The figure was mentioned yesterday by Parliamentary Secretary Tonio Fenech who was speaking on the Saturday morning talkshow on Radio 101.

But with less than a month to go before the coming Budget Speech, the number of doubters and sceptics is increasing.

Calls were made yesterday to The Malta Independent on Sunday offices asking the MCESD social partners to tell the public what are they discussing in their very frequent meetings behind closed doors. “What will they tell us, the Maltese public, when they come down from Mount Tabor?” a caller asked.

Mr Fenech yesterday spoke somewhat obliquely of the meetings, saying a lot of “finger pointing” was taking place. The MCESD members have a pact not to speak to the media and every time someone breaks this rule all hell breaks loose at the next meeting, it is said.

Still, rumours emerge, such as the vociferous opposition by the unions to a proposal to cut down on Malta’s number of holidays (Malta has among the highest level of paid holidays in Europe) by just two.

At other times, participants issue statements and reactions which cannot be understood other than being reactions to something that has been said during the meetings.

Participants speak on condition that they are not identified, stating that most are terrified they will be blamed for their members agreeing to what will come out on Budget Day.

Last year, the MCESD members had attended a weekend seminar with John Dalli, then Finance Minister, in Gozo, at the end of which it appeared they were in agreement. When, some weeks later, the budget was published, the MCESD members felt they had been perceived as having agreed to all the measures in the Budget Speech. This time round, they are prepared not to allow this perception to be given, hence the secrecy.

While it is accepted that the MCESD partners did not co-author last year’s Budget Speech, whatever the perception that is given, they still have to share responsibility for the economic situation of the country.

This year’s Budget Speech will announce the highest Cost of Living increase in recent years, at least some Lm1.75 a week. This is based on the Cost of Living index in a rather automatic way.

Malta now has one of the highest rates of inflation in Europe, if not the highest. This is fuelled by government-induced costs. As regards performance over the past year, inflation has been fuelled by the three per cent rise in VAT imposed last year, and by the eco-tax, imposed this year. All the previous claims that the removal of levies would push prices down have turned out to be pipe dreams.

The MCESD participants were not responsible for the new and increased taxes, but some of them have a clear responsibility when it comes to blocking the government from reducing its expenditure.

In 1960, government expenditure was just 31 per cent of GDP. In 1980 it was 41 per cent of GDP. Right now it is 52 per cent of GDP.

In 1987 government debt totalled Lm86 million on a GDP of Lm549 million, or 15 per cent. By 2003, government debt had risen to Lm1,217 million on a GDP of Lm1,712 million, or 71 per cent. Extrapolating this trend, by 2012 government debt will rise to Lm2,843 million on a GDP of Lm2,451 million, or an impossible 101 per cent.

Government spends 52 per cent of GDP but receives only 43 per cent, hence the recurring deficit. The government now speaks of increasing growth, as Mr Fenech said yesterday.

But many doubt that what the government is trying to do will work out.

Mr Fenech said that many urge him to cut taxes. This, however, he said, will give the government less revenue and thus increase the deficit even further. Considering the present state of affairs, he added, government would be rather optimistic if it were to look beyond a two per cent growth rate. To be able to start cutting taxes, the growth rate must be at around five per cent, he said.

But sources close to MCESD, who spoke to this paper, doubted very much that this growth rate could be achieved unless the government cuts its expenditure, and this is where the government finds itself against a brick wall at MCESD, as is clear from public statements and newspaper articles by the union leaders.

The only other way to increase government revenue was tried in the last Budget and the ones before it, by increasing taxation, but this has wiped out any growth in the country. These tax increases “killed the goose that laid the golden eggs”.

The cuts have to come from government expenditure but the government still seems afraid of biting the bullet. Consider, for instance, one simple fact: every year Lm20 million of public expenditure goes towards the allowances and bonuses of government employees, from top to bottom. But anyone thinking of cutting down on them risks the ire of the unions and their members. And so it goes on.

Every year Lm40 million are being spent on a hospital that has become a byword for something that gets bigger and bigger, is no nearer to completion and keeps gobbling up vast sums of money.

And Lm30 million are needed to fund the increases written in the collective agreement of the public sector and the Cost of Living increases.

Every year people are paying more and more taxes and have less and less money available. Unemployment is perceived as being on the rise and government finances, whatever the promises, go from bad to worse.

The end result is that the ever-increasing weight of government expenditure falls on the shoulders of the private sector which has to carry this enormous weight. Although Maltese entrepreneurs can still be enthusiastic about the challenges they face, the weight of paying for the soaring public sector expenditure falls on the shoulders of the manufacturing and the tourism industries. People who represent the private sector now claim that in their defence of the people in the public sector, the trade unions are not defending their members who are in the private sector. They and the government are also shackling the only sector from where growth can come.

This is why sections of the economy doubt whether the government can indeed attain its stated aim: that of increasing growth to four per cent per year over four years, thus ensuring 16 per cent growth. Or the other government commitment stated in the Convergence Plan of bringing the deficit down by Lm30 million a year.

Mr Fenech said the government’s immediate target is to tackle the issue of competitiveness. We must learn to look at what our competitors are doing, Mr Fenech said, how very hard they are trying to be competitive, to compete with us. They are taking concrete steps to become cheaper, both in the manufacturing sectors and in tourism. When they are competitive, they attract more investment.

Today, he added, all agree that the government’s role in the economy has changed. There is no quick solution. The government cannot take steps which, while they bring about growth, continue to build up the country’s deficit. The only way that a government can keep the rest of the world happy is when they see it is tackling its deficit problems in a serious way.

Our competitors, Mr Fenech added, are trying very hard, much harder than we are doing. Singapore, for instance, has even decided to cut down on wages. Imagine if anyone were to suggest that!

And, referring to one specific issue on which media coverage has perceived hard battles inside MCESD, Mr Fenech spoke about the government’s plans to reform port operations. Many of the expenses which affect importers and exporters, he said, are unjustified. We must either be flexible enough or we will all perish.

The government, he added, is really trying to discover those who evade taxes. Last summer it tackled those who hire out umbrellas on beaches and found they were avoiding paying taxes and had revenue of Lm300 a day each.

Which is one additional reason why the people at MCESD owe it to the country to come out of that closed room, sources told this paper, and tell the country the situation as it is and what they plan to do about it. This is the time to take decisions.