Muscat opens broadsides at PN’s credibility on fiscal responsibility

Labour leader Joseph Muscat opened broadsides on the Nationalist Government during a political activity in Luqa, zeroing in on its track record regarding deficit targets and fiscal responsibility.

Muscat said that "so far, credibility is becoming the biggest election issue," and urged the electorate to examine the PN's claims that it is the best party to manage the country's finances for the coming five years.

"They are telling us that they are capable of managing the economy, but were they able to meet their own targets over the past five years?" Muscat asked.

He said that the PN government has had to answer for repeated negative appraisals at the hands of the Central Bank, the European Commission, and most recently, international credit agency Standards & Poor regarding its "dismal" fiscal performance.

"[The financial institutions] are also saying that they are not believing the government's estimates regarding Malta's economic growth and deficit reduction. And we don't blame them. The fact is that over the past five years, this Prime Minister and this Finance Minister have estimated that our deficit would increase by only €6 million. Instead, it increased by €1,050 million."

"They failed to meet their own targets over the past five years. How can we trust them to meet their targets for the next five?"

The Labour leader also said that the PN government, under the helm of Prime Minister Lawrence Gonzi, managed to incur 40% of Malta's total debt in just the past eight years. "And he has little to show for it."

"There is no credibility in this government upon which we can consider their estimates seriously. They failed once, and they will fail again," Muscat went on, dismissing the PN estimates the party presented as part of its electoral programme costings on Monday.

He also said that while three months ago, Finance Minister Tonio Fenech had claimed that Malta's economy would grow by 4.3% in 2012, he is now saying that it grew by 3.6%

"In two months he erred by 1.4% - and he wants us to take his word regarding what will happen five years from now," Muscat said.

He also insisted that the PN's electoral programme shows that the party "has no plan for energy," and insisted that its plan extends only as far as to keep spending  €1 million on a daily basis on oil.

"And someone is taking commission for that oil," Muscat said, in a not-so-subtle reference to the Enemalta oil-purchasing scandal that is still unfolding what with Minister Austin Gatt's questioning at the Police HQ and Prime Minister Lawrence Gonzi's refusal to comment on the matter.

Muscat said that while the PN is saying that its Night Tariff will mean a reduction of energy costs during the night, he said that irrespective of this "it will surely raise the tariffs during the day, because that is what it is already committed to do."

The Labour leader also pressed upon government's apparent insistence to stick to energy technologies that depend upon oil, saying that the PN government had already turned down a gas in the past on more than one occasion, noting revelations of several proposals over the years which were not taken up by this government in 2000, 2004 and 2010.

"Now, it is saying that we should not worry because it will apply with the EU for EU funding and build a gas pipeline," Muscat said. "We are not worried. This fits with our project," Muscat said.

He also said that despite the PN assurances that this pipeline project would cost the country in the region of €700 million, there is no indication as yet as to what Malta's share of this expenditure would be, given that EU funding would not cover the entirety of the project.

He added that a reading of Malta's budget estimates further shows that there is not "a single cent" allocated to this pipeline. "This shows that these people want to keep working with oil," the Labour leader insisted.

Muscat also scorned the PN's claim that it will obtain greater funding through fiscal care, insisting that "how can this government be cautious with money" given that it has regularly failed to meet its own targets on deficit reduction and spending limitation.

"We have two choices. Either [this party] will raise the debt, or it will raise taxes. And both have their own risks. Both will endanger jobs, the health system, and education as well as in investment in education."

He insisted that government does not seem willing to address the spiralling debt, pointing to its reaction to the S&P downgrade. "This government does not seem to have heeded this warning."

"The other possibility seems to be that it might increase taxes," Muscat added, also insisting that based upon the PN's own estimates, the tax burden would increase considerably.

He said that the PN's estimates show that in 2011, the tax burden stood at 35.5% of the GDP, while in 2017, it will stand at 37.5%.

This, Muscat insisted, will translate into a tax increase whereby, for every €100 they pay in tax today, at the end of the next legislature, people will end up paying €106.

"This shows that this government is admitting that it will be increasing the tax burden," Muscat said.

Muscat however toned down his message, inssiting that Labour is not trying to "scare" anyone. "We will not play the auction game. We are here to carry out responsible politics. We will promise what we know can be carried out in a way that the country can bear."

He said that Labour's own proposals are aimed at generating economic growth: "they are measured, and will help people in various sectors."

He also explained that Labour has opted to explain the costings of each proposal as it announced them.

"We are not asking people to wait for our costings a week or two after we deliver our proposals. We are announcing the figures as we announce each proposal," he said.