The 2008 budget is a natural progression of the past three budgets and government's policy making rather than a pre-election bonanza, said Prime Minister Gonzi yesterday during a political activity in Gozo.

The prime minister went over the four budgets he has presented since taking over as Finance Minister. Government, he said, asked the people to carry some of the burden needed to improve the economy. "Now that the economy has improved and that we had already presented a tax-free budget, this year government was ready to reward the people for their sacrifices," said Dr Gonzi.

He compared this exercise to a vine that is no longer beautiful after pruning but bears more fruit.

The 2007 budget, he said, did not introduce new taxes and increased people's disposable income, this time round; disposable income will increase further through the new initiatives. Dr Gonzi stressed that his government listened to the people and that the pre-budget document and consultation meetings gave invaluable advice on which areas should be targeted.

The prime minister recounted how several suggestions criticised the previous children's allowance structure, whereby the allowance for the second and subsequent offspring was less than that for the first-born. In addition, the households with a greater income than Lm10,000 were automatically discarded from the scheme.

Dr Gonzi said the government is giving a tangible sign of its recognition to families that are bringing up families by doubling the minimum children's allowance to Lm107, allotting the same allowance to all offspring including also families which have an income in excess of than Lm10,000.

He explained how different families will benefit from the new children's allowance configuration. A family of five with an income of Lm2,000 will benefit from an increase of Lm588 in its allowance, said Dr Gonzi, adding that a family of five with an income of Lm5,000 will not pay tax and in addition will receive over Lm1,000 extra as children's allowance. He strongly emphasised that the allowance is tax-free. "The families of over 33,000 children will have a surplus in their cheques," said the prime minister.

As regards the income tax bands, the prime minister said that the increase in disposable income is not a government's gift, but its intention of letting people enjoy more money which is already in their pockets.

Experience has shown, he said, that the more disposable income people have, the more the economy grows and the better they invest in their future.

Prime Minister Gonzi gave a quick review of the pro-Gozo budget measures. He described how businesses who employ a Gozitan in Gozo will benefit from a government subsidy on the worker's pay. This was previously true for businesses employing five Gozitans. As of next year, the subsidy will be available to all.

Dr Gonzi spoke also about the need for more cruise liner business in Gozo as well as the Taz-Zewwieq Waterfront and the Qortin landfill rehabilitation. These projects, said the prime minister, will make Gozo more beautiful for the Gozitans, Maltese and tourists.

As regards employment, Dr Gonzi said the Environment Landscape Consortium model employed in Malta will be applied in Gozo with some differences. This, he said, will generate 50 new jobs on the island. The prime minister also revealed that in a few weeks time he will be inaugurating the first HSBC services centre in Gozo.

Dr Gonzi emphasised that his government's policy making has been described as politically credible and sustainable by the EU, however, he said, the best certification that government desires comes from the Maltese youth, elderly, families, students, workers and entrepreneurs.

"Anyone can preach principles, however, only the finance minister can put his money where his mouth is" he said, adding that the Malta Labour Party failed in delivering promises when in government. "Prior to the election, they promised to preserve the university stipend system. Six months later they made students take a loan to finance their studies."

The prime minister continued his tirade against the opposition by criticising party general secretary Jason Micallef who promised "a government for the Labourites" while unawares of being filmed. Dr Gonzi said the MLP works in a hush-hush way as does the group of selected few who send letters to the editors of the English language newspapers in praise of Opposition leader Alfred Sant.

Parliamentary Secretary Tonio Fenech gave a thorough review of the measures for the elderly that include a full cost of living adjustment of the elderly, as well as the pension measures and the reduction of stamp duty for surviving spouses.

The junior minister explained also the duty stamp reductions for young couples who are to buy their first residence as well as the Housing Authority initiatives aimed at the same sector. He heavily criticised the MLP for proposing a Lm5,000 loan plus interest, which he described as a bullet loan available from all banks.