Updated to include two-year period to be granted for Malta to reduce its deficit.
Prime Minister Joseph Muscat said this evening that in its decision tomorrow about placing Malta under an Excessive Deficit Procedure, the European Commission is not expected to impose spending cuts on the Maltese government.
Speaking in parliament, Dr Muscat said the crucial element was not whether or not Malta was placed under such a procedure, but whether or not the European Commission actually imposed spending cuts on Malta, as had happened under then Finance Minister Tonio Fenech, when he was told to cut €40 million from government spending.
Subject to ratification tomorrow, the government had negotiated in a way which would not see the European Commission impose spending cuts. Instead, it would give the government the opportunity and the time to get matters on track by reducing the deficit to below 3% of GDP as it thought fit.
This was a success, because the government had shown that it would continue to grow the economy and keep finances under control, Dr Muscat said.
He argued that it was the performance of the previous government which had brought Malta to this situation. The EU had cast its eyes on Malta because the deficit exceeded 3% last year, he said.
As for claims by the Opposition that the European Commission was not believing the projections for this year, Dr Muscat said this year’s Budget was the one prepared by the former government.
Therefore the Opposition was saying that it was its own plan that was not credible, Dr Muscat said to interruptions. The difference from that Budget was collective agreements and other financial commitments made by the former government outside the Budget.
The present government would not take the easy way out and would respect those commitments, he said.
EU TO GRANT MALTA TWO-YEAR PERIOD
Finance Minister Edward Scicluna, speaking later on BondiPlus, said the European Commission would grant a two-year period for Malta to reduce its deficit and emerge from the Excessive Deficit Procedure, even though the European Central Bank had indicated it would have preferred a one-year period.
Prof Scicluna said the government would keep its Budget commitments and would reduce its spending by greater efficiency and tackling waste.
NOT-SO-SMART METERS
Earlier in his address in parliament, made in reply to questions made yesterday by the Opposition about his participation at an EU summit last week, Dr Muscat said that while the government would continue the Smart Meters project, the meters were not turning out to be very smart.
Energy was among the topics discussed at the summit.Dr Muscat said 155,000 smart water meters had been installed, but there were ‘issues’ with 50,000 of them. 97,000 meters still had to be installed, mostly in the most problematic areas.
As for the electricity meters, 206,000 had been installed, 131,000 were functioning and 35,000 were not working. 70,000 remain to be installed.
SUBSIDIES
Dr Muscat said it was wrong to say that the government was subsidising Enemalta. Payments made by the government to the corporation were for the feed-in tariff, the eco-contribution and street lighting.
He said the difference between the energy policies of the old and the new government was that the former said it wanted a gas firing generating plant but then opted to build a power station using heavy fuel oil. The contract with BWSC was heavily skewed in favour of BWSC and independent experts had said that if matters were taken to court, matters could get worse for Malta.
It was clear that contrary to what was declared, there was no commitment by BWSC to pay any damages.
The former government used to say it was going for diversification of energy sources, with the interconnector mentioned as an example. This was a good project but one could not depend too much on this because there could still be incidents, as happened to the fibre-optic communication cables.
It was the present government which would bring in a true energy mix, including a gas fired power station and alternative sources of energy.
Dr Muscat said one was still questioning how the former government decided to pay the Commune of Ragusa €300,000 as part of the interconnector project.
The interconnector project was not a bed of roses. Advisers were warning that demand for electricity in Sicily was already saturated and there could be problems in sourcing energy from there unless a new interconnector was laid between Messina and Reggio Calabria.
The gas pipeline project had not been shelved, but the country could not wait for that project to materialise before reducing tariffs for both day and night consumption, Dr Muscat said.
Earlier in the sitting, Nationalist whip David Agius asked if the prime minister would withdraw words he said yesterday and which the Chair had found to be unsuited.
Interjecting, the Speaker said he had ruled that the prime minister could have made a better choice of words and the prime minister could withdraw them or explain.
The prime minister laid papers in reply to parliamentary questions but did not refer to the Opposition’s query.
After question time Mr Agius again asked if the prime minister would withdraw his words.
Dr Muscat said he would regulate himself according to the Speaker’s ruling.