Labour leader Joseph Muscat said today that the Budget ignored the country's major problems and offered a few minor solutions.

The problems which were ignored, he said, included the €80m growth in government debt and the water and electricity bills.

Dr Muscat said the government had given Standard and Poors and the EU the impression that it would raise power tariffs. Its announcement today that the tariffs would not be changed smacked more of political convenience than anything else.

The government announced in the Budget speech that although oil purchase costs were well above the level at which the tariffs had been set, there will not be any increases since there will be efficiency gains through the commissioning of the power station extension.

Asked for his reaction on the maternity leave, Dr Muscat said this appeared to be a case of 'lip service'. Instead of taking a decision to extend maternity lease, the government had reverted the issue to the MCESD, where there was currently no agreement on this issue, Dr Muscat said. Furthermore, the government's proposal to extend maternity leave was diametrically opposed to the government's statements in EU fora against such an extension.

The Labour leader said he hoped the government's projections on deficit reduction were correct, but they may not be. The government, for example had said it would not introduce an amnesty on penalties on VAT arrears, but had now done so.

Dr Muscat said the tax cut for parents appeared welcome, at first glance, but this was far short of the tax cuts promised at the last election and which would have saved taxpayers €160 million by now.

Dr Muscat insisted that a new Labour government would give priority to reducing the water and electricity tariffs because they were the millstone holding down families and the economy.

The Labour leader said he could not understand how the Budget showed that the government next year expected to recoup the €52m it loaned Air Malta this year. The PL wanted to see Air Malta to succeed, but it was being left out of the process, he said.

Dr Muscat welcomed schemes for urban regeneration but said such schemes had been promised for years.

Also welcome were plans for a sports school, but the €100,000 allocated to it were inadequate.

A Labour governemnt, he said, would focus its spending on families, The government, he said, would have spent as much on the breakwater bridge as much as the increase in children's allowance.

The people, he said, were still not being given a clear explanation of how the city gate project would be paid, although, clearly, they would ultimately foot the bill.