Labour leader Joseph Muscat yesterday harshly criticised calls by the Central Bank Governor to cut public spending, saying he should lead by example.

While enjoying a tax-free salary of €160,000, Michael Bonello called on the government to reduce public spending on social benefits, health and education, Dr Muscat told a political meeting in Gozo.

Mr Bonello’s comments, which also included calls to limit stipends to those students who really needed it, were made on Friday in his annual speech during a dinner organised by the Institute of Financial Services.

Mr Bonello’s comments were criticised immediately by student organisations who pointed out that stipends were vital to students. Even Finance Minister Tonio Fenech argued against the proposal, saying the stipend system was intended to ensure more people took up tertiary education.

Mr Bonello could not declare pensions were not sustainable or criticise early retirement schemes when these were available at the Central Bank. If he wanted to give advice, then Mr Bonello should lead by example, Dr Muscat said.

The Labour leader also criticised the government for quietly introducing a €600 weekly increase for ministers and parliamentary secretaries while, in the same breath, saying sacrifices had to be made by everyone.

Turning to Gozo, Dr Muscat mentioned a number of government projects – a modern arts museum, a business incubation centre and an open-air studio – that never saw the light of day. “Gozo can become a motor of the economy and can generate enough jobs for the Gozitans and Maltese,” he said. However, its potential was not being used to the full because it was not on the government’s priority list.

He pointed out it was shameful no one had yet shouldered responsibility for the disaster at Dwejra after the planning authority allowed a film company to lay crushed hard stone aggregate on part of the Natura 2000 site. “The Prime Minister was responsible for the environment but we still don’t know what inquiry is going on and when it was set up,” Dr Muscat said.

He said he was shocked to see footage of workers digging into the sand which had formed a hard, compact layer on the rock against a guarantee of €15,000.

Referring to the controversial power station extension contract won by Danish company BWSC, Dr Muscat quoted the Auditor General saying he had found smoke but not fire in his investigation.

“The Auditor was clear – he said he found smoke. We know there is no smoke without fire. Over these past weeks, the government has been trying to hide the fire when it refused to have witnesses appear before the Public Accounts Committee,” Dr Muscat said.

He queried a statement by Nationalist MP Jesmond Mugliett who said he was not informed about a change in Cabinet’s decision to go from a gas power station to one powered by heavy fuel oil.

There were strong diplomatic efforts underway to stop the EU from investigating the matter. “They are arguing the process was irreversible and would cost too much,” Dr Muscat said.

The Nationalist Party insisted the 11-month investigation by the Auditor General did not find any evidence of corruption. But instead of admitting he made a mistake, Dr Muscat chose to continue twisting the words of the Auditor General, the party said.

The Opposition Leader had no respect or trust in the country’s institutions and was systematically attacking them, now focusing on the Central Bank governor, the party added. He also had a selective memory and failed to mention that the only government that had removed stipends between 1996 and 1998 was a Labour one, it added.

Meanwhile, the Gozo Ministry said the ongoing projects, such as the new Institute for Tourism Studies and civic amenities site, contradicted Dr Muscat’s statements and pointed out it had launched a number of training schemes for more Gozitans to find jobs.

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