Muscat replies to the Budget speech, promises to remove income tax for minimum wage earners

Questions raised on 'secret' funding agreement with Arriva and €29m Wastserv contract

Opposition leader Joseph Muscat this evening replied to the Budget speech, insisting that the people wanted a change of government but reiterating that the Budget measures would be retained by a Labour government in order to ensure stability and continuity.

He promised, however, that a Labour government would remove income tax for minimum wage earners and introduce measures to help those sectors of society which the Budget had ignored.

In his speech Dr Muscat said the government had secretly agreed with Arriva to give it more money from 2014. He also demanded police action into how a €1m contract awarded by Wastserv became a €29 million contract issued without the necessary approvals.

The following is how his two-hour speech developed:

18.30 p.m.

Joseph Muscat says the people know that the government did some good things, but the government has now lost its energy and commitment. It is divided and tired and the people want a change from the arrogance they are seeing. [/event]

  • 18:31 pm

The people's judgement will be based on the government's five-year record.


  • 18:33 pm

The people want economic growth, but growth this year was less than half what the government had projected. Growth was held back not by a decline in experts, but decline in domestic demand because the people had lower spending power.

  • 18:34 pm

A labour government will instil certainty and stability, conducive to economic growth. The EU itself had said it would review Malta's economy because of its high debt. Families were suffering declining purchasing power.

  • 18:36 pm

In real terms in the past four years, wages in Malta declined by €8 while in the EU they went up €13. Inflation in Malta was growing faster than in the EU, with the utility tariffs being the main contributory factor. Food prices in Malta were going up much faster than in the EU.

  • 18:36 pm

Muscat says the government's boast of having created 20,000 jobs is a statistical invention.

  • 18:38 pm

There has been a surge in workers whose part-time job is their only job.

  • 18:38 pm

Women's participation in the labour force is still the lowest in the EU and unemployment in general has consistently risen in the past eight months.

  • 18:40 pm

Unemployment is not only the result of the international situation. The main cause is government decisions, particularly government-induced costs such as the tariffs

  • 18:41 pm

The prime minister likes to announce new investment, but if he does that again in the future, what the people will think about will be 'Brazil'. The people wanted real jobs.

  • 18:42 pm

Dr Muscat turns to income tax and says government decisions are based on political convenience. Despite the tax movements announced in the Budget, government tax revenue is projected to increase again ext year. Tax revenue is not growing as a result of economic growth, since revenue growth is faster than economic growth.

  • 18:45 pm

Dr Muscat says the government has not kept many of its tax cut promises, particularly a widening of the tax bands. In reducing the top rate of income tax, the government has taken an anti-social measure with only top earners benefiting. And for more than half of them, the savings will be small, with a real saving of only €100.

  • 18:46 pm

Income tax earners filing a 'single' computation will pay income tax. How can the government justify such a measure?

  • 18:49 pm

The Opposition is not against tax savings by the well-off, but it is against imposing more taxes on those with a small income. The government, in its Budget measures, is targeting particular sectors for electoral purposes.

  • 18:51 pm

The increase in children's allowance may cause problems for those whose income rises above certain thresholds. It is significant that spending on children's allowance next year will be €5.5m less than in 1998.

  • 18:53 pm

If the Budget is not approved by the House, the blame will rest solely on the prime minister. He knew for months that this situation can develop, but he kept ploughing ahead. Labour appreciates that certainty is crucial for investment and will therefore retain the Budget measures including the revenue-raising measures.

  • 18:54 pm

The Opposition, however, will vote against the Budget because this is a confidence vote and the Opposition has no confidence in the government,


  • 18:58 pm

There is no need for people to be concerned that if the Budget is not approved in parliament, the benefits and cost of living allowance will not be handed out. Ways can be found for the benefits and the raise to be given immediately, in the same way as the revenue-raising measures came into force immediately. But if the government does not do so, a Labour government will do so retroactively from January 1.

  • 19:01 pm

A Labour government will consider the Budget as a long term planning tool, a multi-annual exercise that will tackle issues such as pensions, which this government ignored. What is the government's view on pensions? After the election, clearly, the prime minister plans to raise the retirement age to 67 or more. Labour will not. It will not raise the retirement age but will seek to increase the number of gainfully occupied.

  • 19:02 pm

A Labour government will start planning for Malta's presidency of the EU in 2017 and allocate funds for the purpose

  • 19:04 pm

A Labour government will also achieve more with available resources, particularly the public service. Labour will work with everyone in the public service. It will target squandering, such as needless consultancy services costing €36,000 every day or €52.7m in five years.

  • 19:07 pm

A Labour government will not remove any of the Budget measures, but it will help those who were forgotten. This is social justice.
And income tax on minimum wage earners will be removed.

  • 19:09 pm

Government finances are being mismanaged. In 2008 the prime minister promised to reduce the deficit to €70m but it is now four times higher. This had nothing to do with the international crisis since much of the increase was made in early 2008. It was not true that the deficit rose because of measures to protect jobs, since measures to protect jobs cost far less.

  • 19:10 pm

Furthermore, the government was supposed to have achieved a surplus two years ago.

  • 19:12 pm

According to the latest EU figures, 88,000 Maltese, one in four, are at risk of poverty. This is a certificate of failure, a certificate of a social deficit.

  • 19:14 pm

A Labour government will keep Budget targets and cut waste. €260m more than projected were spent on various projects in the past few years, excluding the new parliament building.

  • 19:16 pm

As a result of government incompetence, the government's debt in this legislature practically doubled. This year alone, government borrowing is €210m more than projected.

  • 19:18 pm

Muscat lists unkept government promises including more day care centres for people with mental problems, a home for the elderly in Birkirkara, more night and day shelters, completion of the Pharmacy of Your Choice Scheme, better harbour facilities, more workers in the employability programme, more in the training aid programme and better funding for the Sapport agency. 


  • 19:21 pm

The government's biggest failure was in the energy sector, with Malta still without an energy policy, without energy security and with high costs. There were also questions on the interconnector project. Does the contract provide for penalties to be paid by Malta to the contractor if the granting of the permit is delayed by Italy? How much will electricity bought abroad cost?

  • 19:22 pm

Furthermore, plans for alternative energy were a spectacular failure, with no progress on wind energy. The government knows that its wind farm plans have been shot down. There is need for a rebalancing towards solar energy.

  • 19:23 pm

There are questions on energy from PVs. Will the higher feed-in tariff for the Gozitans be retained?

  • 19:24 pm

Malta should insist that it is linked to gas pipelines between Africa and Europe crossing close to Malta

  • 19:28 pm

Energy tariffs in Malta are the third highest in Europe. A Labour government will introduce new market rules based on local realities. The European Commission has concluded that an increase in energy prices will take place after the election. A labour government will restore seriousness to this sector and will not play with tariffs according to election timelines. Energy will  become affordable.

  • 19:33 pm

Labour's energy policy will not be dependant on oil and will lead to lower bills. Labour will announce its concrete plans, including how and when, in due time, using alternatives which the government ignored. Taxpayers will not be burdened with new costs.

  • 19:35 pm

Government lacking transparency in petrol and diesel pricing, with prices in Malta not following the trends of the international market. Prices rose in Malta when they dropped abroad.

  • 19:36 pm

Taxpayers are paying for bad governance, with the prime minister lacking authority in this sector when, in one of the first decisions of the Cabinet, he gave himself and the ministers a €600 a week raise while power tariffs were raised for the people.

  • 19:38 pm

Measures taken in the past few years to help SMEs will be retained, but they are not enough. Tax credits are not enough since businesses first have to make a profit. More needs to be done to cut red tape and improve the investment climate.


  • 19:40 pm

Furthermore, the contracts system needs to give a chance to everyone and not to a few. Competition has to be truly free and fair.

  • 19:41 pm

One cannot continue to have legalised usury on overdue VAT payments to the government. Everyone has to pay due tax, but sending people to prison does not solve anything.

  • 19:43 pm

Foreign investment is declining, with the government saying nothing about projects which have been withdrawn or are in doubt, but which are still shown in projections, including SR Technics, a project on alternative energy and another in aviation.

  • 19:44 pm

The prime minister, like George Bush after the Iraq war, declared 'mission accomplished' when that was far from the case, in SmartCity, for example, as well as Arriva, the White Rocks Project and the project from Brazil.

  • 19:47 pm

Turning to tourism, Muscat says the government is not addressing the profitability problems of hoteliers. The government is not mentioning the major challenges in cruise line business next year, particularly the withdrawal of a major cruise line. The government is also not saying what its intentions are on Air Malta. The chairman had spoken of privatisation and the government said nothing.

  • 19:49 pm

Government investment in Gozo is insufficient for the sister island to have a comparable rate of growth as Malta. Just 3% of government capital investment is in Gozo. Labour's priority will be job creation for the Gozitans in Gozo

  • 19:57 pm

Turning to education, Dr Muscat says steps forward have been made but continuity is needed. The international Education and Training Monitoring Report 2012 showed that while spending on education as a percentage of GDP in Malta was higher than the European average, spending on the primary and tertiary sector was lower. Achievements in the tertiary sector were lower than the EU average. Performance in 2011 was worse than in 2004. Participation in early childhood education had declined. But Malta was first in the use of foreign languages. Malta was lagging in reading, science and maths. Malta was doing relatively well in job opportunities for graduands. This was a realistic picture which showed the need for the government to work hand-in-hand with teachers without imposing a myriad of confusing initiatives.

  • 19:58 pm

A serious discussion is needed on how more young people can continue to study. Digs on stipends do not make sense since it was only the government with reduced stipends. Labour is promising education, training and jobs for young people.


  • 20:02 pm

The bus service reform was a 'buzullotta' for which Austin Gatt was to blame. The introduction of the Arriva service did not translate into savings on subsidies. In 2011, €4.5m were paid in subsidies instead of €4.1m and this year the subsidy would be €10.7m, €3m more than planned, because of Transport Malta's mistakes in route planning.A further €10.9m will be paid next year.

According to the Auditor, in 10 years Arriva will receive €17.9m more than originally agreed, thanks to TM's route changes. However the Budget figures only show a figure of €8.2m, with the extra €2.7m per year - €5.4m - kept hidden. Agreement has been reached secretly for Arriva to see these funds paid in 2014. The government needs to explain this.

  • 20:04 pm

The Opposition leader raises questions on Mepa. He says its credibility is low and the Authority has run up a debt of €17 million despite raising tariffs and imposing penalties left, right and centre. What will be done about it?


  • 20:07 pm

On Wastserv, he asks how the company awarded a €1 million contract for six months which ended up becoming €29m without the necessary approvals. The government is acting like nothing had happened. The minister should resign over this, and the police should investigate.

  • 20:10 pm

On health, Dr Muscat hits out over hospital overcrowding caused by lack of planning, and repeated change of plans for the cancer hospital. He also asks what has become of the planned St Philip's Hospital contract. Where has the urgency gone? He asks how only €75,000 have been allocated for IVF treatment. Funding for primary health care reform has also disappeared.

  • 20:15 pm

Concluding, Dr Muscat says the people will base their choice on which party can deliver. This government, he says, has a record of mediocrity. It cannot be trusted because it raised power tariffs to the highest in Europe, the mistaken decisions on the BWSC power station, the inefficiency in ARMS, the way it deceived dockyard workers on job security, the bungled plans for the privatisation of car pars, the delays in the Cirkewwa project, waiting lists and overcrowding at Mater Dei, out-of-stock medicine, political involvement even in cancer treatment, its mismanagement of Air Malta, its lack of care for persons with disability when their parents passed away, and the way how bus drivers and GO employees were deceived.

  • 20:18 pm

It also cannot be trusted because it dismantled Sea Malta, it bungled the bus service reform, because of the way it ignored parliament's decision on Richard Cachia Caruana, because it allowed the wardens system to become a racket, because it choked business in Valletta through lack of parking, because of drugs in the prison, its failure to implement the parole law, because unconstitutional laws were not amended, because of its failure to reform sectors involving women, because of the funds raised on projects such as the Corporate Village, the failure of the reform at Mepa, the lack of accountability at Wasteserv and its failure to create jobs at Smart City.

  • 20:20 pm

The same applied for the White Rocks project, the Sports Village in Marsa and the Crafts Village at Ta' Qali.

  • 20:23 pm

Dr Muscat says the government also cannot be trusted because of its wrong priorities, including the priority it gave to a new parliament building despite the country's financial problems. As a result, taxpayers will pay €3.7m annually in rental costs.
The prime minister cannot be trusted because of the way he voted against divorce in parliament despite the people's approval in a referendum.
The government also cannot be trusted for the way it deceived hunters.

  • 20:27 pm

Dr Muscat says change cannot be only in faces, with the same people continuing to call the shots in the background. The country needs a change of direction, of ideas and systems. People may disagree, but they will still be able to work with the government. The ultimate aim will be economic growth and better living standards through better jobs and higher education standards.
Labour, Dr Muscat says, does not want an 'electoral battle' but a future which unites.

  • 20:30 pm

Concluding, Dr Muscat says the election should not divide families and says Labour will be prudent. Labourites and Nationalists should unite for stability and certainty .



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