The government wage bill went up by €32 million in the six months between October 2012 and March 2013, an increase of 7.3 per cent over the same period a year earlier.
During the same period between 2011 and 2012, the bill had only gone up by 3.2 per cent.
Finance Minister Edward Scicluna said that the increase – particularly in the three months before the election – was due to the conclusion of a number of collective agreements, and he questioned the wisdom of concluding agreements at such a time.
“Can you imagine how much power and clout that gave the minister before the election? You are desperate to win the election; you are desperate to please people. It is not the ideal time to conclude an agreement. We don’t blame the unions for it. We are just saying that this does not do anyone any good,” he said.
Speaking during an interview which will be carried in full in The Sunday Times of Malta, Prof. Scicluna said he would be adopting a top-down strategy in this year’s Budget.
He said that in the past ministries would come with their wish-list and money then had to be found to pay for projects – whereas his approach will be to determine how much revenue the country would bring in, determine the GDP, establish the desired GDP-to-deficit ratio – and work backwards to determine what expenditure he could offer.
It does not sound like rocket science – but Mr Scicluna said that for too long, civil servants had gotten used to finding things to “patch up the Budget to make it look good”.
“But each year, there is enormous panic to find the next patch. That is not sustainable. That is why we need to take expenditure, whether it is health, education or social security, and make it sustainable. But that is a lot of work,” he said.
Prof. Scicluna, a keen sailor, likened the economy to a yacht in very light winds which would keep moving, albeit slowly.
“If there is any movement, it stalls and then it takes a long time to get momentum going again,” he said, explaining why he did not want to make drastic moves in the Budget.
He said that this argument had been accepted by the European Commission when negotiating Malta’s response to the Excessive Deficit Procedure and that they gave Malta until October 1 to show that it can finish this year at under three per cent or, if not, what measures were contemplated in the budget for 2014.
He also said that the Economic Policy Division would be looking not only at expenditure and revenue compared with the previous year but also against projections, on a regular basis. In the past the variance was only considered at the end of the year, by which time it was “too late” to do anything about it. The ministry will soon embark on pre-Budget consultations with MCESD and the public. Prof. Scicluna said he intends to keep the document simple, and ensure that it comes with an executive summary.
“The summary would outline what the Government’s intention is, where we are now, where we want to go, and how we are going to get there... These are the basic questions.”
vanessa.macdonald@timesofmalta.com