these empty promises were made by experts who definitely had first hand knowledge that these were myths not facts.

The problem is that apparently our Treasury managers also swallowed this promise.` Quick on the heels of a nationalist election victory in September 1998 they gave the green light to the financial commitment for a collective agreement for public sector employees.` The benefits were structured to impact largely in 2001 by which time it was hoped to establish the safe flow of such easy money. Some Lm40 million benefits mature in fiscal year 2001.

Such a commitment in the face of a harrowing budget deficit can only be justified if someone took seriously the pledge of our receiving some Lm100 million each year from the EU to balance our growing budgetary gap.

Reality is now knocking on our doors. The commitments of the collective agreement are inescapable and next year the public budget has to account for this upward shock in recurrent expenditure.` An expenditure that has not been in any way compensated by productivity increases.

The bursting of the easy EU money balloon means that what was meant to be financed by this easy money must now come from our own tax money given that we have exhausted our borrowing capacity.

The extra revenue that will be drawn from the overdue tightening of fiscal enforcement screws should be going towards easing our direct tax rates and towards fiscal incentives to stimulate investment and savings for supplementary pensions.` Instead we have to channel such funds into honouring wasteful electoral pledges, which strengthens the wealth `destruction side of our budgetary gap. A typical case of politicians using our hard earned tax money to buy themselves into power.

Alfred Mifsud