Prime Minister Lawrence Gonzi said yesterday that the strategies adopted by the opposition in its comments to the 2011 Budget were grossly mistaken. In a point-by-point reaction to the speech by Opposition Leader Joseph Muscat, Dr Gonzi said that Labour’s economic strategies would lead to a deficit of 9.6 per cent while Cyprus – which had been used by the PL as a benchmark – had been warned to watch out because its deficit was bound to increase to seven per cent.
He also said that Dr Muscat, while taking the side of the European parliament in the EU budget issue, had mixed up administrative expenditure with the financial perspective.
Unlike other countries Malta did not need to implement austerity measures.
The government had safeguarded jobs in spite of insurmountable challenges.
While he admitted that utility tariffs were high, he said that together with the MCESD, the government had attracted new investment. The economy had grown by four per cent.
Moreover, Malta registered the highest decrease in unemployment amongst EU member-states.
Malta and Germany were the only countries whose economy had increased substantially. This improved Malta’s competitiveness.
It was only Malta and Estonia which managed to reduce the deficit by one per cent. Malta would be one of the very few countries that would have managed to reduce its deficit below three per cent.
International agencies confirmed Malta’s positive credit rating. Quoting a study conducted by Ernst & Young on 100 foreign investors in Malta, Dr Gonzi said that 76 per cent confirmed that they increased their operations, 74 per cent considered increasing their operations and 81 per cent thought that the government was implementing a policy that enhanced the private sector.
People discovered that the sacrifices to make good for dockyard debts were not in vain.
SmartCity’s first offices were inaugurated and the project was moving at a faster pace than that planned.
There was an increase of 12 per cent in tourist arrivals and a 20 per cent increase in tourists’ spending. This was the result of good promotional campaigns.
Turning to the educational sector, Dr Gonzi said that there was a record number of 3,400 university students to a total of 11,600. The government would keep striving to increase the number of students who kept furthering their studies.
Mcast had also reached a record number of 6,046 students. Next year, the government would be investing €23 million in stipends. Instead of subsidising the dockyard, the government had, this year, invested €22 million on stipends. In six years, since Malta joined the EU, the government had invested €165 million in stipends. Moreover, the government had also invested €12 million in scholarships to 1,100 students.
The government had invested heavily in the educational sector, the most important sector, opening new schools in Verdala, Pembroke, Mosta and Gozo.
Dr Gonzi said that the situation at Mater Dei was improving. It had undertaken 27,900 surgical operations, 5,000 more than in the last period at St Luke’s Hospital.
The government kept fighting against cancer. It distributed the drug Hereceptine. He said 15,000 women were checked and 42 were positively diagnosed at the early stage. Meanwhile, Mater Dei Hospital would also provide the services that were presently being offered at Boffa Hospital.
Gozo was also benefitting from investments in the infrastructure. It was the first to enjoy a sewage treatment plant.
The Prime Minister said Malta had a very good reputation as an efficient, hospitable, safe and modern country capable of fulfilling its priorities. Its strong financial institutions had provided stability and seriousness at a time when other countries failed to provide such an environment.
He said he was proud of Malta for having reached the government’s aims and targets, thus fostering stability in employment while at the same time closing the books for the financial year at the projected deficit, without having had to resort to austerity measures.
He said it is an honour and a privilege for him to be entrusted for the seventh time in his political career to account to the people of how the taxpayers’ money had been spent and of the measures implemented by the government.
Since decisions taken today could have an impact on future generations, the government is duty-bound to act responsibly in its decisions to strengthen the foundations for future generations through the creation of jobs, strengthen families and enable the country to prosper. The results achieved were merit of the people’s sacrifices.
However, Dr Gonzi warned he was not saying all is perfect. The international financial crisis and the introduction of austerity measures by other countries would also have an effect on Malta.
He referred to the speech by Opposition Leader Joseph Muscat on Monday and expressed appreciation for the pledged cooperation to find solutions for Air Malta. He described the national airline as being one of Malta’s stiffer challenges. However, while acknowledging that the company is of strategic importance for Malta it must become viable and competitive. The government was prepared to work with the leader of the opposition to overcome this challenge.
Other problems that needed to be addressed were the unemployed, measures to establish a work life balance including maternity leave, assisting parents and the elderly, having a better environment and providing respect for the dignity to those who receive refugee status.
The Prime Minister said the difficulties indicated in the ARMS Ltd crisis needed to be overcome, and while progress has been registered, there would not be payment of any bonuses until the situation is regularised.
Prime Minister apologised to the Labour Party for a comment he made some two weeks ago which, he said, may have been construed as linking Labour with disease. He said he never meant his comment to sound that way, and while he might have been misrepresented, he wanted to apologise (applause).
Dr Gonzi taunted the Opposition by saying that the problem between the government and the opposition was one where Dr Muscat wanted to occupy Gonzi’s seat but the latter did not want Dr Muscat’s seat (laughter).
He stressed that ensuring employment and stability in employment was Malta’s top priority since on these depended the prosperity of the country. He was consequently surprised that Dr Muscat had failed to make any reference to employment in his speech.
He also queried why positive developments were not reported by partisan media including the positive news about SR Technic and the favourable official statistics on unemployment.
Figures had shown that over the last six years the number of persons in gainful employment reached 144,000. Female participation had also increased from 40,000 in 2004 to 47,303 as of last April.
Employment within the private sector had increased from 89,000 in 2004 to 104,000 this year while employees in the public sector decreased from almost 47,000 in 2004 to 40,000 in April. He said 17,500 were self employed.
Dr Gonzi praised the ETC for its contribution towards employment. Statistics showed vacancies had increased in the first nine months of this year from 5,900 to 7,300, and that 3,233 persons registering unemployed had found work.
Malta has also fared well in employment when compared with EU members-states and within the eurozone. Malta had the highest ranking of employed men between the age of 15 and 64 years and had registered a six per cent increase of women in employment when compared to that of 2.9 per cent for the EU and 3.7 per cent for the eurozone.
The Maltese also paid the lowest amounts of income tax and national insurance when compared to EU members, surpassing also Cyprus which the leader of the opposition had used as a benchmark. In Malta, almost 112,000 persons do not pay tax. Of these 44,000 are students and pensioners, while 68,000 are gainfully occupied. This means, he said, that 42 per cent of those in gainful employment do not pay tax.
Amid uproar, the Prime Minister said the Opposition was not being responsible when it urged him to implement now his electoral promise to reduce the top rate of income tax at a time when the world was still in financial crisis.
“Do you honestly expect me to be so irresponsible, in the midst of this international crisis, to keep a promise that cannot be implemented at this time?” Dr Gonzi asked amid interruptions.
“This is absolute irresponsibility by an opposition party which has no idea what it means to take responsible decisions for the country.
“What I tell the leader of the opposition and his colleagues is that this promise will be implemented at the appropriate time, like the others...” Dr Gonzi said amid further shouts from the opposite benches.
Dr Gonzi noted that opposition MPs were shouting that the tax cuts would only come on the eve of a general election. It showed, he said, that the opposition’s thinking was according to electoral timetables. (laughter on both sides of the House).
Labour wanted the government to cut taxes now because they were already worried of losing the election, Dr Gonzi said.
However, he said, the government had raised the income tax ceiling so that a single person earning not more than €8,500 and married persons not earning more than €11,900 did not pay any income tax.
The Nationalist government had been faced with a number of problems created under previous Socialist administrations, not least the issue of loss of service pension with the introduction of the two-thirds national pension, and the payment of €62 million for property expropriated under Labour governments.
‘A moment of sacrifice and responsibility’
Over 210 property owners in Rabat and Sta Luċija had been left without the transfer of the title to their property because of difficulties that had been encountered in the root of title to the land which had been taken under a Labour government.
Dr Gonzi said that the projects mentioned by the opposition as not having been realised were in fact projects which were either awaiting Mepa permits or the relative tenders had not yet been awarded.
He said that the economic planning suggested by the opposition would increase the deficit to 9.6 per cent of the GDP. Dr Muscat tried to hide the progress the country went through and which was acknowledged by everybody else. The opposition tried to justify their philosophy because they were only motivated by winning the election.
Dr Gonzi said that now Dr Muscat had admitted that the international crisis was indeed a reality when he had tried to hide this for the last two years because he was criticising the government for increasing the utility rates.
During that time, the government had taken difficult decisions to safeguard employment and cut excessive subsidies. He added that this was a moment of sacrifice and responsibility. The government would honour its promises when it was in the country’s interest.
He quoted Eurostat figures showing that while many countries had to resort to severe austerity measures, including tax increases and cuts in pay, Malta did nothing of the sort. The measures taken by Malta were as a result of the increase in the international price of oil.
Turning to the national debt, Dr Gonzi said the government would tackle this issue once the deficit was brought under the three per cent mark. The national debt had risen because of the government’s investment in national projects.
Dr Gonzi said that the leader of the opposition had made four gross mistakes, one being that of using Cyprus as a benchmark. Just three days ago the governor of the Cypriot Central Bank had warned that austerity measures had to be taken to avoid the country’s deficit rising to seven per cent.
Another mistake was when Dr Muscat had rebuked him for opposing an increase in the EU Budget. He said that Malta opposed the six per cent rise in the administrative expenditure of the EU at a time when all countries were taking austerity measures. This would in no way affect Malta’s negotiations for the financial perspectives which would start in 2011. Dr Muscat had mixed up these two different issues.
Labour’s economic strategy was also mistaken as this would greatly increase the country’s deficit.
The Prime Minister said that the fourth mistake was on the corruption issue. Malta had recovered its position in the Corruption Perception Index this year with the leader of the opposition trying to hide this fact.
Dr Gonzi said he did not give much importance to this index because it was only based on perception. Whenever a report on breach of law or on corruption was lodged to his office he always called on the police to investigate.
The opposition had a moral duty and a legal responsibility to pass on to the police any piece of information which it might have and which could help in the investigations. The government wanted corrupt people to be brought before the courts and sent to prison if found guilty.
He again invited Dr Muscat to report to the police if he had any information on corruption, saying he had full confidence in the Police Commissioner. “Politicians should remain in the political arena and leave investigations and judgments to the Police and the courts respectively,” he said.
Towards the end of his speech, Dr Gonzi spoke about government measures which aimed at fulfilling its five objectives for 2011, the main being that of controlling the deficit and strengthening public finances while sustaining economic growth and making the necessary investments in education, health and the social sectors.
He said this framework was drafted in collaboration with the social partners adding that the €25 allowance per week to minimum wage earners for increasing their employment skills aimed also at increasing job opportunities. Other incentives were aimed at increasing female and pensioners’ work participation rates.
Dr Gonzi said that the VAT increase on hotel bed nights had been announced two years ago and had been postponed at the request of the MHRA. Operators knew beforehand that this increase would have to be implemented. Moreover 55 per cent of tourists visiting Malta made their bookings over the internet.
The Budget benefitted the self employed and the small owners with the micro credit scheme being implemented in the near future after looking into EU regulations. The government was also committed to continue giving necessary assistance to farmers, breeders and fishermen. Two major problems were the tuna issue and the speculative prices on cereals in the international market.
Solidarity was central to the Budget, with the government adjusting the ceilings in the means test to reflect the cost of living increases. The supplementary assistance was also increased. The energy benefit would again be given to 25,000 families.
The Prime Minister concluded that the country’s success was the merit of unity among the Maltese. He was sure the people were confident in rising to the challenge.
The motion for the House to go to a Committee of Supply was approved by 35 votes for and 34 against after a division.
The House meets again today to discuss the votes of the Ministry of Foreign Affairs in the morning session and the Ministry for Justice and Home Affairs in the evening.