Labour leader Joseph Muscat yesterday said the Government was planning to reuse the same “trick” it used for the Budget last year: cutting capital expenditure to rein in the deficit.

We are spending more on debt than on education

The deficit stood at 4.6 per cent in the first half of the year but the Government would find a way to make it drop to below three per cent when it came to the Budget, he said.

During a One Radio phone-in yesterday morning, Dr Muscat said the Prime Minister had promised that the country would begin closing the year with a surplus rather than a deficit by 2010. Lawrence Gonzi made this promise before the election but when he was already proudly stating that a financial storm was on the horizon.

Instead, due to “financial mismanagement”, the Government’s debt has surpassed the €5 billion mark and the country was now aiming for a deficit target of below three per cent.

“The immediate problem is that we are paying interest on this debt. We are spending more on debt than on education. We are spending more on paying interest than on Learning Support Assistants and other educational facilities.”

He said he was convinced that the deficit targets would be reached “artificially”, by reducing investment rather than trimming inefficiency and waste. This would endanger economic growth and jobs.

Contrary to established practices, the Government found a way to rake in all the income from the privatisation of the national lotto this year, instead of over a 10-year span.

He said taxpayers were bearing the brunt of the Government’s bad planning. He referred to a “classic” case last week where the Government was ordered to pay €800,000 to an architect who had been asked to draw up “grandiose” plans to turn Zammit Clapp Hospital into the cancer hospital. The Government then discarded the plans and started building an oncology hospital near Mater Dei.

“Then they want us to trust them on the St Philip’s Hospital contract,” he said, welcoming the fact that the Government had finally agreed to publish the contract before signing it.

The government accused Dr Muscat of twisting the financial figures without a care about how this would affect investment and job creation.

It said borrowing would go down and the tax take would increase in the second half of the year.