1. The Maltese economy

a. Main cause for concern: international oil prices = higher import bill

b. Growth: 2.4 per cent in real terms in 2005 and in first quarter 2006.

c. Investment growth: 8.5 per cent in 2005, 15 per cent in first quarter 2006.

d. Exports declined in first half 2005 due to problems in semi-conductor industry, picked up in second half 2005 and sustained in first quarter 2006 with a 23 per cent recovery.

e. Tourism did not achieve desired levels of growth

f. Government expenditure increased by only 0.6 per cent in 2005. Fiscal consolidation on track; decreasing deficit to GDP ratio and also in debt to GDP ratio.

g. In 2006, Maltese economy expected to continue to register positive growth rates spurred by further investment and buoyant domestic demand.

h. Tourism will be a major challenge with possibly declining earnings.

Proposals

1. Towards a more inclusive and participatory society

A secure future can only be attained through social cohesion.

Measures that improve distribution of social policy to particular groups with greater needs.

a. Strategically focus and invest in a qualitative and inclusive educational system;

b. Address issues of employability;

c. Modernise welfare systems to ensure equity, adequacy and sustainability of benefits provided;

d. Promote gender equality and prevent social exclusion;

e. Ensure a healthy society: beyond Mater Dei opening.

2. A socio-economic strategy for Gozo

Gozo more vulnerable than Malta: small size, double insularity and being on the periphery.

Sound policy framework to address the particular needs and transform challenges into opportunities:

a. The distinctiveness of Gozo

b. Economic efficiency;

c. Education;

d. Social cohesion;

e. The environment

f. Sound regional governance.

3. A review of the fiscal regime

The Tax Reform Commission's report - findings and recommendations.

a. Compare our fiscal systems with those of other countries: Malta gets 45.1 per cent of its total tax revenue from indirect taxation compared to the EU-25 38.2 per cent average; Malta's taxation on labour is among the lowest in the EU; social security contribution is only 6.9 per cent of GDP, compared to EU-25 13 per cent average.

b. Company taxation system: recent developments in international tax arena and need to sustain growth prospects of the financial services industry require some changes to our system.

c. Government considering tax cuts:

- a review of income tax bands

- replace part-time minimum NI contribution with a pro-rata contribution;

- introduce an energy benefit to provide adequate compensation for low income families;

- introduce incentives to funded pension schemes,

- allow spouses to be employed in family self-employed businesses,

- introduce tax rebates for family carers,

- cut airport tax.

4. Sustaining industry and tourism

a. Vision - Malta's comparative advantages: the intelligence, versatility and capacity for hard work of the Maltese labour force; responsive agility to changing circumstances by Maltese organisational structures; Malta's compact size and geopolitical and social stability.

b. Strategy:

- Existing industry base: reinforce it, restructuring and other methods, orientate it towards manufacture of quality, high value-added products.

- New investment: targeted areas: education and health, financial management, back-office operations, maritime support; the creative industries - pharmaceutical and hi-tech manufacturing sectors.

c. Tourism: maximising Internet facilities for passenger booking, developing products that enable Malta to be marketed as high-quality destination; marketing Gozo as a unique holiday experience.

5. Research and innovation

Government's strategy paper for Research and Innovation.

- Government's role as facilitator;

- MCST's role as key enabler of the strategy;

- The role of educational institutions and government departments and bodies

- Benchmarking the effectiveness of the strategy.

6. Towards sustainable development

A Draft Renewable Energy Policy for Malta document published.

Environmental priority areas:

- air emissions

- air quality

- fresh water

- sea water

- waste

- land use and transport.

7. Renewable energy policy

- energy efficiency

- reducing reliance on imported fuels

- stability in energy supply,

- a sound distribution system; and

- support of the energy sector to help it deliver its objectives.

8. The EU dimension

Four main national strategic objectives

- sustaining a growing knowledge-based economy;

- improving citizens' quality of life through environmental protection and urban regeneration;

- investing in human resources; and

- addressing the regional distinctiveness of Gozo.

The adoption of the euro:

- the next logical step in our integration with the EU.

- an important development in the socio-economic sense;

- gains through elimination of exchange rate risk and reduction of external transaction costs.