Opposition spokesman on finance Charles Mangion said yesterday the budget failed to meet the government's targets of responsibility, sustainability and solidarity. All the unions were not convinced that the budget was offering solidarity, and businesses were sceptical that the budget was sustainable. This meant that the government was not being responsible in its administration of the country's social and economic direction.

Speaking in Parliament during the budget debate, Dr Mangion said the government was putting a lot of emphasis on the global financial situation. It was true that this could not be ignored, but the government should take decisions which stimulated the economy.

Not only was the government failing in its aims, but it intended to get €100 million from direct taxation at a time when the economy was going through such major challenges.

Instead of being offered protection, families were being told they had to bail out the Nationalist government. They had to work more and earn less. At a time when the government should put more money into the economy, it was creating instability.

Dr Mangion argued that the water and electricity tariffs were not a separate issue from the budget. The government should also say how much gas was going to cost. Would it subsidise gas and, if so, by how much?

In real terms the increase the government was projecting would mean the water and electricity surcharge would go up to 194 per cent. The minister had said it would be between 125 and 135 per cent but, in saying so, he had failed to include in his calculations the additional €305 million he wanted to collect from taxes.

Up to six months ago the government used to argue that the surcharge was fairer than increasing bills; now it was saying that this subsidised waste. It was time for the government to decide which policy it wanted to follow.

Dr Mangion said that a year ago the government had projected that the deficit should not go higher than €68 million. By September it had already been more than €259 million.

In the first nine months of this year the government's expenditure had exploded by €166 million. Was it possible that the government could not project certain additional expenses? It was obscene that the government did not realise that at the end of 2008 it would be faced with the shipyards problem.

Dr Mangion said the government expected the deficit to go down from €259 million to €200 million by the end of the year. This meant that the government expected to increase its income by more than €58 million over 2007. Since it was projected that it would get €40 million less from the EU, did the revised estimates reflect reality?

The government was projecting a seven per cent increase in income from taxes and a GDP growth of 2.5 per cent. One could not imagine an increase in exports during this period. The contribution of tourism to the economy was going down.

The government also planned to make €30 million from additional taxes and the increases in tariffs, when the people would have less purchasing power. Against all predictions, the government was projecting to return the deficit to under three per cent by increasing the tax burden by one per cent of GDP. This was not even recommended by the European Commission.

Dr Mangion said that between 2003 and 2008 the national debt had increased from €2.9 billion to €3.5 billion. During the same period, the government had received €300 million from privatisation, apart from other income from sale of properties. Consequently, the forecast was that the government would have to borrow a lot next year. How credible were the proposed solutions?

While recurrent expenditure shot upwards, capital expenditure fell below projections. This was reflecting itself in what was happening with EU funds. In 2007 the government had projected it would get €170 million from the EU, but had got €55 million. In 2008 it had projected €116 million; instead, it would get slightly more than half that amount.

This was when the people had to fork out between €54 million and €60 million in contributions to the EU. The government was now saying it would spend €320 million in capital expenditure.

Not enough funds were being earmarked for the regeneration of the ports and the building and maintenance of roads. There was an increase in the allocation to the MTA, but had the authority been given any performance targets?

The new environmental taxes were aimed only at collecting more taxes. From its taxation on cars, all the government wanted was to get more than it had lost with the registration tax. Dr Mangion said the government should consider reimbursing VAT on photovoltaics.

Labour MP Gavin Gulia said that for each euro the government was giving, it was taking between five and seven. It planned to get €59 million more from income tax and €22 million more from VAT. It was giving €12 million in income tax reductions and taking €40 million in water and electricity bills from families and €30 million from businesses.

In transport, the government was giving €7.7 million and taking €27 million. It was taking €6 million in entertainment taxes and €9 million in environmental taxes.

All social partners and leading economists were concerned about the government's economic policy. Because of its pre-election expenditure, the government had its back to the wall and had to increase taxes.

In spite of the international crisis, he said, the government was not implementing short-term measures to stimulate the economy, reducing pressure on families and businesses.

Water and electricity tariffs would have a major inflationary effect when inflation in Malta was already the highest in the eurozone, making businesses less competitive.

According to facts published by the NSO, both halves of this year had seen a great increase in deficit.

In some cases it was not a problem when imports decreased. But when this decrease impinged on investment, it was of concern. When it came to exports, the balance had increased to 74.5 per cent, more than that of last year.

Admittedly the balance of payments had improved by 10 per cent in the first six months of the year. This was mostly due to Gasco and the online gaming sector. Earnings from tourism had decreased by €2 million.

Direct foreign investment had decreased by €31 million, but this could be due to the economic slowdown. Malta was not attracting enough in manufacture and services to make up for losses because of the global situation.

According to the Economic Survey, wages had decreased by a little more than one per cent. To say that new tariffs were necessary to protect places of work was an insult to business owners.

The self employed were the ones who suffered the most as they were often family-owned, and they paid exorbitant rates.

The changes to car registration tax, which the government had finally decided to do something about after the market had stagnated for many months, left operators in this sector, for both new and used cars, in the dark.

Carmelo Abela (MLP) said that when oil was costlier, the mechanism the government had introduced had kept the price the same, but when the price of oil decreased the surcharge went up to 95 per cent, and new tariffs were introduced. This was the worst time for these new tariffs, which affected competitiveness.

Only €20 million had been invested in the five schemes to be implemented over the coming years by Malta Enterprise. These had all been mentioned in previous budgets.

The minister had good ideas, but when proposals were positive there were no timeframes. Malta was at the end of the stick when it came to investment in research and development.

An Ernst & Young survey had revealed defects and weaknesses and the government had to look where it needed to improve. There was another proposal to set up a commission to look into extra expenditure by the public sector.

Expenses related to transport, especially by sea, kept on increasing. The company which controlled the Freeport cared little for small companies, and these often had to face long waits.

The Ta' Qali crafts village was a story of incompetence, as it was 16 years too late. What was the situation at the Ħal Far industrial zone?

Mr Abela asked whether the Malta Industrial Park published its accounts. Why were these not shown in the estimates? What was the company's strategy on the bad state of various industrial zones?

The government had again mentioned energy audits, but what had happened to those of 2008?

What had become of the €2.5 million invested for Maltese businesses to identify new markets? Was the best use being made of sources such as embassies? When it came to investment the government had to be more transparent.

Malta Enterprise had approved 29 expansion projects, 15 of which were foreign. Compared to past years this was a decrease.

The capital investment forecasts of €24 million for 2007 and €16 million for 2008 were not positive indicators.

Mr Abela said that 220 jobs were lost in the manufacturing industry during the last four years, with 887 jobs lost over the last 12 months. The situation was not worse because of a good performance by the pharmaceutical sector. He called on the government to safeguard this sector and to amend the Patents Law in this regard. Mr Abela criticised the government for failing to mention the film industry in the budget speech, adding that new initiatives were needed in this sector.

Concluding, Mr Abela insisted that the people managing the manufacturing sector were showing more courage than the government, which needed new direction.

Mr Silvio Parnis (MLP) accused the government of defending wrong decisions taken before the election. While other governments were putting money into people's pockets, the contrary was taking place in Malta.

It was unacceptable not to hold a social impact assessment before deciding on the new utility tariffs. The opposition believed in social dialogue. He suggested that energy bills be issued monthly so that families could plan their expenditure better.

Mr Parnis said the opposition would also push forward the proposal for the setting up of a consumer protection agency which should also be given the tools to be effective.

The annual inflation rate this year amounted to 5.8 per cent, which was 2.6 per cent more than the average in the eurozone. The increased cost of living had reduced purchasing power and lowered standard of living.