The number one issue of the 2010 Budget remains job creation, Finance Minister Tonio Fenech said yesterday, winding up the debate on the estimates of his ministry. He said that the Budget, focused on Malta's real needs, was so relevant that the opposition was finding it difficult to vote against it.
Admitting he was no forecast guru, Mr Fenech said all 27 EU member states had made wrong calculations averaging four per cent. When the 2008 budget was drafted, neither the IMF nor the European Commission had forecast that the recession would be so severe.
The government intervened by giving financial stimulus to ailing companies and saved jobs. Europe has some 21 million people, or 10 per cent, unemployed. Jobs in Malta have increased across the board apart from the manufacturing industry.
Assistance to ailing industries meant that 2,500 jobs were saved. These companies bound themselves to increase investment. Stainless Steel Limited, which from a four-day week had increased its production, employed 30 new workers and started marketing its product from Malta. Brandt International had also announced an €11million investment in its Malta plant.
Mr Fenech admitted that exports had declined by €300 million but this happened in a year when global business had dropped for the first time since World War II.
There was an increase of €121million in government expenditure with measures that addressed the crisis. €17million still had to be paid for dockyard retirement schemes while another €140million would be paid when the dockyard would be fully privatised and the old company wound up. €7million were spent on vaccines to combat the swine flu. Another €11million had been paid for medicinal supplies.
Turning to EU funds, the Finance Minister explained in detail the process for acquiring and actually using the money, "a process which took time".
Malta was the first among the EU states to conclude this process for the EU programme which was to be concluded in 2013. He said that most of the projects to which the Leader of the Opposition referred as not operational, fell in this category. Work on these projects would start next year.
There were 260 companies which had already benefitted from the EU funds. Under the energy scheme with an allotment of €33.5 million, there were 50 projects which benefitted and another 107 applications were being evaluated.
Foreign investment this year, estimated at €18million had the potential to create 1,000 jobs.
Minister Fenech referred to benefits under the micro credit scheme with an allotment of €10 million. The European Investment Bank was ready to submit another €10million if there were more applications for the scheme.
A total of 1,500 enterprises were expected to benefit from the scheme.
A further €9 million were allotted under the Malta Enterprise vote for expansion of current industrial plants. Through the verticalisation scheme, foreign investors would benefit if they created new jobs.
Most businesses could benefit from 40 percent tax credits under the microcredit scheme if they bought new equipment, employed others or refurbished their premises. There were many who had already shown interest in the scheme.
The Business Incubation Centre in Corradino would be merged with the Bio Technology Park in San Gwann with all the necessary research facilities to create new products. The government was also giving incentives to the creativity sector which had a lot of high value added potential.
Mr Fenech concluded that the public appreciated the budget which focused on the country's needs, aimed at creating employment and sustaining economic activity.
Opposition spokesman on finance, Charles Mangion, had earlier said the Budget was a question of credibility.
He pointed out that only €169 million were spent of a €348 million budget for capital projects in the first nine months of the year when internal economic activity depended on such investment.
The government predicted the recurrent expenditure would decrease by €17 million but this in fact increased by €121 million. What led to such a massive miscalculation? The excuse that this was to save jobs did not convince. Only €8 million were spent to safeguard jobs. This was a step in the right direction and the government would find the opposition four-square behind it in any measures taken in the workers' interests.
Revenue was estimated at €2.5 billion but in the first nine months only €1.5 billion were collected.
EU funds amounted to €100 million for 2008 and €125 million for 2009, of which only €84 million were spent until September. According to the NSO, only €14 million were spent for infrastructural and investment purposes.
There was a massive miscalculation in the deficit: it was forecast at €90 million but now stood at €258 million. Where did the government go wrong?
Dr Mangion said that the national debt stood at €4 billion, even after the government sold most of the nation's assets. Worse than that, roads were still at third-world level, the environment had been neglected and drainage overflows polluted bays in the north.
And the government had projected an energy programme worth €1.2 billion. People needed explanations.
On Wednesday, the Prime Minister was not convincing when he tried to fend off Opposition criticism that targets were not being achieved. Some of the explanations given in his paper were an insult to the intelligence of the people.
Dr Mangion said that the government would not even admit that Malta had the highest inflation rate in the Eurozone when it imported its essential products from these countries where these were the cheapest.
Government decisions on utility tariffs which led to uncertainty, were the biggest contributing factor for the rise in the cost of living. This had been repeated for 2010.
It was true that there was a hike in the price of oil but there were also instances when the price decreased and the government did not take any action to alleviate the consumer. The government did not say anything about non-fuel costs which accounted for 40 per cent of Enemalta's expenditure. This affected the cost of living directly.
Dr Mangion questioned a €4.2 million "infrastructure tax" and how the government made good for the €10 million from commercial properties which were to go to the Investment Fund.
Concluding, the Labour spokesman said that the people deserved a more politically honest and responsible government which safeguarded the interests of families, pensioners the self employed and all those contributing to the economy.
Also contributing to the debate were opposition spokesmen Gavin Gulia, Carmelo Abela and Silvio Parnis as well as Parliamentary Secretary Jason Azzopardi and government back-bencher Jean Pierre Farrugia .
The votes for the Ministry of Finance, the Economy and Investment were approved by 35 votes against 34 after a division.
Similarly, the House approved the financial estimates of the Ministry for Justice and Home Affairs and the Ministry for Resources and Rural Affairs.