Prime Minister Lawrence Gonzi yesterday accused the opposition of populism after five of its members asked a number of questions following a ministerial statement on the European Council summit. He said he was surprised by the opposition’s attitude, adding that it seemed to be indicating that Malta could leave pension and energy issues as they were.

Dr Muscat had noted that some of the proposals coming out of the council meeting were “socially shocking”. Did the government agree with all the conclusions and recommendations?

Particularly so was the point on the sustainability of pensions, which seemed to lean towards taking life expectancy into account and pointed to the pensionable age being raised again. If this was so, the Prime Minister should make this clear, he said.

Dr Gonzi said that the problems being faced by Greece were the result of its government failing to make the necessary reforms including the sustainability and adequacy of pensions by raising the retirement age. The same was happening in the UK.

The government had introduced the pension reform after wide public consultations except for the lack of participation by the opposition. The reform included a clause that compelled the government to revise the reform within five years’ time.

The main challenge was having adequate rather than sustainable pensions.

The government’s aim was to raise the ceiling linked to the maximum pension possible to make it sustainable. The government had also taken measures enabling pensioners to continue to work while retaining their full pension. The retirement age was raised gradually.

Dr Gonzi said that contrary to what the Leader of the Opposition claimed, it would have been socially shocking if the pension reform was not tackled.

Another point approved by the council was that Malta should reduce its dependence on oil through the greater use of renewable energy and better efficiency in its use. Dr Muscat said that he could not understand how the government was now brazenly proposing a set of already-agreed measures. He expected an urgent statement on these.

Referring to oil purchases, the Prime Minister said energy prices were fundamental for Malta as an island. He accused the opposition of playing on people’s sentiments adding that its attitude showed that it was irresponsible and “socially shocking” in giving the people a false impression of the situation through what he termed as its “superficial, false and dangerous politics”.

Dr Gonzi said the opposition was against the Delimara power station when it knew that the one at Marsa had to close down.

The Delimara power station was being extended and could also be operated on gas. The government had also taken steps to connect Malta with the European electricity generation grid.

The council also agreed that in consultation with the social partners and according to national practices, Malta would revise its wage bargaining and wage indexation mechanism to better reflect productivity and competitiveness.

Dr Muscat said that on the cost-of-living adjustment, COLA, Finance Minister Tonio Fenech was on record saying that he had convinced the EU finance ministers that the changes they were proposing did not make sense in Malta’s case, where the COLA mechanism worked well. The government now seemed to be agreeing with proposed changes to the system.

Dr Gonzi told Parliament that the COLA mechanism was used in Malta in agreement with the social partners and had served well for several years.

There were several countries in the EU that relied on the indexation of wages and hence the increase in wages would be given according to an established percentage representing the increase in the cost of living. This meant that the lowest income workers would get a small increase and those in the upper-income bracket would get a hefty rise.

On the other hand, Malta did not adopt such system. COLA was set up as a separate system where everyone would receive the same cost of living increase.

The European Commission understood the Maltese position and decided not to remove COLA as applied in Malta. However, it requested Malta to analyse and evaluate its system to determine whether such system was helping or undermining Malta’s productivity.

Dr Muscat asked what attitude the European Council was taking with countries that were not in agreement with its proposals. Had there been any talk of sanctions?

Most EU member states had pronounced themselves on the prospect of Eurobonds, but what about the government when the EU was already actively examining the issue?

Dr Muscat asked how the massive financial aid to Greece would or would not impact Malta. The European Central Bank’s pushing spelt of hypocrisy. The opposition agreed with helping Greece, because this was in Malta’s best interests too, but up to what point?

This would be the first time Malta would be exposing itself to foreign debt, whereas to date all debts had been local.

Speaking on the Greek financial crisis, Dr Gonzi said that if the Greek government defaulted in paying back the amount lent to it, the Maltese government would borrow money from Maltese people. However this would not be considered as a foreign debt.

The government must be serious and accountable as it had been during the first financial package.

The Maltese Parliament had authorised the loan on specific condition, including interest rates and the implementation of austerity measures that needed to satisfy Malta, the EU, the European Central Bank and the International Monetary Fund.

Answering a question by Alfred Sant, Dr Gonzi said the first financial package amounted to €70 million and at present Malta paid €35 million. There was a pending €5.5 million.

The Greek government had implemented austerity measures but the problem was such that the austerity plan was not enough for Greece to improve its position.

The EU and IMF concluded that the financial package, as authorised in April, would not suffice for Greece to improve its position and requested it to further increase the austerity measures and to engage in a commitment of privatisation that would generate a further €50 billion over five years.

Moreover, the EU, IMF and ECB threatened they would not even pay the remaining of the first financial package if Greece did not honour the conditions.

Dr Gonzi said bank stress tests were being carried by the ECB in the coordination with the Maltese Central Bank. Indeed, he said, the results with regard to Malta should be positive.

Questions were also asked by Labour MPs Anġlu Farrugia, George Vella and Charles Mangion.