Tonio Fenech upbeat on Malta's economic prospects

Malta's economic performance exceeds the picture shown by official statistics, finance minister Tonio Fenech said today during a pre-budget working breakfast.

Fenech said that Malta's results in job creation, wage increases, exports and tourism show an upward trend despite Malta officially entering recession following negative growth in the last quarter of 2011 and the first quarter of this year.

The working breakfast was organised by the ministry to receive feedback from social partners in preparation for the 2013 budget.

While praising the government's positive economic results, the Malta Employers' Association director general Joe Farrugia said it was "disappointing to see Parliament cut off from the economic reality over the last few months."

Although Fenech explained at length the effect of external factors on Malta's economy, he said it was not his responsibility to comment on the parliamentary situation.

Farrugia also noted that employers are finding difficulties in engaging employees because of a lack of skilled workers.

To this, the General Wokers Union secretary general Tony Zarb offered Farrugia the union's disposability to work together to find workers for employers, because "many workers approach the union for assistance in looking for a job."

The minister explained that the 2013 budget should address the situation of mismatches in the labour force. He added that the budget should also look at increasing the skill base of workers to increase wages across the board. Statistics show that last year alone wages increased by an average of 3.3% however, Fenech noted that this does not mean that everybody's wage increased.

The minister also noted that government's responsibility was not that of "taking and giving money to citizens" but that of "administering the country's finances."

The MUMN's Paul Pace stressed that the 2013 budget should aim at increasing the purchasing power because workers had been hit hard by various measures.

Pace added that the government had not yet implemented its electoral pledge to reduce the highest income tax rate to a maximum of 25%.

The minister explained that the promise to reduce income tax was the only one that had not been implemented and insisted that the government had introduced a number of other measures including the removal of taxation on credit cards, measures encouraging women to return to work, initiatives for working parents and families which send children to private schools and micro-investment schemes.

"Our actions are dictated by the reality of the economic crisis surrounding us and although the government is still committed to reduce labour taxes, this has to be done in a balanced and prudent way."

Fenech also warned against "raising public sector wages irresponsibly" because this would spiral into the private sector and have a negative effect.

In reply to comments by entrepreneur and hydrologist Marco Cremona on the need to address the country's deficit in water resources and construction, Fenech said that in the next few weeks the working group engaged to draft a paper on a Green Economy will publish its workings.

George Mallia from the Malta Hotels and Restaurants Association said that while there is an upward trend in tourist arrivals he also called for a revision of water and electricity bills for the industry.

Fenech said that the increased efficiency achieved by the ongoing woks on the Delimara power plant extension, the Malta-Sicily interconnector and the installation of smart metres will "cancel out the rising prices of oil and energy production and therefore energy prices will not need to be revised."

He added that all these projects still depend on the volatile price of oil and explained that the government is still exploring the idea of having a gas pipeline connecting it to North Africa but is dependent on EU funds.