Mr Fenech’s very first word in his budget speech introduced the Nationalist Party’s electoral campaign slogan f-word, flimkien (together), saying that together they could overcome the serious challenges created by the world’s upheaval, and he then went on to appeal for a “genuine effort” by the political, economic and social forces so that the country would “continue succeeding”.
The times were not easy, he said. It was stormy all around and the decisions they were taking today would translate into everyone’s future. Everyone – our children, our families, our elderly, our young – depended on the decisions they were taking.
It was not the first time they were facing difficult situations. In 1991, when recession hit Europe, they could have withdrawn into themselves but instead they invested in the infrastructure, building the airport, kilometres of roads and other projects.
They had also had difficult choices when it came to joining the European Union. It involved crucial but difficult reforms, such as opening the market to competition. Time had proved the government right in the decisions taken then.
Another challenge was to join the eurozone, and there were those who had tried to dishearten them. Again, time had proved it would have been a disaster to listen to those who wished to postpone the decision.
The aim was sustainable development and the government believed the country could develop further, economically and socially. This was the government’s vision for 2015, to excel in sectors where we have particular skills and advantages. The main pillars of employment, education and the environment must remain at the heart of the government’s policies for sustainable development, to bequeath to future generations a society that was more just, economically strong, with water, air and sea that were cleaner, a historic and cultural heritage that was cared for, better communities for living, a countryside that was safeguarded and improved, and a healthy people who had more opportunities.
To meet the challenges they were foreseeing for next year, the government has drawn up an economic plan which aimed to stimulate economic activity without endangering the future of the coming generations. In formulating this budget they had submitted themselves to three main tests: responsibility, sustainability and solidarity.
They had asked themselves three questions: what was demanded of them in this proposal; did this pass the test of sustainability; were they working so that everyone would have a better future, even those who truly needed assistance?
The international
economic situation
The economic clouds that appeared in the first months this year were already preoccupying, particularly because of the rise in the price of oil and food. The oil price crisis was the result of the world’s economic expansion, and while Malta suffered from the oil price rise, it was on the other hand benefiting from the world’s economic expansion.
Today the situation was radically different. The situation today was the result of the collapse of the international financial system in which markets had suffered as never before, and there was no credit for investment, with a decline in the prospects for economic expansion. There was some calm now, after the intervention of governments and central banks, but the difficulties remained.
Economies today were in cautious mode or had stagnated completely. The EC, the International Monetary Fund and other institutions had revised downwards the prospects of economic expansion of all countries with which Malta has commercial ties.
The latest economic forecasts were that the 27 EU countries would grow by an average of 1.4 per cent this year, down to 0.6 per cent next year. The expansion of countries in the eurozone is expected to be 1.3 per cent this year, and 0.2 per cent next year. The large economies – Germany, UK, France, Italy and Spain – were either already in economic stagnation or would enter a period where their economy would shrink. In this situation, unemployment in the main economies, especially those with which Malta had strong commercial links, was expected to rise.
As a result of various factors, including spreading economic stagnation, the rise in prices of raw materials, food and oil appears to have been reined in. Prices are this year expected to decline somewhat.
The Maltese economic situation
The Maltese economy is expected this year to expand by an average of three per cent, a rate that was very good when compared with that of other countries and with the European average. For next year, the estimate was that the Maltese economy would grow at about 2.4 per cent. Employment had continued to grow by an average 3.3 per cent in the first six months when compared to the same period last year. In the same period the average cost of employment had gone up by about two per cent, which was relatively low when compared with that of our competitors and which continued to help the economy improve its competitiveness. At the same time the number of unemployed had continued declining and in September the number of people registering for work had gone down to 5,390, which was the lowest level in many years.
The financial
situation in 2008
The government had forecast a deficit of e68.4 million in the consolidated fund, meaning a deficit of 1.2 per cent of the gross domestic product. Government revenue had risen by e142 million, as a result of economic expansion, the rise in employment, better wages, more profits by companies and a strong development in trade. This year the Maltese are enjoying a substantial cut in income tax, amounting to over e56 million.
Capital expenditure had seen no change except for projects which are in their initial stages. As forecast, the opening of Mater Dei Hospital, and the investment linked to schools, had resulted in a substantial increase in recurrent expenditure.
Wages had gone up by e31 million when compared to 2007. The biggest change lay in programmes and initiatives, which include pensions and social benefits, and subsidies for those needing assistance, such as agriculture, students and public services, where the increase was of e74 million over 2007.
The government had spent nine million euros more than last year in contributions to public entities, mainly in the health sector so that while Mater Dei Hospital deals with medical interventions, convalescence would take place at Karen Grech Hospital, which is complementing Zammit Clapp Hospital.
Because of the extraordinary circumstances this year, particularly the oil price crisis, the government chose to pass over 55 million euros in subsidies to Enemalta, impacting not lightly on the aims we had, so much so that our target was missed by one per cent of the gross domestic product. Another e56 million were paid in early retirement schemes for Malta Shipyards Ltd employees.
Were these two extraordinary circumstances to be eliminated, the deficit this year would not have been of 200 million euros, but 90 million euros, or 1.8 per cent of the gross domestic product. The national debt is expected to be 62.8 per cent of what the country produced, remaining in the established levels of sustainability.
The financial situation in 2009
A sustainable financial situation and wise fiscal policy were essential for investments. It would have been fundamental to have a positive balance by 2010 in circumstances where the forecasts for next year indicated that Malta would maintain economic expansion of about 3.5 per cent.
But the precarious international situation and the impact this is already having on Malta make it incumbent on the government to be fiscally flexible. The present time called on the government to adopt an investment strategy which would ensure sustainable economic development.
This did not mean, on the other hand, that we could have an unlimited deficit. So while in the circumstances we should review our aims, it does not mean that now everything should be discarded. In the light of the international economic situation, the government is presenting a financial package spread over three years, aiming to achieve a positive balance by 2011, instead of by 2010.
2009 is expected to end with a deficit of 98.8 million euros, or 1.6 per cent of the gross domestic product.
The increase from tax is expected to be e117 million, or e22 million less than the increase we had this year over last year. As a result of an increase in employment and wages, revenue from income tax and social security contributions will rise by e60 million and of e15 million respectively. We expect a rise in VAT revenue of e23 million, e16 million from duties and excise, and e4 million from licences and various other taxes. Other revenue would yield e49 million more than this year.
There would be a e67 million increase in recurrent expenditure for programmes and initiatives, pensions and social benefits. But the full recurrent expenditure would decline by e18 million euros, seeing that the expenditure for this year included e111 million linked to the shipyards schemes and subsidies to Enemalta Corporation.
Capital expenditure, with the help of the European Union, would rise to e348 million from e275 million.
Economic strategy
The international economic situation is fragile. Although the Maltese economy is still creating employment, we are aware of the risks. The government knew where it wanted to get. It believed in a market economy with suitable and just regulations. It would fight all sorts of fiscal evasion and other market abuses. These abuses hurt serious business and the consumer. They also undermined the government’s policies and finances so there would be no compromises in fighting them.
They would be emphasising the need for more productivity and competitiveness. They would insist on more efficiency and accountability, especially in those sectors which are finances by public funds. They would continue incentivising industriousness, enterprise and creativity. Only in this way could they improve the quality of life and ensure a secure future for the coming generations.
They would continue liberalising sectors which still operated restrictively. That was why they had launched their vision for public transport. They would continue privatising entities which were not strategically important for the country and which could be managed better by the private sector. They intended to conclude the privatisation of the shipyard and Enemalta’s petroleum division, and would launch the process of the yacht marinas’ privatisation.
In Malta’s open economy, not every investment left an impact on the country. Our investments needed to be responsible investments which would help sustainable development. They would be investing heavily in six important sectors:
• e124 million in infrastructural works which would be instrumental for economic and social expansion, including building of roads, factories, schools and other facilities;
• e61 million in environmental projects;
• e58 million to continue improving the people’s skills. This amount does not include expenditure on the country’s educational system;
• e30 million in a series of alternative energy projects and others which would improve energy efficiency;
• e47 million in incentives for small and medium enterprises, and various economic sectors, including tourism; and
• A series of other measures to incentivise employment and to attract the talent we need to expand the various economic sectors.
This was a package of special investment amounting to over e320 million. That is what would be investment in the economy.
ENVIRONMENT
Economic incentives for
sustainable development
Economic development contributed heavily to sustainable development, helping sustain education, health, social services and investment in a better environment. The creation of employment is a major aim of the government. In its economic plan in relation to the realities the country would face in 2009, an incentives package would be launched aiming to:
• Help local enterprises, and attract others from abroad;
• Incentivise research and innovation;
• Identify new markets; and
• Continue development industrial zones.
A better environment
and quality of life
The budget will continue to place the environment as among the government’s top priorities with the aim of providing a cleaner environment and balancing economic development with sustainability.
Climate change
This budget will address the safeguarding of the climate and other environmental issues through a number of measures and initiatives aimed at giving a push forward to sustainable development.
The whole world has been impacted by the strong rise in the price of oil, Malta doubly so since it also uses electricity for the production of fresh water.
In facing the challenges ahead, the budget proposes the way forward is not to continue to permanently subsidise, but rather to invest in energy conservation, alternative energies, and more efficient means of generating electricity.
The budget looks to both face the challenges in the area on the road ahead, while at the same time seizing the opportunity nurture sustainable development.
The measures are to help everyone – families, the commercial sector, and industry – to participate and contribute toward the related goals of conserving energy and generating alternative energy.
The country will invest in systems of alternative energy generation and in more efficient means of generating electricity.
New regulations on efficiency standards will be introduced in terms of the construction of new buildings, coupled with an educational campaign supporting a culture of energy conservation.
Firstly, energy produced must be used in a better and wiser way. Toward this aim the government has published a National Action Plan on the Efficient Use of Energy.
Secondly is to introduce consciousness favouring energy conservation, both on the domestic and commercial levels. Along these lines the government will introduce new regulations on Energy Performance of Buildings, through which an energy performance certificate will be needed before development permissions are granted.
To promote the generation of energy from clean and renewable sources, the budget is allocating e33 million from European Union funds to for schemes incentivising the take up of such technologies for both the domestic and commercial sectors.
Family incentives
The budget proposes a number of ways in which families would be encouraged to use energy in a better way and to invest in alternative energies.
The electoral pledge of energy saving light bulbs for each and every household, which can be collected from shops of consumers’ choice, will be honoured come 2009. The measure is being implemented in collaboration with the GRTU and the Electrical Importers Association. The initiative is to cost e4 million.
On the flipside, over 2007 over four million incandescent light bulbs and fluorescent tubes were imported into Malta. To discourage their use and to encourage the take up of energy saving light sources, the budget proposes the introduction of an eco-contribution of 25c on every incandescent light bulb and 50c on every fluorescent tube. The new eco-contribution is effective immediately.
The budget estimates e600,000 in revenues from the measure.
e2 million is to be allocated to incentives for solar water heaters. Every family will be reimbursed two-thirds the price of a solar water heater, up to a maximum of e460. It is estimated the scheme will benefit over 4,500 families.
Another e500,000 is to be allocated, similarly, to reimburse households 50 per cent of the price of a photovoltaic system, up to a maximum of e3,000. The scheme is estimated to benefit some 200 families.
An additional e300,000 is to be allocated to assist households to install roof and wall insulation and double glazing. The government will cover 33 per cent of the cost, up to a maximum of e300.
The scheme is expected to benefit over 1,000 families.
The Enemalta Corporation is to begin a new service through which families will be given personalised advice on how the would be able to reduce and control their electricity consumption.
e200,000 is being allocated for an informational campaign on electricity use.
All domestic appliances will also be marked with full information on the energy efficiency of the appliance in question.
Clear and transparent standards on the efficient use of domestic appliances and buildings will be published, while a large project on managing energy will be launched.
The Budget makes it clear that the assistance schemes, to be managed by the Malta Resources Authority, will close when the funding allocations run dry, and applications will be seen to on a first come, first served basis.
Industry incentives
Malta Enterprise will assist local companies to identify environmental and energy technologies that would assist their operations.
The Budget also proposes assisting enterprises to make more efficient use of electricity and alternative energies. To date 11 companies have been assisted along such lines through an investment of over e500,000.
Enterprises ready to invest in green energy generation and the better use of electricity will be supported to the tune of 60 per cent of the overall cost of the measures implemented. e10 million will be allocated toward the measure, which is expected to benefit over 1,600 enterprises.
Companies investing in photovoltaic cell systems are already eligible for an investment tax credit of 243 per cent.
The net metering system currently applicable to the domestic sector will be extended to industrial concerns installing such photovoltaic systems.
A Business Advisory Scheme will also be available, which will see the government paying part of the consultancy services on matters including water and electricity and water use and waste management.
Enterprises will also be incentivised to carry out energy use audits, with the government footing 40 per cent of the bill up to a maximum of e300 for small enterprises and up to e1,000 for large enterprises. Over the coming year, the budget estimates some 1,000 enterprises will conduct such audits. Government entities and departments over the coming year will invest in such audits, setting a concrete example in addressing the country’s energy challenge.
National investment
The Budget identifies that wind energy holds an important potential in terms of addressing climate change, and that Malta has to follow successes registered in the area in other EU countries.
The government intends investing in a e130 million offshore wind farm at Sikka l-Bajda following an evaluation. It is estimated the project would supply energy to over 21,000 homes – equivalent to 80 per cent of Gozo’s energy consumption or four per cent of the national consumption.
The project alone will save 80,000 tonnes of greenhouse gases per year.
The government is also exploring the possibility of a small onshore wind farm project in uninhabited areas.
Alternative energy fund
So as to undertake the Budget’s alternative energy investment and incentives, it is also instituting an alternative energy fund.
With immediate effect, the Budget has proposed the fund would be financed by a new excise duty of three cents per litre of petrol and two cents per litre of diesel.
Conventional energy
generation
If, by 2010, an investment is not made in another power plant in Delimara the country would not be able to produce enough electricity for its needs.
The development is also crucial in closing the Marsa power station, which is polluting and inefficient.
Another large investment will be that related to connecting Malta to the European power grid, which will ensure energy security link up to the wind farm project and offer future opportunities to purchase cheaper energy from the European single market.
Addressing the
emissions challenge
In Malta, the main cause of emissions is transport, with Malta having one of the EU’s highest congestion rates with over 10,000 vehicles on the roads.
Moreover, the median age of vehicles on Malta’s roads in 15 years, compared with the EU average of eight – leaving a substantial impact in terms of pollution, congestion, parking space, the environment and public health.
Public transport reform
Limitations in public transport play a significant part in the problem, with outdated systems and unacceptable quality levels.
The reform will see public transport contracted from 2010 having a fleet of different sizes and new routes; an investment in public information to facilitate a change from using private to public transport; an investment in quality and accessibility of bus termini and bus stops; a regulatory reform so the government and its agencies to have the means to enforce the contractual conditions of public transport contracts; and a liberalized market for taxis, coaches and minibuses to improve services, quality and prices.
The viability of a tram system is also being studied, the results of which are to be published in the coming year.
The reform is expected to result in a more efficient, environmentally friendly and better used public transport system.
Vehicle registration and licensing system
The new system is to benefit those purchasing smaller vehicles with lower emission levels and using greener technology.
The system is being based according to the polluter pays principle and on a vehicle’s contribution to congestion.
The three main factors to be assessed through the new registration system will be the vehicle’s amount of CO2 emissions, its emissions of particulate matter as well as the age and value of the vehicle. Value added tax will no longer be applied to the registration tax.
The licensing and registration reform will be addressed in two phases. The first will commence on 1 January and will include private vehicles, including self-drive, leased, garage hire and motorcycles.
Commercial vehicles will be addressed in the reform’s second phase.
The price of used vehicles, which enter the local market for the first time will be determined in line with local conditions.
A fair and transparent mechanism has been devised that will reflect the value of a vehicle on the local market. The system will be available on the internet, where the consumer will be able to ascertain the tax owed on a particular vehicle.
An appeals board will also be set up to hear and decide upon disputes over valuations and registration taxes charged.
Roads
Following a heavy investment programme in the last legislature, the government is to invest over e100 million in arterial roads across Malta and Gozo. In September work began on 37 residential roads in 10 localities at a price of e1.3 million and comprising over 4,000 metres of new roads.
The government is to introduce quality tests to be undertaken by independent laboratories before contractors are given final payments for their work.
Work on the Marsascala bypass is to begin, while by 2012, among others, the government expects to complete Valletta Road, Zurrieq, Council of Europe Road in Luqa, Garibaldi Road. Luqa, a substantial part of the Coast Road in Bahar ic-Caghaq, an underpass between 13 December Road and the Valletta Waterfront, a road from the top of Ghadira hill to Cirkewwa, and to finish off work on the road between Mgarr, near the heliport to Rabat, Gozo.
The government is also evaluating a change in the way in which the construction and maintenance of roads are financed and is studying partnership models with the private sector on new responsibilities such as maintenance works including road signage and markings and traffic lights.
Amendments to the
Eco-Contribution Act
In the past the government had introduced an eco-contribution on plastic bags to discourage their use, which did not materialise in the expected results – to the effect that some 40 million plastic bags are used yearly.
The Budget proposes the introduction of a 15c eco-contribution on each plastic bag from shops.
Every shop will be obliged to include the plastic bag charge on consumers’ fiscal receipts.
Given the huge impact printed material on waste levels, a new eco-contribution of 1c per 80 grammes is to be levied on fliers and magazines that of a purely commercial nature and distributed with newspapers, door-to-door or given free when more than half of their content comprises advertisements.
Sustainable localities
The government allocated an extra e4 million in assistance to local councils as part of reforms.
An incentive scheme towards more investment from small enterprises in localities was also launched together with a two-year tax holiday for those investing a minimum of e10,000.
The sum of e2 million is being allocated towards a one-time special scheme for restoration of residential building facades built before 1950. Assistance of up to 30 per cent of total expenditure assistance will be given to a maximum of e2,500. This scheme is expected to cover around 700 buildings around the Maltese islands with preference given to those scheduled in the village core.
The sum of e50,000 was voted towards two pilot projects for planning strategies of sustainable development on a local level. Meanwhile, e100,000 will be allocated towards the Local Council Green Challenge Award to local councils taking initiatives towards a better environment.
An extra e100,000 was voted towards the Local Council Enterprise Support Award Scheme for local councils that come up with incentives for businesses in their localities.
Incentives will also be given towards collective accommodation in localities. Voluntary organisations too will be assisted and refunded up to 15.25 per cent over their expenditure on presentation of their fiscal receipts.
The environment around us
A public sector carbon offsetting initiative will be introduced with the aim of incentivising sustainability within the public sector and to introduce more of an environmental consciousness. The work will form the basis of introducing a carbon offsetting scheme on a national basis.
Malta has over 2,000 licensed swimming pools, with a combined capacity of over 137,000 cubic metres – creating a heavy demand on water and electricity alike.
As from 1 January domestic and commercial pool licences will be reviewed. Administration fees will be raised from e34.94 to e50. Domestic pools with fresh water will see their annual fees raised from e2.33 to e4, while domestic pools using sea water will see their fees raised from e58.23 to e100. Fresh water commercial pools will see their fees raised from e3.39 to e6, while those using sea water will see their fees raised from e349.41 to e600.
Regeneration of ports
and harbours
The government has started to draw up a plan for the regeneration of ports and harbours to start from Il- Menqa, Marsa. This project will include investment in road infrastructure, landscaping and pedestrian zones to embellish the area and increase investment from the private sector.
The Upper Barrakka Gardens will be transformed into a heritage park. This project will include the restoration of underground tunnels and shelters.
Maritime studies to establish specific measures for existing and possible future cruise liner quays at Barrier Wharf and the Marsamxetto breakwater, the cruise liner harbour at Marsamxetto, the Kalkara yacht marina, and the yacht marina at the upper part of Sa Maison.
Meanwhile, the government is publishing a tender for works on quays where merchandise is unloaded at the Grand Harbour. As from next year, cruise liners will also be able to berth at Boiler Wharf.
Yacht marinas and licences
The privatisation Unit will issue a call for offers for the privatisation of the Msida, Ta’ Xbiex and Gozo yacht marinas. The government will later announce the choice for companies with which it will launch negotiations. Sites for new yacht marinas will be identified for up to around 1,000 new spaces as well as spaces for boat owners to be able to carry out maintenance work and to keep their boats on land in the winter months.
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The government is expected to make an extra e1 million from the annual yacht registration fee which will be revised after licences for sea craft were integrated with licences for marine radios last year. This measure will come into effect as from 1 January 2009.
Agriculture and fishing
e100 million was allocated under the Rural Development Plan 2007-2013 to continue strengthening the sector.
The government will be giving fishermen up to e375,000 for the purchase of machinery and is also receiving applications for up to a maximum of e81,000 towards the purchase of health and safety equipment by professional fishermen.
An extra e11.1 million were allocated towards the fishing sector along the coming five years. Both sectors had already received significant assistance from EU funds.
Taxation
Revision of the Income Tax bands
A package of fiscal measures aimed at providing incentives for businesses and promoting those who work hard includes specific measures to encourage women to enter the workforce, the removal of the departure tax, and a change in the vehicle registration tax.
All the income tax bands will be widened to sustain economic growth and create incentives for people to work.
The income tax bands will be revised as shown in the following tables. Over a three-year period, this measure will save families e152 million.
Compensation for the cost of living (COLA)
Inflation was at 3.7 per cent in September and because of the international economic situation they were anticipating slower rises in prices.
The cost of living increase according to the inflation rate in September this year amounts to e4.08 a week. This increase does not include the e2.33 which was anticipated last year. Pensions will receive the increase in full under the same method of payment as last year.
Alcohol and tobacco
excise duties
The government will carry on combating alcohol abuse, but the presently high excise duty encourages smuggling of alcoholic beverages from nearby countries that have lower duties.
The minimum drinking age will be increased from 16 years to 17 years. Furthermore, the government will allocate e100,000 towards improving enforcement in the sector. A greater emphasis will be placed on educating the people, especially young people on the danger of excessive alcohol consumption.
In the meantime, the budget proposes increasing the excise duty on tobacco products by e0.20 with immediate effect
SOCIAL SERVICES
The government will continue subsidising utility bills for 30,000 families. The government will, however, subsidise up to a maximum of e75 per entitled person. In order to promote thrift in energy consumption, the government will impose a service charge for utilities.
Unemployment benefits
As of next year the government will oblige people registered as unemployed for more than five years and who are not receiving training to carry out 30 hours of community work per week. They will be encouraged through an increase of their social benefit to a level equivalent to 75 per cent of the minimum wage. The measure will discourage abuse of the system and do justice to taxpayers.
Pensions
Pensioners will once more receive the full cost of living adjustment.
The previous anomaly in service pensions, in which the first e466 were not figured into the reassessment, will be revised to include only the first e266. About 5,900 pensioners are expected to benefit from the e1.1million measure.
Social accommodation
The Housing Authority will issue 150 housing units at subsidised prices in Malta and Gozo. The Authority will also launch a means-tested scheme by which it will subsidise a maximum of 30 per cent of loan repayments for 10 years for couples who buy their first residence. The measure is to cost a maximum of e1.7million.
The Authority will also renovate and upgrade a residential block in Cottonera as part of the urban generation of Grand Harbour.
Social Welfare
The government is committed to finance all agencies working in the field, with a figure amounting to e11million over 2009.
Tourism
There had been an increase of almost 76,000 in the number of tourists over the first nine months this year, meaning a rise of 7.8 per cent. The number of cruise liner passengers had gone up by almost 56,000, or 15.2 per cent, to a total of over 426,000. Tourists are estimated to have spent nearly e855 million, comparing well with 2007, a record year.
To help the sector they would continue investing in promotion and the introduction of more air routes. The allocation to the Malta Tourism Authority would be increased to e26 million, up by e1.5 million over last year. A special allocation of e2 million would be made for 2009, in view of more difficult circumstances that are forecast which need an immediate answer. This means the MTA vote would be increased by e3.5 million.
There would also be substantial investment in the product, with capital projects worth e120 million over the coming four years. This was apart from assistance schemes. Works would start in the coming months in various tourism zones and bays in Malta and Gozo, including a visitor attraction in Qawra, embellishment at St Paul’s Bay and Qawra and upgrading of the coastline at Sliema, and bays around Malta and Gozo.
Heritage Malta has also conducted a project for the prehistoric temples of Mnajdra and Hagar Qim, which in the coming weeks would be protected against the weather. Three other projects would be started costing e9.5 million on the prehistoric temples of Hal Tarxien, Gganti and St Paul’s Catacombs in Rabat. Bastions in Valletta, Vittoriosa, Mdina and Cittadella would be restored over seven years, involving 135,000 square metres of bastions over a length of six km.
The teaching of foreign students in Malta was expanding and to encourage more families to host students the ceiling of non-taxable income from this activity would be raised to e3,500.
The government is investing substantiall in the tourism sector, paying between 15 and 25 euros for every tourist coming here using low cost airlines, and helping support schemes for tour operators. About 1.2 million tourists spend 9.5 million nights in Malta. To ensure that the government would be able to sustain the sector, a contribution of e0.50 would be introduced for every night a person spent on paid collective and private accommodation. Because of none too easy circumstances they were expecting in 2009, the government would be introducing this contribution from 1 January, 2010, estimating to collecting e5 million from this measure.
Initiatives for Enterprise
Malta Enterprise this year approved 29 new industrial and expansion projects, 15 of which were foreign investment, with about e10 million invested in financial assistance to industry under various schemes and incentives.
New schemes would be launched by Malta Enterprise, involving e20 million over five years:
• International Competit-
iveness would involve e2.5 million, for the development of initiatives to penetrate new markets;
• Grants for research and development, with an investment of e3.5 million, to add to industry investment in research and development;
• Innov Act, with an investment of e9 milion, to help small and medium companies in the development of processes, products and innovative services;
• Small Start-Up Scheme, with an investment of e2.5 million, to help innovative companies which have just started up; and an
• E-business Development Grant Scheme, with an investment of e2.5 million, to incentivise the use of information technology in the operation of businesses.
The Kordin Business Incubation Centre
Apart from the start-ups scheme, they would be expanding facilities for new and innovative enterprises to start operating.
The Business Incubation Centre in Kordin has 32 companies, and is expected to double the space by investing e2.8 million, doubling the potential for the creation of new businesses.
Research and Innovation
– BioTechnology Park
There would be an investment of about e15 million for the setting up of a Bio Technology Park in San Gwann industrial zone. This would be apart from the grants for research and development Malta Enterprise would be offering, valued at e3.5 million. This research and development centre would cover an area of around 100,000 square metres.
Industrial zones
Over the coming years some e20 million would be spent on upgrading industrial zones in the country, with the first project in 2009 covering Hal Far, valued at e6.5 million. The zones at Bulebel, Mosta, Xewkija and Kordin would be refurbished over a period of four years. There would be the development of two micro enterprises parks, one in Mellieha, the other in Xewkija.
They were aiming to attract high value added investment in industrial sectors. Over 80 delegations from foreign companies had come to Malta this year. While international demand would decline because of global economic problems, the markets were large for Malta so local enterprise should be helped to find new markets. Malta Enterprise would be complementing the e2.5 million International Competitiveness to Establish New Markets scheme with e500,000 to encourage more trade missions in which Maltese business would identify new markets.
To help enterprises the government would take the following steps:
1. Drawing up a Small Business Act, to ease the regulatory environment for small businesses and improve the entrepreneurial environment in which they operate;
2. General Accounting Principles for Small Enterprises would be introduced, to ease the unnecessary burden being imposed on these enterprises through the International Financial Reporting Standards;
3. One entity would be set up which would distribute all assistance and services linked with enterprises;
4. An Enterprise Research Group would be set up to help and sustain the government policies for enterprise;
5. A commission would be set up to see what unnecessary costs the public sector was passing on to businesses;
6. Enforcement structures for the market would be improved, while those conducting their business seriously would be helped and illegal practices would be fought;
7. A section, Design Malta, would be set up to help initiatives taken to encourage development and creativity of design in Malta;
8. Means would be considered of improving the cooperative movement in the country, including in the public sector, through a commission which would be set up and asked to report to the government by June 2009; and
9. The Department for Fair Competition would be strengthened, to ensure free markets which would be balanced and transport, to help businesses and consumers.
Revision of the systems of fines and interests
It was time to review the systems of fines and interests related to income tax and VAT. Fines should be compatible with the seriousness of the offence. Fines are tough enough in certain cases and new rates would be introduced aiming to encourage timely, complete and detailed submission, together with payment on time.
They would be reviewing also the rate of interest on tax not paid in time. The interest is not meant to serve as an additional fine and they felt that a punitive rate should not be imposed. From 1 January the rate would be reduced to 0.75 per cent per month, that is, from 12 per cent to nine per cent annually.
The Commissioner’s powers to reduce a fine would be used only in genuine cases. Those caught abusing would face not only administrative fines, but also criminal steps.
Financial services
The financial services industry would remain a symbol of success the Maltese economy was achieving. Up to September 38 new licences were issued to financial and credit institutions, 134 trusts and 96 authorised trustees, 28 companies linked to insurance, 647 assurance managers, brokers, agents and intermediaries, 84 administrators of funds and investment services, and 387 collective investment schemes.
They had closely followed and were still following, the developments in the global financial sector. Together with the Central Bank of Malta and the Malta Financial Services Authority they had talks with all banks operating in Malta. They had assured themselves that the Maltese financial sector was, and remained, healthy.
They aimed to give special attention to the Malta Stock Exchange to give it a more important role in European markets.
In information technology and communications, the projects launched by the government to provide access to the internet, and provide personal computers cheaply, had helped considerably to widen the use of technology. Submarine cable links next year would mean that more SMEs would be in a position to exploit the technology to conduct their business more efficiently.
Also next year, the government would announce plans for fibre-to-homes, a modern infrastructure which would add services more efficiently in all aspects of communications.
SmartCity Malta was launched this year for the local and international markets. There were prospective clients with whom the company has already started negotiating, which augured well for the initial phases of the project.
Employment and training
More assistance will be provided for the purposes of training and development, with particular measures to:
• identify the skills required by industry in the immediate and medium term;
• restructure schemes for individuals with specific needs;
• improve access to training programmes in favour of high quality skills;
• promote careers in the sectors that the economy requires the most; and
• provide incentives for the development of courses and curricula related to the needs of industry.
The government will give a year’s income tax exemption to mothers (having children under 16) who enter the work force after an absence of five years.
A year’s income tax exemption will also be given to working mothers who had children from 2007 onwards and who re-enter the workforce after having had children.
Over the next year, the Employment and Training Corporation (ETC) will develop new programmes for employers, those seeking employment, as well as those who already work but would like to improve their skills.
The Employment Aid Programme helps needy people find employment and subsidises their salary. About 1,500 people benefit from this programme, which will cost about e10 million over a five-year period.
Over the next year, the ETC will launch the Training Aid Framework, primarily financed by European funds. This programme provides subsidies to entities that train their employees, and financial assistance increases if the entity happens to be a small one.
This project will cost about e9 million by 2013 and it is expected that about 3,500 employees will benefit from the training provided under this programme.
On the long standing issue of overtime, debated upon heavily by the government and the Opposition in the last election campaign, the government declared that as promised in the PN electoral programme, the overtime regulations will remain the same as they are.
HEALTH
The government aims at keeping health care at par with the latest developments and maximising the service which is financed through taxation. Government spending in the sector will increase by e39 million to a total e284 million during 2009.
The government will ensure abuse and waste are cut by hiring cost controllers and professionals in order to maximise on the use of resources available so as to expand health services without increasing the burden on the people. The measure is to cost e500,000
The government will purchase a PET scan, used in cancer treatment, with the help of the Swiss government.
A e24 million Oncology Specialised Centre will be built, with e4 million apportioned during next year.
People with disabilities
The government will exempt disabled people from paying succession taxes on inheriting their parents’ or guardians’ homes if they live with them.
The elderly
The government will launch its first night shelter for the elderly in the south of Malta, costing e100,000.
The John Paul II Hall at the St Vincent De Paul Residence will be completed by the beginning of next year and will accommodate 144 residents with all necessary facilities and with two specialised halls for dementia sufferers.
The government has also earmarked e4 million for the maintenance of Karen Grech Hospital and the upgrading of essential services for the hospital to serve as a rehabilitation hospital until a new one is built.
Thus, the hospital will provide all rehabilitation services which until now have been spread over Zammit Clapp Hospital and St Luke’s Hospital.
The extension of two halls at St Jeanne Antide Complex in Attard will be completed by the beginning of next year and will accommodate an additional 64 residents.
Mental health
Mount Carmel Hospital services will be extended to the community, thus helping patients to live within the community.
The hospital, in collaboration with the Richmond Foundation, is identifying hostels within the community to be inhabited by female patients.
Primary health care
The government set up a taskforce to evaluate the process of registering patients. The process involves all general practitioners present in all local councils.
Breast screening
The government completed an action plan on a national breast screening programme according to EU quality standards. Women in the 50-59 age group will be invited to undergo screening during the programme’s first three years.
A national plan on cancer is also close to being finalised. The plan takes on cancer in a holistic approach, from prevention and diagnosis to all treatment involved.
Patients’ rights
The government intends to reform the list of medicines imported in the light of the country’s needs. At the same time, the government intends to restructure procurement in order to increase efficiency in both the procurement and distribution of medicines.
Herceptine, a breast cancer medicine, will be given for free at a yearly cost of e1.4million.
The government will also set up a transparent system to introduce more innovative medicine. The measure will have a special emphasis on people suffering from cancer.
Blood bank
A call for tenders to improve the National Blood Bank and to bring it in line with EU standards has been issued and is estimated to cost e2.5million.
The government intends to place the bank’s financial and operative systems within an autonomous framework.
EDUCATION
Primary and secondary education
The government allocated another e4.4 million to create a strong support system for the 10 colleges, through employing more professionals.
Foundation for Tomorrow’s Schools will have e13 million for the scholastic year 2009 to continue works on the Pembroke primary school, the construction of the Victoria secondary school and the new Mosta secondary school .
Furthermore, the government aims to open a new school each year over three years.
Direct financial aid will be given to private schools to employ more facilitators to help children with special needs. The government will invest e16 million over a number of years in e-learning.
Childcare centres
Childcare centres are an incentive for more women to enter the labour market. Three were already opened this year in Gharghur, Paola and Luqa. Over the next years, the 10 government Colleges will have at least one childcare centre each and two of these, one in Siggiewi and one in Pembroke, will be opened this year.
Higher education
The government wants to increase the number of students continuing their studies from 70 to 85 per cent by 2015.
Over the next four years, the government aims to invest e10 million in government scholarships schemes while next year, the University of Malta will have an extra e4.4 million amounting to a total of e36 million. Another e1.5 million will be allocated for research and development and in improving the library.
The budget aims to allocate another e3.7 million for a new campus in MCAST, while improving the working conditions of the teachers through three projects worth e3.3 million to better their qualifications.
The government also allocated another e5.7 million for six projects through which MCAST will have a multimedia centre, language laboratory and new computers.
Sports
The government is allocating an extra e1.6 million for sports and aims to open a new regional sports complex in Kirkop while initiating a public-private partnership to set up a new sports complex in the north of Malta.
To promote cleaner methods of transport while promoting exercise, the government will refund 15.25 per cent on new bicycles – around 6,000 people are expected to benefit from this measure.
Gozo
In the context of government’s Vision 2015, the focus on Gozo with its particular requirements remains a determining factor. Gozo, together with the rest of the country, is moving ahead with its development and improving the quality of life This progress was possible through the infrastructural development and the significant social investments. The expenditure on capital projects during the past year exceeded e6m. The government also understands the reality that Gozo is not part of Malta. There are areas which for various reasons require particular attention, perhaps even more than in Malta. In the employment area, government believes that more effort is required to generate employment opportunities. Next year, Malta Enterprise together with the Ministry for Gozo will draft an action plan to promote Gozo as an investment destination to create more jobs. In the tourism sector, government will continue to evaluate the measures required so that the island continues to register progress particularly during the low season months of spring and autumn. Government committed itself to an ambitious plan to develop Gozo into an ecological island till 2015 – a model for sustainable development. The first project which government will launch in the eco-island context is the radical transformation of the public transport sector to serve as a realistic alternative to the private vehicle. The public transport will have to serve the needs of Gozitan residents who today are served with a very mediocre system. The reformed service will provide the opportunity for tourists to experience the island in utmost comfort and easily accessible vehicles which are also environmentally friendly. The environmental initiatives for Gozo will include educational campaigns, measures to protect natural resources, the introduction of practices and technology to reduce electricity consumption in public properties and the management of sites with a natural value. Throughout this year, government implemented a number of projects and initiatives. In the education sector, the first phase of the construction of the Ninu Cremona Lyceum was completed while the second phase got underway. Work on the new Adult Training Centre in Victoria continues while the construction of a training hotel in Qala, to train employees in the tourism sector, was completed. The passenger terminal at Mgarr Harbour was also completed. The necessary permits for cruise liner berthing in Xlendi were issued.Government believes that the economic activity in Gozo should develop in a sustainable way while the island should be more accessible for improvements in the tourism sector. The services rendered to the agricultural sector will be improved further while organic farming and fishing will be promoted. It will be assured that the best possible service will be rendered in the health, education and infrastructural sectors. Part of the roads leading to Xlendi and Ta’ Pinu Sanctuary will be rebuilt while work will continue on the road which leads from Mgarr to Victoria. A new Radiology section will be set up at the Gozo General Hospital while the second operating theatre will be refurbished with new and modern equipment. The gardens of Villa Rundle will be rehabilitated.
Conclusion
The Budget is a fundamental tool to address the country in a strategic direction. The strategic direction chosen is sustainable development and for this reason investment is aimed at the people, at education, training and a cleaner environment. To draft this budget government looked around and considered the financial crisis, the negative international economic growth being forecast and the loss of employment.
These realities will affect the islands in terms of tourism, exports and investments. We would be disillusioning ourselves if we think that the international developments will not affect Malta. The main resource of these islands are the people themselves. Workers are flexible, capable, creative and productive. The islands also enjoy other advantages such as European Union membership and the euro, two decisions which are helping the islands overcome the challenges and are providing the necessary means to implement what has been proposed in this budget. However, government also considered the Vision 2015, a vision of sustainable development which guarantees a better quality of life. Despite the difficult economic scenario, government is still forward looking and has identified the tools required for the country to achieve its aim of becoming a centre of excellence in the education, health, financial services, value added manufacturing, information technology and tourism sectors.
With these in mind, government made the responsible decisions to make this possible:
• Investment of e322m in capital projects for better infrastructure,
• Investment of e112m for a cleaner environment to reduce the ill effects on health and to improve the appearance for ourselves and whoever visits the islands,
• e30m in incentives for more energy efficiency and towards investments in alternative energy resources,
• Investment of e64m to incentivise industry to grow and expand,
• Investment of e362m in education, and
• Investment of e98m to improve the quality of life.