Finance Minister Tonio Fenech defended the government economic policies and actions but at the same time gave one of the sternest warnings yet on the general economic picture, saying deficit and debts should be slashed if Malta was to keep attracting investment.

Winding up the debate in second reading on the Budget Measures Implementation Act, he said the government never fooled the people. From the onset, it had had warned of the challenges ahead.

The government was always consistent in its arguments while the opposition had suggested reducing the VAT rate. Such measure had had an adverse effect in the UK and the British government had subsequently raised it to 20 per cent.

The government had a social conscience –it wanted to help those most in need.

Contrary to other governments, the Maltese government presented a Budget that provided stability and certainty. It would also give the full increase for the standard of living as dictated by the COLA mechanism.

Through the Budget, the government also sustained education and stipends when university fees in the UK had tripled.

Mr Fenech said that, in the long run, politicians should be responsible. While debts of foreign governments kept accumulating, people had to suffer the consequences. The Greek government made several promises but in the end it had to face reality and there, fuel prices were shot up by 42 per cent.

Turning to the local scene, the minister said the government had also increased state aid to parents whose children attended private schools. It was also investing in the health sector, including new medicine and the fight against cancer.

The government has also negotiated with factories and encouraged them to keep operating here. It had also negotiated with ST Microelectronics and saved 1,600 jobs. Had the government not intervened, such companies would have stopped operating.

In the 17 Eurozone member-states, 10 per cent were seeking employment. In Malta the figure read six out of every 100.

Speaking on the €1.16 cost of living increase, Mr Fenech said this was arrived at through the mechanism agreed upon by the social partners. There were arguments for and against whether this could be improved. However, had the government had accepted certain proposals, the mechanism would have meant the sum would have been reduced not increased.

The electricity company in the UK had announced a nine per cent increase in electricity prices while the price of gas rose by three per cent. Malta was not the only country that faced challenges.

Yet, last year the Maltese economy increased by four per cent. Quoting Eurostat, Mr Fenech said that while consumption rose with an average 0.8 per cent from October to November in the Eurozone, Malta saw the highest increase of 5.5 per cent.

The opposition should tell people that social benefits in Germany were reduced by €30 million. In certain countries, governments removed overtime and froze pensions. Portugal had pushed up VAT by two per cent. The French government froze salaries.

While the leader of the opposition suggested the government compared itself with Cyprus, the Cypriot government had to introduce VAT on food. The Maltese government managed to keep its derogation.

Due to the global situation, there would be a wave of high prices. In the Budget, the government stated it would present a detailed report to the MCESD on price increases, their impact and what measures could be taken.

Families included the voucher scheme on energy were further assisted because of the hike in the price of gas.

One could not forget the country’s focus since challenges were still apparent. Employment should still be safeguarded, otherwise no wages or salaries would be forthcoming, Mr Fenech said.

When the question was put, the opposition called for a division, which would be taken at a later stage.

Both sides agreed that the committee stage of the Bill would be taken in the Consideration of Bills Committee but if votes were called on any clause, this would be taken by the whole House.

Thirty MPs, including three ministers, took part in the eight sessions during which the Bill was discussed in second reading.

Earlier, Philip Mifsud said last year was one of reforms during which the Maltese experienced an enhancement in service and a higher standard of living. He urged the people to start looking at things from a quality perspective.

The public transport reform should benefit commuters and he hoped that the number of passengers would increase.

He dwelt at length on the Mepa reform, which was the result of a long and difficult consultation process that resulted in a total change from application till decision stage.

However, Mr Mifsud, an architect by profession, expressed concern over applications that were already in the system. These, he said, needed to go through the screening process and one needed a transitory period or process for all the 5,000 pending applications. The Resource Ministry had set up a committee to look into Mepa policies with respect to agriculture.

Nationalist MP Franco Debono said there could not be a strong democracy without a strong Parliament. MPs had to talk in the name of their constituents and no one should suggest that they keep their mouth shut.

He recalled that this year was the ninetieth anniversary of Malta’s self-government in 1921.

From surveys, it resulted that only 0.1 per cent of the population followed parliamentary proceedings and, therefore, there was a need for strengthening the institution and giving it exposure. No opportunity should be missed, including live screening of parliamentary sessions, even on the internet.

He emphasised the need of regulating party financing and said that he was working on the relevant legislation. Dr Debono said the time had come to update the House Standing Orders.

Other speakers will be reported tomorrow.