Further cuts in government subsidies expected in budget
Labour Party replies
Tourism is subsidised by the government by 33 million euros a year, Finance Minister Tonio Fenech stressed in an interview. He pointed out that low cost airlines cost the country between five and six million euros a year.
The government will continue to cut subsidies when it presents its budget later this year, Finance Minister Tonio Fenech told The Times Business.
“Let’s continue cutting subsidies because these come from taxpayers’ money and they can be made to better use,” Mr Fenech said in an interview.
Mr Fenech said it be very dangerous for an economy if it had to become dependent on government subsidies, adding that government funds should be there for investing in the country “in order to create the best environment for business to operate”.
“There are a number of areas which we constantly subsidise. Today we subsidise transport, the agricultural sector and tourism. We need to make sure we are getting the value of these subsidies and to consider whether the government should continue with these high levels of subsidies, or how we are to recoup some of them,” he said.
Mr Fenech said the government subsidises tourism by €33 million a year, pointing out that low cost airlines cost the country about €5 to €6 million a year. “This is taxpayers’ money. We need to get the tourists here but at the end of the day there has to be a value. The government has to recoup back in order to re-invest. No industry can expect the public to subsidise it indefinitely.”
In the interview Mr Fenech said he believed the worst was over for the manufacturing sector and that the government will soon be in a position to announce significant new investments into Malta which will create a number of jobs.
Mr Fenech said the manufacturing companies recently helped by the government will probably create about 250 new jobs in 2010. “That means we have not only saved over 2,000 jobs but we’ve actually created new jobs through these packages,” he said.
He said that the recession had certainly taken its toll on public finances and in the first six months of this year public revenue from income tax and VAT declined by over €60 million.
Regarding the European Commission’s end 2010 deadline for Malta to regularise its deficit which last year stood at 4.7 per cent of GDP, Mr Fenech said Malta’s deficit in 2010 will be close to the three per cent limit, “but still above, at around 3.3 per cent.”
“The government will try and reach the three per cent target by 2010, but this will not be done at the expense of creating more problems for the economy,” he said, adding that “in these difficult times economic growth and job creation exceed strict disciplinary deficit rules”.
Asked if the COLA mechanism would one day be abolished, Mr Fenech said he believed this system has actually made Malta more competitive.
He said: “One has to examine the alternative: Do we leave the negotiations purely between unions and employers? I don’t think that would give us the industrial stability that we have enjoyed for quite some time which is so good for investment. Investors find our labour skills attractive and they also like our industrial stability which COLA plays a part in. Do we want to see strikes talking place in every factory over wage demands?”
Mr Fenech said that at some point a decision will have to be taken to fully privatise Bank of Valletta but added: “We have no intention of selling the bank at a point in time when the market does not give us the right returns.”
He also hinted that the Malta Stock Exchange will be privatised saying that as a long-term strategy “there is no reason why the Malta Stock Exchange should be government-owned”.
Mr Fenech said he hoped the privatisation of the shipyards could be concluded by the end of the year.
See full interview in today's The Times Business
LABOUR PARTY'S REPLY
I refer to the above interview.
Mr Fenech resorted to nothing more than petty political spin when implying that one of the PL's proposals is "having to buy things from the government".
He either doesn't know that the government imports its own products, such as fuels, or else he is consciously trying to deceive The Times' readers to gain some cheap political points.
Funnily enough, he is also contradicting himself, as minutes after having contributed to Labour's national conference on the cost of living he gave comments to PBS news expressing his satisfaction at the consensus that exists across parties on the liberalisation of the markets. He later added that Labour's proposals are already being implemented by the government. There is definitely some confusion in Mr Fenech's mind when trying to deal with Labour's positive attitude in proposing things rather than just criticising.
For the benefit of readers, Labour's proposal is about introducing measures to increase transparency, cut inefficiencies and reduce bureaucracy in the products which the government already imports.
It is the lack of transparency, gross inefficiencies and massive red tape in the government's administration that have caused the prices of products, such as fuels, to shoot up to record levels.
Any other serious government would have taken Joseph Muscat's proposals seriously rather than find a way to spin them in the media.
Instead of dealing with the real problems that working and middle-class families as well as businesses are facing, Lawrence Gonzi and his Administration continue to play political games. Clearly, Dr Gonzi and Mr Fenech did not learn anything from last June's heavy defeat at the European elections.
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charles zammit
Sep 3rd 2009, 23:13
i really cannot fathom how this minister has taken upon himself to go against the current trends and is coming up with one gaffe after another and worst not only he is not getting results but all economic trends have proved him wrong all the time. but he keep on insisting on these hard hitting tactics. the unemployment figures. the decline in tourism, the decline in the manufacturing industry, the increase in the deficit. have u heard it guys, just as our minister has informed us that there will be further cuts in government subsidies in the us they have just announced another cash for clunkers after the one on cars, this time its refrigerators............
joe camenzuli
Sep 3rd 2009, 22:57
'Continue cutting subsidies as they can be made for better use'. Better use for what? To subsidise the influx of illegals!!!
F J Brincat
Sep 3rd 2009, 20:58
Should be a good budget then. Another feather in the minister's (and government's) hat no doubt.
I'm sure that the tourism sector will take more shake ups right on the chin and will grin and bare it with fortitude. Mela ma ghadux pilastru ta' l-ekonomija dan?
The same applies to the transport sector. I'm pretty sure that the local population will take to an increase in public transport costs like a duck takes to petrol.
Agriculture? No problem there at all. By the way, what did you promise the farmers?
But we have EUR 80 million to spend over 4 years..no worries. This is unreal.
Oh yes, I shall look forward to the budget with great eagerness.
Godfrey Pirotta
Sep 3rd 2009, 20:41
Mr Fenech wants to cut the subsidies on - tourism, agriculture and public transport - which have supported Malta's economy. As we shall see in the coming budget these are subsidies which cannot be meaningfully cut since they would deal a fatal blow to an economy already in a grave situation. What Mr Fenech means is that he is going to inflict on us a higher burden in indirect taxes. This is the usual Machiavellian way which this government employs to prepare us for the worst.
This government always speaks for example of the subsidies on health when the truth is that the only chance I have of using the health service is if I am admitted in danger of life or limb. Indeed, so far, the only way of looking after my health was by paying through the nose.
If the government is serious about cutting subsidies it could start by putting into place a transparent public procurement system for the current system is nothing short of a subsidy, at taxpayers' expense, of all kinds of contractors many of whom give us back low quality products and services and who quite often, ironically, one meets at public receptions.
c.caruana
Sep 3rd 2009, 19:10
Thanks for all of you who voted pn!! You've destroyed all the work done by our past leaders!!
lgalea
Sep 3rd 2009, 18:39
N.Calleja
The people are cursing people like you who are foreigners lackeys and lick their boots instead of being proud to be independent and free to manage our own affairs instead of being ordered what to do from the Brussels foreigners.
Mark Galea Do you think that anyone is stupid enough to leave lights and gas on and waste them just for fun?
F.Bartolo snr
Sep 3rd 2009, 18:35
Then why don't you guys get rid of RyanAir and all the low cost Airlines altogether my friend, if its costing the country 5-6Mil. and coming out the tax payer's pockets, charity begins at home and if that were me i back our National Airline and no foreign companies. Do same as they do in Britian and that is to buy British and support the home country.
victor caruana
Sep 3rd 2009, 16:01
Bravu l-boy, quote: “Let’s continue cutting subsidies because these come from taxpayers’ '. As if subsidies are passed on cats, rats and dogs.
He should tell this to the EU commissioner for the economy and agriculture. They are harming the eu economy with dishing out subsidies.
hawwadni ha norqod!!!
David Pisani
Sep 3rd 2009, 15:53
I think its wrong to cut subsidies in public transport. Subsidies are there to keep price low, thus making more attractive to people to use public transport, apart from the upgrading. It will help to reduce traffic congestion, improve the environment and decrease the necessity for more building of new roads. Government should look at subsidies through a social and environmental perspective, as is with the use of Gas. Neoliberalism dogma creates social divide and harms more the environment as it does not put into practise the concept of polluters pay principle.
What about subsidisation of Mater Dei Car park, Mr Tonio Fenech?
If the carpark is operated by the Public Service, the price for parking cars can be cheaper whilst the Government would be saving funds which are currently subsidizing the private company. Revenue generated through the scheme could be used for public purposes”.
I think Government should rethink itself on the use of subsidisation.
Claire Busuttil
Sep 3rd 2009, 15:34
Simply a disgusting situation!! Malta like other countries, is not going so well financially, so there is a need of cutting govt. subsides.......but than strange enough, there are lot of funds to be spent on Renzo Piano`s plan, and other cosmetical projects around the island. there is also a lot of money for the MPs to spend, on cars, and other benefits. Then the old pensioner that goes to collect his medicine from the govt pharmacy, is told that the hypertension pills are out of stock!!
C. Borg
Sep 3rd 2009, 15:15
What about making checks on people who are receving unemployment benefits or disability benefits, when in fact they work, and those receiving single parents benefits, when they are living with their partner. This is money from taxpayers, all this adds up to the deficit.
Muscat.Pat
Sep 3rd 2009, 14:42
PN believes in "small government" except when it comes to spend our monies! The Minister expects us to deliver every Euro due to him, all fine, however, when are we going to see the fruit of all this collected money? Potholes, Vat fraud, conflict of interest, jobs for the blue eyed boys and "money no problem" galore, is hardly synonymous with good governance ! And now, our taxes going to the pockets of illegal immigrants. For refugees yes, for econmic and illegal migrants no !
m sciortino
Sep 3rd 2009, 14:29
Government's share in BOV should not be sold. The recent financial crisis has shown that Governments cannot let major banks fail. Many Governments ended up taking huge stakes in banks to save them from collapse because having a Govt as a shareholder gives that bank strength. BOV is important for the local economy and the Government stake should stay.
Jack fabello
Sep 3rd 2009, 14:09
I cannot stand this thing of the government imposing on the population. All these rises in prices will effect the country and put it on recession by itself!
Electricity increased, Gas Increased, Cost of living Increased... and wages remain the same. This will lead to people stop buying and moving the economy of the country. This is the cause of going in recession.
You have to give a helping hand to people and reduce some stuff so that people will have more money in their hands and move the economy.
We are people and not animal just working to live and nothing else. It's getting to be a struggle to exist at the moment. If subsidies are removed at this stage, you are not solving anything since if subsidies are removed... prices will get even higher.
My and everyone's else point to the government is to cut the cost which are really effecting the Country's money box! Cut expensive cars, cut excessive expenses, tax abuse, other abuses of tenders etc etc and other overused privileges! That is what causing this country financial problems!
francis cini
Sep 3rd 2009, 14:08
statistics, does anyone bodybelieves statistics,long time ago there was a famous foriegn politician who used to say , lie to your people as much as you like and then give them the statistics,i think it is being done today. does anyone agree.
Sunny Said
Sep 3rd 2009, 13:57
I totally agree with D.Scerri. The population must be accounted for. We don't reduce the deficit of the country by cutting this and that. Of course, if the subsidies are useless and people are abusing from it, well we would be stupid not to cut it off.
I think the Government and all other parties must sit down and discuss what REALLY is best for the country. I watch foreign countries which are in the EU... which have a high cost of living, but to compensate that the wages are quite high! In Malta unfortunately the cost of living is getting higher example with 10% and then we get a 0.01% increase of wage.
For normal families it's impossible to cope with all these expenses. Light/ Water and other stuff you need to just live! Naqra ohra nispiccaw bix xemgha billejl u bil karettun biex nifrankaw.
C.Zarb
Sep 3rd 2009, 13:44
Would it be possible for Mr Fenech to explain to us whether the MPs astronomic pay rise and the jaguars bought to be used by certain ministers fall under the better use category?
D. Scerri
Sep 3rd 2009, 13:37
Which low cost airlines cost 5-6m Euros? How is that money being split up between those parties? How much does Air Malta receive from the taxpayer? We want specifics, man, not sweeping statements.
Where is our money being spent?
We want fully audited accounts of government expenditure.
You demand such information from us, so we demand the same from you. Otherwise, return our taxes.
E. Azzopardi
Sep 3rd 2009, 13:26
First and foremost: Do not forget the €10m regarding the alleged fraud or whatever of the VAT dept. The law abiding citizens expect the government to get back the FULL amount, irrespective how. Above all, and this is the most important, the government MUST see that it is collects all tax due and all VAT due (?? see above ??) There is so much VAT (especially) that it is not collected. Only the naive would deny this. It is there for all to see. One of the main things : VAT receipts. There are methods to control this. Ask the VAT department , they will give good advice!!!!
Mark Galea
Sep 3rd 2009, 13:17
@All
I work like everybody else and have a family to maintain, like everybody else. However, I agree that subsidies should be REDUCED (not completely removed). For example, I take care not to WASTE gas, water and electricity. Why should WASTE be REWARDED by subsidies? That way wasteful consumption will be reduced. Those in need of help should be MEANS tested and helped.
N.Calleja
Sep 3rd 2009, 12:52
@ IGalea
the people are cursing people like you for your pessimistic view. Out of the whole European continent 27 are members already and all the rest are dying to be included! It's only the PL that was against the EU but has now conveniently converted too!!
Arthur Brigh
Sep 3rd 2009, 12:39
So far all we got from europe are illegal emigrants
AFabri
Sep 3rd 2009, 12:36
To remind Dr. Fenech & the PM
that we the TAX PAYER as shareholders of this country that subsidy your wages, nice cars, free mobile , trips to Brusells and Vatican & all personal expenses.......
.....So in these bad times do you ever considered a salary cut.
PLEASE RULE BY EXAMPLE to be credible.
Most of the people does not care about Renzo Piano Project.......People care about jobs & money in their pockets.
Joanne Micallef
Sep 3rd 2009, 12:22
“Let’s continue cutting subsidies because these come from taxpayers’ money and they can be made to better use,” Mr Fenech said in an interview.
Well so does all the money our Goverment overspends and the various ministries waste thanks to some inefficiencies and lack of planning, hasn’t made much of a difference in all these years though has it?
Ray Ciantar
Sep 3rd 2009, 12:02
The comment that cutting subsidies because these come from taxpayer's money makes ineteresting reading. I wonder who is going to pay the price increases????
Mark J. Magri
Sep 3rd 2009, 11:55
People-These are all BAD NEWS and more to come....
Europe does not subsidize by the way!
lgalea
Sep 3rd 2009, 11:49
"...pointing out that low cost airlines cost the country about €5 to €6 million a year"
Why should we subsidize low-cost airlines with our money so that they can compete with our National Airline?
"He said that the recession had certainly taken its toll on public finances and in the first six months of this year public revenue from income tax and VAT declined by over €60 million."
Were we not supposed to ride recession?
"Regarding the European Commission’s end 2010 deadline..."
Why were other countries given much more time than us to fix their economy? DISCRIMINATION by the eu against US, that's why.
"Mr Fenech said that at some point a decision will have to be taken to fully privatise Bank of Valletta...He also hinted that the Malta Stock Exchange will be privatised saying that as a long-term strategy..Mr Fenech said he hoped the privatisation of the shipyards could be concluded by the end of the year."
Everything privatized to comply with the eu petty dictators orders who are destroying everything that the Maltese people had built at great sacrifices. No wonder people are cursing the eu and those who betrayed us to become members.