Former Labour Prime Minister Alfred Sant told Parliament yesterday that the application of the fiscal pact by Malta meant that future governments would have to present budgets that aimed for a surplus with the aim of decreasing the national debt when neither Malta nor Eurostat knew exactly how much this debt amounted to.
If the fiscal pact had been adopted six years ago, Malta’s budgets would not have been approved by the EU- Sant
Speaking in the House of Representatives on motion for the ratification of the adhesion treaty between Croatia and the EU member states, Dr Sant said it was important that the country knew what it was entering into and the problems it would face.
He said that if the fiscal pact had been adopted six years ago, Malta’s budgets would not have been approved by the EU.
The Prime Minister’s signing of the fiscal pact meant that Malta’s sovereignty on fiscal affairs would be restricted because the pact was giving strong control to technocrats in Brussels. He hoped that the government had made some form of analysis on the pact and would inform Parliament about it.
Dr Sant claimed that the fiscal pact adopted benchmarks – that deficits should not be more than three per cent of the GDP – which were adopted 20 years ago and might not be still valid today because of developments and a changed economic reality.
Micro economies such as Malta’s had to adopt the same criteria as much larger economies. Statistics showed that the purchasing power of micro economies decreased over the last 10 years. The one-size-fits-all policy was being adopted.
The countries which accepted the fiscal pact had no central taxation system but under the pact they assumed that deficits had to be restricted but not surpluses. This would lead to certain problems. Some countries were saying that the fiscal pact would lead to increases in the rate of VAT.
Dr Sant said that the fiscal pact issue was debated in the Irish Parliament while the German Supreme Court was insisting that Parliament should be given detailed information and, if necessary, take a vote since it led to restrictions in the country’s sovereignty.
He added that technical hearings should be held with technocrats giving necessary explanations. One had to see how to counter those obligations which might include increasing VAT, the retirement age and decreasing pensions for small countries.
Earlier in the debate Dr Sant said that everyone agreed on Croatia’s membership but insisted that the treaty should have been approved under the Ratification Act and not under the European Union Act.
The government was mixing things up and the way things were handled showed that the Malta Independence Constitution was being eroded. Integrating the treaty under the EU Act was different from ratifying it. The letter of the law was not respected. This included the signing and ratification of the treaty and integrating the ratification in the EU Act.
If the government wanted to change the Ratification Act or of integrating these two acts it should have presented the necessary changes before Parliament. The government’s briefing on this treaty was superficial, he said, adding that it should have presented some form of report on the economic impact that Croatia’s membership might have on Malta. Both countries could seek an alliance on tourism but at the same time one had to see whether access to funds in this sector would be affected.
One had to look also at the issue of the qualified majority when one analysed what the political implications for the other Balkan states were.
Dr Sant also showed his disappointment at the way the government was treating Parliament in briefing it on council of ministers’ meetings. This was done in a question and answer session with the Prime Minister interpreting things in his favour.
At the end of question time, Dr Sant remarked that, contrary to what had become a customary procedure, the Prime Minister did not make a statement on the latest EU summit held last week. On being informed by Leader of the House Carm Mifsud Bonnici that the statement would be made tomorrow, Dr Sant said the government was treating Parliament as an outlet selling cheesecakes. You have rendered the House like Hefu Bar (in Birkirkara), he told the government side.