Points from the Budget Speech

This is the eighth Budget that the minister is presenting and once again it is a budget aimed to face the challenges. The challenges of the first few years were to build an economy while improving fiscal governance.

What we did first was strengthen the economy to reach targets we never dreamed of. We carried out reforms, which were belittled by some but which other countries are now asking about.

It took the country 30 years to understand that we could have a debt-free situation. But success brings with it new challenges. There were years when families spoke of difficulties regarding employment, childcare and poverty. Now we are talking about ways we should pursue for this success to be maintained in the years to come. Now we are talking about how we could preserve the environment, how families could enjoy the heart of towns and villages without traffic and how the country could be as clean as possible.

We are conscious of this but this government is not afraid of taking important decisions to ensure the sustainability of the quality of life we have achieved. This is the Budget we worked on so as to reduce the burdens on families. It is yet another Budget in which there are no taxes, the third one in a row. And we will finish with a surplus for the fifth year.

In the first six months of the year the economy grew by 4.7%. This is three times better than the EU average. GDP grew by 7.3% in nominal terms.

Investment in the first six months grew by 14.2%. Private consumption was up 4.5%. Importation increased by 2.2% while exportation was up 1.5%. Salaries went up by an average of 5.7% while companies registered a 9.5% increase in profit.

The number of workers has now reached 230,000, with the private sector registering 90% of the new jobs created. The unemployment rate is down to 3.3% and that among young people at 8.4%. The rate of participation in employment has gone up to 74.7%, higher than the European average.

Public debt is now down to 45.8% in 2018 of GDP and will go down further to 43.1% by the end of the year. In 2020, the GDP will be double what it was in 2013, up from €7bn to €14bn.

The economic growth is expected to be 4.3% in real terms in 2020 and 6.5% in nominal terms. This will come about with an increase in investment of 9.7%. Private consumption is projected to be 4% more while public consumption will go up by 4.9%. Exportation is set to rise by 1.6% while importation is forecast to grow by 2%.

In 2020 employment will go up by 4.1% while the unemployment rate will remain at 3.5%. Inflation is set to be 1.6%. There will be a surplus of 1.4% in 2020, while debt will fall to 40.4% of GDP.

The cost of living adjustment will be €3.49 per week and will cover also pensioners and people on social benefits. Stipends for students will increase pro-rata.

There will be an additional bonus of €15 to single-person families and €35 to families with more than one person. This bonus will be paid for by the government.

An additional day of leave will be added.

Tax refunds amounting to €11.5m – from which 200,000 will benefit – will be given out as in previous years (between €40 and €68 per worker).

The rate of tax on overtime will go down to 15% for the first 100 hours of overtime of workers who earn less than €20,000 per year and are not in a managerial position.

Government

will not tolerate any abuse in the payment of national insurance by employers. All employers will be given a chance to regularise their position; action will be taken against those who continue to abuse.

As from January, workers will be able to register, de-register or cancel VAT registration online. Pensioners will no longer pay provisional tax every three months but will have their pension deducted. Tax rebates will be paid within six months (not a year).

Pensioners will be getting an additional €3.51 per week for a total of €7 increase per week or €364 per year. No tax will be paid on the first €13,798 received by pensioners. Couples with a single pension will be tax exempted for the first €15,798.

There will be a revision of the way pensions are handed out to soldiers, police officers, employees at the Corradino Correctional Facility and the Civil Protection Department who choose to continue working after their retirement.

A bonus of between €200 and €300 will be given to 16,500 persons who do not receive a pension because they did not pay enough national insurance contributions.

Widows and widowers who have children aged less than 18 will be getting a €4.54 increase if the parent is in employment and €9.32 if there is no employment.

€13m will be allocated to adjust injustices and anomalies regarding pensions. Some 8,000 will benefit.

People over 75 years of age who live at home will be getting, once again, a €300 grant. People aged over 80 will be getting €350. This grant will be given to elderly people who pay to live in residential homes.

The 62+ government savings bond will be issued again.

Public transport will be free of charge to people over 75 years of age.

€300 bonus will be given to each born or adopted child as from 1 January.

Disability pension will go up from €150 per week to €161.40. Invalidity pension will also go up.

VAT exemption on special apparatus bought for people with a disability will go up by €400 to €1,000.

Parents who are forced to leave employment to take care of their children with a rare disease will receive the social security contributions that they will miss because of this situation, up to a maximum of eight years.

People suffering from cancer will have their sick leave conditions revised.

Government will be working on a rent reform exercise.

Housing schemes introduced in the past years, including those for first- or second-time buyers, will be extended to 2020. As from Tuesday, first-time buyers will be tax exempted on the first €175,000 (up from €150,000)

Government will be aiding people under 40 years of age who are unable to pay the 10% down payment on housing. Government will be paying the deposit which needs to be paid back within 15 years − maximum: €17,500.

Government will be building 1,700 new housing units.

Government will be giving special attention to the environment, in particular with regards to climate change. Government is still in time to take action in line with efforts to combat climate change.

Government will be presenting a national strategy that will make Malta carbon neutral by 2050.

Plans for a waste to energy plant continue to enable the closure of the Sant’Antnin waste recycling plant.

Next year government will announce the date when all new cars on the road need to be free of pollution. The number of charging points will be increased and preferential rates will be given on energy costs to people who have electric cars.

The beverage container recycling scheme will start by the end of this year with a number of machines to be installed as a pilot project.

Single use plastic will be banned as from 2021 (plastic bags, cutlery, straws and plates)

Government will be helping shop owners to invest in green corners to sell items by weight, with consumers taking re-usable containers.

Part of Regional Road will be getting a roof to eliminate the division of the locality into two parts.

Stakeholders involved in public cleansing will be involved in plans for the better use of resources.

Malta Enterprise will be offering incentives to construction operators to replace equipment with new machinery. This will eventually reduce pollution.

Rinella Bay and Ghadira Bay may be extended next year to create bigger beaches.

A national trail network will be drawn up.

Embellishment works will be carried out in Msida, Kalkara, Pieta, Senglea Gate and parts of Valletta. Work will start on the Marsaxlokk waterpolo pitch.

Government will continue to offer incentives for renewable sources of energy. The natural gas project link with Sicily will be completed by 2024.

The pumps at the Pumping station of St Paul’s Bay and Xemxija will be replaced.

By the end of next year the flyover project at Marsa will be completed. Work on the Central Link project will continue after PA approval and a new flyover project will start in Msida while St Andrew’s Road will be widened as part of the Pembroke tunnel network project.

Work on three ferry landings sites will start next year.

The scheme for no registration tax on electric cars will continue. Plans to strengthen public transport, including the On-Demand Buses network will continue.

Government will be working on better connectivity at sea. Areas such as Cottonera, Marsaxlokk, Marsascala, St Paul’s Bay, St Julian’s and Mellieha will be included in these connectivity plans.

Government’s scheme to give a full VAT refund on motorcycles, scooters and electric bikes to be extended.

Gradually all petrol stations will be equipped with charging points.

Plans are in hand to build a new Outpatients section at Mater Dei Hospital. There will be more investment in robotic surgery. A new regional health centre is on the cards for the north of Malta as part of investment in primary care.

There will be an increased focus on mental health, which will be one of the major challenges in the coming years.

Government will continue to invest in new medicine and a National Poison Centre will be launched to offer services to people exposed to toxic chemicals.

More investment in technology in schools and this will also include the University of Malta. A pilot project in middle schools is aimed to extend the One Tablet per Child project.

A €7m investment will be allocated for the University and MCAST infrastructure. A new school will be opened in Qawra.

A process to have a Maltese Spellchecker online will start.

Guidelines will be established on the weight of school bags. A plan will start to have a drinking water fountain in every state school.

The ITS campus at Smart City is expected to start and will include a hotel which will be run by the students.

A restoration and modernisation project of the National Library will start to be implemented.

Government is considering building a roof over the Royal Opera House site in Valletta.

The Malta Stock Exchange will be implementing initiatives to promote the issue of Green Bonds.

Government is exploring new economic niches in the financial services industry, including Fintech.

Malta to continue to invest in Artificial Intelligence, video game development and e-sports.

A public call for tenders will be issued for a land mining project in Marsa to convert the old dumping site into a recreational area.

The number of tourists projected to visit Malta in 2018 is 2.7 million, a 4.5% increase. Air Malta to continue its plans to modernise its fleet. Plans to increase its operations across Europe and North Africa, with medium- to long-haul flights on the cards

Government in discussion with Valletta Cruise Port for upgrades at Pinto 4 and 5 and landing facilities at Lascaris.

Government is expecting Gozo to attract new niches of employment. Through the Gozo Business Scheme, government is offering incentives for more private investment. Fiscal incentives will be offered to companies interested in relocating to Gozo.

The introduction of the fourth ferry (lease) has improved the connection between Malta and Gozo. Gozo Channel has learnt from the experience and is in a better position to invest in its own fourth vessel.

Studies on the feasibility of the tunnel between the two islands will be concluded in the coming months. Infrastructure Malta will soon be publishing a pre-qualification questionnaire to be available to companies interested in the project.

Road works in Gozo include the ones leading from Victoria to Mgarr and the road from Victoria to Marsalforn. Embellishment works to be carried out at Marsalforn and Xlendi.

Gozo will have its first reverse osmosis plant at Hondoq ir-Rummien.

The number of pending cases in the law courts has decreased from 26,650 in 2012 to 22,510 this year.

Government will continue its plans to separate the duplicate functions of the Attorney General’s office.

Malta has reduced fiscal evasion by 8% in one year and is the fourth least country where tax evasion takes place.

The strategy to combat money laundering, with 45 actions to be implemented in three years, is in place, with 30% of the measures already in place.

Government drew up a detailed plan to implement the recommendations listed in the Moneyval report. A new Financial Organised Crimes Agency will be launched to complement the work of the Police’s Economic Crimes Unit. The MFSA and FIAU have taken initiatives to strengthen their fight against money-laundering and terrorism.

As from next year, the purchase of property, cars, boats, diamonds and art objects cannot be done exclusively in cash. A limit of €10,000 in cash is to be established.

Government will continue to invest in equipment and training of the Armed Forces of Malta, the Police and the Civil Protection Department.

The Citizenship by Investment programme is a valid contributor to the Maltese economy, but even without it the economic surplus would still be achieved.

Government will embark on its plans for the organisation of the Small Nations Games in 2023. Work on the indoor poor in Cottonera will continue. €28m will be invested in the Marsa horse-racing track. Government will be announcing its concrete plans for a car racing track.

After opening an embassy in Ghana, government is preparing to open an embassy in Tokyo and another one in Latin America.

It would have been justified for the government to slow down after years of success. But we are not doing so. This can be seen by the number of measures introduced in this Budget. This is a social Budget aimed to improve the quality of life of all sectors of society, in particular the ones mostly in need. We have drawn up a list of the challenges and how we are going to tackle them.

This Budget is prudent in public expenditure to reduce debt and save up for future generations. This is being done to keep away risks. This Budget is aimed for us to continue to grow together.