Prime Minister Joseph Muscat yesterday would not commit himself on the agreement with the new transport operator but insisted that bus fares will not increase and the service will improve. Dr Muscat was answering questions by journalists during a post-budget press conference in St George's Square.

The Malta Independent asked the Prime Minister if the agreement with Autobuses Urbanos de Leon has been concluded, whether the subsidy will increase from €23 million after the first year and how the court proceedings filed by one of the failed bidders for the tender - Island Buses Malta - could affect the timeline.

Dr Muscat said that in a democratic society, the government cannot stop any company from seeking legal avenues if they felt wronged. On the subsidy the Prime Minister said it will initially be €23 million and bus fares do not need to be increased.

"It is definitely not a good comparison with the Arriva story. Arriva was given a subsidy of €10 million and it failed, costing the country much more. Taxpayers will be forking out €30 million this year to make up for that mess."

He also said criticism by the Opposition that public sector employees have increased will go up in smoke when, come January, 900 drivers and staff will be transferred to the new operator. "If it was up to Simon Busuttil these 900 people would be out of a job." Dr Muscat, however, made no mention of the agreement with the Spanish company, which is supposed to take over the public transport service in one and a half months' time.

In his introductory speech, the Prime Minister said the budget is "built on optimism." The government is breaking traditions, he said, and not leaving all the good things for the the fifth and last budget of the legislature. "Those who believed in the Malta Taghna Lkoll project are realising that it was real and is happening."

Dr Muscat said the one word that is not included in the budget is "bailout," in reference to past claims by the PN that the government would need to borrow money before the end of the legislature. "We exceeded all expectations. Our economy grew and the deficit was brought down and will reach record levels next year. This is all down to the hard work being carried out by a united, dynamic and hard-working team."

The idea is to create more jobs and encourage more people to go out and work. At the same time the government is helping those in need while stamping out abuse. "COLA worked out at 58 cents, which, in itself is a good sign. But we did not stop there. We introduced several incentives and tax cuts. Next year's budget will help businesses and families alike. We thought of everyone."

Benefits should be given to those who need them, Dr Muscat said. "We are increasing benefits for those who are genuinely in need but we are also embarking on a fight against benefit cheats. We are also encouraging youths to help themselves - we will help them do that but we will not be giving out free hand-outs."

Dr Muscat said the stable fuel prices will also help families. "We are sometimes criticised for focusing too much on the economy. We are doing that, but we also want the wealth generated by the economy to be distributed fairly." The reduction in energy tariffs for households and now for businesses amounts to an €80 million injection into the economy. People have more money to spend. The list of out of stock medicines has been brought down from 130 to an average of 5.

Dr Muscat said the government will announce more measures to encourage people to work in next year's budget, and the one after that.

Replying to other questions, Dr Muscat said the agreement with Shanghai Electric Power will be implemented in full. A date for the signing of the agreement has been set.

Answering another question, the Prime Minister said the budget was not being financed by the Individual Investor Programme.

Then asked if the one-time €35 bonus was a direct reaction to criticism by the PN, Dr Muscat said it was a reaction to common sense.