The comments made by the Minister of Finance in last week's interview in The Times Business have surprised a number of people who wonder whether the minister is indeed the same person who presented the 2009 budget. Had we not heard the promises and projections made by Mr Fenech less than a year ago, we might have believe that the government has indeed an effective plan to address Malta's current economic problem.

The current difficult worldwide economic situation was already clearly predictable in the last quarter of 2009 when the government presented its budget in Parliament. The PL had clearly indicated that the projections of €7 million reduction in expenditure and a €75 million increase in capital expenditure were unlikely to be achieved in view of the looming recession. But at the time the government tried to create the impression that we would be spared the worst effects of this global recession.

We get no satisfaction in now confirming that our doubts on how public finances would evolve in 2009 were more than justified. The minister is now trying to manage expectations by saying that with a drop of €60 million in income tax and VAT no one should expect a generous budget.

When commenting on investment the minister is promising us that this time round his government will be "investing in the economy". Haven't we heard this promise before?

In the first seven months 2009, rather than an investment of €75 million in capital expenditure, we saw a meagre increase of only €6.5 million, while recurrent expenditure hit the roof with an increase of €54 million. Moreover, the government has so far used only €13 million out of the €125 million of funds allocated by the EU to Malta for capital expenditure. So why should be believe that the 2010 budget will indeed be investing in the economy?

The minister at least now also acknowledges that our inflation that remains stubbornly higher than that registered in the eurozone is indeed a threat to our competitiveness. He has done well to take up some of the suggestions made by the PL in its conference on the subject of inflation. Once again we will not judge this government's by its pious intentions to tackle inflation effectively but by the results it manages to achieve - and so far these results have been very disappointing.

The declaration that the next budget is likely to tax polluters rather than aim at raising taxation across the board is simply not credible. With decisions like those taken for the Power Station extension where the government has decided to opt for highly polluting technology, and with ADT condoning air pollution by substandard vehicles, one is more than justified in doubting the political commitment of this government to environmental protection.

The Minister of Finance's comments on Cola were at best obscure. He has failed to address sufficiently the other issues that affect our workers' productivity like the quality of our education, the corrosive effect of high inflation, the insufficient modernisation of our industries through new productive investment, and the effect of government induced costs on our competitiveness and excessive bureaucracy.

The semantics of the Minister of Finance are also worth analysing. Last year the support given by the government to the tourist industry in general and the low-cost airlines in particular was labelled as an "investment". Now we are told that these are "subsidies" and that they deserve to be chopped. Like the rest of the population those working and investing in tourism have a right to ask the minister: "Where's is the beef in the government's strategy to revive this industry?"

Finally the minister seems to be giving up on controlling public expenditure. "Government expenditure is what it is", he tells us. He promises more tax enforcement to collect overdue taxes when it is clear that over the past 20 years the Nationalist administration allowed tax arrears to grow massively, only to declare a tax amnesty as a last resort to fill the black hole in the government's revenue.

Any diligent observer of the way that our country is being managed at present can easily come to the conclusion that the management of our economy is on auto pilot. The government is more intent in limiting the damage caused by the current economic slowdown, but lacks the courage and political will to tackle the more serious issues that can affect our future prosperity.

We need to change this attitude if we are to reach the standard of living of other leading EU countries in a reasonable time.

Dr Mangion is Shadow Minister of Finance.