Federal budget good for a year, at the most

21st November 2012, Comments 0 comments

Let's face it, achievements should be recognised. The 2013 budget, which the federal government failed to deliver on time, seems to be in keeping with the strict austerity measures agreed upon with Europe. The fact that the budgetary deficit has been dropped to 2.15%, with a view to eliminating it completely in 2015, is something many other EU countries can only dream about. This route is the best recovery measure the country could have taken, with debt interest kept at a historically low level, and an absence of former tricks like once-off earnings through the sale of pension funds or sale and lease back operations. The third positive merit of this budget is the fact that it is not simply a rehash of the old budget with a few changes here and there, but contains serious measures as well. For instance the small shift from tax on labour to tax on capital and environmental pollution. And the linking of benefits for temporary unemployment to compulsory training. The prime minister also stressed a fourth point, saying: “We have not harmed anyone whereas other countries actually did.” And that’s true. But on closer inspection that’s not really such an accomplishment. Firstly it does not answer the population’s call for clarity. Secondly the prime minister and his six top ministers did not seek the best possible solution for the country during the past forty days, but rather a combination of measures which focused predominantly on finding a way to take as few blows as possible and to ensure that the other five did not score. This consequently led to an an amalgamation of small measures that go in all directions. As a result the population doesn't exactly know what has been decided and will remember those ideas that were first proposed like the VAT increase and the indexation jump, ed. but promptly rejected as ‘unacceptable’ and ‘pernicious’. That does not “recover the public’s confidence” that is required for an economic recovery but causes distrust. The public is certain the so-called unacceptable and pernicious ideas will return. And they are right. At the most within a year these ideas will all be on the table again. And if the economy should slow down, perhaps even in spring, when the government will have to reshape its budget. The country would be better off with another approach, introducing some measures that perhaps may hurt, but that are structural and could possibly cure the diseases from which the country is suffering.

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