EU projects slower economic growth for Malta

Opposition leader Alfred Sant said yesterday that while the government was saying that the economy grew by 2.7 per cent in the first three quarters of this year, the EU said on Thursday that Malta's economic growth for the whole of this year would be just 0.8 per cent in real terms.

And while the government was projecting GDP growth of 1.1 per cent for next year, EU projections were for growth of 0.7 per cent, which would be less than for this year. In fact the 1.1 per cent growth that Dr Gonzi was projecting for next year would only come about in 2007.

Speaking at the end of the budget debate in Parliament, Dr Sant said that whatever the figures, it was more than clear that there were major problems in the manufacturing, tourism and financial services sectors.

The government was continuing to ridicule Labour calls for a plan for economic and social recovery, but it had not come up with a better alternative.

It seemed that for Dr Gonzi, the only thing which Malta needed to do was to adopt the euro.

Although there was no denying that Malta would have to adopt the euro at some stage, Dr Sant insisted that it would be a major mistake if the European currency was adopted before the economy was given time to recover and pick up strength. Dr Gonzi, however, was ready to move for euro adoption even when the economy was weak.

Dr Sant said this budget debate had continued to reveal the government's failures in various sectors and its lack of direction, ideas and managerial efficiency.

Despite what the government claimed, it was clear that public finances still depended heavily on tax increases. It was also clear that urgent measures were needed in the health, education and environment sectors to avert crises which would wipe out gains made over the years.

The people were clear that they were not better off with this budget. The government's attempt to label this as a budget of no new taxes while imposing new burdens outside the budget had backfired.

Still, this could not be described as a budget of no new taxes when tax revenue next year would rise by 6.2 per cent while the economy would grow by under four per cent in nominal terms. That could only mean heavier burdens on the people, over and above the surcharge on water and electricity bills.

Dr Sant said the new withholding tax on property sales had been introduced in an amateurish way, and the government was even trying to paint this as a tax reduction.

There were then burdens on the residents of old people's homes and Valletta parking charges. The government even planned to have higher revenue from the sale of graves.

The imposition of more burdens was clearly unsustainable and had led to economic stagnation and a loss of competitiveness.

Dr Gonzi was boasting that the government was attaining its deficit reduction targets, but he was relying on government figures which, despite many promises, were still not based on accrual accounting.

Indeed, government figures were suspect, and it was useless for Dr Gonzi to say that they had been confirmed by the EU. After all, the EU's auditors had not approved the annual accounts of the bloc itself.

Also suspect were the government's workings that led to the surcharge on power and water and the compensation given for it. The opposition had presented documents to demonstrate the discrepancies and inconsistencies in the government figures and declarations. The government was not clear on the burden which Enemalta was expected to carry because of the rise in oil prices next year. However, even if one was to use the government's own vitiated calculations, one would see that compensation given to the workers should be 70c weekly and not the 50c which the government had established.

Dr Sant said there was incoherence in the government. For example, the Prime Minister said that education was a top priority, yet funding for this sector was not increasing in real terms.

Government spending was continuing to rise faster than economic growth, and there was no emphasis on value for money.

Last year the government allocated almost Lm1 million for an investment fund but nothing had resulted. The same thing had happened three years ago. But the government was quick to invest millions in the failed Brindisi harbour project.

There was much talk about quality charters and IT, but government services had deteriorated. The setting up of a myriad number of authorities, foundations, boards, corporations, agencies and corps had rendered public administration less accountable and less efficient.

Many government projects were behind schedule, such as the Mgarr/Cirkewwa harbours project, the Tal-Qroqq Hospital, the Fort Chambray development, the rebuilding of the opera house site, the Barrakka lift, the redevelopment of Ta' Qali crafts village, the White Rocks project and Dar Malta in Brussels. Millions were being squandered as a result.

Dr Sant said the social sector was in crisis. The government had said nothing on the potential problems which the health sector faced owing to poor management and a lack of resources ahead of the opening of the new hospital.

In the education sector results were not matching expenditure, and Malta was at the bottom of the Lisbon Agenda scoreboard on areas such as youth, research and technology.

The government had not come up with any environmental policy or any plan to reduce bureaucracy.

Government arrogance and incompetence were leading the social sector to crisis.

In this context one became more curious over the government's attitude with regard to its pension reform proposals. The government accused the opposition of not having taken any position on this subject when it itself had not established its stand.

The pensions sector deserved attention and consideration of changes that had to be made. But one needed to establish priorities. The top priority in the social sector was health, education and the environment.

The government, however, lacked vision and direction and it was only Labour which offered hope for a better future, concluded Dr Sant.