‘Debt: 117 per cent of the GDP by 2020’

The European Commission has said that Malta was at high risk with regard to sustainability on public expenses and forecast that, in 2020, the national debt would increase to 117 per cent of the GDP.

The Budget did not address the bottlenecks and challenges Malta was facing

Opposition spokesman on economic development Charles Mangion yesterday told Parliament that the government never reached its economic targets except for 2011 after postponing certain payments to 2012.

During the last months of 2011 and the first two months of 2012, national debt had increased by more than €202 million. The government had already exceeded its target for 2012 in the first two months.

While the minister said that government stock had to be €4.2 billion at the end of 2012, it already amounted to €4.3 billion in February 2012.

While the government was to contribute €13.5 million in 2012 in favour of governmental entities that depend on it financially, it had already contributed €19.3 million by February 2012. It ignored the fact that these entities provided their services against payment. Such contribution arose from €150 million to €230 million in the last three years.

On economic challenges, Dr Mangion said through increasing utility tariffs, the government had increased inflation.

Lack of investment in the last five years affected Malta’s productivity. While the government said it had increased investment, this had decreased year after year.

The gross fixed capital formation was 22 per cent of the GDP in 2006. This had decreased to 21 per cent in 2007, 16 per cent in 2008 and to 13 per cent in 2011.

At the beginning of his speech, Dr Mangion said the Budget Measures Implementation Bill was a clear confirmation that the Prime Minister believed he did not have the support of the majority in the House of Representatives. Thereforehe had to engage in delaying tactics.

Between 2008 and 2011, such a Bill was discussed in January and was approved in all stages by March. The debate had only started in March this year and the Bill had to be passed by May 14.

This showed that the Prime Minister’s individual race did not serve to improve Malta’s economic position and credibility.

Speaking on Malta’s socio-economic position, Dr Mangion said that by eliminating unneeded bureaucracy, entrepreneurs would focus on their core work.

The government was duty-bound to ensure good working conditions for employees. While the government declared it was against precarious work, it did not take any action to eliminate it. Moreover, the Health Department had awarded contracts to companies who engaged workers in precarious work.

Opposition leader Joseph Muscat had already declared that a Labour government would not award contracts to such companies.

Eurostat confirmed that in February 2012, there were around 84,000 people who risked poverty and social exclusion in Malta. The minister should have referred to this reality in his speech.

The Eurostat report stated that 27 per cent of the Maltese households (around 110,000 people) would not be able to meet their needs in a contingency.

Meanwhile, eight per cent were not able to meet their loan payment schemes. There were 42,000 people who did not afford to eat meat or chicken twice a week. Moreover, 56,000 people were unable to keep their houses warm during last winter.

Between 2005 and 2010, the number of people who risked poverty rose from 14 to 16 per cent.

“What was the government doing to reach the EU’s 2020 vision?”

Caritas Malta had also published a study in which it said that a family of two parents with two children needed a minimum of €10,600 a year. No one contested this figure, he said.

There were more than 55,000 full-time employees who did not earn €9,000 a year. Together they paid more than €5 million in taxes. There were 13,000 people who earned between €9,000 and €11,000 who paid around €4 million in taxes. The government should increase the tax capping to exclude these people from the liability to pay taxes.

The government was ignoring the fact that poverty and social exclusion were increasing in Malta. NSO reports had also confirmed that the situation had deteriorated in the last five years.

Dr Mangion said that if wages did not increase at the same rate of productivity, the retail sector would be affected.

The main issue affecting productivity was the reduction in investment during the past five years: 22 percent of the GDP in 2006 to 13 percent in 2011. It was very important to attract investment in order to increase productivity and in turn improve wages, he said.

Increased expenditure mainly relating to rent and energy tariffs was resulting in export companies holding back from investing.

The 2012 competitive report listed a number of problems which created difficulties when investing in Malta. One of the reasons was government bureaucracy. There was the need to implement the idea of a one stop shop to be more efficient and reduce bureaucracy.

The national reform programme mentioned the educational sector. Dr Mangion said that although it was positive that schools were highly equipped, at the end of the day it was the academic results which mattered.

It was positive that Malta held a strong foothold in the financial services sector. More specialised people were required for this sector. It was sad that the Smart City project which would have employed 5,000 people had never materialised.

The budget did not address the bottlenecks and challenges Malta was facing. It was important to attract investment and focus on sectors which could improve the economy.