ASCS Budget Review

By Ġorġ Vella

October 18, 2021 at 4pm

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As done in previous years, ASCS feels the urge to assess the budget brought forward by the Government and provide a holistic critical assessment, meant to facilitate all students as they make their assumptions and conclusions on the 2022 Budget. This original format in which the Budget was presented, is not divided according to the different ministries, but rather to goals, be it social, economic, or environmental, and they entail how such goals are to be met over time.

This year’s budget was a display of socialism, as those most vulnerable in society; being the elderly and those at risk of social exclusion, were at the forefront of the various measures presented.

Some of the most notable mentions in this year’s budget:

• Free Public Transport for All as from 1st October 2022

• Decrease in part-time and overtime tax rights, incentivising work.

• 10% increase in all Student Stipends

• Substantial increase in pensions

• Incentives for digitalisation and green investments

• 1.75 increase in Cost of Living Adjustment (CoLA)

Measures related to Employment

Throughout the budget, various measures have been introduced incentivising work, from students to pensioners. The maximum working hours for students applying for stipends has increased to 25 hours, from a previously allowed 20 hour week. As for those who form part of the working population, tax rate reductions for part-time workers incentivises individuals to work. Moreover, tax refunds are set to increase in the coming year, with a maximum receivable of 140 EUR.

The introduction of a Skills Census and the extension of child care hours into late hours, even weekends, are notable measures introduced last Monday.

Education and measures relating to students

As regards expenditure related to education and students, the Government has put forward efforts to make engagement in education more attractive, with hopes to retain students and decrease the early school leaving rate, however, the effectiveness of the measures brought forward is still to be measured upon implementation.

A 10% increase in stipends and a 5-hour increase in the maximum hours a student is allowed to work per week, and still receive a stipend and maintenance grant could serve as great facilitators in allowing students to cope with rising prices.

As regards educational infrastructure, the construction of the schools in Msida and Victoria, Gozo are ongoing and the Budget has also allocated funds for the modernisation and restoration of a number of schools across Malta and Gozo. Moreover, the Government plans to bolster the STEM program (Science, Technology, Engineering and Mathematics) by modernising no less than 180 laboratories found across state educational institutions.

Education, training and development have been given great importance, and this conveys a clear message. The refinement of skills through up-to-date training programs and state-of-the-art infrastructure, increase the potential of the Maltese product’s superiority, something which is of utmost importance in a modern market where quality outweighs quantity.

Welfare and the Elderly

As previously stated, the 2022 Budget has numerous social measures, related to those who require welfare, and the elderly. These include an increase in pensions and free medicine, among others.

IVF treatment is freely available, and the 2022 Budget has allocated funds to distribute medicine related to IVF treatment for free as well. ASCS applauds these initiatives and all others such as measures related to helpers and equipment needed for the care of those who are vulnerable.

As regards this year’s COLA of 1.75 EUR, ASCS feels that there was not a substantial increase when considering the rapid rise in prices of essential goods. Inflation is of course the prime factor, however, externalities such as Brexit also play a role. Malta has received EUR 44 million in funds meant to alleviate repercussions that may be felt from Brexit - Malta received the second-highest amount in funds with respect to land area, coming second only to the Republic of Ireland.

Sustainability, Climate Change, and the Environment.

ASCS welcomes all measures directed toward afforestation, urban greening, and sustainable urban mobility. As regards free public transport for all as of October 2022, there is concern whether the current infrastructure and fleet can theoretically sustain a significant increase. ASCS hopes the necessary steps are taken to ensure safe, sustainable, and reliable public transport for all, maximising efficiency. The introduction of numerous electric charging points and incentives directly related to the purchase of electric vehicles make the switch to an electric vehicle more financially accessible.

Digitalisation and the Green Economy

In his speech, Finance and Employment Minister Clyde Caruana stressed that Digitalisation and the Green Economy are the paths to the future, and all those who engage in trade must accept this. This “early” investment will allow Malta to compete. A 9-year plan meant to develop the skills of Maltese human capital, and stimulate innovation was also mentioned throughout the Budget.

Malta’s failure to reach its 2019 sustainability targets, along with its evident lack in achieving proposals put forward in the EU’s Green Deal and the FitFor55, have motivated the government to incentivise sustainability, through Digitalisation and the Green Economy. The effect to which Malta satisfies these checkpoints will determine allocation and access to EU funds further on.

The Economy and FATF Greylisting

The 2022 Budget has not presented additional taxes on business and has still predicted an increase in tax revenue from that obtained in the previous year. The government has conveyed that this will be achieved through better monitoring and adherence to policies and regulation, with strict enforcement - in fact, the 2021 Rule of Law Report for Malta has mentioned how there have been increased legal enforcement against money laundering, yet convictions remain insufficient.

This shall be the catalyst if Malta is to clear its name off the FATF Greylist and regain the trust the Maltese people deserve in order to compete in an ever-challenging world.

Gozo

The introduction of the Fast Ferry service has been a lifeline for the connectivity between the two islands, as is the introduction of the second fibre optic cable. The Budget has also mentioned the modernisation of the airport facilities, yet these were vaguely mentioned. The effect these incremental measures will have on Gozo’s brain drain is questionable, and topics such as permanent connectivity through the tunnel and or metro lines were paraded around up until the Budget started being read, as no funds were allocated to either. However, incentives such as increased subsidies for those who buy their first-ever property in Gozo could help combat the ageing population.

Overall, the Budget proposed for 2022 has a sense of continuity when it comes to the social aspect of the governing administration.

Media outrage, public outcry, and EU pressure have also motivated the government to take action in addressing the Maltese economy’s carbon footprint, and the effects of Climate Change on the Maltese archipelago.

The three most pressing issues being Covid-19 recovery, inflation and FATF Greylisting were not adequately addressed. The government must provide clarity on how it plans to stabilize the economy for the long run and clear Malta’s name.