The government must focus on supply side dynamics so as to increase the output capacity and potential to grow, Finance Minister Edward Scicluna said this morning during a business breakfast presentation on the pre-budget document.
He spoke of the need for fiscal stability and competitiveness while pointing out the (OECD) yesterday revised economic growth forecast in the EU and said the situation is better, although still not good. Unemployment is the “huge scar” on the EU, he said, and despite not being at the levels of EU countries, unemployment in Malta must be addressed together with the need to encourage women enter the work force.
Last year a growth of 0.8% was registered and this does not reach our expectations, he said. Rates lower than 4% do not help us to grow and reach the EU average, he highlighted. Low consumption was also registered.
In 2012, capital transfers dropped by 1% because €12 million less than expected was spent. This therefore needs to improve.
He said the government's intention is to increase efficiency but not at the expense of expanding the size of the public sector or expenditure.
In terms of revenue, we are on track. He said that as finance minister he is paying more attention to revenue than expenditure; otherwise, the government would need to take action.
The Auditor General is to appoint an independent expert to assess the country's fiscal situation until an independent fiscal council, that must give independent budget forecasts and opinions, is set up, preferably by next year.
Spending review is necessary to increase efficiency, cut queues and increase results in education by means of reforms.
He also highlighted that supplementary estimates which have so far been done are a way for the government to lose control. Many EU countries have removed this process and only draw up contingency plans for each project. Malta must plan for this mechanism to be changed.
Energy, female participation in the work force, improving skills and pensions are being addressed by the government. He pointed out that cutting debt would help increase sustainability of pensions.
A series of “crucial” measures are intended to incentivise employment, irrespective of whether EU funds are available for them.
Long terms stability, fiscal responsibility and prosperous and just society are the focus, he said.
As the discussion opened to the floor, GRTU president Vince Farrugia said the government must give vision of action and must show it is hard on people because everyone is an expert in spending. He also urged on the need to improve skills and give a new breath to employers.
“Be bold in this budget while helping producers to increase productivity and output,” he said.
GWU secretary general Tony Zarb said the pensions reform should be discussed before MCESD before plans are taken further. He also suggested a fund to fight precarious employment.
William Portelli, on behalf of CMTU, said the country's aims must be high and the 4% growth figure is important to be kept in order for us to try hard.
Renee Laiviera, Commissioner for Equality, spoke of the need for gender responsive budgeting noting it cannot negatively affect people in the lower strata of society.
Doris Dingli, for the Council of Women, said more courses need to be organised for women who would like to re-enter the workforce. She suggested that Lifelong learning courses should not stop between May and October because there is great demand for them.
Tony Zahra, on behalf of MHRA, said we need to solve the problem of 30% of students leaving school with “zero education”, he said. It is useless to speak of precarious employment, otherwise the engine will never achieve the momentum it needs.
Michael Grech, from the Gozo Chamber of Commerce, said the high percentage of social services abuse must be addressed because many people are getting assistance while working on the black economy. The Budget must incentivise hard working people, he insisted.
Jeffrey Pullicino Orlando, chairman of the Malta Council for Science and Technology, agreed “we have to think out of the box,” and focus more on non traditional sectors and new markets. Research and innovation is something the MCST is focusing strongly on this. Emerging economies including India are having success based on R&I and Malta must focus more on this.
Sandro Chetcuti said addressing efficiency would cut bureaucracy and this is much necessary for Maltese business people to regenerate the economy.
Victor Carachi said the same problems are discussed every year and solutions seem to exist but he believes we fail when it comes to medium to long term strategies and planning.
In concluding remarks, Prof. Scicluna said the culture of medium to long term planning does not really exist but is much necessary together with research and development. Countries that succeeded have done so on the basis of research and scientific studies.