Investors praise SR Technics $1.6b deal

Prime Minister Lawrence Gonzi belied Opposition Leader Joseph Muscat's claims that the Budget reflected the government's failures and unachieved targets, saying that within 24 hours of Dr Muscat's attack, international investors were full of praise for the government for having managed to secure a US$1.6 billion aircraft maintenance operation by Swiss-based SR Technics, employing 350 by 2014.

In a blow-by-blow reply to Dr Muscat's comments, Dr Gonzi said the government acknowledged the challenges it was facing but, at the same time, it had also identified "windows of opportunities".

Sectors such as the financial and IT sectors were already performing well. During the global recession, while some companies abroad were closing down, Malta continued to be competitive and attracted good companies, such as Lufthansa-Technik. Malta attracted investment which would result in hundreds of Maltese people being employed. The government had worked hard to safeguard and create jobs, and would continue to strive to keep its promises even in cases where the opposition did not support the government. Malta's future was bright.

Dr Gonzi said the government would continue to fight corruption. It would continue to show total respect towards authorities and the courts, and nobody would take the country back to socialist times, when the courts had ended up as a government tool.

He said he had directed Enemalta to seek stabilisation on oil pricing for next year. The corporation had locked 75 per cent of dollar purchases and concluded swaps for 56 per cent of Malta's needs. Enemalta had advised that the current market situation did not permit it to conclude yet on the remaining 44 per cent.

The average price of oil over the last 30 days had exceeded last year's price. It was inevitable that utility tariffs had to reflect fluctuations in oil prices, he said, adding that Dr Muscat had agreed that the country had no control over oil prices. When the dollar weakened oil prices rose. It was important that this message be passed to families and to economic operators.

The government had helped 28,000 vulnerable families through the energy benefit at a cost of €7 million. Additionally it would give €10 million to about 97 per cent of families to help them meet the increased tariffs, and would also continue to help industry through a long list of incentives and tax credits. Despite the pressure on the country's finances, the government was also forking out €15 million on the sewage system. Last year Dr Muscat had accused the government it was not offering any economic stimulus. Dr Gonzi retorted that jobs had been saved in the manufacturing and tourism sectors through government intervention but, at the same time, companies had been encouraged to increase their investment in Malta as well.

The Prime Minister tabled a document which showed that 3,652 women had returned to work over the last three years; 1,702 of them in 2009. Women in full-time employment over the last five years had increased by 6,120, amounting to a 15 per cent increase.

The gainfully occupied this year totalled 144,742, an increase of 6,591 over the last five years. There was an increase of 12,876 workers, or 14 per cent, in employment in the private sector while jobs in the public sector declined by 6,591 or 14 per cent. Part-time workers had also increased by 35 per cent over the last four years.

Dr Gonzi said this proved the country was not in crisis.

It was only the Leader of the Opposition who could not understand the government's economic strategy. Last August the IMF had praised Malta, saying that following the strong structural reforms in the run-up to the adoption of the euro, the Maltese economy was better equipped to face the global crisis. Similar positive comments had been passed by the European Commission for using resources to counter the recession.

Malta had also managed to convince the EU to continue not charging VAT on food and medicines. Such a deal had only been achieved by Ireland and the UK.

Dr Gonzi criticised the opposition for failing to present proposals on the Mepa reform and on education measures for the Cottonera area, as had been promised last year. On the contrary, the government had invested in the Cottonera and had performed a consultation exercise on Mepa reform, with the necessary Bill expected to be published soon following Cabinet approval.

The Leader of the Opposition had presented what he called a list of broken government promises. This could only be termed an exercise in deceit because he had misled the House and his listeners. Dr Gonzi laid on the Table of the House a list of explanations for the delays in all items listed by Dr Muscat, most of which would now materialise in 2010. Serious politics meant honesty with the truth, said Dr Gonzi.

The government's announcement of a cost-of-living adjustment of €5.82 was no mean feat, and the government fully appreciated the arguments of all social partners. This would result in €302 given to all workers by employers and to all pensioners by the government.

The government could not allow the vegetable market to cause spiralling cost of fruits and vegetables without most of the proceeds going to farmers. Resources Minister George Pullicino would be having talks with all concerned, including the middlemen, to continue to give the Maltese genuine products with decent income for farmers.

On medicines the government had sat with the operators and thought it had a formula, but it was not working. It was inexplicable why some medicines in Malta cost four times their counterparts overseas. The government wanted importers to make reasonable profits in a free market, but with social rules to serve the weakest in health.

Dr Muscat seemed to think one must copy to succeed in politics, but this could be a sign of weakness. When Labour said "Truth will prevail" it brought people's backs up because it sounded out of tune, contradicted honesty and integrity and insulted all who had lived through the bad times. When the PN was fighting for the truth to prevail, Dr Muscat was fighting for it not to prevail.

Dr Gonzi said the government could not afford to heed the opposition's advice, genuine as it might be, because it had always believed that the Maltese were small fry that could easily be eaten by the big fish.

Malta deserved common efforts, serious analysis of the truth, identification of challenges and possible solutions. The Budget exercise should be routine, but this year it bore fundamental and crucial importance, not only in the analysis of the past but in proposing a new strategy for the future.

It was also crucial because one must understand what was out there and what there would be in a few months' time. It was well known that foreign, financially-stronger countries had had to resort to bitter measures to shore up their economies.

The opposition did not even seem to have taken into consideration what the government had planned for Malta and Gozo, because it had not been mentioned.

Dr Gonzi recalled that in 2009 the government had cut income tax, leaving €12 million more in people's and industries' pockets. Malta now had the lowest income-tax levels of the whole European Union. It had also come as a pleasant surprise that money in hand, bank deposits and holdings of government and private bonds were now the highest in years, at over €8 billion.

He placed on the Table of the House a list of all the actions taken by the government throughout 2009, highlighting that the ETC scheme of part-payment of new employees' wages had been an enormous success, especially in Gozo.

Other highlights had been rent reform; the privatisation of the shipyards, which had been a very positive experience with the shedding of up to 1,000 workers; and the initiatives for alternative energy which had led to consumption being lowered by eight per cent in one year, or one month's worth.

Dr Gonzi said that never before had the government felt so badly the weight of decisions for the Budget, to prepare the country for what was hoped to happen in the next few months.

The three fundamental considerations had been the recession and its effects, the analysts' contention that 2010 should be the year of recovery, and the upcoming summit on climate change in Copenhagen.

Malta should give climate change great importance, not just because parts of it could be flooded if sea levels rose, but also because the whole world would be agreeing on measures for the next few months, binding all countries, including Malta, to cut down on emissions from several sources.

There would be a guillotine hanging over the world's head, and the government wanted Malta to be well into the 2015 target. If Malta did not reach the required levels it would be very expensive, even to the extent of foreign investors leaving the country.

While the Budget sought to increase economic and fiscal stability, the government would be working hard to increase competition and stability in prices.

The transport reform would be aimed to encourage people to use public transport. The government could not subsidise a system that was not giving an incentive to people to use public transport. The reform would provide better services to commuters as well as modernise Malta.

Referring to property prices, he said the market required quality apartments, and this was in line with the needs of couples who opted for superior residences.

The Budget would also help the construction sector.

Speaking on the energy sector, Dr Gonzi said everyone should take the environmental aspect with the seriousness it deserved: when planning a new building, one should plan to minimise energy consumption.

This was a budget focused on investment. He said that the European Investment Bank had accepted that should there be a demand that exceeded the €10 million in assistance to SMEs, it would provide €10 million more.

Self-employed would be given tax credits of a maximum of €25,000 if they employed up to 10 people. Further tax credits were available for the improved accessibility of outlets to people with individual needs, the elderly and expectant mothers.

Students were being given all opportunities not only to read for degrees, but to take their studies further by following Master's and Doctorate degrees.

Dr Gonzi said that research projects were being undertaken in Malta, and because of some interesting discoveries that had been made the government was considering changing the Patents Law.

The Budget also concentrated on the social sector, with an estimated expenditure of €1.2 billion. The creation of wealth served to help those in need while strengthening national values.

EU studies had shown that social benefits had reduced the number of people living in the risk of poverty by half, proving the system was effective. While abuse had to be curbed, one had to acknowledge that single parents were taking care of innocent children who were most vulnerable. There were people living on unemployment benefit who had to pay €230 monthly for accommodation.

Dr Gonzi warned that unfortunately the country was losing some of its values. The family fabric was still strong, but there were many who were facing difficulties. The government would be proposing means to intervene on these real situations.

Investment in education was to increase by six per cent to €270 million. Other incentives were being given to promote the arts.

He said other investments were in infrastructural projects, adding that the government intended to make Valletta one of the best capitals in the region. Such projects would generate employment.

A record financial vote of €25 million was being allotted to Gozo over the next three years to turn it into an eco-island.

Concluding, Dr Gonzi appealed to the Maltese to have faith in the country. Malta's richest resource was its people who, through education, had and were achieving the necessary tools to compete in the modern technological world. The Budget invested in people and in the country for creating new jobs.

The motion for the House to resolve into a committee of supply was passed by 34 votes for and 33 against, after a division.

In a statement last night the Labour Party (PL) said it was obvious the Prime Minister was not understanding what families and businesses were going through, the burden of the increasing cost of living on families and the preoccupation of those who were uncertain about their jobs.

The PL said the Prime Minister had failed to speak on various issues including why the government had failed in its former budgets and reneged on its promise to reduce income tax.