Labour MP Karl Chircop said yesterday that the savings ratio had been reduced to a flat zero and household debt had risen to 53 per cent of GDP.

He told Parliament during the budget debate on the social policy ministry that there had never been a government which used social services to win votes as much as the present one.

The Labour MP said the cost of living had never been as steep on essential items, notably food and medicines, with the government failing to take effective action. And the power surcharge had, literally, instilled fear in the lives of low income families. The rebate given to some low income families was far from adequate. He knew of a household that was given a rebate of Lm11 for consumption of Lm300.

Dr Chircop said the people were expected to applaud the measures of this budget, but how could anyone forget how the savings ratio had declined from Lm10 per Lm100 in 1995 to a flat zero now? How could they forget the increase in VAT, the government's increase in tax revenue, the hike in power prices and the increase in various tariffs and prices including the Gozo ferries, the departure tax, buses, gas cylinders, telephone, kerosene and fuel?

Household debt had risen from 29 per cent of GDP in 2001 to 53 per cent last year, he said.

Such financial pressures were leaving an impact on society, as seen in the increase in marriage break-ups.

Dr Chircop said the government had been scaling back children's allowance since 1998. Almost Lm50 million had been saved by the government since that time, to the detriment of hundreds of families. Now this budget would raise outlay by just Lm5 million. Clearly a case of too little, too late.

Families near the poverty line would not see much of an increase in children's allowance. A family with an income of Lm7,000 would see the allowances rise by 33 per cent while a family earning Lm10,000 would see a 100 per cent rise. This did not respect the principles of social justice.

This measure, and the fact that low income people would not benefit from income tax cuts meant that the budget measures would widen the social divide, he warned.

Opposition social affairs spokesman Marie-Louise Coleiro Preca said Malta had been reduced to a state where tax revenue growth was among the fastest in the EU while wage increases were among the lowest.

Ms Coleiro Preca said the widening of the tax bands was welcome for the middle class. At last the government was giving back something of what it had taken after having introduced consumption taxes. But these tax cuts would not benefit the low income workers, the vulnerable groups which relied on social benefits and those who had part-time jobs as their principal activity.

The measures reducing succession duty on residences and on children's allowance also amounted to the government giving back something of what was taken away before.

Furthermore the Lm1.50 cost of living wage increase was inadequate in view of galloping inflation. Indeed, what the government needed to do was to address the causes of inflation if purchasing power was to improve.

Among them was the cost of medicines and VAT on essential services such as services and products forming part of education. For a start, the government needed to provide resources to the price monitoring bodies. And it could take the most effective measure of all to raise disposable income by halving the power surcharge, as Labour was promising. If this was a budget addressed for families, why not reduce the surcharge on consumption by families?

Ms Coleiro Preca criticised Sandro Spiteri, president of the National Family Commission, for having come out in praise of the budget while ignoring the problems which low income families would continue to have.

She referred to measures for persons with disability, saying she welcomed the subsidy being given to those who engaged a personal assistant. But what about those who could not afford an assistant in the first place?

The increase in the allowance for children with disability was also welcome, but the families of such children needed more help as in many cases only one of the parents could work and they were near the poverty line owing to their huge expenses.

The government was now promising a new scheme to help persons with disability to work. She hoped such promises would be backed by commitment because former schemes had not worked. There was also need for sports initiatives for persons with disability, who did so well in the Special Olympics.

Concluding, Ms Coleiro Preca said single mothers had been forgotten in the budget and there was no funding for the National Drug Policy. And with regard to Sedqa, could somebody explain how funding increased and referrals decreased? How were reformed drug addicts to be helped to reintegrate into society?

Helena Dalli (MLP) said the budget did not address the needs of families which were near the poverty line, many of whom were single parent families. It was not enough to argue that these people did not pay tax. Often such mothers could not find jobs and resorted to part-time jobs where they were exploited. There was need for better training courses for these people. It was unacceptable that attendance for such courses had actually declined. Furthermore, what real progress has been made on child care facilities and the promised subsidies for families to avail themselves of such services?

Ms Dalli also asked what action was being taken to raise the number of women in decision-making positions.

Joe Abela (MLP) said that for too many years a lot had been said about the Children's Act. Was this no longer considered important? It was important to propagate children's rights, but little was said to children about their duties.

A number of positive measures were being taken for senior citizens, but there was still no effective measure for such people to continue to live in the community. Most budget measures of this kind were addressing the needs of senior citizens in institutions, but not much was being done to help the carers of those who decided to live on at home. This was creating a gap that needed to be addressed.

The budget also presented some welcome measures on disabled persons. Such people deserved help on the purchase of their expensive equipment.

The drugs problem should have been given a greater emphasis in the budget, especially when one considered that the age of drug offenders was getting ever younger.

On illegal immigrants, Mr Abela said it was a shame to see these people suffer in the recent storms. Every possible step should be taken to ensure better conditions for them.

Silvio Parnis (MLP) said the time was ripe to do something meaningful about senior citizens who needed to buy more medicines and families living near the poverty line, especially because free medical services around the clock had not been available for a number of years now.

There were too many families that could not really afford to pay for their children's extra needs in education, and were looking for part-time jobs to make ends meet.

Stefan Buontempo, opposition spokesman for housing, said the government was not saying how the country would tackle the issue of the 53,000 vacant dwellings or how it would conduct rent reform to make renting affordable.

The amalgamation of the Housing Department and the Housing Authority had still not happened although a Bill had been presented.

Dr Buontempo said many proposals in the pre-budget document were left out, the exception being the interest subsidy scheme for first-time buyers.

Proposals which were left out included the Private Housing Equity Share Scheme, assistance for the installation of lifts in private residences and improvements to the Headstart scheme. The minister should explain why.

Replying, Social Solidarity Minister Dolores Cristina said that the purchasing power of families had increased from 67.6 per cent in 2005 to 73.8 in 2006 as GDP grew from 3.3 per cent last year to 3.7 per cent this year.

The financial allocation for the social solidarity ministry was the highest ever, including a Lm6.2 million increase for children's allowance and Lm11.5 highest increase in pensions.

Turning to housing, Ms Cristina said the Housing Authority would shortly turn over more properties for rent. The opposition was ignoring the benefits which the various Housing Authority schemes were yielding, notably the popular equity sharing scheme and the care and repair scheme.

It was not fair for opposition MP to argue that the government was giving back something of what it had taken in the past. When children's allowance was reformed in 1995 and linked to a maximum family income (of Lm10,000) those families which became ineligible for children's allowance had at the same time seen a drop in income tax so that, on balance, they had greater savings.

What she wanted to know, Ms Cristina said, was how between 1996 and 1998 under Labour, spending on children's allowance rose by Lm2 million even though eligibility conditions were not changed. Where had that money gone?

Now children's allowance would be given to all children aged under 16. And still, families would benefit from further tax cuts.

Labour MPs had complained that funding for social bodies was not high enough. Yet under Labour Sedqa did not even have enough money to pay social workers!

This budget was significantly raising the allowance for foster parents and for families having children with disabilities. There were also increases in the orphans allowance. Indeed, this was a budget which addressed vulnerable groups as much as the country could afford.

A national action plan on social inclusion had been drawn up and won praise from the European Commission. Action was also being taken, through a new centre at Zejtun, to help children with difficult behaviour. There were also outreach and support programmes for such children. In some cases individual assistance was given round the clock.

A home had been opened at Cospicua for three former prison inmates to help them reintegrate in society, but the opposition had even contested this in a parliamentary question. The Labour council in Fgura had also raised issues when a home was opened for migrants at Fgura, even as neighbours helped these migrants. So where was the Labour social conscience?

Ms Cristina said Ms Coleiro Preca had also criticised the comments on the budget by the Children's Commissioner. The commissioner's office was doing a lot of work. The former commissioner used to say that the office needed Lm40,000 and it had now been allocated Lm42,000. She acknowledged that the office needed more support and she was confident things would improve. The same applied for the Office for NGOs, which was in the process of being set up.

This budget, Ms Cristina recalled, also included an extension of maternity leave to 14 weeks. This measure, she said, would be extended to adoptive parents, as would maternity benefits.

On the income tax reform, Ms Cristina said that in a process which started last year, many more families were ending up not paying any income tax, and she was hopeful that this process would continue in years to come.

This budget was also helping widows and widowers in that they no longer needed to pay duty on the share of the residence they inherited from their spouse.

The minister defended the system of energy vouchers given to low income families and said that this was based on average consumption, but many opposition MPs did not seem to know how the system worked.

She said this budget had increased, to Lm90,000, the assistance which would be given to the voluntary sector.

On illegal migrants, Ms Cristina said the government never intended to have a tent village such as the one at Hal Far, but it had no alternative, with shelter being provided for 1,000 people. There simply were not enough resources, and all sorts of problems were raised wherever the ministry tried to open a new home for the migrants.

Ms Cristina said that with the Domestic Violence Law having been enacted, the ministry was now better able to monitor the provision of services and provide assistance.

She said pensioners had welcomed the fact that they were getting the full cost-of-living increase given in the budget. The government had also started the process to reduce deductions of the two-thirds pension for those in receipt of a service pension.

A Pensions Strategy Unit had been set up to oversee the review of pensions by 2010 as promised when the law on pensions reform was enacted earlier this year. The objective would remain to ensure that pensions were adequate and sustainable.

Ms Cristina said the number of women in employment had risen by 3,000 over the past year.

Standards had been raised in child-care centres and the ministry was looking at properties for new centres. A new one will be opened at Birkirkara this week. Works were in hand for the provision of child-care centres at Luqa, Gharghur and Paola state schools and she hoped there would also be a centre at the ministry.

Ms Cristina said a reform was under way at the disability centres, which would be transferred to the Support agency.

New centres on the line of Access, set up at Cospicua some years ago, would be set up at Birkirkara, St Paul's Bay and Valletta.

Earlier, David Agius (PN) referred to the Labour Party's proposal for first-time property buyers and said it was shameful that Labour was only proposing to advance money to first-time buyers which then had to be paid back within 10 years "with accrued interest". These were conditions which had been repeated by several Labour speakers including housing spokesman Stefan Buontempo and could not be denied.

In contrast, the government had unveiled an interest subsidy scheme where it would subsidise the interest of up to one per cent over the Central Bank rate. If possible, Mr Agius said, the government should consider helping first-time buyers who had already taken out a mortgage.

This budget also reduced stamp duty when property was transferred from parents to their children.

The government was also raising financial allocations for social housing including the shared ownership scheme.

Assistance was being given to parents who sent their children to private kindergartens.

Joe Cassar (PN) said the best certification of any government policy could only come from the people. Among them was the National Commission for Persons with Disabilities which had taken part in the pre-budget meetings and welcomed the budget measures.

The government's commitment to ratify the UN Convention of Disabled People's Rights had been especially lauded, as had the commitment to implement the Spiteri Report on inclusive education and measures for the public sector to employ more people with disabilities. There were several other measures in favour of people with disabilities, including the use of European special funds.

The government knew that the best support for such people should go to community services. This jarred with past Labour proposals to set up part of St Luke's Hospital for people with disabilities. People should be made aware of the great results that had been achieved by allowing former inmates of Mount Carmel Hospital to live in the community, rather than in institutions.

It was good to know that Mcast would shortly be restarting the Pathway programme for people with intellectual disabilities.

Dr Cassar said people who worked first-hand with people with disabilities and their families knew the importance of addressing the issue of adult training centres.

Clyde Puli (PN) said the government had invested over Lm1 billion in social services over the past four years. This was only possible because the country was generating wealth, a reality that the opposition seemed to be missing.

Talk of centres of excellence in various sectors meant not only the generation of wealth but also the fair distribution of such wealth. Even opposition MPs had, albeit haltingly, praised parts of the budget when they said it was a pre-election budget or one of political opportunism. On the other hand, the man in the street held that the budget was looking after the interests of all, having heeded public comments.

Over the past 20 years, except for a period of 22 months, the opposition had never ceased to harp on the effects of inflation, pretending to be oblivious of the fact that an appreciable part of it was imported. It was now distributing a leaflet in homes with an illusion that Labour could curb the cost of living, including the fuel surcharge. But it was not saying what new taxes would be introduced to make up for the reduced revenue. And had anyone forgotten the power charges under Labour?