Prime Minister Lawrence Gonzi may be fresh from a new victory, but he is facing some old problems, as Steve Mallia found out.

The question a number of people were asking after the election is: did you get the message?
I think I've given ample proof in the past seven weeks or so that I've responded to the messages sent by the electorate: smaller Cabinet, younger faces, young ministers, offers to try and see whether the opposition are prepared to cooperate in order to make a real change in politics. The answers are there. Some of the major reforms, such as the Malta Environment and Planning Authority, are still at an early stage but we're moving down that road as well. This has been a very busy period for us.

You came in as Prime Minister with a five-seat majority. Now it's down to one. Doesn't this make you a weaker PM?
Not at all. This is a strong government. We have a strong programme which we intend to implement. It's not the first time we've had a one-seat majority in parliament. Irrespective of what the opposition does, we will govern strongly and will continue to move the country forward especially now in the face of these enormous challenges that are affecting every country, including Malta.

Doesn't this reality, though, give the backbench more clout?
One should never look at a parliamentary group as backbench and frontbench. We are all in the same boat. If something goes wrong, it goes wrong for us, the party and the country. And we need to deliver not just for the people who voted for us, but also for those who didn't vote for us. So the responsibility on our shoulders is enormous.

Does having just a one seat majority make it less likely that that this government will last five years?
This government will last the full term.

Are you saying outright that an early election is out of the question?
Absolutely. It would be a disaster for this country to go for an early election.

Even if your position might be strengthened two years down the line, for example?
Political and economic stability are fundamental ingredients for a country to move forward in the world we're living in today. As soon as we start shaking either of these two pillars, local and foreign investors get really scared. The secret of our success during the last legislature was the economic stability we achieved, the financial consolidation and the political stability throughout - in spite of the fact that we had an opposition that was negative from the very start. I'm hoping that they've learnt their lesson. We've learnt our lesson as well.

During this legislature, we will press ahead with our agenda. Now if Labour decides to cooperate, then that's good for the country. If Labour decides to continue, as they seem to be doing, to have a negative stance to everything, that's bad for the country. And bad for them as well.

If pairing doesn't happen, does this mean that your government won't be able to function?
My assumption is that pairing will not happen. I can feel that Labour is being very negative on everything at this point in time. But we will function. We will meet, if need be, on Saturdays. I will not allow anyone to place obstacles in the way of progress for this country. At the end of the day, if parliament is unable to meet it's not the government that will not be able to operate, but it's the country that will be in a difficult position. I am still hoping that common sense will prevail and that the opposition will understand it has a positive role to play.

During the election campaign there was a €1,400 (Lm600) spending limit for candidates. Many of them exceeded that and yet took an oath saying they spent that amount or less. Are you happy with this state of affairs?
Absolutely not. I think it's time we changed the law because it's full of loopholes. For example, it says you can't spend more than that amount, but it doesn't say what happens if somebody else spends it...

My understanding is that €1,400 is the total amount, irrespective of who spends it.
The law is not clear. The time has come for us to change the law. The spirit needs to be that a candidate who contests an election is allowed to spend a certain amount of money but, of course, that must not then limit the number of candidates to just those who can afford it. The idea is to provide a level playing field.

Are you happy that some MPs probably ended up taking a false oath on that?
I hope nobody has taken false oath. The issue is about an old law that needs to be brought up to date. I hope people in the country appreciate that offering yourself for parliament is a good thing and we should find a practical way to encourage people to come forward. This country needs good people from all walks of life to be politicians.

Would this mean you favour raising the salary of ministers and prime ministers?
I believe that a minister should receive the salary he or she gets today, but on top of that also receive the parliamentary honorarium; because the minister is not just carrying out his function as a minister but is attending parliament as much as - if not more than - other MPs. I also believe it's time for us to review the honorarium because, as I said, we need good parliamentarians that today must shoulder the responsibility of parliamentarians that are in the EU.

A few days after the election, when asked about the Jeffrey Pullicino Orlando case on PBS, you said: "I knew that there was some informal agreement, that was the description, but I didn't have all the details..." On March 24, Dr Pullicino Orlando was reported in The Times, saying: "I told the party about all the facts that had to do with me". These are contradictory statements. So who's telling the truth?
Not necessarily. I don't think they are contradictory statements. I repeat what I said: Jeffrey had told me that there was some form of arrangement but I did not have all the details.

He's saying that he told the party all the facts.
Well, facts, yes, he said there was a formal agreement in some way or other with this individual. Again, I don't see anything illegal in that and as a fact that was correct, and as a fact...

But you're saying you didn't know all the details. He's saying he told you all the facts. There's a discrepancy there.
We're playing with words. He's saying facts, I'm saying details...

He's saying all the facts.
I did not know all the details. Nor was I concerned with details because the issue wasn't on the details, at that point in time at least. The issue was that there was some type of agreement with respect to the site in Mistra. That is the fact that needed to be established. The point here is: was there anything irregular or illegal?

That's an issue on one level. Another issue...
But at this point in time that's the fundamental issue. I am the Prime Minister and I have to be extremely careful. I have every confidence in the Police Commissioner just as much as I have every confidence in Mepa's auditor. I was the one who first asked the Police Commissioner to investigate. I think the correct way of doing this is to allow the commissioner to carry out his investigation and then allow whoever is responsible to decide whether there are any legal implications - without any implied, direct or indirect pressure on my part.

One question the Police Commissioner is not addressing is whether Jeffrey Pullicino Orlando misled you or not. It's not material to his investigation. So, did he mislead you?
I don't think he misled me, at this stage, from the facts I know. But I don't know all the facts, or the outcome of the investigation. Let the process take its course and then that assessment can be made.

OK, after the Police Commissioner concludes his investigation, will you then say openly whether you were misled or not?
Of course. I have no qualms whatsoever in stating the facts.

Some people have described some of Mepa's past decisions as 'absurd', especially when it comes to the appeals' aspect. Do you agree with such a statement?
I think there are some decisions that are difficult to explain. When I made a public statement saying I will take responsibility for Mepa's reform, among the four criteria I mentioned were that there has to be a level of transparency - setting people's mind at rest that they are being treated in the same way as others. Because I know of cases where a permit has been issued for one individual, and not for another. And the reasons for that are not clear. So, we will try to ensure there is more efficiency and transparency.

What you describe as 'not clear' others describe as 'corruption'. Do you agree with that?
I have referred every allegation of corruption to the police and I continue to do so. I encourage people to do the same thing. I plan, in this legislature, to try and strengthen the institutions we have that are there precisely to investigate corruption allegations...

But do you believe there has been corruption within Mepa?
I cannot answer that question.

But you're not happy to say there hasn't been.
Of course I'm not. I cannot eliminate that at all. On the contrary, my point of departure is to ensure there are the checks and balances in there that set people's minds at rest that there is no corruption. So, if someone has been refused a permit or granted a permit - in the face of opposition - then at least people will accept that that decision has been taken in a fair manner.

You've had an opportunity now to look at Mepa personally. Is it a mess?
There's too much bureaucracy. I think we can simplify and speed up the process. There needs to be much stronger positions on Outside Development Zone applications.

Will you rule them out entirely?
You risk shooting at the agricultural community if you do that. Do I prevent a genuine farmer having a greenhouse? Because that is ODZ. Or building a well? But, there again, we've had cases of what appears to be a genuine farmer filing an application to build a well and then he builds a garage or something similar.

There have also been larger buildings. Is that something you guarantee, from this day forward, will no longer take place?
We will try our best to have a system in place that works. You've got to be very careful not to have a system that then stagnates the whole economy. I believe that, as a rule, ODZ applications should be turned down. However, we should have a transparent mechanism which allows certain types of development in ODZ, mostly agricultural in nature.

Why did Mepa end up in such a bad state? There was a minister responsible for it before and a number of people placed the blame on his shoulders. You taking over its reform supports that view...
That's an interpretation people put on it...

...There can't be any other interpretation.
Of course there is. I took Mepa's reform under my wing, and tourism, and local councils. In the previous legislature I took finance under my wing. If the Prime Minister takes responsibility for something, does that mean he's in some way or other criticising or damning what was done in the past? No. It's because there are certain areas and certain circumstances where it is necessary because the Prime Minister wields a coordinating power which is much stronger than a minister's.

I consider sustainable development to be the biggest challenge the country has right now. We have to understand what we're talking about: we managed to achieve fiscal consolidation, which is under threat from what is happening in the international markets. Now we have a situation where every single development is becoming a controversy. Every one, large or small. So the biggest challenge today is finding the right balance for sustainable development. And that's why I took this under my wing.

Are you going to stop political appointments at Mepa?
It depends what you mean. Should the Prime Minister not appoint the chairman and the board? Of course not. Even if I were to leave that to someone else, the responsibility would still fall into my lap. People would still hold the government responsible for the decisions being taken.

What about the NGOs recommending board members at Mepa?
There's no difficulty with that and I will listen to what they're saying - as long as they understand that we're not only talking about safeguarding the environment, but also allowing it to move towards sustainable development.

Martin Scicluna suggested there should be some sort of 'firewall' between the government and the authority. Is this something you think can work?
I understand what's being said, but we have to decide. I will go for a firewall but then if anyone asks me or a minister about a particular application, our response will be, 'there's the firewall, sorry but I can't do anything about it'. In theory, that exists today as well, to the extent that the auditor said there should be an ethic that stops somebody interfering in the process at Mepa. It's a very delicate issue and we have to be extremely careful how to deal with it.

You've said that your role is to reform Mepa, not to run it...
...And not to substitute it...

Who's going to run it?
The chairman, the board and the CEO in a reorganised Mepa that will be able to focus on the major issues.

Are you going to keep the current chairman or are you going to replace him?
I think the time will come when there will have to be a replacement, yes.

Sooner rather than later?
It depends on the process I'm going through at this point in time. Because I'm sure that the process will lead me towards some changes within Mepa's structure. Therefore, everyone today operating as a nominee or on any board in Mepa will have to adapt to the changed structure. So, nobody there has any guarantee whatsoever. All of them are on notice.

But the chairman was there previously. The implication is he didn't perform well, so he will be replaced.
Let's wait for the process to move forward, but I believe it's time for changes within the composition...

Will you appoint a minister or parliamentary secretary to take responsibility for Mepa after you've reformed it?
That is something I will decide in future. The answer is probably yes, I would be tempted to go down that route. But I don't want to commit myself at this stage. I want to make sure the reform process takes place, that the authority regains the trust it deserves. Because I also believe the authority has been treated unfairly. There have been some controversial decisions, that's true, but there have been hundreds of difficult decisions as well that have safeguarded the environment and policy issues that are important within our community.

With regard to income tax, come the next budget are you going to announce the whole change that you proposed before the election?
It's early days for me to make a categorical statement on that. We have started the process to prepare for our pre-budget document. We have our electoral commitments and we will implement them. But we have to do it carefully.

I'm concerned about what is happening in the international market... commentators are saying that the ceiling on oil may be $200. The income tax proposal was formulated as an economic stimulus initiative, not just to reduce tax that people pay - though obviously that is an implication of it. We need to stimulate economic activity. Our outlook so far for 2008 and 2009 continues to be positive. On that basis we will take our decisions and implement our income tax proposal. As long as those basic statistics do not indicate there has not been a shift in the negative rather than the positive...

...And you will implement it all in one go, so it won't be staggered.
At this stage, I repeat, I want to see the economic indicators.

But before the election weren't you giving the impression that this was going to be in the next budget and that it would all be in one go?
Yes, although we were not as categorical as that. Yes, the intention was (that), if we get the economic figures right. This is straightforward: this is going to cost us Lm20 million (€46 million). The whole issue is: in 2009 will our economic growth continue to develop as it has done so far even with the government losing Lm20 million in revenue and diverting it into the economy. If the answer to that question is yes, we will go for it this year, full-blown for 2008. If the answer is no, then we will stagger it.

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