The government is running a higher deficit in order to finance its inefficiencies and not to protect jobs, Labour leader Joseph Muscat said yesterday.
He accused the Prime Minister of being "very creative" in justifying the reasons behind the runaway deficit, which for the first three months of the year was €55 million higher than in the same period last year.
However, The Times reported that government spent only €3.7 million to help companies retain workers over the past months.
"Jobs are still being lost, investment has not increased and the deficit is already €55 million more. The money spent to salvage jobs is minimal when compared to the deficit. Lawrence Gonzi has lost control of expenditure and the situation is being made worse because the government is collecting less money from taxes as there are fewer people working and less wealth is being created," Dr Muscat said during a press conference in the second week of the election campaign for the European Parliament.
He said that while the Prime Minister was promising to create jobs the EU did not believe him.
Fresh EU projections showed that unemployment would rise by a further 0.5 per cent this year and the number of jobs next year would increase by a marginal 0.2 per cent, or just 300 full-time jobs. In February this year, unemployment was almost 1,000 higher than in the same month the year before.
Dr Muscat pointed out that the deficit last year mushroomed from a projected €68 million to €266 million.
"We are still owed a credible explanation as to why government expenditure had already shot up beyond projections before the election," he said.
Dr Muscat said job creation was important and so was purchasing power. Yet in the years since Dr Gonzi had become Prime Minister, price inflation was consistently higher than wage increases. As a result, workers could not maintain the living standards they were used to.
He said that 12 EU countries had lower price inflation than Malta but only one country had lower wage increases.
"The Prime Minister believes he can talk his way out of a crisis. First he had said Malta was unaffected by the recession and now he had to change tack. The reality is that the first real shock to the economy was delivered by the government when it introduced the high water and electricity tariffs."
Dr Gonzi, he said, was increasingly being associated with bills, inflation and unemployment.
Labour wanted to see the reintroduction of the price-control mechanism that was in force ahead of euro adoption and the creation of a Consumer Protection Agency.
Taking a detour, he also referred to the ongoing fraud investigations at the VAT department. He said it was unacceptable that, weeks after the case was first revealed, people were still unaware of the extent of the problem and whether it "ran into hundreds, thousands or millions of euro".
He also demanded that someone assume political responsibility for the corruption.
Reacting to Dr Muscat's criticism, the Nationalist Party accused the Labour leader of putting a balanced deficit before jobs.
"When all the governments worldwide are more interested in salvaging jobs and creating new ones, Joseph Muscat has his priorities turned upside down since he is more interested in numbers than jobs," the PN charged.
The party defended the government's decision to support companies in difficulty. However, it failed to answer why the deficit in the first three months was €55 million higher than last year when the financial support to companies only amounted to €3.7 million.
The PN reiterated that last year 7,000 jobs were created and foreign direct investment amounted to €624 million.