Budget is reason why government cannot be believed - Muscat
Opposition leader Joseph Muscat said this evening that the people could not have confidence in a government which had not kept its core election promises or even promises made in the Budget speech a year ago.
Speaking in reply to last week's Budget speech, Dr Muscat said that the government had not only, for the second year, not kept its promise to reduce the top rate of income tax to 25 per cent, but it also did not deliver on the long list of promises it made in last year's Budget speech.
And what was even worse, the economic projections made in that speech had also gone haywire.
How could the people have confidence in the new budget, when they could not, as individuals and businesses, draw up their own budgets because the new utility tariffs had not been announced?
Dr Muscat in his two-hour speech said the three crucial elements in the life of the country which the Budget had not addressed were the cost of living, competitiveness, and corruption, which was now a tax on the people.
Many sections of the population were not making ends meet, and the government decision to raise the utility rates even further had instilled uncertainty and spoiled the festive season for many. Indeed, the government had not learnt from the mistakes it made last year.
The raising of the tariffs would also further erode competiveness, so how could the government's stated commitment to job creation be believed?
How could the government be believed when its economic projections for this year had all gone so drastically wrong?
The people were told last year that the deficit would be of €99 million at the end of this year. It was off by €160 million. Last year the subsidies on electricity and the dockyard as well as capital expenditure were blamed for the deficit. This year those subsidies had gone, capital spending was lower than planned, but the deficit had still widened.
The government was claiming the deficit grew this year as the government splashed out to safeguard jobs. Yet the Finance Minister himself had said in parliament he had spent €8 million for this purpose, when the deficit had widened by €160 million. The figures did not add up. Where had the difference gone?
Funds from the EU were to reach €80 million this year yet only €14 million had been received so far, and Malta's contribution to the EU was €66m.
Economic performance this year was the worst since independence and investment, exports, output, profits and tourism were all down sharply.
The government, therefore, needed to explain how the economy was projected to grow by 1.1 percent next year and VAT revenue would grow even faster.
How could the government be believed when last year's Budget promises were not realised? Last year the government promised to double the industry incubation centre and create a biotech park but nothing had happened. It promised to invest €20m for industrial zones but only spent $4.7 million. It promised to invest €6.5 on Hal Far industrial estate, and spent €37,000. It promised assistance to micro enterprise but no one was told of the legal notice and no one applied. The rehabilitation of the menqa area in Grand Harbour had only translated in plans. Promised road rebuilding projects remained just that.
The micro parks at Mellieha and Xewkija had not come about, neither had the effective monitoring of market conditions.
The ‘fibre to homes' IT project had not come about, neither had Design Malta, the e-ID cards and the visitor attraction centre in Qawra.
Nothing had come of the promised study on the reintroduction of trams, the transfer of Zammit Clapp Hospital to Karin Grech, the PET scanner at Mater Dei, and the Gozo public transport reform.
Malta had slipped in competitiveness rankings, because of government-induced inflation, at a time when salaries had, in real terms, gone down. The value of the average wage now was lower than when Dr Gonzi first became prime minister.
The €5.82 cost of living increase to be given in next year's Budget had already been used up. And because the government had not adjusted the tax bands, this increase would mean that many people would fall into a new bracket and would pay higher taxes or be ineligible for some benefits. Dr Muscat also pointed out that the students' stipend had continued to be frozen even though costs had continued to rise.
The Opposition leader referred to the amendments made last year and this year to the vehicle registration tax regime and said that in two years, the government would receive an additional €40 million from this source. So much for the promise of no additional taxes. The government would do well to save for compensation of VAT paid on registration tax, which case would continue to be pursued in court.
Dr Muscat asked why the government was hiding its new power tariff proposals? If the government was to lock prices for a year, why had oil purchases not been made when prices were half what they are at present? Indeed, at what price was oil being bought? It was worrying that figures given by Minister Austin Gatt on the average oil purchase price between March and October were between 20 and 26 percent higher than average prices on the market.
Also worrying was the fact that Enemalta's non fuel costs had risen by €13 million in six months, when salaries had not gone up. Furthermore, since April, Enemalta's inefficiencies were now being passed on to the people - an increase of €12 million. This was unfair on the people. The government's revenue from this source alone would equal the so-called compensation to be given to all households.
Dr Muscat criticised the government for not giving any compensation to ease the burden imposed by higher prices of domestic gas (lpg), despite its promises.
Turning to tourism, Dr Muscat said it was bad enough that this key sector was under a parliamentary secretary, not a minister but his responsibilities now even included Mepa. A Deloitte survey showed that every €1 spent on tourism showed a return of €8. So why had the government at least not ditched the 50c tax on each tourist?
Dr Muscat said fresh importance needed to be given to retailers. The government was imposing high utility tariffs on this sector, without compensation. Tax credits had been announced. He hoped they would not be mired in bureaucracy.
It was a shame, he said, that less than half of the declared number of beneficiaries had received assistance for the purchase of solar heaters and other subsidies.
In his speech Dr Muscat criticised Mepa for its attacks on its audit-officer and said that in this context, one had to wonder how much the government really believed in the Whistleblower Act. The government was removing the €6m subvention on Mepa, meaning that the amount would end up being imposed on the people, Dr Muscat said.
On the medical sector, Dr Muscat said the government had, since 2006, promised action to reduce the waiting lists, yet the lists were getting longer. Now the government was saying the lists would be reduced to acceptable levels in three years' time. What were these levels?
Promises made by the government to reduce medicine prices had also been made in 2006. The people knew the outcome.
Dr Muscat said the Opposition agreed about the building of a cancer wing within Mater Dei. But how had costs risen to €40m from €24m projected last year? What would happen of St Luke's and Zammit Clapp?
And would somebody please explain how new graves at the Addolorata would cost €8,000 when, before the election, people were promised graves for €3,500. Had the cost of dying gone up as well?
Dr Muscat said the Budget said nothing on rent assistance schemes in the wake of the rent reform.
Turning to education, Dr Muscat said it was shameful that only 40 per cent of the capital allocation was spent last year, And how had just €500,000 been allocated to the new Mcast campus this year?
On sports, he said the government needed to keep its promise to allocating space for a Rugby pitch.
Turning to City Gate, Dr Muscat said this should be a project of all the people, and there should be agreement on it. He said the minister had insulted the people when he claimed that the new Parliament House would not burden taxpayers as funding would come from the commercialisation of government properties. Those funds could still have been used on health or education, Dr Muscat said.
He said the government had been similarly hard headed on the privatisation of the dockyard, and yet, many months on, everything now appeared to be still open. Was it true that the Privatisation Unit had made a proposal on the sale of the superyacht facility but the government rejected it? What was happening? What interest did the former CEO have in all this?
Dr Muscat said that only €3 of every €100 spent by the government were reaching Gozo. Gone, in the Budget, were the plans for the Cirkewwa harbour upgrade. A contractor was paid €5.5 million for building three quarters of the San Lawrenz Road, when the whole project was meant to cost €4m.
When he spoke on rural affairs, Dr Muscat said nothing was said on the rights of animals. And, he said, he was calling for an independent inquiry into the drainage overflows of animal blood from the abattoir.
Concluding, Dr Musat said the Budget had not offered solutions to the country or the people on the cost of living, businesses, jobs and corruption.
The economic crisis would pass despite the government, not because of it, Dr Muscat said. The Opposition had confidence in the people, and that was why its doors were open for all those who wanted the best for the country, not mediocrity.
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John Bugeja
Nov 17th 2009, 14:36
Joseph Muscat has a vision for Malta; a vision completely lost from the gonzipn party. Gonzi is more worried about his internal party problems and fights than he is worried for my family and the rest of the maltese families. We need a man like Joseph Muscat who loves his country and who has visions for our country. We need to be positive with our children about their future and it is only Joseph Muscat who can give that future to our children.
Matthew Agius
Nov 17th 2009, 13:30
Once more, if this prophet were in government, with all his sweet vote-pulling words, as moviment progressiv, and all, he would definately save the world.
I think some time soon he is going to tear his shirt open and have a blue tshirt with a capital red "S" on it. But I worry than when one day he will, Superman will be trying to use his powers but since we are not living in a bubble or fairyland, he will be snapping his fingers to no magic - and then a lot of people will be let down!
Is it about winning elections , or about safeguarding the state for the coming generations? Words won't do much.
c.camilleri
Nov 17th 2009, 12:38
Joseph Muscat reply to the budget was factual.
He referred to 40 promises made in the previous budget which were shelved, plus other promises which have become standing orders in each budget and which never saw the light of day.
So far nobody challenged Joseph Muscat about these broken promises.
C Debono
Nov 17th 2009, 12:10
@ Malcolm Seychell
1. When reducing taxes, there is the so called Laffer curve ergo if we are highly taxed and taxes are reduced, the government can increase revenue. In fact we are highly taxed even though it is not perceptible. The surcharge is not part of taxes but part of the Enemalta's profits.
2. When Government Revenue is higher it means that you can spend more money as part of capital investment projects. There is the so called Government Expenditure as part of the component of Income. In bad times gov increases spending being careful not to crowd out private investment helping the economy to recover. ( Keynesian Economics)
3. Once the government injects a euro in the economy, it has a multiplier effect. The end result on Y(Income) is not a euro but say 3euro. This helps stimulating consumption, leading to higher revenue from consumption taxes like VAT.
4. Our economy is in dire straits due to high inflation. Our exports are less competitive in foreign markets. Exports are an injection in the economy, and therefore if prices are higher people will resort to purchase foreign goods (imports) which are a leakage in the system.
Joe Micallef
Nov 17th 2009, 11:51
First part
The anatomy of Joe’s replica
Pre budget: Irrespective of global recession Joe raised expectations and proposed 20 points which were neither here nor there
Budget Speech Monday 9th: A no frills, focused, highly demanding budget speech based on the need to create jobs, which is a fundamental problem elsewhere as recovery begins.
Joe’s post Budget conference: In a prepared statement a displaced Joe labels this budget as irresponsible.
General reaction to Budget: A positive balance in the context of the global recession.
Budget replica Monday 16th: Unable to rant on the misplaced “Irresponsible” label, lest he excludes himself a voice in the desert, an “angry” Joe decided to attack the budget on the counts of corruption, water and electricity and incompetence (so much for the new way of doing politics) and stomach the need to state the obvious, that is, that a good measure is good (Eureka!), carefully balancing it with insults and mockery at the prime minister and other ministers. This charade was made more irresponsible by the fact that not only he sought to avoid talking about the global recession, but worst still he tried to convince all that this was irrelevant to us.
Melissa Borg
Nov 17th 2009, 11:30
Well Done Joseph - Very well said!!! Kept us on till the end... for the rest of you who think it is more of the same - wake up and smell the coffee we need change and new energy it is written all over and it is sad to see that not everyone sees it! it is not about being PL or PN it is We need change and Joseph is the change that we need!!!
Aaron Farrugia
Nov 17th 2009, 10:30
Joseph Muscat today captured the nation's imagination. His vision for Malta is a catalyst for things to come. He managed to keep all of us on our reforming toes and his speech was a powerful reminder of why Labour values matter and how the PN bandwagon is coming off the rails. His apparent willingness to call a spade a spade is fresh air in the local political arena. His speech was well-crafted, well-delivered and pleased the middle class, hard working families, progressives and moderates. To fix the problems our country is facing right now, you first have to face up to them. And thats what the Labour Party is doing while the Prime Minister and his band of unknowns are in bizarre mode. Denial of reality. Joseph Muscat showed big time that he is less of a leader of the Opposition and more of a Prime Minister in waiting, a true Statesman.
Edric Micallef Figallo
Nov 17th 2009, 10:18
On. Muscat's reaction is extremely different from that of the social partners and probably that is because they don't have an interest in being elected. That says it all.
Gianni Xuereb
Nov 17th 2009, 09:42
now the damage control excercises will come into action....
DUSTY WILLIAMS
Nov 17th 2009, 09:20
malcolm seychell
taf ghaliex ma tistax temmen li joseph muscat inaqqas it-taxxi ghax taf li m'huwiex possibbli taht dan il-gvern u qed taqta qalb il-poplu habbrieki milli xi darba dan jista jsehh. Pero wahda nghidlek , il-labour u t-track record tieghu li jaghmel dawn il-weghdi realta hija wahda ferm aktar kredibbli minn ta dawk li hlief jitnellhu bin - nies ma jafux. WARA KOLLOX INTOM QABEL L-ELEZZJONI WEGHDTU LIN NIES LI SE TNAQQSU T-TAXXI!
g.c.Forte
Nov 17th 2009, 08:38
@ malcolm seychell.....Have courage my friend..............If the P.N. governments,especially this one, brought disaster one after the other, concerning the financial situation, does not means that nobody can do better. Just give a chance, then make your judgment.
DBorg
Nov 17th 2009, 08:18
More of the same from both parties....promises, speeches, fanfarunati...etc.....
Hope is in the young generation, that they grow out of this closed mentality imposed by both parties, and vote for the third party.
Joe Micallef
Nov 17th 2009, 08:10
The cherry on the cake was when with a highly charged ending, he told all that “he believed in all Maltese” “that together” we “can be successful in Europe” and that in the end “The truth always wins” (I believe these phrases belong to someone else and that he has spent most of his time ridiculing them). This, coming from a person who in his political life was so far called only once to make an important decision, that is supporting or not Malta’s effort to join the EU, and who chose to actively work against – maybe because being honest about it did not fit his long term opportunistic agenda.
After seven days in hibernation one would have expected Joe to come up with some constructive criticism as to why he thinks the measures proposed by government where not suitable to address the serious international context. Ah but that would require a statesman…an antonym to all that is Joe.
All this wrapped up with his pathetic decision to wear a blue tie. It was such a “thought” decision that without being prompted during the press conference he could not resist making reference to it.
Mark Piscopo
Nov 17th 2009, 07:58
Well Done Dr Muscat our next Prime Minister!
Stephen Bartolo
Nov 16th 2009, 22:17
A very good speech which had ruined all the government sand castles. A speech that had putted on the agenda, the people needs and wishes , not the clique agenda and demands
Marco Spiteri
Nov 16th 2009, 21:57
very weak Dr. Muscat. I thought you would have done better.
malcolm seychell
Nov 16th 2009, 21:50
So Joseph Muscat is promising tax cuts, an increase in capital investment and even manages to balance the deficit!!!!!.
It's more of the same.
Byron Camilleri
Nov 16th 2009, 21:46
This was one of the best, if not the best speech in parliament I have ever witnessed.
Well done Dr. Muscat, you are gaining more and more credibility with the Maltese population everyday.
SIMON AMATO
Nov 16th 2009, 21:27
A SPEECH WITH AVISION. SIMPLY EXCELLENT. JOSEPH TONIGHT SHOW THAT HE DESERVE TO BE THE NEXT PRIME MINISTER...WITH A VISION FOR A FUTURE OF MODERN MALTA. WELL DONE DR MUSCAT
Joe Chetcuti
Nov 16th 2009, 21:27
Everything is wrong with the budget but we are going to get out of the recession! Come on let us wake up and admit that the climate made also by this Goverment is innovative and addressing the country's needs. The pople will be able to maintain the high standard of living achieved through years of healthy polices by this Government.
Carm V Diacono
Nov 16th 2009, 21:20
What Joseph Muscat explained in today's Opposition's response is exactly what we the people are living. Nobody can deny the simple truth that Joseph Muscat is saying. The man in the street knows very well now that the Nationalist Government has turned the annual budget into a symbol of infinite numbers and statistics. But what is eventually remembered by the families and the businesses is how much they were promised and how they were deceited time after the other.
The bubble has exploded now. Muscat's Opposition is different from before and Gonzi cannot ignore certain situations. This is the same Prime Minister that promised a reduction in the Ministries' overspending and then it was his Ministry itself that registered the greatest overexpenditure. Now he is responsible for MEPA and everyone knows in what circumstances this authority is in. The same applies for all the other authorieties that have become ineffective under the PN administration.
The Nationalist Party is quite good at criticising the Labour Government of the 1980's. Although they are still harping about how they fought for liberty, Gonzi's recent statements about the autonomy of auditors in government authorities are shocking.