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PN’s 'everything for everyone' proposals will reduce incentive to work, Finance Minister warns

Finance Minister Edward Scicluna warns that the PN's proposals do not incentivise people to work

yannick_pace
Yannick Pace
15 May 2017, 6:44pm
Edward Scicluna (left) and Evarist Bartolo (right)
Edward Scicluna (left) and Evarist Bartolo (right)
The Nationalist Party’s electoral proposals showed that the party had not understood how the county’s economic growth had been achieved, according to finance minister Edward Scicluna.

Flanked by Education Minister Evarist Bartolo, Scicluna said that while it was normal for parties to criticise each other’s proposals during a campaign, he was concerned that the PN’s proposals were so reckless that there was a great risk they would undo what was achieved over the past four years.

“Malta has the highest rate of growth, far exceeding the European average, when it comes to jobs. It also has record low unemployment,” he said.

He argued that this had contributed to a 50% reduction in the number of people living in poverty or at risk of poverty.

“This was achieved through a series of well-thought out budgets following the best studies on structural reforms,” Scicluna said.  

The government’s policies, he said, had been driven by two main factors: increased female participation in the workforce and a set of initiatives aimed at “making work pay”.

Scicluna explained that Malta’s disproportionately low level of female workers represented a “hidden resource” which the government had exploited through a number of family friendly measures.

Displaying a graph of female participation, Scicluna acknowledged that this growth would have continued, no matter who was in government. The graph showed that the rate had significantly increased during the last legislature.  

He said that measures such as free childcare for those who work, the reduction in tax for people using private childcare facilities, breakfast clubs at school, tax credits for working women above 40 years, higher benefits for maternity leave, and a reduction in the burden of maternity leave on employers had all contributed to the accelerated rate of females entering the workforce.

The second driver of economic growth, was a set of initiatives aimed at “making work pay”. He said the government had first sought to reduce the burden of tax from employment, through a reduction in income tax.

“We reduced tax from work, not consumption,” Scicluna said.

He pointed to the in-work benefits scheme, which he said was significantly higher for those in employment, and the tapering of benefits scheme, which allowed individuals who entered the workforce to keep their benefits for a number of years.

Scicluna said that roughly 5,000 people had benefitted from the two schemes.  

In explaining that the PN proposals effectively offer a lesser incentive to work, Scicluna explained that – the measures introduced by a Labour administration - resulted in a situation where those choosing to go out and work stood to gain roughly €10,000 a year more than families living on benefits.

“There is an incentive this way, it is no longer a poverty trap,” said Scicluna.

He said that the PN’s proposals of “everything for everyone” reduced the difference and offered less of an incentive: “When we calculated the PN’s proposals we found that this difference had dropped to €41 a week – or roughly €2,165 a year.”

This, Scicluna argued, meant that the difference in annual income between a family that works, and a family that doesn’t, will drop from €10,000 to €2,000.

“Where is the incentive to work now?” Scicluna asked.

Earlier today, Nationalist Party leader Simon Busuttil pledged that a government led by him would create 30,000 high-paying jobs, with the average salary increasing by between 25-30%

Bartolo said that Busuttil’s plans would take Malta’s finances back to a pre-2013 state and would slow down economic growth, adding that this was necessary to create jobs and wealth.

“We managed to double the expenditure on education, and it was only possible because of the growth in the economy,” he said. “No matter people’s political beliefs, everyone will tell you that there is strong economic development, strong job creation and more money in people’s pocket.”

He said that it was imperative for the country to continue with its rate of economic development in order to be able to afford pensions, health and social services, and ensure that the surplus remains a surplus.

“Not only will we not move forward, but we will move backwards,” insisted Bartolo.  

yannick_pace
Yannick joined MaltaToday as a journalist in 2016. His main areas of interest are politics...