Joseph Muscat reveals strategy to reduce utility rates

Opposition leader Joseph Muscat tonight revealed for the first time his party's strategy to reduce utility rates after lambasting the government for not decreasing the water and electricity costs.

Replying to the Budget speech in parliament, Joseph Muscat said a Labour government would run the Delimara power station gas and not by heavy fuel oil, benefiting from the cheaper gas prices.

Additionally, a further €12 million will be saved by reassessing the return on capital employed factored in the utility rates and reduce the mark-up on the rates.

A third measure will be the introduction of a night tariff to stabilise demand, which Muscat said would help families save money on energy consumption. "The inefficiency of the smart metres project has prevented families from benefiting from this proposal," Muscat said.

"Our plan is based on common sense. We're confident that new technologies and better leadership will lead to lower utility rates... Our vision is that we no longer depend on oil and move towards cleaner technology."

The Labour leader said his government would seek the best utility rates in Europe through the Malta-Sicily interconnector project, as part of a coherent energy strategy under one ministry.

Public finances

In his criticism of public finances, Muscat said tax revenues would be €10 million less than estimated last year while spending would increase by €36 million, adding that capital expenditure suffered in the process of balancing the books.

Muscat said the government was reaching deficit targets by playing "an accountant's game" and cutting on capital spending and EU-funded projects.

"The government didn't want to spend it or it wasn't able to spend it," Muscat said referring to the reduction of €137 million in estimated capital expenditure for 2011. "[Gonzi] is like the head of a family who has a money problem but instead of cutting his extravangaces, he decides not to fix the leaking roof."

Muscat accused the prime minister of scrounging on EU funding so that the government does not co-finance capital projects. "EU funds are expected to be half of what had been estimated... the government used a strategy of not applying for all the funds it was allocated, so that it does not finance the projects itself to be able to reach the deficit target... a miser of progress."

He also said that national debt would increase by €78 million more than estimated, to €4.3 billion. "Since he's been in power, the Prime Minister generated €400,000 of debt every day," Muscat said.

The Labour leader said government's deficit target for 2012, which is backed by an extra €158 million in tax revenues, was contradicted by the European Commission.

"The deficit will be cut by €46 million more in stamp duty, €45 million more in VAT from an amnesty, €18 million in income tax, €12.5 million in duties and excise and €36 million more from licences and €28 million from concession fees."

Muscat specifically said the concession fees were primarily based on domestic tariffs for tobacco and alcohol duties, car registration tax and registry fees but not from industrial licenses such as gaming, oil exploration, or the White Rocks projects - which so far is still under negotiation.

Muscat said the national debt was not reflecting the €52 million paid to former bus drivers, €200 million for the BWSC power station contract, and €100 million on the new parliament. "While the dockyards' debt was never factored in the government's books, the €70 million paid on the Fairmount contract was booked and taxpayers paid for this."

He also referred to the special purpose vehicles that government was using to finance capital projects, such as the new parliament building, by floating them as public companies. "The estimates indicate no rents for such projects... one images the government will end up 'renting' the parliament from the company that will own it. It will be an unprecedent symbol of 'democracy in debt'."

Muscat said there was no consolation from comparing Malta to financial strapped nations like Spain and Greece, referring to PBS reports from the two countries as "tax-funded television broadcasts" the Prime Minister was using to exploit the crisis.

"The budget has not addressed warnigs by the EU's national reform programme, the Moody's downgrade that stated our debt dynamics were not being addressed, and the EC warning that there was no convincing evidence of sufficient and permanent fiscal measures."

Maternity leave, IVF, equality

In his speech, Muscat accused Gonzi of being weak in the face of demands to extend maternity leave, saying Labour had been supporting this proposal since 2009.

"We saw a U-turn in this Budget, but it turned out that nobody knew what it was about," he said referring to discussions to extend the maternity leave by four weeks over the next two years, subject to MCESD discussions. "That's why nobody believes him... a new Labour government will increase maternity leave. We will improve paternal leave foir all fathers and introduce more flexibility."

Criticising the lack of action on a draft IVF law approved by a committee of MPs, Muscat said Labour would introduce an ethical law regulating in vitro fertilization, and also a cohabitation law and civil unions for same-sex couples.

"This is no convenience for someone with an identity crisis who consoles himself by waving an identity card," Muscat said referring to the Prime Minister's speech last Sunday at the PN general council.

Ministerial salaries

Muscat also said he would revert ministerial salaries and cancel the €500 weekly increase for the prime minister and the Cabinet, and instead charge the Auditor General with the creation of a new mechanism for salary increases "only when the national economy and finances so permit... this is the kind of judicious leaderhip that the public expects."

Muscat said the cost of living increase for workers, the middle-class and pensioners was less than 1% of the increase that ministers were enjoying.

He also said that in the past three years, €35 million was paid to directly appointed consultants. "These consultants also had something reserved for them by the Cabinet... and their main qualification was not their competence. No prizes for guessing what was their qualification to benefit from these consultancies."

Pensions

Muscat also said that Gonzi did not tell the electorate that he has agreed with the European Commission that he will increase the pensionable age.

"At the European Council in June, the prime minister agreed on five points of the national reform programme that included the acceleration of the retirement age and tag it to the life expectancy rate. In other words, he agreed with the EU to increase retirement age."

Muscat said a Labour government would face the pensions challenge with economic growth, and create quality jobs to tie in with the increased maternity leave and create a better work-life balance.

He added that a Labour government would encourage the creation of optional third pillar pensions and not increase retirement age.

Health

Muscat said a new Labour government would limit hospital waiting lists, and anticipate EU limits on waiting lists with patients' rights charters.

"There are 4,474 patients waiting for cataract operations and 1,978 waiting for knee replacement operations. If every operation costs €500, the government appears to have preferred spending €2.5 million on the 'bridge to nowhere' breakwater project," Muscat said.

Muscat also said the Pharmacy of Your Choice scheme had fallen behind, with 120 medicines out of stock for almost five months.

Income tax

Muscat said he welcome a new parent income tax band, but said ther was more than meets the eye on the higher tax ceiling for parents.

"Three years ago the prime minister promised tax cuts for everbody as the ideal recipe to weather the international financial storm. Now he says the storm is too big to keep this promise, and instead chose to build a roofless theatre to take cover from the storm. This electoral pledge was the biggest political gimmick of our time."

Muscat said that the new parents tax bank would save €10 million, as against the €160 million in tax cuts he had promised. "It means they will save an average of €3.50 a week, the major part of it being taken back in national insurance. When this is contrasted by the fact that the average wage has decreased by €6.83 a week due to the cost of living and utility rates, the income tax reduction is nothing but a joke."

Muscat however said the small print of the new parental tax band is only available to working couples whose children are minors, and not those families where there is only one breadwinner, and whether the tax will apply for part-time mothers, unemployed breadwinners, pregnant women who are not working, or unmarried parents.

"This convenient tax band is a scheme created by the finance minister that discriminates between our children... we'll even have first and second class elderly, because if you take care of your 80-year-old parents, you don't qualify for the new tax band. What social justice is this?" Smart City and foreign investment

The Labour leader said some 4,760 workplaces envisioned for 2011 by the Smart City project were still nowhere to be seen. "The only surplus we're seeing here are the prime ministr's promises," Muscat quipped.

"The Prime Minister is duty-bound to explain where these thousands of jobs are... investments minister Austin Gatt has only confirmed these jobs have not yet arrived, that this was not the government's fault, and that the reason why these jobs have not yet been created is because a pumping station in Xghajra has not yet been relocated... this is a certificate of the incompetence of this government.

"I find it difficult to believe that a government that was able to undermine Sea Malta, the shipyards, Air Malta and the treasury is not able to get rid of a pumping station."

Muscat said the European Commission had also cited Smart City as an example of yet another project on paper.

"The Prime Minister has a lot to answer for his defence of Autin Gatt and the way he allowed the person who led the Smart City negotiations to end up as the chief executive of Smart City Malta, and then return to be chairman of the Malta IT Agency, to spend €8 million renovating the façade of its new premises."

Muscat listed various projects that had not yet achieved fruition, citing the Corporate Village, the Marsa and White Rocks sports village. "This land was given by direct order to a private consortium... and we haven't heard nothing of this project yet. I'm sure the Prime Minister has instructed this company not to leave Malta without agreeing on the deal. He'll probably sign it tomorrow at Castille, as he did with the SR Technics project after my Budget reply last year. Maybe I should be speaking every week so that the prime minister works harder..."

The Labour leader said that €371 million less in foreign investment had characterised the first six months of the year, and claimed CEOs had told the Prime Minister that they could not increase their investments due to the utility rates, service charges and costs of bureaucracy. "The Trelleborg chif executive said utility rates were double those that were being paid by 17 of his factories globally."

Employment

Muscat said government could not tolerate any longer private companies that were abusing of their employees, who were being paid salaries with split cheques so that they could save on pro rata leave entitlements. Muscat said employees were being registered as self-employed workers so that they are not entitled to leave and other bonuses, even though they were paying their national insurance. He also said women were scared of saying they were pregnant for fear of being sacked.

"If government does not take a strong position against these abuses it cannot have any moral authority that gives the private sector any direction... Transport Malta says it does not interfere on such contracts. An inquiry inside hospitals over the employment of paramedics was only launched when we raised the matter. Pakistani nurses have been interviewed by public officials at the home of the private contractor who employs them. No inquiry was launched. And police, army and civil protection officers still do not have the right to join a trade union."

Muscat said a new Labour government would improve these workers' conditions and introduce the right to form a union for the disciplined corps, without the right to strike.

Education

On education, Muscat said Labour was supporting the public schools reform but was concerned about reports from the teachers' union that raised questions on the college system.

He said the Budget speech had offered no solutions to illiteratism, or the fact that secondary-school leavers were the highest in Europe. "A new Labour government will prioritise the reduction of students leaving school at 16."

He also said the MCAST campus, valued at some €30 million, only had €4.2 million voted for its development this year.

Air Malta and tourism

Muscat said a new Labour government would place Air Malta at the centre of its tourism policy, and raised questions about government's conviction that the national airline would pay back €59 million in loans to the public coffers.

He accused the government of having endangered hotels' viability by increasing VAT on accommodation and only increasing the MTA's budget by €1 million, decreasing Heritage Malta's budget by 50% and the St Elmo project by €300,000.