Updated at 11.55am with more videos

With Malta’s current population, a mass transport system would only be feasible in the Sliema area, Joseph Muscat told a business sector crowd on Wednesday.

“Would we have a system that just links Sliema to St Julian's?” he asked rhetorically when discussing the possibility of Malta ever having a metro system. 

Read: Valletta to Gozo in 30 minutes: what a metro in Malta could look like

“The key question is: do we want to grow, or not? Where do we want to go as a country? To stay the same? Or to truly become metropolitan?”

Dr Muscat was being interviewed at an event organised by consultancy EMCS Malta and held at the Malta Chamber of Commerce, Enterprise and Industry titled ‘state of the Maltese economy’.

He told the crowd that the government’s first priority was for the country to have an improved road network. This he said, was a must.

Read: Drones to be used to analyse roads' condition

Beyond that, it was no secret that the government had commissioned a report detailing the cost and feasibility of having a large-scale metro system. That report, conducted by UK engineering firm Arup, was now being updated, he said. 

Costings had been finalised and were “significant in GDP terms,” he said.

“But now is not the right time” to reveal them, he added.

Malta’s population was proving to be a stumbling block, he said, and unless it grew significantly a metro would only be an option if it was funded through people’s taxes.

“This is a hard pill to swallow, but it’s the hard truth,” he said.

Another hard truth was that an eventual metro would be focused on the most densely-populated harbour areas, and could not cover the entire country.

He hinted that a metro in Gozo was simply not going to happen.

Earlier in March, Times of Malta revealed how the Arup report had estimated that Gozo’s population would need to explode five-fold to reach 150,000 for a metro there to be viable.

Turning Gozo into “another Sliema”, Dr Muscat said on Wednesday, was something that he did not think anyone was keen on.

'Malta is not a tax haven'

Reacting to a European Parliament report, which on Tuesday found that Malta operates like a tax haven, Dr Muscat said the timing of its release had to be taken into consideration .

Tuesday’s report by the EP’s Tax3 committee named and shamed seven countries, including Malta, as having levels of foreign direct investment (FDI) that could only be explained to a limited extent by real economic activities taking place within the countries.

Dr Muscat said the report had come as the EP heads into an election cycle.

Muscat reacted to an EP report which criticised tax regimes such as Malta's. Video: Chris Sant Fournier

The European Commission disagrees with this position, and any country that had been successful in the financial services sector had been labeled by the EP.

Dr Muscat said that while a few “local incidents” had been genuinely flagged at EU level, others had been extrapolated because of “Malta’s internal political bickering”.

Within the Maltese bubble, it was easy to think the focus was on the island, however the reality was that the scrutiny was of the entire financial services industry across the whole union, he said.

Reform 

Dr Muscat attributed the country’s economic success to a government that was “fearless on reforms”.

When a government stopped changing and evolving, then the economy started to stagnate, he said.

That said, business leaders played a huge role.

The Prime Minister thought back to his first car when discussing Malta's economy. Video: Chris Sant Fournier

He compared the island’s economy to his first car - a Mini Minor -  which he said used to run on fumes as he never had enough cash to fill the tank.

“But somehow if you handled it correctly and trusted it, it would run,” he said.

Maltese businesses, Dr Muscat mused, had taken signals from the government that it was willing to facilitate growth, and they had run with that.

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