Finance Minister Edward Scicluna told Parliament yesterday that according to one “tough” criterion of the EU Stability Treaty, all future budgets must be balanced or in surplus – a situation Malta has not seen since the late 1970s.

It was up to the Government to set up such an institution

The minister was opening the debate on a motion to ratify the EU Treaty on Stability, Coordination and Governance, which was signed in March 2012 by all eurozone member states and eight other EU members. It came into force last January.

Signatories to the treaty agreed to implement a balanced budget rule in their national legislation through permanent, binding provisions, preferably of a constitutional character, by the end of this year.

Under this rule, annual structural government deficit must not exceed 0.5 per cent of GDP. The deficit must also be in line with the country-specific mini-mum benchmark figure for long-term sustainability.

Prof. Scicluna stressed the importance of controlling expenditure, even in the good times, as a sort of back-up.

Among other things the treaty stipulated the role and independence of monitoring authorities. Many countries had academic institutions and think tanks to do the monitoring and pressure the government to stay on the right track, he said.

However, there was nothing of the sort in Malta. It was up to the Government to set up such an institution.

The EU tried to plan ahead, asking member states to respect benchmarks regarding public expenditure and deficit, but subsequently these weren’t respected by many countries, among them Greece.

Two solutions were needed: prevention – to avoid such a situation happening again – and a resolution of how to emerge from this crisis. The latter was the most complex problem, he said.

The first phase was to strengthen the Stability Pact. A stronger eurozone needed more coordination between member states.

Furthermore, the treaty dictated not only the benchmarks but also what should happen once they were exceeded. The treaty objectives included fiscal discipline, strong governance and discipline in the eurozone.

Opposition finance spokesman Tonio Fenech said Malta had to make an effort to reduce its national debt by 0.5 per cent because it stood at 70 per cent of GDP when the EU benchmark was 60 per cent.

He said corrective measures had to be taken and criticised the Government over its commitment to reduce the deficit by 0.6 per cent, which meant that the debt would increase by €600 million over three years.

Mr Fenech called on the Government to review its projections in view of the fiscal treaty which put states in a strait jacket with the introduction of new fiscal regulations.

However, he welcomed the Government’s intention of setting up an independent fiscal body to supervise the budget, adding that there was a reference to such a body in the 2013 pre-budget document.

The motion was unanimously approved.

€243K for legal services

Between 2002 and 2012 the Occupational Health and Safety Authority spent just over €243,000 on consultancy fees with Georg Sapiano, Sapiano & Associates and its later name Aequitas Legal.

Answering a parliamentary question by Carmelo Abela (PL), Health Minister Godfrey Farrugia said the arrangement with Dr Sapiano had started with a retainer for legal services up to 720 hours a year at a fixed annual rate of €18,169.

In 2010 it had been decided that the service provider’s work should not be classified exclusively as consultancy because the amount of consultancy as such was being negligible.

In 2006 agreement had been reached with Sapiano & Associates for better financial terms for the authority – €16,492 for 2007 rising to €18,169 a year up to 2010. For the next two years the fee had been fixed at €22,356 a year.

The OHSA had terminated the agreement at the end of 2012 following an appeal by Aequitas Legal against the award of a tender. The appeal had been decided for the authority.

To ensure continuity of service, the authority had given a direct order to another lawyer at “much more favourable terms” until such time as a new tender was adjudicated.