Monday, October 07, 2013

The Forgotten Islands Of State Investment

It may have slipped under the radar, and slipping under the radar may well have been what the regional government might have hoped. While it has been engaged in its war with the teachers, the national budget was announced, an element of which is the annual divvying up of state funds for investments to the country's regional administrations. The budget for the Balearics is down. Down again. President Bauzá might wish to make political capital by deflecting any blame from himself by casting blame on his masters in Madrid, but he is of the same party. He is party therefore to the philosophy of economic management through austerity. It's tough being PP regional president when you are so identified with the national strategy.

Hoping the budget might slip under the radar would be as a result of the criticisms levelled at the president last year. The opposition argued then that a paltry investment by Madrid was because of the inexperience of both Bauzá and the then finance minister Josep Aguiló. Regional presidents have to fight their corner, and fighting the corner has never been tougher than in these tough economic times. Yet, not all regions end up with sums as paltry as those destined for the Balearics and not all regions have this year seen a reduction to their budgets.

To be fair, the 5.7% cut to the Balearics budget is nothing when compared with the 25.5% reduction that Catalonia is going to have to endure. And before any conclusions based on Catalonia's arguments with Madrid are drawn from this substantial cut, it might be noted that quiet Asturias has had the largest cut of all - 31.6%. But percentage reductions tell only part of the story. While 5.7% is not too far away from the average budget reduction for the regions (7.1%), in absolute terms the Balearics investment budget is tiny. It stands at a little over 0.6% of the total investment directed by national government to the autonomous communities. Andalusia, as an example and as the recipient of the largest share of state funds, gets 17.3%, but then Andalusia is a pretty big region. A more meaningful comparison where the Balearics are concerned is with the Canary Islands. They are unhappy there, too. A fall of 4.8% is not, however, as great as that in the Balearics budget, while the Canaries will in fact receive a sum more than four times greater than the Balearics; it is 2.7% of the total investment to the different regions.

If one goes back to times before crisis, in 2007 the budget for the Balearics was 217.7 million euros, more or less three times higher than the 74 million that the islands will get in 2014. The Balearics budget has tended to be one of the lowest among the regions but not as low as it now is. Go back a further ten years to 1997 and while the amount was lower than in 2007 it was greater than those for Cantabria, Asturias, the Basque Country, Murcia and Extremadura. Each of these regions has since and for quite some number of years left the Balearics trailing a considerable distance behind.

There are many different explanations as to why the regions' budgets should be as they are and why there were as they were in the past, while over the period from 1997 to 2007 the Balearics budget fluctuated considerably between a low of 110.6 million euros in 1998 and a high of 265.3 million in 2003. An average of 205 million for the period has now been slashed by almost two-thirds, and by comparison with other regions the Balearics have in more recent years been dealt a far more parsimonious hand. The rot really set in in 2010 when the budget reduction for the Balearics was the largest for any region - almost a quarter - and it has been falling ever since.

Bauzá cannot therefore be blamed for what was a trend before he became president. It may be that inexperience might have led him not to have pressed for greater investment last year, but he now has more experience as well as the experience of the criticism that came his way because of last year's low budget. But there may be some justification for one explanation advanced for the low budget - that Bauzá is simply too compliant with Madrid in all sorts of ways. Were he more awkward or awkward at all, he might and so the Balearics might fare better. Or perhaps there is another explanation, one offered by the region's finance minister, José Vicente Marí, that in Madrid they have forgotten that the Balearics exist.

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