Labour has accused the government of "correcting" its economic figures and falling short on all of its targets since 2008, while unjustly blaming the economic crisis for its failures.

Malta's debt is growing faster than its GDP (gross domestic product) and taxpayers are forking out €630,000 per day on debt servicing, party spokesmen Karmenu Vella and Charles Mangion said. They also explained how purchasing power is today lower than it was four years ago.

The Budget, they said, tried to "fill a pool with a glass of water" and ignored the pressing issues.

Questioning figures given in the Budget, the spokesmen noted that this  year, the government had planned to spend €440 million on capital projects but instead spent €303m. This meant less of a boost for economic growth, said Dr Mangion, the party's spokesman on the economy.

On the other hand, the government spent €36 million more than it had forecast in recurrent expenditure such as health and education.

Mr Vella said the government worked on fewer projects but still missed deadlines and spending targets.

Fewer projects were delivered also because the government had to make up for the overruns in recurrent expenditure by cutting back on capital expenditure.

Despite projecting a smaller economic growth than last year, this Budget claimed that the government would rake in some €46 million more in National Insurance, without explaining whether this would mean a hike in NI rates.

Mr Vella said many of the Budget measures focused on quantity rather than quality and in some cases, put people in a worse position than they were before.

He pointed out that the new tax band for parents only made sense for couples who both worked – otherwise single and married parents would benefit more with the old rates.

He therefore questioned whether the new tax band would really affect 55,000 people, as was being claimed, and, if not, whether the measure would still cost €10 million as projected.

Dr Mangion pointed out that the Budget made no mention of Smart City, despite the fact that it was meant to spur economic growth.

Mr Vella observed that the government also consistently said it would collect more in tax revenue than it actually did and brought in less EU funding and other grants than it had forecast.

He  pointed out that the government had planned to reduce its debt to a very specific 3,368 million by 2010 but instead this kept growing over three years, reaching more than €4,600 million.

Adding to this the government's guarantees, the debt figure swelled to €5,560 million.

Although Finance Minister Tonio Fenech had been quoted in the Commercial Courier as claiming that Malta always reached its deficit targets, it actually failed on each of the past three years.

"Coincidentally", Mr Vella said sarcastically, its forecast for this year was reached perfectly.

Mr Vella said water and electricity rates should be reduced to spur economic growth, but the government had no intention of doing so and had opted for a oil power station that used heavy fuel oil, instead of a gas power station, only to blame the energy prices on the price of oil.

The government could not keep saying its forecasts were missed because of the economic turmoil, because a pledge to the electorate was like a promise of sale which could not be defaulted because it started raining.

Government reaction

In a reaction, the Finance Ministry said the comments by the Labour spokesman reflected panic and disrespect for official figures.

The ministry said 12,000 new jobs were created in the past two years, and the economy and investment grew.

The government’s priority had been to sustain the country’s finances and the workers’ jobs, and that objective was achieved, despite the international crisis. 

Thanks to efficiency gains and economic growth, government revenue had increased and was projected to increase further, while the deficit would drop to below 3%. The national debt was also below the EU average.   

Referring to comments on capital expenditure, the ministry said that in terms of EU rules, funding for projects in which the EU was involved was committed at the start of the projects and was then used over the years of project implementation.

The ministry also highlighted various budget measures included reduced income tax for 55,000 households.