Updated - Adds PN reaction

Labour leader Joseph Muscat said today that ministers in a new Labour government would revert to the pay which ministers had at the beginning of this legislature and a study would be commissioned on the pay of public office holders. Any increase would come into force only when the economy allowed it.

Speaking in parliament in his reply to the Budget speech, Dr Muscat also reiterated his promise to bring down power tariffs in a sustainable manner using clean technology. He also said that a Labour government would not raise the retirement age.

Early in his speech, Dr Muscat accused the government of 'engineering' the budget by hiding large sectors of public borrowing.

This Budget, Dr Muscat said, was a Budget of convenience tailored for the needs of those who wrote it.

Some people were given a little of what was taken from them, but this was a budget of small solutions for big problems, and far from what was promised. Whole sectors had been ignored and people had to turn 80 to be given some help.

Dr Muscat observed for this year, government tax revenue was down by €10m. Recurrent expenditure went out of control, and therefore the government scaled back capital spending, by a staggering €137 million. Revenue from the European Union was half what had been projected. Indeed, the government had not sought all the funds available for it from the EU, in order not to go into the costs of joint financing, thus denying the country important financing.

The country's finances had been 'engineered' with the government starting from the answer and then going back to the workings. But still, the debt this year would reach €4,535 million, €78 million more than projected.

For next year, the government was projecting further deficit reduction by saying the economy would grow four times faster than in the eurozone and make more in tax revenue. The government would have to assume responsibility for these projections.

It appeared that VAT revenue would increase thanks to the recently-announced amnesty and the government would continue to scale back its capital sending. Where would the concession fees mentioned in the budget come from?

And what about the new birth registration fees and the increase in wedding registration?

THE NATIONAL DEBT

The debt next year would rise by €134 million and interest costs would rise by €17 million, double the expenditure on the tax cuts for parents. Debt serving costs would reach €530,000 daily.

Dr Muscat said it was little wonder that no one was believing the prime minister. The debt situation was worrying, more so because this was not the full picture, excluding the spending on the buses, enemalta and city gate, among others.

It was shameful that the City Gate costs were hidden from the Budget. The special purpose vehicle for the city gate project appeared to be called Malita. He hoped that the prime minister had some comfort from investors and therefore he hoped that the government had not gone into this project blindly. The SPV would only succeed with a regular income, but where would this be? It appeared that the government would end up renting the parliament building, a symbol of democracy in debt like no other.

This project was the ultimate symbol of how the government was cut off from reality, Dr Muscat said.

The labour leader warned the government to heed warnings given to it by the European Union, Jean-Claude Trichet in the Eurogroup and Moody's, among others, about the excessive deficit.

What action was the government taking in case the eurozone crisis worsened, particularly in Italy? What was the government doing about eurozone moves for the introduction of a financial transactions tax?

DECLINE IN PURCHASING POWER

Dr Muscat said that despite the crisis, the workers' purchasing power was increasing in Europe, while in Malta it was actually decreasing.

Malta this year had seen a drop in foreign direct investment, in exports and in services, when one excluded 'oil' in the exports list.

At the same time, the Maltese were paying more for their fuel.

LABOUR TO REDUCE INTEREST ON OUTSTANDING VAT

On the amnesty on outstanding VAT payment penalties, Dr Muscat said the government had brought this situation on itself through unfair high interest rates, and this decision was sending bad signals to the market and honest traders. Clearly it was the high interest rate of 9% which needed to be addressed, as a Labour government would do, Dr Muscat said.

Dr Muscat said the increased tax on oil bunkering could undermine the competitiveness of this sector and had been introduced without consultation.

He promised that a Labour government would allow space for business. Labour, he said, would be 'safe' for business.

TAX CUTS FOR PARENTS

Dr Muscat said there was more than meets the eye in the reduced tax for parents. This was inspired by convenience not convention. Three years ago, the prime minister promised to reduce income tax for everyone in order to fight the gathering storm. Now he was saying the storm was too big. So much for electoral honesty.

Had the election promise been kept, families would have saved €160 million. Now they would save €10m and much of the savings would be eaten away in social security.

The tax cuts announced in the budget was limited only to married working couples who have minor children. If only one of the parents worked, they would not be eligible. Parents would also not qualify if one of them worked only part-time, or had to leave work to care for the children.

These tax cuts unfairly discriminated between households to the detriment of the children. Would there be children of the first class, and those of the second?

This tax cut could be built upon, but one needed to think of other categories.

As for the increase in children's allowance, those earning less than €18,000 would not benefit. This measure would cost the government less than what it spent on the breakwater bridge to nowhere, Dr Muscat said.

SAME SEX UNIONS

Dr Muscat asked what had become of the cohabitation law and said a Labour government would legislate in this sector, including civil unions for couples of the same gender. Labour would also enact an IVF law that was ethical and realistic.

Dr Muscat hit out at the government for being confusing in its position on extending the maternity leave. In saying in the Budget that maternity leave would be extended, it said this was conditional on agreement in the MCESD. But Labour was promising that it would introduce this measure, and find the means to help businesses to implement it.

Labour would also introduce new incentives to encourage more women to go to work.

POWER TARIFFS

Dr Muscat said the power tariffs were a millstone holding down the economy. The tariffs were not related to oil prices and were an austerity measure. Standard and Poors and the European Union had both said, after talks with the government, that the tariffs were to increase further. That tariffs would not rise was only a measure of convenience for the government. Oil prices had risen but tariffs would not because, it was claimed, there would be a €20m efficiency gain in the power station extension, even though the balance of oil costs would be higher. This was the usual electoral game and the people knew it, Dr Muscat said.

That was why no one believed Dr Gonzi any longer.

Labour would reduce power tariffs in a realistic and sustainable manner, opening the door for economic growth and lifting many families from poverty.

Labour had already said that the power station should be gas firing because gas prices would eventually be cheaper, something which the government was now admitting. The formula on return on capital employed on which the tariffs were based, would be made more realistic. This would save €12m a year. Labour would also introduce a new, cheaper night tariff, something which this government had not introduced despite the smart meters.

There were many other opportunities which with new technologies and better management, would bring about realistic cuts. Malta should not remain reliant on oil but shift to clean technology which the prime minister knew about and could introduce himself. If he didn't this was one of a set of possibilities which Labour would seriously consider for cleaner air and a stronger economy, Dr Muscat said.

Labour would also transform the Delimara plant to gas oil and retain the interconnector to buy electricity at the cheapest rates and ensure there was security of supply.

UNION RIGHTS FOR THE POLICE

Dr Muscat said a Labour government would give the members of disciplined forces the right to join a trade union, without the right to strike. It would also refuse to award contracts to contractors who did not respect workers' rights.

MINISTERIAL PAY

Dr Muscat criticised the prime minister and the government for not refunding the pay raise given to ministers. Indeed, the estimates did not show the truth of how ministers were paid. The payments were hidden under various votes, despite what the auditor had said. Indeed, the ministers were likely to have taken a cost of living increase from their two pays. This was an insult to the workers.

And the ministers were not alone. In three years the government had awarded €35m in consultancies.

He would not have nothing of this, Dr Muscat said, and a Labour government on being elected would turn back the clock on the increase of €500 per week. Ministerial pay would be restored to what it was at the beginning of the legislature. The Labour government would then commission a study, headed by the Ombudsman, to establish the pay of ministers and other political office holders. This mechanism would come into force when the economy was strong enough.

LABOUR WILL NOT RAISE RETIREMENT AGE

On pensions, Dr Muscat said a Labour government would not raise the retirement age, as the present government had agreed to do. Third pillar pension contributions would not be mandatory, he said. Labour would also remedy anomalies in the current pensions system.

WAITING LISTS

Dr Muscat said the government was showing lack of commitment in reducing hospital waiting lists, and was instead committing funds on useless projects, such as the breakwater bridge. He hit out at out of stock medicines and said he could not understand this mediocrity in the management of stocks.

A Labour government would be proactive in reducing the waiting lists, Dr Muscat said, and introduce new rights so that people would know what service to expect and how long they had to wait.

SMARTCITY 'HAS DISAPPEARED'

Dr Muscat noted that Smartcity had disappeared from the Budget. There was also no mention of funding for the road leading to it. A government-commissioned report had said that Smartcity was to have employed some 4,700 workers by this year. Where were these jobs?

It was incredible, Dr Muscat said, that the jobs had not come about because, according to Austin Gatt, the government had not removed a pumping station on time. This was a certificate of mediocrity. But was it true that the investors now were not bound by job creation commitments? How could the government not have dismantled a pumping station on time when it dismantled so many things, including the dockyard and Sea Malta?

WHITE ROCKS PROJECT

Dr Muscat asked what had become of plans for the corporate village, the Marsa sports village and the White Rocks sports village. No one had applied for the Marsa project because investors knew somebody had cast his eyes on it. And with regard to White Rocks, the prime minister had told the investors to come to Malta and not to leave until an agreement was reached.

Dr Muscat criticised the new service charge in industrial estates saying it was inflated and aimed only at topping up the pay of top brass at Malta Enterprise.

He said the new micro credit scheme was good, but had it been cleared by the EU?

A SECOND UNIVERSITY

Dr Muscat said that such were the government's priorities that it was spending more on the building of a new parliament than a new Mcast campus.

Labour, he said, would retain the stipends and promote the setting up of a second university for greater plurality, possibly with overseas investment.

Dr Muscat insisted that Air Malta's strategy, especially for tourism, should be explained. And the government should explain how Air Malta would pay back its €52m loan next year, although it appeared that a land transaction would be involved.

Labour would put the airline back at the core of Malta's tourism policies, Dr Muscat said.

On environment policy, Dr Muscat said the bus service reform was meant to lead to fewer cars on the road. But now there were more, and air quality was getting worse. The situation would get worse if December 13 Road was closed next year.

Transport policies would be given priority by a Labour government, Dr Muscat said.

On Mepa, Dr Muscat said that just when people thought the situation could not get worse, it did. Tariffs had gone up and the burdens on the people had increased. Government subsidies were still retained and service had not improved.

TAX ON POLLUTERS

Dr Muscat said a Labour government would start a gradual shift of taxation on the basis of the polluter pays principle, easing the burden from those who wanted to work productively.

On Gozo, Dr Muscat said Labour's priority was job creation in Gozo for the Gozitans. The Gozo business chamber would also be given a place in the MCESD, as would the FORUM of trade unions.

In his speech, Dr Muscat promised more resources to the Family Court, measures to reduce court delays, and measures to revamp the local wardens system, which were little more than 'a racket'.

Near the end of his speech, Dr Muscat said the prime minister had asked him 10 questions, and he had replied with 51 promises and proposals, and more were to come.

These were sustainable and realistic proposals which would harness everybody's talents and abilities. The solution was not to spend more, but to be wiser in one's spending. The prime minister was asking questions, but the Opposition was giving solutions, Dr Muscat said.

PN: NO WORD ON COST OF MUSCAT'S PROMISES

In a reaction, the Nationalist Party said that Dr Muscat had promised changes but had not told the people how much his changes would cost.

He had not said how he intended to reduce water and electricity rates without increasing taxes; how he planned to reduce national debt without raising taxes and whether he would slash water and electricity rates for everyone.

The PN said Dr Muscat had not said whether he would still slash utility rates even if the price of fuel went up, how he would create jobs, and what economic policies he would adopt to make sure that Malta continued to weather successfully the economic and financial storm.

"The most Joseph Muscat could tell the people was that he would reduce water and electricity rates by €4. In typical Muscat fashion, he said nothing about jobs, and as expected from an Opposition leader who lives in a world of make believe, he ignored the international economic and financial crisis," the PN said.

However, people got the point that Joseph Muscat wanted to become Prime Minister – in two hours he made it a point to say it 51 times.