National Association of Pensioners president Albert Tabone yesterday described the budget as balanced and one of consolidation.

Mr Tabone said pensioners would be positively affected by the changes to income tax bands.

He also welcomed the amendments to the Income Tax Act which now mean that tax arrears arising out of revisions of pensions will be spread over the respective years of income on which the pension arrears were due.

It was announced that all arrears would be paid on January 1, provided that these do not go back further than 1999. Arrears due before that year would be added on to the income of 1999 for tax purposes.

However, Mr Tabone was critical of the government's decision to set up a new cost of living index for pensioners.

Mr Tabone said the government implemented this measure without consultation.

"This measure could affect pensioners favourably or unfavourably. But we were very surprised because we were not consulted. The fact that the finance minister said this was an electoral promise does not mean anything. There were other electoral promises regarding pensioners which were not implemented."

In the budget speech, Finance Minister John Dalli said that in its electoral programme, the government had promised that the workings of a new cost of living index for pensioners would reflect their expenditure patterns.

He said that from studies that had been undertaken, it emerged that a pensioner's expenditure trends were different from those of a person who was still in employment.

It has emerged that a pensioner-household spends more, or 60 per cent of its income, on food, personal care and on healthcare. At the same time, they spend less, or 46 per cent of their income, on domestic needs, transport, education, entertainment and recreational activities.

When the government applied the price index worked out on the expenditure patterns of pensioner households, the cost of living increase amounted to Lm1.27.