Credibility is crucial

On Monday the Leader of the Opposition dismantled the little credibility that this government may have had on sound economic management. In his response to the Minister of Finance’s budget speech in Parliament Dr. Joseph Muscat showed that a substantial proportion of the promises made by the Gonzi administration this time last year have proved to be hollow.

The long litany of capital projects that was read to us in Parliament last year can now be used to expose the Nationalist administration’s inability to deliver what it promises.

All this happened at a time when good political and economic leadership would have been pivotal in dampening the effect of the global recession on Malta.

The list of projects that never saw the light of day in 2009 and are being repackaged for 2010 is indeed long. Dr. Joseph Muscat highlighted many of these in Parliament on Monday. The Times led the following day with a headline of a Budget of failed promises.

Let us mention just a few of these projects: Five million euros on Hal Far industrial estate barely reached €37,000. The reform of the Gozo transport system is still on the drawing board. Out of a total forecast investment of €20 million in the industrial zones, only € 4.7 million was spent.

In the trade sector we have seen exports fall by 21 percent so far in 2009, while the fall in the EU-27 was a more respectable 16 percent. What is even more worrying is the significant fall in industry related imports that indicates that any recovery in this sector is likely to take much longer to start.

In the educational sphere the government has once again failed to deliver on its promises. The long awaited new campus at MCAST has been on the drawing board of quite a few years, and yet last year only € 500 thousand was spent on this project. Dr Gonzi keeps repeating that education is the main platform of his strategy to achieve the Vision 2015. And yet he keeps measuring his success not by the results achieved in critical areas of educational excellence, but by the money he spends on this sector.

At the hands of the Nationalist administration our tourism industry keeps underperforming with a real risk that it will fall into structural decline. The government stubbornly refuses to reduce costs to the industry to stimulate some much needed demand and to improve competitiveness by reducing operational costs. No wonder the operators in this industry have given up on trusting this administration.

The economic projections for 2010 must be seen and judged in the light of what has happened in 2009. The Minister of Finance was brazen enough to project a 1.1 percent GDP growth for next year when the latest forecast of the EU for Malta is a more realistic 0.7 percent growth. The Minister of Finance is also projecting further increases in revenue but fails to  identify in which sectors he is seeing economic growth.

We have a duty to remind the public that just a few weeks after the Lehman Brothers debacle, the Minister of Finance was projecting a deficit of € 99 million for 2009. Now he tells us that this deficit is more likely to be €160 million more than originally forecast.

The Prime Minister tries to use a fig leaf to hide behind this gross miscalculation by saying that he had to spend millions to save jobs in export oriented manufacturing business that were about to shed jobs. But the reality is that while the €8 million saved in this scheme were more than justified, on its own it does not account for the massive failure to hit the deficit target.

In politics credibility is crucial. This administration has once again proved that they are unable to deliver on promises, not just those made before the 2008 election, but also those made in the 2009 Budget. The GonziPN myth of good economic governance has practically been destroyed by events that happened this year.

The PM’s own mantra is that we should judge him by what he does and not by what he says. Unfortunately for this country and its hard working taxpayers and families both what he says and what he does are today clearly on a very weak footing.
Dr Charles Mangion

Shadow Minister of Finance

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