Government ready to implement measures pending national agreement

Parliamentary Secretary Tonio Fenech said yesterday that the government will tell a meeting of the MCESD tomorrow that it is ready to implement its measures on public holidays as announced in the budget pending national agreement on ways to raise productivity. It would be inviting the social partners to set a target date for such an agreement to be reached but, he said, in its race for competitiveness the country could not wait forever. If no agreement was reached it would be better to say so and the government would shoulder its responsibilities.

Speaking when opening the debate in parliament on a bill to implement budget measures, Mr Fenech observed that the government and the social partners had, for over four months before the budget, discussed ways to raise productivity but no agreement had been reached.

It had been felt that workers' pay should not be reduced or frozen, there should not be adjustments in the way overtime was paid or resort to one-off cash payment systems as used in Holland. The only alternative that remained was therefore that of raising production days. The government had proposed in the Budget that public holidays falling on Saturdays or Sundays would not be added to vacation leave.

That decision had drawn a strong reaction from the trade unions, but meetings held since had not drawn any alternatives. The government remained open to alternatives which would also yield productivity gains, but if none were forthcoming it would proceed with its plans out of a sense of responsibility to the country and the workers. Because if Malta did not gain competitiveness it would not be holidays, but jobs, that would be lost.

The government had received and accepted a new request for talks by the UHM and another meeting of the MCESD would also be held next Wednesday. The proposal he would make to the social partners was that the government would start to implement the measure as announced in the budget while a target date was set for a national agreement on ways to raise productivity, Mr Fenech said. But it would be damaging to the country if no action was taken because no agreement was reached.

Earlier in his speech, Mr Fenech said the aim of the budget was to strengthen the economy, education and the environment. The economy would be strengthened through stronger government finances, better control on government spending as well as structural reforms and investment to make Malta more competitive.

Public deficit targets had to be attained so that development could be sustained. The government wanted to end this year with a deficit of Lm76m, dropping to Lm55 million next year, which would be less than three per cent of GDP. Achieving these targets would signal confidence for investors, who were very wary of what credit rating agencies said. Indeed, he could confirm that the government had ended 2004 within its deficit target of Lm94 million, as projected in the budget speech in November.

Mr Fenech said reducing government spending, which everyone wanted, always had consequences. This government would be taking various initiatives to address its spending, such as through restructuring of its entities and agencies. This process had already seen savings of Lm20 million. Over the coming year some of the government entities and agencies would be merged to remove overlapping. A Financial Management Monitoring Unit had been set up to monitor government agencies and ensure there was stronger financial accountability. There was also stronger control over civil service recruitment and more effective use of public-private partnerships. A unit was being set up for this purpose at the Finance Ministry, with assistance from the British Treasury.

Mr Fenech defended the increase in the price of kerosene announced in the budget. He said 18 million litres of kerosene were used in 2003, rising to 22 million litres in the first nine months of 2004. The biggest increase was in summer, showing that kerosene was not being used for heating. Yet it should be recalled that the government had been subsidising the price of kerosene for heating purposes. The international price of kerosene was higher than that of diesel. Studies showed that only a small percentage of households used kerosene for heating, but Lm14 were being given to those families in need which used kerosene for heating.

Mr Fenech said that while many had homed in on the issue of public holidays, the budget included several other measures to boost job creation, including incentives for the productive sectors in areas of research and development, training and access to finance. The Business Promotion Act would also be amended for this purpose.

The government was playing its part, but it also expected employers and trade unions to play theirs. The measure on public holidays had not been taken lightly but in the context of the other measures and the calls made throughout last year for action to stop job losses and for the government to act for Malta to regain competitiveness.

Mr Fenech also spoke on other aspects of the budget. He explained that the government was seeking approval for a loan of Lm150 million when the deficit was actually of Lm94 million so as to refinance past loans with new, softer ones.