Updated | Labour flags errors in PN criticism on public spending

The Labour Party has said the Opposition’s criticism of the government’s increase in public spending comes late in the day, after shadow finance minister Mario de Marco issued a reaction to the latest economic update from the Central Bank.

The PL said that the data on which the update is based is from June 2015, but the Central Bank’s update was published earlier this week.

“What’s worrying are the mistakes the Opposition made: it says government consumption increased by 8.3%  but the Central Bank report says the first quarter increase in 2015 was 3.6%.”

Labour said that of the real 4% growth figure, only 0.8 points were due to government spending. “Compared with the first quarter of 2013, when the PN was in government, GDP growth was just 1.7%. Even when removing public spending, this year’s growth was double that.”

Labour also said that national debt under the PN increased by 3.8 percentage points in the first quarter of 2013.

‘Labour needs a crash course in English, statistics and economics’ – PN

In a reaction, the Nationalist Party suggested that Labour “would do well to invest some time and money in training to be able to grasp better the concepts of basic English, statistics and economics”.

The PN said that its statement had been based on the Central Bank’s own report, stating that government consumption rose by 8.3% over the previous year, contributing 1.6% points to growth.

“Also, contrary to what is stated by the Labour Party, it is the Central Bank and not the Opposition that is flagging the increase in government expenditure both in absolute terms and as a percentage of GDP growth.”

The PN said it had quoted verbatim extracts from the quarterly review. In Quarter 1 of 2015, the percentage point contribution of government final consumption expenditure went down marginally by 0.1% when compared to the same period in the previous year.

The PN said according to the Supplement to 2015:1 document, “at 2.3%, the annual growth rate halved compared with the previous quarter”. This, the PN said, backed the Opposition’s statement that that the rate of GDP growth was slowing down.

The PN said it was untrue that public sector headcount increased during the past PN administration: “The public sector headcount stood at 40,893 at the end of 2012  - the last full year of a PN administration, down from 46,686 in 2004, and 55,000 in 1987. In the past two years, the public sector headcount, rather than continuing on this downward trend, is increasing and has reached 43,892 - that is 3,000 more than it was in 2012.

“In order to calculate the number of people put on the public payroll in the past two years one has to add to the 3,000 the 1,500 public sector personnel who retire each year bringing the total of persons put on the public payroll in the past two years to 6,000.

“By the Ministry of Finance's own calculation, the public wage bill is set to increase by €127 million over a two year period and this despite of the smallest cost of living increase given in 2015. The increase in government expenditure is pushing up national debt.

“In the first quarter of 2015, national debt increased by €143 million when compared to the same period in the previous year.”

The PN also said that the government was showing lack of interest in the problems being faced by the manufacturing industry.

The tit-for-tat between the Labour and PN on statistical interpretation continued with the PL issuing another statement retorting that “the PN’s economic analysis is inspired by the shadow finance Google group” – referring to a google group created by former shadow finance minister Tonio Fenech.

Labour said the PN was basing its statistics on NSO figures published in March 2015 and while figures for the last quarter 2014 had been revised.

It said, that what the PN quoted on the Quarterly Review 2015:1 was neither on government consumption, nor on economic growth. Labour said economic growth analysed by the Central Bank amounted to 4% of GDP in the first quarter of 2015 and 4.2% in the last quarter of 2014.

“These are not small figures but one of the best rates our country’s economy has ever seen.”

Labour reiterated that 509 persons had been employed with the government between January and February 2013, compared to the 422 employed over the past year.

It said, that under the previous administration, jobs in manufacture decreased by 2,000 persons while the figure had now increased by 340 persons.