A week before the election, Prime Minister Lawrance Gonzi speaks about 'dangerous' games, reshuffles, divorce, and that health memorandum

We're a week away from the election. Do you believe the PN campaign has managed to entice some of its lost sheep?

I think we've shown everybody that we have an electoral manifesto with substance and we have a better programme than the Opposition's. I believe we have persuaded people that we are offering the best option.

Once again, Labour leader Alfred Sant is being targeted as enemy number one. Can't the party be more imaginative?

I disagree. We have not targeted him as enemy number one. We've moved our own programme and we've come up with some innovative ideas. We've proposed 353 measures, a package of proposals which covers the whole range of our quality of life, whereas Labour has been on the defensive on proposals such as the repeater class for our children, their proposal to have overtime slashed to a one-hour rate of pay; it's a comedy of errors. Dr Sant never featured in my own speeches. It's the Labour Party and their proposals which continuously worry our electorate. The uncertainty is extremely worrying. The latest worrying aspect is Sant's statement that the 2010 (budget) surplus target is no longer a priority.

I think you agree that this campaign has been turned into a presidential campaign, pitting you against Dr Sant.

I would tend to disagree. People out there are discussing the proposals put forward by the PN about the income tax bands and the reduction of tax from 35 per cent to 25 per cent as opposed to Labour's proposal to introduce a repeater class in primary school. I think people out there are worried about the issues. Of course I am the leader of my party. I am ultimately responsible for the proposals put forward. I'm also responsible for what this country has achieved over the past four years. I've worked with a team of people who have helped me out. Yes, people have to choose between individuals. But the bottom line is that on March 8, people will choose the future of their children, their jobs... whatever makes a difference to our lives.

Do you feel that you're fighting this election on your own?

Absolutely not! I have a good political programme that has been prepared by the PN and it continues to build on the trust that we have in our people to move forward. We took Malta into the eurozone, achieved high levels of competitiveness, record levels of employment, tourism, low unemployment... the facts speak for themselves.

You have now made it clear that there will be a reshuffle in your Cabinet if re-elected. The million dollar question - why didn't you do it before, considering that so many were disgruntled with your team?

We were focused on some very ambitious targets, which a lot of people thought were unachievable. Joining the eurozone was in itself the climax of an exercise that started four years ago. We wanted to get fiscal consolidation, reduce the debt, control inflation, and keep the lira stable throughout. We also wanted to complete Mater Dei hospital, we wanted to use funds from the EU on specific infrastructural projects, get Smart City going. We wanted to transform the economy, while absorbing the shocks of the closure of the textile industry and create enough jobs to make up for those we were losing. These have been a very busy four years which required focus. So, I had to have a stable situation within the Cabinet to be able to achieve the targets. And the results speak for themselves.

So, if you're so happy with the work of your team, why are you determined to change it?

I'm not saying I'm happy with the work. I'm never happy with what I do. I think we could have done even more. But we've achieved, and we've surprised a lot of sceptical people, including the Opposition. They kept saying we shouldn't reform the pension system until 2010; they said we shouldn't go for Mater Dei now. They kept saying we shouldn't go for the euro and at the same time they proposed the devaluation of the lira. For heaven's sake, that was the most incompetent and irresponsible proposal I've heard in the past four years.

Alfred Sant said he's convinced that your Cabinet is corrupt. Are you convinced that your team is clean?

Every time there were allegations on anybody, whether in politics or not, I've put my money where my mouth is and referred every case to the competent authorities - the Police Commissioner or the Commission Against Corruption. I've requested them to carry out full investigations without fear or favour to anybody.

What about political accountability?

You first have to find out if any allegation of corruption is valid or not. May I remind you that the Police Commissioner investigated a particular case and it resulted that it was a total frame-up. Whoever invented this story was taken to court and found guilty. Dr Sant has conveniently bandied about a number of accusations and he has never referred these claims to the competent authorities to investigate them. There was a particular instance where we took a case of an allegation made by Dr Sant to the Public Accounts Committee, chaired by Labour's deputy leader. He refused to go and give evidence.

Do you think you could have handled better certain cases of alleged corruption or maladministration? Some people believe you didn't handle the (Roads Minister) Jesmond Mugliett case well.

The Jesmond Mugliett case was referred to the Police Commissioner. The people involved were taken to court and action was taken. They paid for their crime and were sacked from the Malta Transport Authority. One can criticise the administrative part, but let's make a clear difference between this and allegations of corruption. Zero tolerance to corruption means that I report everything to the police. We took action following an allegation of corruption against one particular individual who was working in the secretariat of one of my ministers. He was removed from his job. A relative of his criticised me for taking action and this same individual found protection in the Labour Party general conference. I find this extremely strange.

If Labour accuses one of your ministers of corruption in the coming week and you establish that he is corrupt, are you prepared to take action before the election?

Of course. But I must establish that he is corrupt and I will insist that investigations have to be carried out by the competent authorities. The politician should not investigate the case himself. If I were to investigate myself, whatever conclusion I reach will be perceived as biased.

The Labour Party has just issued (two hours before the interview) an internal Cabinet document suggesting the introduction of health care fees but that such payments "should not be introduced for the moment because of political underpinnings..." Are you guaranteeing that there won't be charges for health?

This issue has been going on for a long time now. It cropped up four years ago and my Government was exploring every possibility of controlling the deficit to get fiscal consolidation. This memorandum was discussed by a Cabinet committee and not by the Cabinet itself. Like other proposals we received, the truth is that in four years we didn't take any initiative of the sort. I find it flabbergasting that the Opposition leader, who as Prime Minister had introduced charges on medicine, is today referring to a four-year-old document which has never been implemented.

Are you giving a guarantee...

Facts speak for themselves. We've got fiscal consolidation, we achieved our targets without imposing any tax on health. I strongly believe that health should continue being provided for free to all our citizens. We have a social obligation to keep providing the best health service for free.

So you are saying that for the next five years you will not introduce any charges for health.

Yes.

The Labour Party says you were aware of this document discussing...

Of course I was aware, but the Labour Party has been promoting the theory that I was the person to present this memo to Cabinet, which was a total lie. This was a proposal, together with a list of other proposals related to stipends and other issues - and each single case was decided on its own merits. With respect to stipends, we even increased them and I made a commitment that they will also continue in the next legislature. What we need to do with the health sector is to enter into partnerships with private hospitals to address waiting lists.

So you're saying that you were aware of this document, but it was not discussed in Cabinet.

Exactly. The document went back to a Cabinet committee for social affairs, which was responsible for discussing a number of issues, among which was pension reform. When I became Prime Minister I set up a number of Cabinet committees precisely to examine different aspects and report back to Cabinet.

But you told journalists that the topic was not even broached.

The journalists asked me direct questions - whether I, as Prime Minister, and therefore as Finance Minister, proposed a memorandum about health charges. That's totally incorrect.

You've pledged to reduce the maximum income tax rate from 35 per cent to 25 per cent. Alternattiva Demokratika says this measure will cost €125 million. You say it will cost €46.5 million. Who is right and will you release the workings?

We are right because Alternattiva calculated it in an incompetent way. They took a parliamentary question that outlined the Government's different revenue strings and averaged out the amount and multiplied it accordingly. I can't understand how anybody in his right senses could cost it that way. We have the precise details - the number of taxpayers, the declarations of the last years. The cost for these measures would be in the region of Lm15 million and Lm20 million.

Are you prepared to release the workings?

Of course.

When?

I'm already explaining clearly that these are calculated in a very technical and scientific way. We actually took the declarations made by taxpayers last year so we are very close to the mark. Now everything depends on our fine-tuning of the tax bands. Don't forget that our proposals are not targeting only those who earn up to €60,000 but we are also proposing to raise the tax ceiling of those who are non-taxable. We are also proposing to increase the number of those who pay 25 per cent tax to the 15 per cent tax band. We have €46 million on the table and the package needs to fit into that, not the other way round.

What about the timeline? When will these measures be implemented?

Taxpayers are already paying less tax this year. In the next Budget, by the end of 2008, I hope we will be able to propose the measures...

Your manifesto promises to eliminate departure tax and the revision of the car registration tax. The PN is taking credit for their removal but in reality, these taxes have to go because the EU says they're in breach of its rules.

I disagree. They're not in breach of EU law. The EU has queried the departure tax and asked why it's not imposed on tourists because it's deemed discriminatory. We don't want to impose taxes on tourism so we will remove it. It's our choice. Similarly with the car registration tax - the EU is telling us we shouldn't discriminate between second hand cars and new cars from the EU. We said we would review this system and go for a polluter-pays principle tax.

You say you will make up for the revenue shortfall with an increase in economic growth. What makes you so sure you're on the right track? What if there's a worldwide (economic) crisis?

In 2007, we had a four per cent growth rate with oil prices at record levels...

...and it's still going up. Today, oil was selling at $102 a barrel...

In 2007, we had our first change in income tax bands. The Government dedicated close to Lm15 million (€34.9 million) specifically for the revision of tax bands - and look at the results. If you do this in a carefully phased manner, it will leave more money in the economy, enough to still achieve its fiscal targets while stimulating the economy. This is what happened in 2006, in 2007, this is what is happening in 2008, and I'm sure this is what will happen in 2009. In 2010, we will achieve a surplus situation...

...despite these tax cuts.

...because of these tax cuts.

Your electoral manifesto makes no reference to the issue of divorce. Don't you think it's high time we start discussing this topic in the 21st century, considering the large number of separations?

I have no difficulty to engage in a discussion about the topic. We need to discuss issues which relate to our social realities. We need to be realistic and recognise the fact that there are individuals out there who started off with a family and things went wrong. Now they're living in different situations, like cohabitation. We need to have a legal system that is fine-tuned to these situations.

But these two issues are not mentioned in your manifesto.

They are mentioned, but they're not spelt out. There's a section in our manifesto which refers to the family, marriage and our social units. It clearly states that the Nationalist Party in government in the next legislature will be addressing these issues in a realistic manner because we need to have a legal system that provides protection to individuals living in particular situations.

So are you saying that the issue of divorce could be broached in the coming five years?

I believe that the most urgent issue we need to address, and I'm sorry we didn't address it in this legislature, is the issue of cohabitation. We need to come up with our rights and obligations in order to protect cohabiting couples. Within the wide definition of cohabitation, I even include individuals who live together and are unprotected, like brothers and sisters. We've had situations where they are totally vulnerable.

But you're not making any reference to divorce.

I'm not making any reference to divorce in the electoral programme but it is a programme which recognises the fact that there are couples out there who are living in a particular situation and who require the state to address their particular needs - and we intend to do that.

Are you suggesting a discussion, a referendum...?

We will propose changes in the law that will regulate cohabiting couples. Of course, if a discussion about divorce starts then we're prepared to engage in it. We did have that discussion a number of years ago and we probably have to face it in future. I expect the issue to come up.

...but who will trigger the debate (on divorce)? Will it be the Government, society? In 1998, it was Alfred Sant himself as Prime Minister.

I believe these issues will have to be triggered by society itself. I'm sure it will happen. I'm sure our society will define the time when to initiate this discussion. After all, we're talking about social realities around us. You have to be sensitive to these situations.

One of the issues in this campaign is the subject of coalition. Why are you ruling out a coalition with Alternattiva?

Because they ruled it out. How can somebody insult me consistently throughout the whole legislature and propose a coalition on the eve of the election? It doesn't make sense and I can't see it happening.

Many believe the PN has a lot in common with AD.

It doesn't appear so from what they've been saying so far. They've focused all their criticism on my party, my administration, on my way of moving forward. They've made it so clear they have absolutely nothing in common with us.

Do you think they've got more in common with Labour?

I don't know. I don't judge them. They have every right to take this position. They have their own political agenda and I respect that.

What if you reach a situation where no party obtains an absolute majority...?

We are facing a situation where we could have, as a result of our electoral system, a situation where none of the parties achieves a 50 per cent plus one majority.

And if Alternattiva gets one seat in the Government we could end up with a gerrymandered situation where the party with the larger number of seats assumes the Government and there's nothing we can do about it. That's the situation we're looking at, at this point in time.

I find it extremely strange that we are discussing coalitions when we should be focusing on the end result of March 8. And people need to understand that on March 8 they will be deciding the destiny of this country for the next five years.

There are some dangerous games that are being played out there, especially with some of the proposals put forward by the Labour Party. There's the future of our children, employees and of this country at stake. My advice to everybody is to listen to each of the parties' proposals, even AD's, but then make a clear choice.

Do you think your party will win the election?

That's speculation. I think we have the best political, economic, educational and social package.

Are you confident?

I am confident that our proposals are the best. I'm confident of our track record. I back my arguments with facts, not theories. I have results to show. We've moved forward, but there's a long way to go.

What will you do if you lose the election?

I'll take a holiday!