Standard of living improving under Labour - Scicluna

Former Nationalist finance minister Tonio Fenech says 2015 Budget is nothing but an accounting exercise littered with budget shortfalls   

Finance Minister Edward Scicluna presenting the Budget to parliament.
Finance Minister Edward Scicluna presenting the Budget to parliament.

Finance minister Edward Scicluna said the 2015 Budget “is not an accounting exercise but an economic budget which offers people opportunities to improve their standard of living and awards hard working people.”

Scicluna insisted that "under the Labour government the standard of living has improved and this is confirmed by the country's positive ratings."

He said the opposition’s criticism on debt, public transport and energy was fickle given that these same issued were the downfall of the previous PN government.

Accusing the PN of making a mess in all three sectors, Scicluna said the deficit in 2008 of reached 4.8% of GDP, which he said “not only resulted in the European Commission putting Malta in the excessive deficit procedure but ruined the country’s reputation.”

However, thanks to the current administration’s efforts, “the deficit is now below the 3% threshold and on the way out of the excessive deficit procedure.”

Scicluna added “whatever opposition MP Tonio Fenech says” government is confident of achieving its 2.1% target in 2015 and bringing debt levels under control.

In reaction to Fenech’s claims that the 2015 Budget is off-track, Scicluna insisted that all allocations were justified and invited his predecessor to go over the estimates together.  

Scicluna said that after consulting the constituted bodies and following the opposition’s poor criticism, he was “satisfied” with the 2015 Budget.

He said the opposition’s lack of criticism of measures such as in-work benefits, tapering and maternity leave meant that the PN agreed and approved the measures aimed at creating a just society.

Noting the creation of 6,000 in the private sector, Scicluna said that five jobs were created in the private sector for every job created in the public sector, adding that unemployment was at all-time low. 

Earlier, opposition MP and former finance minister Tonio Fenech accused government of presenting an accounting exercise to balance the books and warned that government will inevitably have to increase its expenditure in 2015 because it has under-budgeted a number of expenses.

Listing a number of budget shortfalls in the 2015 Budget allocation, Fenech said that according to the supplementary estimates finance minister Edward Scicluna’s budget for next year will be €30 million to €40 million off-track.

Explaining that this will lead to an increase in the country’s deficit and debt levels, Fenech asked “how does government intend to reach the target of having the national debt at 62% of GDP."

According to government’s plans, the general government gross debt ratio is planned to continue increasing until 2014. From 71.3% of GDP in 2012, it is forecast to increase to 73.2% of GDP in 2014.

Noting that the average debt increase under his watch stood at €14 million a month, Fenech said this was dwarfed by the monthly increase of €22 million registered last year and the €39 million a month registered this year.

As Parliament discussed the budget estimates for the finance minister, the MP said that according to figures in the supplementary estimates, government’s expenditure target in 2014 was missed by €226 million, including a €2.3 million increase in the Office of the Prime Minister’s wage bill.

This, Fenech said, contrasted with the meagre €500,000 increase in the local councils’ budget.

Describing government’s reaction to the EU commission’s as opinion on the 2015 Budget as “pathetic,” Fenech said government has so far failed to answer the questions raised by the commission.

Last month, the European Commission issued an opinion saying Malta’s draft budget in 2014 – submitted earlier this year – will not fulfill the requirements to correct the government’s deficit under the excessive deficit procedure (EDP).

The lack of detail on Budget 2015 revenue measures in the draft budget that the finance ministry gave to the Commission, meant that the EC had to base its opinion on a “no policy change” based on previous budgets.

On pensions, Fenech reiterated that the third pillar pensions alone will not resolve the age-old problem and echoed the European Commission’s warning that “decisive policy action in the pension system is still missing.”

Turning his sight on Enemalta, the former finance minister said the reductions in energy tariffs was bankrolled by the increase in government’s increased revenue from the taxes on fuels.

He also asked “where did the €130 million in money owed to government by Enemalta come from?”

Answering his own question, Fenech said that €85 million came from government’s new company, Enemed that borrowed money and “the rest came out of nowhere.”

The former finance minister “guessed” that the rest could have come from a bridge-loan, guaranteed against the Chinese investment in Enemalta. 

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