5th September 2008
The Malta Independent - Friday Wisdom
Let me start with a small
commemoration and leave Obama for the end. Today is the 10th anniversary of that
infamous election which terminated early the life of the last Labour government.
It was one of the saddest days of my life even though as things turned out there
were hidden blessings. As Labour desperately tries to climb out of the deep hole
it dug itself into over the last 10 years, let true Labourites never forget
those responsible for landing the party in the pitiful state it is still in
since its collapse 10 years ago.
The budget figures published for the first seven months of 2008 make it unlikely that come the end of the year government can hit the projected deficit of e68 million. It has become almost routine for actual results to under perform substantially in an election either due to over-expenditure in the bid to get re-elected and/or through overly optimistic budgetary assumptions to put artificial cosmetics on government performance and make it look better than it actually is when it seeks the electorate’s judgement.
Up to July 2008 the deficit was e283 million or 36 per cent more than last year. In the last five months of last year the budget deficit was shrunk by e99 million. If the same experience is repeated (the last five months are more revenue rich than the first seven months due to the structure of provisional tax payments by commercial organisations) this year the deficit will finish at e184 million which is 2.7 times more than projected. The only way government can close this gap is by postponing payments for capital expenditure which still carries an unspent budget for the year of nearly e200 million. And this assumes that government can keep within its recurrent expenditure budget which seems unlikely given unbudgeted subsidies incurred. To stay within the recurrent expenditure budget it has to cut the outlay by seven per cent over the same expenditure for the same last five months of last year.
It looks probable that the projected budget for 2008 will be missed by a mile and this will set us, fiscal discipline speaking, two years back rather than one step forward. Tax cuts in the first budget and balanced budget by 2010 may have to wait.
To finish on a lighter note I felt proud of being Maltese upon hearing Obama’s acceptance speech of the presidential nomination at the Democratic convention in Denver last week. Proud because Obama’s vision of a kinder, gentler and more caring America are things which in this tiny resource-less state we have grown used to up to the point of taking them too much for granted.
Read these quotes from his speech and you will understand what I mean:
“This country is more decent than one where a woman in Ohio, on the brink of retirement, finds herself one illness away from disaster after a lifetime of work”.
“We are more compassionate than a government that lets veterans sleep on our streets, families slide into poverty, and sits on its hands while a major American city drowns”.
“Out of work? Tough luck. You’re on your own. No health care? The market will fix it. You’re on your own. Born in poverty? Pull yourself up by your own bootstraps – even if you don’t have boots. You’re on your own”.
“We (should) measure the strength of our economy not by the number of billionaires we have or the profits of the Fortune 500 but by whether someone with a good idea can take a risk and start a new business, or whether the waitress who lives on tips can take a day off and look after a sick kid without losing her job – an economy that honours the dignity of work”.
“We will keep our promise to every young American – if you commit to serving your community or our country, we will make sure you can afford a college education”.
“Now is the time to finally keep the promise of affordable, accessible health care for every single American”.
“Now is the time to help families with paid sick days and better family leave, because nobody in America should have to choose between keeping their job and caring for a sick child or ailing parent”.
“Now is the time to keep the promise of equal pay for an equal day’s work, because I want my daughters to have the exact same opportunities as your sons”.
“The change we need does not come from Washington. Change comes to Washington. Change happens because (you) demand it”.
We are not rich, certainly have no natural resources to speak of, we spend in election years as if there is no tomorrow, and we have an imperfect democracy where business and special interest lobbies pro one party and obstruct the other. But we have a caring society the type of which the world super power may only now have the courage to mandate the new kid on the block to bring it to modern levels of social solidarity. I felt proud to be Maltese even though so far, I have been a donor not a receiver in our social solidarity experience.
I pay homage to the one above all who had the foresight to found our social structures and this irrespective of the finger in the pie he had in the debacle of ten years ago.
The budget figures published for the first seven months of 2008 make it unlikely that come the end of the year government can hit the projected deficit of e68 million. It has become almost routine for actual results to under perform substantially in an election either due to over-expenditure in the bid to get re-elected and/or through overly optimistic budgetary assumptions to put artificial cosmetics on government performance and make it look better than it actually is when it seeks the electorate’s judgement.
Up to July 2008 the deficit was e283 million or 36 per cent more than last year. In the last five months of last year the budget deficit was shrunk by e99 million. If the same experience is repeated (the last five months are more revenue rich than the first seven months due to the structure of provisional tax payments by commercial organisations) this year the deficit will finish at e184 million which is 2.7 times more than projected. The only way government can close this gap is by postponing payments for capital expenditure which still carries an unspent budget for the year of nearly e200 million. And this assumes that government can keep within its recurrent expenditure budget which seems unlikely given unbudgeted subsidies incurred. To stay within the recurrent expenditure budget it has to cut the outlay by seven per cent over the same expenditure for the same last five months of last year.
It looks probable that the projected budget for 2008 will be missed by a mile and this will set us, fiscal discipline speaking, two years back rather than one step forward. Tax cuts in the first budget and balanced budget by 2010 may have to wait.
To finish on a lighter note I felt proud of being Maltese upon hearing Obama’s acceptance speech of the presidential nomination at the Democratic convention in Denver last week. Proud because Obama’s vision of a kinder, gentler and more caring America are things which in this tiny resource-less state we have grown used to up to the point of taking them too much for granted.
Read these quotes from his speech and you will understand what I mean:
“This country is more decent than one where a woman in Ohio, on the brink of retirement, finds herself one illness away from disaster after a lifetime of work”.
“We are more compassionate than a government that lets veterans sleep on our streets, families slide into poverty, and sits on its hands while a major American city drowns”.
“Out of work? Tough luck. You’re on your own. No health care? The market will fix it. You’re on your own. Born in poverty? Pull yourself up by your own bootstraps – even if you don’t have boots. You’re on your own”.
“We (should) measure the strength of our economy not by the number of billionaires we have or the profits of the Fortune 500 but by whether someone with a good idea can take a risk and start a new business, or whether the waitress who lives on tips can take a day off and look after a sick kid without losing her job – an economy that honours the dignity of work”.
“We will keep our promise to every young American – if you commit to serving your community or our country, we will make sure you can afford a college education”.
“Now is the time to finally keep the promise of affordable, accessible health care for every single American”.
“Now is the time to help families with paid sick days and better family leave, because nobody in America should have to choose between keeping their job and caring for a sick child or ailing parent”.
“Now is the time to keep the promise of equal pay for an equal day’s work, because I want my daughters to have the exact same opportunities as your sons”.
“The change we need does not come from Washington. Change comes to Washington. Change happens because (you) demand it”.
We are not rich, certainly have no natural resources to speak of, we spend in election years as if there is no tomorrow, and we have an imperfect democracy where business and special interest lobbies pro one party and obstruct the other. But we have a caring society the type of which the world super power may only now have the courage to mandate the new kid on the block to bring it to modern levels of social solidarity. I felt proud to be Maltese even though so far, I have been a donor not a receiver in our social solidarity experience.
I pay homage to the one above all who had the foresight to found our social structures and this irrespective of the finger in the pie he had in the debacle of ten years ago.
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