[WATCH] Muscat: A budget to repay people for their faith in the government

The Prime Minister said that after consolidating its economic position, the government was now investing in the future

Prime Minister Joseph Muscat addresses a press conference outside Castille (Photo: James Bianchi/MediaToday)
Prime Minister Joseph Muscat addresses a press conference outside Castille (Photo: James Bianchi/MediaToday)
Muscat: A budget to repay people for their faith in the government

Prime Minister Joseph Muscat has hailed the budget for 2018 as one that repaid people for their faith in the government.

“It is all part of the strategy we started in 2013 were we set off trying to fix things that needed to be fixed in economy and which has now led us to a situation where we can work for today as well as for the future,” said the Prime Minister as he addressed a press conference at Castille shortly after Finance Minister Edward Scicluna delivered this year’s budget speech.

Muscat insisted that budget was also an answer to all those who had questioned where the surplus was going, emphasising the fact that for the first time in recent history, the budget included no new taxes.

“Normally right after an election the nation is used to politicians reducing spending and introducing measures that hadn’t previously been mentioned,” he said. “We are giving the nation what it voted for.”

Turning to one of the Labour Party’s main proposals ahead of the last election, Muscat said talks were still ongoing on finding a way of giving workers back public holidays falling on the weekend, adding that it would for the time being be giving workers an extra day of leave.

Another pledge that the government has followed-through on is that of giving all workers a tax rebate, with all employed individuals set to receive a cheque of anything between €40 and €60 over the course of the next year.


“For the first time, all the country’s pensioners, all 90,000 of them, will see their pension increase by €2 in addition to an increase in their in cost of living allowance,” he added.  

Muscat said the budget also contained clear and targeted interventions interventions, such as those in the property market. He said that through second time buyers, government was investing in social mobility, helping families buy a second home, as long as they sell their first.

He said the government would also be offering incentives to those with a disability who will be able to benefit for a refund of €5,000 when buying a home. In addition to this, Muscat explained that parents of children with a disability will also be able to benefit from a €5,000 pay out, which will help them equip their home to the requirements of their children.

Turning to social housing, Muscat said the government would be using innovative schemes that will see the country make its biggest ever investment in the sector.

With the country’s traffic situation seemingly getting worse every day, Muscat said that as of next year, those aged between 16 and 20 would be benefitting from the use of free public transport, while government would also be working on having a system of free school transport for children attending all of Malta’s schools, including church and private schools.

This in addition to the “largest ever capital investment” made in Malta, that will see a newly-set up agency administer the budget for the maintenance and construction of new roads, which has also doubled.  

The government recently said it intended to implement a cut-off date, by which point it hopes to have stopped selling non-electric vehicles. Muscat said the government’s measure not to charge registration tax and road tax, for a period of three years, would contribute towards this end.

In order to help the country keep hold of its talent and to continue to develop new economic sectors, Muscat said government would be offering tax exemptions to those competing a Masters of PhD, as long as they live and work in Malta for a period of three years.

“This is why we are preparing for the future, because the challenges we are facing we can face because of the strategy we have implemented over the past four years,” said Muscat, adding that government was looking forward in planned and target manner and not a sporadic one.

Finally, the Prime Minister said that with a surplus expected once again next year, the nation’s debt will continue to decrease.

Finance Minister Edward Scicluna said that the budget was as responsible one, insisting that government had an obligation to ensure the country was not living beyond its means. “That is the secret to obtaining a surplus and reducing debt.”

He said he was happy to be able to prepare budgets with many innovative measures, adding that through such measures, the government had shown that it understood the country’s long-term problems and had committed itself to dealing with them in a constructive manner. 

According to the Financial Estimates for 2018 issued by the finance ministry this evening, the government’s consolidated fund - which registered an €8 million surplus in 2016 and showed a €31 million surplus in August this year – is expected to show a €29 million u €21 million deficit in 2017 and 2018 respectively.

Asked by this newspaper how this could be explained, Scicluna pointed out that the estimate was based on an econometric model that had also predicted a deficit in 2016.

“The forecast is calculated using a model, so we were forecasting a deficit for this year, same as we were last year,” he said, adding that the last year’s surplus had now been added to model. Scicluna went on to explain that the income being generated by the government was not due to it charging higher taxes, or increasing other rates. “We see an increase from every source, both in direct and indirect taxes.”

“In other words, we are beating the system,” Muscat chimed in. “In reality, we are in an economic situation we have never had before and the model is built on the experiences of the past, where we had situations where the economy wasn’t working in this way.”

As a result, he said that the model still made certain assumptions that led to it predicting a deficit. He said that government had “completely changed the landscape” insisting the model would soon “catch-up to the new reality”.

“When you put money in the Maltese economy, or rather, when you give people the opportunity to work, they give you back a lot more than you expect,” concluded Muscat.

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