PM says economy is picking up

In an upbeat mood laced with prudence and caution the Prime Minister yesterday gave a one-hour overview of how the economy is faring.

Appearing more sure of himself than of late, Dr Lawrence Gonzi admitted that the economy was ticking at a slow rate but said it was, nevertheless, showing healthy signs as regards exports and investment.

Government revenue had gone up, the inflation rate had stabilised following the three per cent hike in VAT and the structural deficit had been trimmed by 14.3 per cent.

The main thrust of his speech was that one had to keep one's feet on the ground because any improvement in the general finances of the country could be wiped out by external factors, such as the rising cost of oil on the international market.

During the meeting with Dr Gonzi last week at his official country residence in Girgenti, ministers and parliamentary secretaries had done a dry run of how they can clip expenses, with the Prime Minister making it crystal-clear that the performance bonus for permanent secretaries, directors and assistant directors in the civil service would be directly tied to whether they had reached their targets of cutting costs and raising productivity levels.

For a similar purpose the government is to call a meeting for the chairmen of authorities and public corporations to set up a team whose brief would be "waste-busting", Dr Gonzi said.

Seeming to put his finger on another wound that was bleeding government coffers, the Prime Minister asked the media with a wry smile whether they knew the extent of the overtime bill in summer for the civil service.

"We have half-days and yet we get a bill for overtime," he said, his smile giving away the fact that the amount of this bill, which he did not divulge, would be startling.

Speaking during a media briefing at his office at the Auberge de Castille in Valletta, Dr Gonzi argued that he would be prepared to cut down government-induced costs but one would then have to be prepared to join forces with the government to reform work practices, such as at the ports.

Dr Gonzi was also on the attack when he fielded questions. On privatisation, he said the situation at Sea Malta was such that the government was prepared to take into account the public social obligation by the maritime company to assist manufacturers but the government was not prepared to do this "at any cost".

The government, he said, could not keep subsiding this company. "As it is, Sea Malta has far too many expenses," Dr Gonzi added.

Regarding the privatisation of the Freeport, he said negotiations were at an advanced stage while in the case of Maltacom there was still much ground to cover.

On the Mater Dei Hospital - which many have described as a white elephant that is draining the government's finances - Dr Gonzi seemed to be weighing every word when talking about this capital project.

Initially, the hospital was meant to cost about Lm90 million, that is for the construction of the building, he said. The government, he revealed, had already forked out that amount and was now in earnest talks with Skanska, the building contractors, to see why and where additions to the original plan were made.

The government was prepared to honour those expenses involving additions it had authorised but it would not be prepared to shoulder the burden of the expenditure of "other parts that need explaining".

Answering more questions on the new hospital, the Prime Minister noted that the government was holding meetings with trade unions about work practices.

He said the tender for the IT equipment will be announced shortly.

When asked when he thought the hospital would be ready, he was even more cautious with his words saying there were a number of variables that had to be taken into consideration before one could arrive at a date but he would be insisting that the opening date would be "as soon as possible".

On the Lm9 million spent on a building to house Malta's permanent representation at the EU in Brussels, for which the government had got a lot of flak, Dr Gonzi said the decision to buy it was taken by the Cabinet in May after expert reports were drawn up; 16 properties had been identified, and three were shortlisted.

He thanked (MIDI chairman) Albert Mizzi for his assistance in arriving at the decision to buy. Mr Mizzi was instrumental in 1991 when the government bought the property that now houses the Maltese High Commission in London. Dr Gonzi said time had shown that was a good business decision in view of the rapid appreciation of property since then.

The government, he explained, had realised that if it were to rent the property in Brussels it would have to spend the same amount over a 25-year period without having anything to show for it.

Instead four floors of the building would be rented out to third parties to offset part of the cost. The building would house about 60 officials.

"It seems many have not yet realised that Malta is now an EU member state. The building in Brussels is not an embassy but will be used by Malta to make the best out of EU membership. It will assist the government to obtain all that we need to get from the EU," Dr Gonzi said.

Noting that criticism had been levelled at the government, implying that it had commissioned KPMG because the brother of Richard Cachia Caruana, Malta's representative in Brussels, worked for that firm, the Prime Minister explained that the firm contacted was KPMG Brussels, and not KPMG Malta.

Donning the hat of Finance Minister, Dr Gonzi made it clear that with government accounts he would not accept any bills pending to be forwarded to the following year.

Dr Gonzi said that among the subjects discussed at the Girgenti meeting was the need to use and incentivise alternative sources of energy, since existing plans for the generation of energy had to be completely revised in view of the greatly increased demand.

Another point discussed was the need to assign responsibility for public cleanliness to one ministry, rather than three as at present. Much greater co-ordination was required in this area.

Asked about the coming into force of the eco-contribution, Dr Gonzi said that much progress had been made in talks with the constituted bodies, but they still had to be concluded with one operator. However, he believed the contribution would come into force next month.