Malta:Draft Budgetary Plan2014

Ministry for Finance October 2013

The following symbols have been used throughout this document:

. . . to indicate that data are not available;

___ to indicate that the fi gure is negligible;

0 to indicate that the fi gure is zero;

- to indicate that data are not applicable or cannot be determined;

n/c to indicate that there is no change in the data.

Figures may not add up due to rounding.

iMalta: Draft Budgetary Plan 2014

Contents

1. Overall Policy Framework and Objectives 31.1 Major Structural Reforms: Addressing Malta’s CSRs 31.2 Budgetary Targets 31.3 Endorsement of the Macroeconomic Projections 4

2. Economic Outlook 72.1 The Short-Term Scenario 7 2.1.1 Assumptions for Projections 8 2.1.2 Risks to Outlook 8 2.1.3 Employment Prospects 9 2.1.4 Infl ation 92.2 Comparison to Commission’s Spring Forecast 92.3 Potential Output and the Output Gap 10 3. General Government Budgetary Developments 173.1 Budgetary Targets 173.2 Expenditure and Revenue Projections under the no-policy change Scenario 193.3 Expenditure and Revenue Targets 203.4 Divergence from the April 2013 Stability Programme 24 4. Distributional Implications of Budget Measures 41 4.1 Improving Employability 414.2 Improving Quality of Life for Senior Citizens 414.3 Improving Quality of Life for Persons with Disability 414.4 Improving Quality of Life for Families 424.5 Illustration of the Quantitative Impact of a Selection of Budget Measures 42 4.5.1 Revenue Measures 42 4.5.2 Expenditure Measures 43 Appendix Tables 0.i Macroeconomic forecasts (Basic Assumptions) 111.a Macroeconomic forecasts (Macroeconomic prospects) 121.b Macroeconomic forecasts (Price developments) 131.c Macroeconomic forecasts (Labour market developments) 131.d Macroeconomic forecasts (Sectoral balances) 146.a Indications on how the measures in the DBP address CSR and the targets set by the Union's Strategy for growth and jobs - CSR recommendations 264.c.i Expenditure and Revenue Targets (General government expenditure by function) - General government expenditure on education, healthcare and employment 374.c.ii Expenditure and Revenue Targets (General government expenditure by function) - Classifi cation of the functions of the Government 37

ii Malta: Draft Budgetary Plan 2014

Tables 2.1 Main Macroeconomic Indicators 72.a Budgetary Targets (General government budgetary targets broken down by subsector) 182.b Budgetary Targets (General government debt developments) 193 Expenditure and Revenue Projections under the no-policy change scenario (General government expenditure and revenue projections at unchanged policies broken down by main components) 204.a Expenditure and Revenue Targets (General government expenditure and revenue targets, broken down by main components) 213.1 Analysis of Improvement in the Defi cit-to-GDP Ratio 224.b Expenditure and Revenue Targets (Amounts to be excluded from the expenditure benchmark) 225.a Description of discretionary measures included in the draft budget (Discretionary measures taken by General Government) 237 Divergence from latest SP 25

Charts 2.1 Potential Economic Growth 104.1 Share of Household Consumption 424.2 Estimated Increase in Household Income 43

1. Overall Policy Framework and Objectives

3Malta: Draft Budgetary Plan 2014

1. Overall Policy Framework and ObjectivesThe Maltese economy has proved to be resilient and fundamentally sound in the midst of major international economic and fi nancial shocks. The fact that the banking sector was left unscathed during one of the most severe international fi nancial crisis indeed contributed to this stability. An increasingly diversifi ed economy with a healthy balance between manufacturing and several services sectors also helped in this regard. The 2009 recession was therefore short lived and while economic growth remained sluggish and anemic up till now, the growth rate did not fall into negative territory. In the meantime employment also held up its pace.

And yet, the political and electoral uncertainty during 2012 led to substantial weakening of domestic demand which in turn led to a deterioration of the public fi nances. As a result, Malta exceeded its defi cit targets for that year.

The Government believes that the expected recovery in domestic demand following the election of a new government, together with stricter control on projected expenditures would help Malta to reach a defi cit target of 2.7 per cent of GDP in 2013 and continue to reduce it further in subsequent years. Indeed the Government is aiming towards a balanced budget position in the medium term.

The Economic Partnership Programme presented by the Government of Malta on 1st October 2013 clearly delineates a two-pronged strategy based on structural economic reforms leading to greater investment and economic growth whilst placing revenues and expenditures on a sustainable path.

1.1 Major Structural Reforms: Addressing Malta’s CSRsThe Government’s economic and fi scal strategy rests on a number of key policy planks, which while vital for the development of the economy, are primarily meant to address the weak factors as laid out in the country’s CSRs by implementing their respective recommendations:

1. Ensuring public fi nance sustainability in the short to medium term, while also addressing the long term; 2. Raising potential output, in particular through the increasing of the labour force participation, especially

of women, raising skill and education levels, promoting lifelong learning, and increasing productive capital investment;

3. Enhancing the competitiveness and transparency of the products and services markets whilst strengthening consumer protection, including a holistic justice reform;

4. Effectively reduce bureaucracy especially signifi cantly reduce the length of public procurement process, and ensuring that the public service is effi cient and cost-effective:

5. Safeguarding the successes achieved by the Maltese fi nancial sector as based on sound regulation and ensuring it continues to follow rigorous practices;

6. Prioritising the promotion of a diversifi ed and balanced economy, with renewed importance given to the maritime sector.

These reforms together with others including those addressing the energy sector, are presented in more detail in Table 6.a in Appendix and in the Economic Partnership Programme submitted to the European Commission and the ECOFIN Council earlier this month.

1.2 Budgetary TargetsThis Draft Budgetary Plan presents the budgetary measures aimed at reaching Malta’s fi scal targets in 2014. In particular the Government aims to continue reducing the defi cit to 2.1 per cent of GDP, in line with the targets presented in the April’s Budget Speech 2013 and earlier in the Stability Programme. Government is

4 Malta: Draft Budgetary Plan 2014

also committed to stabilise the debt ratio in 2014. In addition a structural effort of around 0.5 per cent of GDP in 2014 is being targeted, within the context of an economy which is still recovering from a negative output gap. In order to achieve these targets a number of permanent discretionary tax measures are contemplated in this Draft Budget Plan aimed at ensuring that the correction in the defi cit achieved in 2013 is permanent.

The fi scal consolidation effort is supported from both revenue and expenditure. Any expansionary measures are neutralized or counterbalanced by other contractionary ones.

The main fi scal consolidation measures for 2014 include the 2006 pension reform initiatives, through additional revenue and expenditure savings, a number of indirect tax measures to be announced in the budget, a measure introducing a non-domestically paid fee for a new service, and measures which restrict recruitment in the public sector. In addition the equity injection in Air Malta will be almost two-thirds less than this year. The expansionary measures are aimed mainly to spur growth and employment. Other measures are aimed at distribution of income towards the most needed households in the Maltese society.

These measures will be sustained by stronger drives against tax avoidance and tax evasion, and the control of public expenditure through an ongoing Spending Review aimed at identifying effi ciency gains in public expenditure and controlling the rise in its discretionary elements.

1.3 Endorsement of the Macroeconomic Projections The fi scal projections have been carried out on the basis of macroeconomic projections prepared in June 2013. When compared to similar projections carried out by independent institutions such as the European Commission, the Central Bank of Malta, the International Monetary Fund and a number of rating agencies, the government’s forecasted fi gures are generally more conservative.

In the absence of a fi scal council, the macroeconomic projections have been submitted for the scrutiny of the National Audit Offi ce (NAO), an independent institution established by the Constitution of Malta. The National Audit Offi ce Report was submitted in September. It concluded that the methodology employed by the Economic Policy Department within the Ministry for Finance was sound, and the assumptions plausible. Growth forecasts were deemed to be prudent. However the National audit Offi ce identifi ed some risks to the composition of growth in view of the more recent release of national accounts data where domestic demand is taking longer to recuperate though over-all growth was not affected.

2. Economic Outlook

7Malta: Draft Budgetary Plan 2014

2. Economic Outlook

2.1 The Short-Term ScenarioIn the fi rst half of 2013 the Maltese economy continued to grow at an average rate of 1.8 percent despite weaker than expected developments in the Euro Area. Furthermore employment continued to grow at a substantial rate of 3.6 per cent in the second half of 2013. The world economy which continues to suffer from the fallout of the fi nancial and the sovereign debt crisis has not been able to revive the growth conditions of the preceding decade.

During the fi rst half of the year, GVA at basic prices increased by 5.5 per cent compared with a 1.6 per cent in the same period of 2012. Growth in GVA at basic prices is attributable to increases registered in all sectors of the economy with the exception of the construction activities sector. Signifi cant increases were recorded in the fi nancial and insurance activities sector, in the information and communication sector, in the professional, scientifi c and technical activities sector, in the public sector, in the manufacturing sector, and in the mining and quarrying, electricity, gas, steam and air conditioning supply, water supply, sewerage, waste management and remediation activities sector, the latter is largely the result of a base effect over the same preceding period.

From the income side, the growth in GDP was mainly driven by the growth in compensation of employees and gross operating surplus and mixed incomes as they grew by 5.4 per cent and by 5.8 per cent, respectively. On the other hand, the taxes on production and imports over the fi rst half of the year decreased by 8.7 per cent

Main Macroeconomic IndicatorsTable 2.1

2010 2011 2012 2013(1) 2014

GDP growth at current market prices (%) 7.1 3.9 3.1 3.7 3.8GDP growth at constant (2000) prices (%) 4.0 1.6 0.8 1.2 1.7

Expenditure Components of GDP at constant (2000) prices (% change) Private fi nal consumption expenditure(2) 2.4 4.2 1.6 1.2 1.3 General government fi nal consumption expenditure 4.9 4.8 7.0 -0.4 1.3 Gross fi xed capital formation 12.0 -10.9 0.7 0.7 3.5 Exports of goods and services 21.5 11.4 6.2 1.9 1.9 Imports of goods and services 18.1 7.2 4.5 1.5 1.8

Contribution to GDP growth:Domestic Demand 4.6 1.6 2.5 0.8 1.4Inventories 0.1 -1.6 -1.3 0.0 0.0Net Exports 2.4 3.9 1.8 0.4 0.2

Infl ation rate (%) 2.0 2.5 3.2 1.7 2.3Employment growth (%) 1.8 2.6 2.4 1.8 1.8Unemployment rate (%) 7.0 6.6 6.5 6.3 6.3

(1) Forecasts from 2013 onwards

(2) Includes NPISH fi nal consumption expenditure

8 Malta: Draft Budgetary Plan 2014

while the subsidies on production and imports increased by 0.5 per cent. It is noteworthy that compensation of employees and gross operating surplus and mixed incomes both contributed 2.5 percentage points. On the other hand, taxes on production and imports contributed negatively by 1.2 percentage points while the contribution from subsidies on production and imports were negligible.

In 2013, the Maltese economy is expected to keep its growth momentum, rising by 1.2 per cent in real terms1. Growth is expected to be underpinned by positive developments in both the domestic and the external sectors of the economy. Private consumption is expected to increase by 1.2 per cent supported by strong employment, return of consumer confi dence and moderate appreciation of wages. Government expenditure is expected to decrease by 0.4 per cent during 2013, refl ecting efforts to consolidate public fi nances. Gross fi xed capital formation is forecasted to increase marginally by 0.7 per cent. The positive development in net exports is expected to persist during 2013 with both exports and imports expected to register positive growth rates2. In 2013, exports are expected to increase by 1.9 per cent while imports are expected to grow by 1.5 per cent in real terms. In 2014 growth is expected to increase to 1.7 per cent supported by a stronger domestic demand component.

Table 2.1 presents the main macroeconomic indicators for the years 2010-2014. The fi gures for the 2010-2012 period and the January-June fi gures for 2013 have been published by the NSO, whilst annual fi gures for 2013 and 2014 are forecasts underlying the budgetary projections.

2.1.1 Assumptions for ProjectionsThe macroeconomic forecasts presented in this Stability report are based on the following assumptions:

• Economic activity in Malta’s main trading partners is expected to increase by 0.3 per cent in 2013 followed by a positive growth rate of 1.4 per cent in 2014.

• Oil prices are assumed to remain relatively stable for 2013 at an average of US$106.9 per barrel and to decrease marginally to US$105.4 per barrel in 2014.

• Both short-term and long-term interest rates are assumed to remain broadly stable during the forecast period. The real effective exchange rate is also assumed to remain broadly constant for the remaining forecast period.

• Government employment follows a downward trajectory as Government restricts recruitment in non-essential categories.

• Changes in inventory are assumed not to contribute materially to GDP growth.

2.1.2 Risks to OutlookThe medium-term outlook for the global economy is one of steady growth. Nevertheless, there are a number of factors that could restrain growth prospects.

The independent report presented by the National Audit Offi ce about the assessment of the macroeconomic forecasts on the Maltese economy presented by the Ministry for Finance presents both downside and upside risks to economic growth. Among the most immediate downside risks is the possibility that the recovery in domestic demand will not take place whilst export recovery may also be weaker due to the degree of uncertainty in the global economy at this current juncture. Furthermore, there is also the possibility of heightened geopolitical uncertainty that could trigger a sharp increase in the price of oil. On the other hand, there are also upside risks which can bolster economic growth such as a stronger recovery in private investment

9Malta: Draft Budgetary Plan 2014

through the capital projects in the energy sector and a stronger performance in private consumption assuming the reduction in households’ energy tariffs. Moreover, greater confi dence stemming from successful policy measures and waning supply-side disruptions, if the risk premium in oil prices dissipates, could foster a more forceful rebound in investment whilst a weaker euro exchange rate against the US Dollar and the UK Sterling would also make Maltese exports more competitive and boost external demand for Maltese output. Furthermore, stronger than expected growth in Malta’s main trading partners will result in positive export prospects and thus translate to economic growth. Overall the risks surrounding the forecasts remain signifi cant and are broadly balanced.

2.1.3 Employment ProspectsThe labour force survey recorded an employment growth rate of 3.6 per cent in the second quarter of 2013, higher than the average growth of 2.4 per cent in 2012. Employment is expected to continue to grow at 1.8 per cent in 2013 and 2014. This is expected to support a higher female employment rate, partly refl ecting increased efforts from Government to increase female participation, and an increase in employment fl exibility.

Growth in output is expected to be supported by the emerging growth sectors with the possibility of gaining market shares in industries such as pharmaceuticals, aircraft maintenance, information and communication and the fi nancial and related business services. These sectors will increasingly offset the decline of more traditional sectors of the Maltese economy and are likely to increase further the openness of the economy.

In 2013, the unemployment rate (based on the Harmonised defi nition) is expected to decrease by 0.2 percentage points to 6.3 per cent and to remain broadly the same in 2014.

2.1.4 Infl ationThe infl ation rate (HICP, twelve month moving average) which during 2012 stood at 3.2 per cent started falling during the fi rst half of the year with the latest report showing it at 1.8 percent. Annual infl ation is expected to decelerate to 1.7 per cent in 2013 and to increase again to 2.3 per cent in 2014.

2.2 Comparison to Commission’s Spring ForecastThe spring forecasts published by the European Commission project a growth rate for Malta of 1.4 per cent in 2013 and to 1.8 per cent in 2014, as domestic demand gradually strengthens to become the main driver of growth. Forecasts for real GDP growth in 2013 presented in this draft budgetary plan are 0.2 percentage points and 0.1 percentage points lower than the rate forecasted by the European Commission for 2013 and 2014, respectively. This is attributed mainly to a higher expected net contribution from the external sector in 2013 and a lower contribution from domestic demand to economic growth than that recorded in the Commission’s spring forecasts for 2013 and 2014, respectively, with the exception that in 2014 both institutions are expecting a contribution of 0.2 percentage points from net exports to overall real economic growth. Both sets of forecasts are consistent with a domestically-led growth scenario. Forecasts presented in this draft budgetary plan are also lower compared to the latest forecasts published by the Central Bank of Malta. The Central Bank projects real growth rate of 1.4 per cent and 1.9 per cent for 2013 and 2014, respectively.

With regards to nominal GDP, the MFIN is expecting a growth rate of 3.7 per cent and 3.8 per cent for 2013 and 2014, respectively, being marginally higher by 0.1 percentage points in 2013 but relatively cautious by 0.3 percentage points in 2014, respectively when compared to the European Commission’s spring forecasts.

The European Commission will be updating its forecasts in the coming weeks by its autumn round of forecasts.

10 Malta: Draft Budgetary Plan 2014

2.3 Potential Output and the Output GapAverage potential economic growth, which is a measure of the growth potential of the economy, stood at 2.0 per cent during the period 2006–2012. This rate of growth is marginally lower than the average potential growth rate pertaining to the period 2000 – 2005. It is pertinent to point out that the rate of growth of potential output has decelerated markedly from the year 2009 onwards. This deceleration in potential output is expected to reach a through in 2014, and exhibit a marginal gradual increase over the forecast period. This slower growth rate in potential output compared to the pre-crisis levels is underpinned by a lower contribution from the capital factor and a lower contribution from the labour factor input. Over the forecast period 2013–2016, average potential growth is expected to hover around 1.2 per cent level, mainly underpinned by a positive contribution from labour and total factor productivity, with the contribution of capital expected to remain largely subdued in the short term. This is illustrated in Chart 2.1.

The output gap, is defi ned as the difference between actual and potential output, expressed as a ratio of potential output. The gap is indicative of the cyclical developments prevailing in the Maltese economy. Following a number of years in which the Maltese economy operated with a negative output gap, the output gap turned positive in 2007. This however proved to be short-lived, since during 2009, following the international recession and the subsequent contraction of the domestic economy, the output gap turned negative yet again. Indeed, in 2009 the output gap is estimated to have declined to a negative of 2.0 per cent. In the subsequent years, although the negative gap between potential and actual output contracted, the output gap remained negative and is estimated to have stood at a negative 1.1 per cent in 2012. The output gap is estimated to continue closing down steadily until the year 2015.

Footnotes:

1 Macroeconomic forecasts were carried out in June 2013 and submitted to the National Audit Offi ce for endorsement in July 2013. The NAO report, published in September 2013 is included with this Draft Budgetary Plan.

2 These forecasts are based on the June release of National Accounts and Balance of Payments data and therefore do not include the most recent information. At that time, a stronger recovery in domestic and external demand was expected.

Chart 2.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Potential economic growth

%

11Malta: Draft Budgetary Plan 2014

Macroeconomic forecasts(Basic assumptions)

Appendix Table 0.i

2012 2013 2014

Short-term interest rate1 (annual average) 0.8 0.8 0.8

Long-term interest rate (annual average) 4.1 4.1 4.1

USD/€ exchange rate (annual average) 0.759 0.772 0.770

Nominal effective exchange rate 1.03 1.04 1.041

World excluding EU, GDP growth 0.4 0.3 0.5

EU GDP growth -0.3 -0.1 0.9

Growth of relevant foreign mar-kets 0.3 0.3 1.4

World import volumes, exclud-ing EU n/a n/a n/a

Oil prices (Brent, USD/barrel) 111.6 106.9 105.4

1 If necessary, purely technical assumptions

12 Malta: Draft Budgetary Plan 2014

Macroeconomic forecasts(Macroeconomic prospects)

Appendix Table 1.a €000s rate of change

ESA Code 2012 2012 2013 2014

1. Real GDP B1*g 5,040.7 0.8 1.2 1.7Of which

1.1. Attributable to the esti-mated impact of aggregated budgetary measures on economic growth 1

--- ---

2. Potential GDP 1.4 1.2 1.2contributions: - labour- capital- total factor productivity

3. Nominal GDP B1*g 6,829.5 3.1 3.7 3.8Components of real GDP

4. Private fi nal consumption expendi-ture P.3 3,196.8 -0.2 1.2 1.3

5. Government fi nal consumption expenditure P.3 1,023.0 5.0 -0.4 1.3

6. Gross fi xed capital formation P.51 661.5 -3.9 0.7 3.5

7. Changes in inventories and net acquisition of valuables (% of GDP) P.52 + P.53 -72.6 -1.4 0.0 0.0

8. Exports of goods and services P.6 5,430.3 7.0 1.9 1.99. Imports of goods and services P.7 5,198.4 4.5 1.5 1.8

Contributions to real GDP growth

10. Final domestic demand 4,881.3 0.3 0.8 1.511. Changes in inventories and net acquisition of valuables P.52 + P.53 -72.6 -1.2 0.0 0.0

12. External balance of goods and services B.11 231.9 1.7 0.4 0.2

1 Please report here the estimated impact on real GDP growth of the aggregated budgetary measures

contained in the DBP.

13Malta: Draft Budgetary Plan 2014

Macroeconomic forecasts(Price developments)

Appendix Table 1.b €000s rate of change

ESA Code 2012 2012 2013 2014

1. GDP defl ator 120.5 2.3 2.5 2.1

2. Private consumption defl ator 116.5 1.8 1.4 2.3

3. HICP 118.9 3.2 1.7 2.3

4. Public consumption defl ator 118.8 1.9 3.4 1.6

5. Investment defl ator 146.6 4.8 1.8 4.6

6. Export price defl ator (goods and services) 130.4 -0.8 2.3 2.4

7. Import price defl ator (goods and services) 131.3 2.4 2.3

Macroeconomic forecasts(Labour market developments)

Appendix Table 1.c €000s rate of change

ESA Code 2012 2012 2013 2014

1. Employment, persons1 172.6 2.4 1.8 1.8

2. Employment, hours worked2 346,442.7 2.1 1.8 1.8

3. Unemployment rate (%)3 11.8 6.5 6.3 6.3

4. Labour productivity, persons4 29,204.0 -1.5 -0.6 -0.1

5. Labour productivity, hours worked 5 14.5 -1.3 -0.6 -0.1

6. Compensation of employees D.1 3,040.5 4.1 2.1 3.8

7. Compensation per employee 17,616.0 1.7 0.8 2.5

1 Total employment, resident population concept, labour force survey defi nition.2 National accounts defi nition.3 Harmonised defi nition, Eurostat; levels.4 Real GDP per person employed.5 Real GDP per hour worked.

14 Malta: Draft Budgetary Plan 2014

Macroeconomic forecasts(Sectoral balances)

Appendix Table 1.d % GDP

ESA Code 2012 2013 2014

1. Net lending/net borrowing vis-à-vis the rest of the world B.9 2.9 4.4 4.3

of which:

- Balance on goods and services 6.7 7.3 7.5- Balance of primary incomes and transfers -5.1 -4.7 -4.6

- Capital account 1.3 1.8 1.42. Net lending/net borrowing of the private sector B.9 0.0 7.1 6.4

3. Net lending/net borrowing of gen-eral government B.9 -3.3 -2.7 -2.1

4. Statistical discrepancy 6.2 0 0

3. General Government Budgetary Developments

17 Malta: Draft Budgetary Plan 2014

3. General Government Budgetary DevelopmentsIn 2012, a worsening of economic conditions caused by the protracted electoral uncertainty led to weaker domestic demand and postponed private consumption. This impinged negatively on public fi nances. As a result, the actual fi scal imbalance recorded in 2012 increased by 1.0 percentage point over the original 2.3 per cent Budget estimate and with an end of year reported fi gure of 3.3 per cent of GDP, exceeding the 3 per cent of GDP reference value of the Treaty. In addition, in 2012 the debt ratio increased to 71.3 per cent of GDP, above the 60 per cent of GDP reference value, and Malta did not make suffi cient progress towards compliance with the debt reduction benchmark, in line with the requirements of the transition period.

Against this background, on 21st June 2013, the ECOFIN Council decided that an excessive defi cit existed in Malta and recommended that Malta takes action to reduce the excessive defi cit by 2014. Furthermore, the Council set headline defi cit targets of 3.4 per cent of GDP for 2013 and 2.7 per cent of GDP for 2014, consistent with an improvement of the structural balance of 0.7 per cent of GDP in both years whilst also setting a deadline of 1st October 2013 for taking effective action. The Council called on Malta, to continue progress towards its medium-term objective of a balanced budget in structural terms following the correction of its defi cit.

3.1 Budgetary TargetsThe increase in the general Government balance above the 3 per cent of GDP reference value, is considered by the Government to be temporary and exeptional. Malta remains committed to reach a defi cit target of 2.7 per cent of GDP in 2013, supported by a number of structural reforms and on the assumption of a recovery in domestic demand conditions in the second half of the year. The decline in the ratio of general Government defi cit-to-GDP is expected to be sustained and the fi scal imbalance is expected to be reduced further from 2.7 per cent in 2013 to 2.1 per cent in 2014. Furthermore, Government's fi scal policy objective remains that of ensuring a sustainable fi scal position by gradually but consistently reducing the fi scal imbalance, to reach a balanced budget in the medium-term.

In line with the requirements of the revised Stability and Growth Pact, Malta will continue to aim for a balanced budgetary position net of one-off and temporary measures over the cycle as its medium-term objective (MTO). The achievement of a balanced structural position in the medium-term is necessary in order to ensure a stable and sustainable debt-to-GDP ratio and to make adjustments necessary to fi nance the future cost of ageing. As indicated in Table 2.a, when one corrects for the cyclical effects, the budget defi cit is expected to decline from 2.9 per cent of GDP in 2012 to 1.9 per cent of GDP in 2014. This should be seen in the context of a negative output gap. At this juncture, it is pertinent to note that since there is signifi cant uncertainty surrounding the potential output and output gap estimates, a certain degree of caution is warranted in the analysis of the structural adjustment over the forecast period. The structural balance1 is expected to decline from 3.0 per cent of GDP in 2012 to 2.0 per cent by 2014, as reliance on one-off defi cit reducing measures is expected to remain contained.

Government’s debt strategy remains that of ensuring that the fi nancing needs of the public sector are met at the lowest possible cost while concurrently minimising medium and long-term interest rate risk. The negative primary balance and moderate economic growth relative to the interest paid on the debt had an expansionary impact on the debt ratio in 2012. Furthermore during 2012, stock fl ow transactions are estimated to have resulted in a 0.7 percentage point increase in the debt-to-GDP ratio. These transactions were in relation to an equity injection in Malita plc and the European Stability Mechanism (ESM), a sizeable European Financial Stability Facility (EFSF) re-routing and a notable decline in cash holdings. In 2013, the expected recovery in the underlying economic growth momentum is expected to contribute to a 2.5 percentage point decline in the debt-to-GDP ratio which, together with a positive primary surplus are expected to compensate for the upward pressure of interest expenditure on the debt-to-GDP ratio. Nevertheless, during 2013, stock fl ow transactions are expected to result in a sizeable 1.7 percentage points expansion in the debt ratio. This is expected to be largely underpinned by an expansion of cash holdings. In 2014, the ‘snowball effect’ is expected to result

18 Malta: Draft Budgetary Plan 2014

Budgetary Targets(General government budgetary targets broken down by subsector)

Table 2.a % GDP

ESA Code 2013 2014

Net lending (+) / net borrowing (-) (B.9) by sub-sector 1 B.9

1. General government S.13 -2.7 -2.1

2. Central government S.1311 -2.7 -2.1

3. State government S.1312 __ __

4. Local government S.1313 0.0 0.0

5. Social security funds S.1314 __ __

6. Interest expenditure D.41 3.1 3.1

7. Primary balance2 0.4 0.9

8. One-off and other temporary meas-ures3 0.3 0.2

9. Real GDP growth (%) (=1 in Table 1.a) 1.2 1.7

10. Potential GDP growth (%) (=2 in Table 1.a) 1.2 1.2

11. Output gap (% of potential GDP) -1.19 -0.70

12. Cyclical budgetary component (% of potential GDP) -0.48 -0.28

13. Cyclically-adjusted balance (1 - 12) (% of potential GDP) -2.22 -1.85

14. Cyclically-adjusted primary balance (13 + 6) (% of potential GDP) 0.88 1.23

15. Structural balance (13 - 8) (% of poten-tial GDP) -2.5 -2.0

1 TR-TE= B.9.2 The primary balance is calculated as (B.9) plus (D.41, item 6).3 A plus sign means defi cit-reducing one-off measures.

19 Malta: Draft Budgetary Plan 2014

in a decline in the debt ratio of around 0.5 percentage points as the rate of nominal GDP growth and the primary surplus are expected to more than offset the expansionary impact of interest expenditure. This will be completely offset by stock fl ow transactions of 0.5 percentage points of GDP, such that the debt ratio will stabilise at a level of 73.2 per cent of GDP in 2014. Developments in the debt ratio and the contributors to the trajectory of the debt-to-GDP ratio are presented in Table 2.b

3.2 Expenditure and Revenue Projections under the no-policy change ScenarioIn the absence of policy intervention, as illustrated in Table 3, the revenue ratio would increase by 0.9 percentage points to 42.8 per cent of GDP in 2014. Of this increase, 0.4 percentage points is attributable to EU grants. The dynamism in tax revenue relative to economic growth is also related to the rather tax rich composition of growth, particularly in view of the expected recovery in domestic demand. It also refl ects strong ongoing efforts to recover tax revenue arrears through various administrative measures supported by legislative changes which give further powers to the Minister for Finance towards this aim. Administrative reforms aimed at consolidating the revenue departments and thus increasing the effi ciency of revenue collection are also at a very advanced stage.

Meanwhile, in the absence of policy intervention, the expenditure ratio is expected to increase marginally by 0.3 percentage points to 44.9 per cent of GDP by 2014.

Developments in revenue and expenditure at unchanged policies mainly refl ect developments in capital projects fi nanced from EU investment grants, such that revenue fl ows correspond to similar increases in expenditure, as well as the impact of discretionary revenue and expenditure measures announced and adopted

Budgetary Targets(General government debt developments)

Table 2.b % GDP

ESA Code 2013 2014

1. Gross debt 1 73.2 73.2

2. Change in gross debt ratio 1.9 -0.0

Contributions to changes in gross debt

3. Primary balance (= item 7 in Table 2.a) 0.4 0.9

4. Interest expenditure (= item 6 in Table 2.a) D.41 3.1 3.1

5. Stock-fl ow adjustment 1.7 0.5

p.m.: Implicit interest rate on debt 5 4.6 4.3

1 As defi ned in Regulation 479/2009.

2 The differences concerning interest expenditure, other expenditure and revenue could be distinguished when relevant or in case the debt-to-GDP ratio is above the reference value.

3 Liquid assets (currency), government securities, assets on third countries, government controlled enterprises and the difference between quoted and non-quoted assets could be distinguished when relevant or in case the debt-to-GDP ratio is above the reference value.

4 Changes due to exchange rate movements, and operation in secondary market could be distinguished when relevant or in case the debt-to-GDP ratio is above the reference value.

5 Proxied by interest expenditure divided by the debt level of the previous year.

20 Malta: Draft Budgetary Plan 2014

in previous years and which are expected to have an impact on public fi nances during 2013 and 2014.

3.3 Expenditure and Revenue TargetsDuring 2014, the general Government defi cit is projected to decline by a further 0.6 percentage points of GDP from 2.7 per cent to 2.1 per cent. The more restrictive fi scal stance projected for the next fi scal year is mainly attributable to an increase in the revenue-to-GDP ratio which is expected to more than offset the increase in the ratio of total expenditure to GDP.

On the expenditure side, lower expenditure on compensation of employees will be offset by higher expenditure

Expenditure and Revenue Projections under the no-policy change scenario 14

(General government expenditure and revenue projections at unchanged policies broken down by main components)

Table 3 % GDP

ESA Code 2013 2014

General government (S13)

1. Total revenue at unchanged policies TR 41.9 42.8

Of which

1.1. Taxes on production and imports D.2 14.0 14.2

1.2. Current taxes on income, wealth, etc D.5 14.2 14.4

1.3. Capital taxes D.91 0.2 0.2

1.4. Social contributions D.61 7.4 7.5

1.5. Property income D.4 1.3 1.2

1.6. Other 1 4.8 5.2

p.m.: Tax burden 36.1 36.7

(D.2+D.5+D.61+D.91-D.995)2

2. Total expenditure at unchanged policies TE3 44.6 44.9

Of which

2.1. Compensation of employees D.1 13.5 13.4

2.2. Intermediate consumption P.2 6.4 6.5

2.3. Social payments D.624 D.632 13.6 13.7

of which Unemployment benefi ts 5 0.5 0.5

2.4. Interest expenditure D.41 3.1 3.1

2.5. Subsidies D.3 1.3 1.2

2.6. Gross fi xed capital formation P.51 3.3 3.8

2.7. Capital transfers D.9 1.2 1.1

2.8. Other 6 2.1 2.2

14 Please note that the no-policy change scenario involves the extrapolation of revenue and expenditure trends before adding the impact of the measures included in the forthcoming year’s budget.

1 P.11+P.12+P.131+D.39rec+D.7rec+D.9rec (other than D.91rec).

2 Including those collected by the EU and including an adjustment for uncollected taxes and social contributions D.995), if appropriate.

3 TR-TE = B.9.

4 Under ESA95: D6311_D63121_D63131pay; in ESA2010 D632pay.

5 Includes cash benefi ts (D.621 and D.624) and in kind benefi ts (D.631, under ESA2010 D.632) related to unemployment benefi ts.

6 D.29pay + D.4pay (other than D.41pay) +D.5pay +D.7pay +P.52+P.53+K.2+D.8.

21 Malta: Draft Budgetary Plan 2014

on gross fi xed capital formation and intermediate consumption. The increase in gross fi xed capital formation from 3.3 per cent of GDP to 3.8 per cent of GDP primarily refl ects higher expenditure related to capital projects fi nanced from EU funds under the 2007-2013 Financial Framework and thus corresponds to analogous increases in revenue. Meanwhile, the increase in intermediate consumption, compensation of employees, subsidies, social benefi ts, capital transfers and ‘other expenditure’ in Table 4.a primarily refl ects the impact of an allowance provided under these categories to allow for the fi scal impact of expansionary measures to be announced in the Budget of 2014, including measures that are intended to spur growth and employment. These will be in part offset by a lower capital injection in the national airline, which is expected to decline from €40 million in 2013 to €15 million in 2014. Other discretionary expenditure measures include expenditure savings from the pension reform initiative and savings from Government’s restrictive policy on recruitment in the public sector, which help to limit the growth pressures from social benefi ts and compensation of employees, respectively. In total, as indicated in Table 3.1, this combination of expansionary measures and expenditure consolidation measures are expected to contribute marginally to the improvement in the defi cit ratio by 0.25 percentage points of GDP.

Expenditure and Revenue Targets(General government expenditure and revenue targets, broken down by main components)

Table 4.a % GDP

ESA Code 2013 2014

General government (S13)

1. Total revenue target TR 41.9 43.1

Of which

1.1. Taxes on production and imports D.2 14.0 14.5

1.2. Current taxes on income, wealth, etc D.5 14.2 14.2

1.3. Capital taxes D.91 0.2 0.2

1.4. Social contributions D.61 7.4 7.5

1.5. Property income D.4 1.3 1.2

1.6. Other 1 4.8 5.5

p.m.: Tax burden 36.1 36.8

(D.2+D.5+D.61+D.91-D.995)2

2. Total expenditure target TE3 44.6 45.3

Of which

2.1. Compensation of employees D.1 13.5 13.3

2.2. Intermediate consumption P.2 6.4 6.6

2.3. Social payments D.624 D.632 13.6 13.7

of which Unemployment benefi ts 5 0.5 0.5

2.4. Interest expenditure D.41 3.1 3.1

2.5. Subsidies D.3 1.3 1.3

2.6. Gross fi xed capital formation P.51 3.3 3.8

2.7. Capital transfers D.9 1.2 1.2

2.8. Other 6 2.1 2.3

1 P.11+P.12+P.131+D.39rec+D.7rec+D.9rec (other than D.91rec).

2 Including those collected by the EU and including an adjustment for uncollected taxes and social contributions D.995), if appropriate.

3 TR-TE = B.9.

4 Under ESA95: D6311_D63121_D63131pay; in ESA2010 D632pay.

5 Includes cash benefi ts (D.621 and D.624) and in kind benefi ts (D.631, under ESA2010 D.632) related to unemployment benefi ts.

6 D.29pay + D.4pay (other than D.41pay) +D.5pay +D.7pay +P.52+P.53+K.2+D.8.

22 Malta: Draft Budgetary Plan 2014

Analysis of Improvement in the Defi cit-to-GDP Ratio(percentage points)

Table 3.12014

Discretionary factors underpinning fi scal consolidation (1) 0.44 Revenue increasing measures 0.62 Revenue reducing measures (0.18)Tax revenue buoyancy 0.45 Other 0.32 Change in revenue ratio 1.22

Discretionary factors underpinning fi scal consolidation (1) 0.25 Expenditure increasing measures (0.08) Expenditure reducing measures 0.33 Change in Gross Fixed Capital Formation (0.42)Other expenditure (0.48)Change in expenditure ratio (0.65)

Adjustment in defi cit ratio 0.57

Note: positive represents a decline in the defi cit-to-GDP ratio

(1) Includes the incremental impact of measures announced and adopted in previous

years

Expenditure and Revenue Targets(Amounts to be excluded from the expenditure benchmark)

Table 4.b % GDP

ESA Code 2012 2012 2013 2014

Level

1. Expenditure on EU pro-grammes fully matched by EU funds revenue

131.0 1.9 2.6 3.1

2. Cyclical unemployment benefi t expenditure 1 0.5 0.0 0.0 0.0

3. Effect of discretionary revenue measures 2 14.3 0.2 -0.2 0.4

4. Revenue increases mandated by law - - - -

1 The cyclical unemployment benefi t expenditure is calculated by multiplying the gap between the Non-Accelerating Wage Rate of Unemployment (NAWRU) and the unemployment rate (expressed in terms of the unemployment rate) by the total unemployment benefi t expenditure. Data for the NAWRU is obtained from the AMECO Database, updated May 2013, data for the unemployment rate is per Table 1.c of this report, and data for the total unemployment benefi t expenditure is per Table 4.a in this report as defi ned in COFOG under the code 10.5.

2 Revenue increases mandated by law should not be included in the effect of discretionary revenue measures: data reported in rows 3 and 4 should be mutually exclusive.

23 Malta: Draft Budgetary Plan 2014

Description of discretionary measures included in the draft budget(Discretionary measures taken by General Government)

Table 5.a €000s

List of measures Detailed description 1

Target (Expendi-ture/Revenue

component) ESA Code

Accounting principle (c)

Adoption Status

Budgetary impact

2012 2013 2014

Introduction of a Bunkering Tax The introduction of excise duty on fuel for bunker-ing of ships outside territorial waters D2 - R Cash Adopted 0.2 0.0 0.0

Revision in excise duty on mobile telephony Revision in excise duty on mobile telephony D2 - R Cash Adopted 0.5 0.1 0.0

Revision in excise duty on fuel Revision in excise duty on fuel D2 - R Cash Adopted 0.0 3.9 1.3

Revision in excise duty on cement Revision in excise duty on cement D2 - R Cash Adopted 1.2 1.0 0.4

Revision in excise duty on cigarettes and tobacco Revision in excise duty on cigarettes and tobacco D2 - R Cash Adopted 3.7 4.0 1.4

Other Indirect Tax Measures A series of Indirect tax measures to be announced in the Budget 2014 D2, Other - R Cash Approved 0.0 0.0 23.9

Fees of Offi ce Revenue measure to be announced in the Budget 2014 that would provide a service against a fee Other - R Cash Approved 0.0 0.0 15.0

Revision in the registration tax of private vehicles

This incentive is to promote cleaner private vehi-cles, as a result of which the amount of tax payable upon registration of private vehicles will be based on the Euro standard of the vehicle, in addition to

carbon dioxide, particulate matter, length and value of the car according to the make

D2 - R Cash Adopted 7.8 -3.0 0.0

Removal of TV Licenses Removal of TV Licenses D5 - R Cash Adopted -1.5 -2.5 0.0

Adjustments in Income Tax RateRevision in the income tax rate for parents support-ing children who are not gainfully employed up to

18 years of ageD5 - R Cash Adopted -10.0 0.0 0.0

Widening of the income tax rates

A revision in the tax rate from 35 per cent to 32 per cent for those on a single or joint computation for up to eur 60,000 from 2013. In 2014, the top in-

come tax rate will go down to 29 per cent and drop further to 25 per cent in 2015. The rate of 35 per cent will apply for those earning over eur 60,000

D5 - R Cash Adopted 0.0 -11.5 -13.0

Pension reform initiativesThe pension reform initiative legislated in 2006 is expected to lead to revenue increases in terms of

national insurance contributionsD6 - R Cash Adopted 11.5 11.5 11.5

Effi ciency in revenue collection and Tax Arrears Collection Schemes

The consolidation of the various functions of Gov-ernment revenue into one authority will improve

effi ciency in tax collection. In addition a number of schemes were announced to facilitate the recovery

of tax arrears.

D2, D5, D6 - R Cash Adopted 0.9 -20.6 -8.2

Restrictions on recruitmentResignations and retirees in the public sector

(excluding health and education) will be replaced by new employees on a ratio of 2:3

D1 - E Cash Approved n/a n/a 4.9

Control of Intermediate Consumption Control on intermediate consumption with various measures targeting specifi c components P2 - E Cash Adopted 0.0 21.2 0.0

Pension reform initiatives The pension reform initiative legislated in 2006 is expected to lead to lowering pension expenditure D6 - E Cash Adopted 6.6 18.9 19.7

Revision in the minimum rate of children’s al-lowance

Children’s allowance increases from €350 to €450, and to €527 for families dependent on a minimum

wageD6 - E Cash Adopted -2.8 -2.3 0.0

Extension of maternity leaveThe maternity leave has been extended from 14

weeks to 16 weeks as from the beginning of 2012, and increased by a further two weeks in 2013

D6 - E Cash Adopted -0.5 -0.5 0.0

Assistance to the Elderly Assistance to help the elderly live independently D6 - E Cash Adopted -3.5 -1.5 -3.3

Equity acquisition in Airmalta plc The investment was carried out in Air Malta to sup-port the national airline’s restructuring programme D9 - E Cash Adopted -20.0 -20.0 25.0

Other MeasuresOther expansionary measures to be announced in the Budget of 2014, including measures that are

intended to spur growth and employment

D1, P2, D3, D6, D9, P51, Other - E Cash Approved 0.0 0.0 -27.7

TOTAL -5.9 -1.4 50.9

1 Please describe in further detail in case of major fi scal policy reform plans with potential spillover effects for other Member States in the Euro Area.

24 Malta: Draft Budgetary Plan 2014

Meanwhile, increases in the main items of tax revenue are expected to keep pace with the projected macroeconomic developments. In particular, the ratios-to-GDP of current taxes on income and wealth, capital taxes and social contributions are expected to remain relatively stable. The ratios of 'other revenue' and taxes on production and imports are expected to increase by 0.6 percentage points of GDP. These developments are mainly driven by the impact of a series of indirect tax measures to be announced in the Budget 2014. Meanwhile, the higher ratio of ‘other’ revenue to GDP is mainly on account of higher revenue from EU investment grants.

As indicated in Table 3.1, the noteworthy increase in the revenue ratio, which is expected to increase by 1.22 percentage points of GDP to 43.1 per cent in 2014, is mainly on account of the impact of discretionary revenue measures. The main revenue increasing measures to be announced in the 2014 Budget and the additional revenue from social contributions as a result of the 2006 pension reform will more than offset the negative impact of the gradual widening in the income tax bands. In aggregate, the discretionary revenue measures underpinning fi scal consolidation are expected to contribute to a net 0.44 percentage point improvement in the defi cit-to-GDP ratio.

As the domestic demand led economic recovery becomes more sustained as from 2014, revenue is also expected to rebound, as refl ected in a positive tax revenue buoyancy of 0.45 percentage points of GDP. Meanwhile, the ‘other’ revenue category is expected to contribute to a 0.32 percentage point decline in the 2014 defi cit-to-GDP ratio, mainly on account of EU investment grants, refl ecting the expected timing of implementation of projects fi nanced from the Financial Framework for the period 2007-2013. However, such infl ows correspond to similar increases in outlays and thus have a predominantly neutral impact on the budget balance.

A list of discretionary measures included in the draft budget and underpinning the expenditure and revenue targets for 2014 is presented in Table 5.a. Given that these measures are all undertaken at central Government level, Table 5.b would be identical to Table 5.a and is thus not replicated in this report.

3.4 Divergence from the April 2013 Stability ProgrammeThe targets for the general Government balance have remained unchanged since the April 2013 Update of the Stability Programme. Meanwhile, the targets for the general Government balance at unchanged policy have been revised by 0.3 and -0.3 in 2013 and 2014, respectively. These revisions are mainly attributable to both deviations stemming from changes in the projected macroeconomic scenario, as well as to the fact that the no-policy change scenario is defi ned differently for the purpose of the Draft Budgetary Plan as compared to the Stability Programme.

25 Malta: Draft Budgetary Plan 2014

Footnote:

1 MFIN estimate of revenue from one-off and temporary measures

Divergence from latest SP

Table 7 % GDP

ESA Code 2012 2013 2014

Target general government net lending/ net borrowing B.9

Stability Programme -3.3 -2.7 -2.1

Draft Budgetary Plan -3.3 -2.7 -2.1

Difference 0 0.0 0.0

General government net lending projection at un-changed policies

B.9

Stability Programme -4.3 -2.4 -2.5

Draft Budgetary Plan - -2.7 -2.1

Difference 1 - 0.3 -0.4

1 This difference refer to both deviations stemming from changes in the macroeconomic scenario and those stemming from the effect of policy measures taken between the submission of the SP and the submission of the DBP. Differences are also due to the fact that the no-policy change scenario is defi ned differently for the purpose of this Code of Conduct with respect to the Stability Programme.

26 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

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g st

eps

Spec

ific

chal

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es/ri

sks

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plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

a) C

orre

ct th

e Ex

cess

ive

Def

icit

in a

sus

tain

able

man

ner

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st fi

gure

s su

gges

t tha

t Mal

ta is

on

track

to re

ach

the

defic

it ta

rget

of 2

.7%

. Stru

ctur

al re

form

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d co

nsol

idat

ion

mea

sure

s, b

oth

reve

nue

and

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nditu

re b

ased

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bei

ng im

plem

ente

d in

201

3 an

d w

ill b

e in

tens

ified

in 2

014

to s

uppo

rt a

furth

er re

duct

ion

in th

e st

ruct

ural

def

icit

in li

ne w

ith th

e M

ediu

m T

erm

Bud

get O

bjec

tive

and

the

appr

opria

te a

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tmen

t pat

h to

war

ds it

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ianc

e w

ith

the

SG

P re

quire

men

ts. M

ore

deta

ils a

re a

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ble

in th

e R

epor

t on

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ctiv

e A

ctio

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bmitt

ed in

co

njun

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n w

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is P

rogr

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e

2013

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4A

sm

all o

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ch

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limit

the

accu

racy

of f

orec

asts

on

whi

ch fi

scal

pol

icy

is

base

d. H

avin

g sa

id th

is, G

over

nmen

t is

follo

win

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ry p

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nt

mac

roec

onom

ic a

nd fi

scal

pro

ject

ions

. Stru

ctur

al re

form

s ar

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to h

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a po

sitiv

e im

pact

on

grow

th e

ven

in th

e sh

ort-t

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. H

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omic

pro

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a n

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licy

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nd d

o no

t tak

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to a

ccou

nt th

e fu

ll im

pact

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refo

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for p

rude

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side

ratio

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The

redu

ctio

n in

the

defic

it is

prim

arily

bac

ked

by s

truct

ural

mea

sure

s, in

clud

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the

ongo

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in p

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indi

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solid

atio

n m

easu

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s on

gro

wth

are

exp

ecte

d to

be

mar

gina

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view

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very

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onom

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iden

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i) Th

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fect

ive

as fr

om 1

Jan

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14

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mea

sure

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cont

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ess

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us in

crea

sing

pro

duct

ivity

.

CSR

1:

"...P

ut in

pla

ce a

bin

ding

, rul

e ba

sed

mul

tinan

nual

fisc

al

fram

ewor

k in

201

3..."

a) F

isca

l Rul

esA

Fis

cal R

espo

nsib

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Act

will

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Par

liam

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whi

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ct w

ill in

corp

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e ru

les

of th

e S

tabi

lity

and

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wth

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t (S

GP

), na

mel

y th

e es

tabl

ishm

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Med

ium

Ter

m B

udge

t Obj

ectiv

e an

d th

e A

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tmen

t pat

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war

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at o

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tive,

cou

pled

with

the

nece

ssar

y es

cape

cla

uses

co

nsis

tent

with

the

SG

P, a

utom

atic

cor

rect

ion

mec

hani

sms

and

repu

tatio

nal c

onse

quen

ces

in th

e ev

ent o

f non

-com

plia

nce.

end

of 2

013

A ru

les-

base

d fis

cal f

ram

ewor

k is

a n

eces

sary

but

on

its o

wn

insu

ffici

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tion

for e

nsur

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long

-term

fisc

al s

usta

inab

ility

. Th

e su

cces

s of

the

fisca

l rul

es d

epen

ds o

n th

e su

cces

sful

im

plem

enta

tion

of th

e ot

her r

efor

ms

in th

e fis

cal f

ram

ewor

k an

d th

e po

litic

al c

omm

itmen

t at a

ny p

oint

in ti

me

to s

uch

a fra

mew

ork.

A m

echa

nica

l int

erpr

etat

ion

of th

e th

e fis

cal r

ules

pr

esen

ts a

n ad

ditio

nal r

isk

to a

sm

all o

pen

econ

omy

like

Mal

ta. I

t is

impe

rativ

e th

at th

e fis

cal i

nstit

utio

n re

spon

sibl

e fo

r the

m

onito

ring

of fi

scal

rule

s em

ploy

s an

eco

nom

ic in

terp

reta

tion

of

the

rule

s an

d es

cape

cla

uses

rath

er th

an a

mec

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cal

inte

rpre

tatio

n.

This

is p

art o

f the

refo

rm o

f the

Fis

cal F

ram

ewor

ks e

nsur

ing

the

nece

ssar

y in

stitu

tiona

l ref

orm

is in

pl

ace

to s

uppo

rt a

bind

ing

rule

s-ba

sed

fram

ewor

k w

hich

enc

oura

ges

sust

aina

ble

publ

ic fi

nanc

es in

th

e lo

ng te

rm b

ut w

hich

als

o pr

eser

ves

a ne

cess

ary

degr

ee o

f cou

nter

-cyc

lical

fisc

al p

olic

y su

bjec

t to

unde

rlyin

g fis

cal c

ondi

tions

.

b) S

ettin

g up

of a

Fis

cal C

ounc

ilTh

e fu

nctio

ns o

f an

Inde

pend

ent F

isca

l Cou

ncil

are

envi

sage

d to

be

unde

rtake

n by

the

Aud

it O

ffice

i nM

alta

whi

ch is

alre

ady

back

ed b

y a

lega

l fra

mew

ork

to e

nsur

e its

inde

pend

ence

and

ade

quac

y of

re

sour

ces.

The

func

tions

of t

he A

udit

Offi

ce a

ctin

g as

the

Fisc

al C

ounc

il w

ill b

e de

linea

ted

in th

e Fi

scal

Res

pons

ibili

ty A

ct a

nd w

ill in

clud

e th

e as

sess

men

t of o

ffici

al m

acro

econ

omic

and

fisc

al

proj

ectio

ns, t

he e

valu

atio

n of

the

fisca

l sta

nce

cond

ition

al o

n th

e fis

cal r

ules

and

sub

ject

to e

scap

e cl

ause

s an

d au

tom

atic

cor

rect

ion

mec

hani

sms,

the

com

mun

icat

ion

of it

s as

sess

men

t to

Par

liam

ent

and

the

publ

icat

ion

of th

at a

sses

smen

t thr

ough

a re

port

at le

ast t

wic

e a

year

, in

Aut

umn

afte

r the

pu

blic

atio

n of

the

budg

et a

nd in

Spr

ing

afte

r the

pub

licat

ion

of th

e S

tabi

lity

Pro

gram

me.

Am

endm

ents

to

the

Aud

itor G

ener

al a

nd A

udit

Offi

ce A

ct w

ill b

e m

ade

to e

nsur

e co

nsis

tenc

y w

ith re

spec

t to

the

Fisc

al R

espo

nsib

ility

Act

.

For t

he 2

014

Bud

get,

the

Gov

ernm

ent h

as

appo

inte

d th

e N

atio

nal A

udit

offic

e to

und

erta

ke th

e en

dors

emen

t of t

he M

inis

try fo

r Fin

ance

m

acro

econ

omic

fore

cast

s un

derly

ing

the

2014

B

udge

t. Th

e re

port

was

com

plet

ed a

nd p

rese

nted

to

the

Gov

ernm

ent a

t the

beg

inni

ng o

f Sep

tem

ber.

Dup

licat

ion

of re

sour

ces

in s

uch

a sm

all a

dmin

istra

tion

can

pres

ent a

risk

. Pol

itica

l pol

aris

atio

n ca

n al

so te

st th

e cr

edib

ility

of

the

Aud

it O

ffice

act

ing

as a

fisc

al c

ounc

il. C

omm

unic

atio

n w

ith

the

publ

ic o

n su

ch a

n im

porta

nt y

et c

ompl

ex p

olic

y as

the

budg

et

requ

ires

the

build

up

of a

dditi

onal

reso

urce

s in

clud

ing

reso

urce

s to

enh

ance

fina

ncia

l lite

racy

in M

alta

cou

pled

with

inve

stm

ent i

n fin

anci

al jo

urna

lism

.

The

fisca

l cou

ncil

will

be

resp

onsi

ble

to e

nsur

e th

e ap

prop

riate

bal

ance

bet

wee

n th

e ad

here

nce

to

fisca

l tar

gets

and

the

oper

atio

n of

the

budg

et a

s a

mac

roec

onom

ic s

tabi

lisat

ion

tool

. In

othe

r wor

ds it

w

ill s

afeg

uard

long

-term

fisc

al s

usta

inab

ility

by

ensu

ring

fisca

l pru

denc

e an

d al

so b

y pr

omot

ing

coun

ter-

cycl

ical

fisc

al p

olic

y. It

als

o su

ppor

ts th

e fu

nctio

ning

of t

he fi

scal

rule

s by

inte

rpre

ting

them

in

such

a w

ay th

at th

e ap

prop

riate

bal

ance

bet

wee

n fis

cal c

onso

lidat

ion

and

grow

th o

bjec

tives

is

mai

ntai

ned.

c) P

uttin

g in

pla

ce a

bin

ding

rule

mut

iann

ual f

isca

l fra

mew

ork

in 2

013

A ru

les

base

d fra

mew

ork

will

gov

ern

the

setti

ng u

p of

a 3

-yea

r bud

get,

inco

rpor

atin

g ru

les

for t

he

dete

rmin

atio

n of

bud

geta

ry a

lloca

tions

by

min

istry

and

by

func

tion,

sub

ject

to th

e po

litic

al p

riorit

ies

of

the

Gov

ernm

ent.

It w

ill e

stab

lish

an e

xpen

ditu

re c

eilin

g to

ens

ure

that

the

med

ium

-term

bud

get w

ill b

epr

eser

ved

and

over

runs

pre

vent

ed. F

urth

erm

ore,

a s

tar c

ham

ber a

t cab

inet

leve

l com

pose

d of

the

Prim

e M

inis

ter,

the

Dep

uty

Prim

e M

inis

ter a

nd th

e M

inis

ter f

or F

inan

ce w

ill b

e es

tabl

ishe

d . T

he s

tar

cham

ber w

ill b

e ta

sked

with

fina

lisin

g a

com

prom

ise

betw

een

the

line

min

istri

es o

r ent

rust

ing

the

Min

istry

for F

inan

ce to

com

e up

with

app

ropr

iate

reve

nue

mea

sure

s to

add

ress

the

fund

ing

gap.

In

addi

tion,

leg

isla

tive

prop

osal

s fo

r the

set

ting

up o

f a c

ontin

genc

y re

serv

e fu

nd a

nd th

e re

gula

tion

of

supp

lem

enta

ry e

stim

ates

are

als

o be

ing

form

ulat

ed.

end

of 2

013

A

rule

s ba

sed

fram

ewor

k ca

n la

ck c

redi

bilit

y if

it is

too

rigid

. In

this

con

text

a m

ulti-

annu

al fr

amew

ork

will

ass

it th

e G

over

nmen

t in

com

mitt

ing

to fi

scal

targ

ets

whi

lst l

eavi

ng ro

om to

impl

emen

t its

pol

itica

l com

mm

itmen

ts in

a re

ason

able

tim

e fra

me.

On

the

othe

r han

d to

o m

uch

flexi

bilit

y ca

n un

derm

ine

the

effe

ctiv

enes

s of

suc

h a

fram

ewor

k. T

he c

redi

bilit

y of

suc

h a

fram

ewor

k is

en

hanc

ed if

the

inst

itutio

nal r

form

s ar

e in

pla

ce, c

ondi

tiona

l on

the

polit

ical

com

mitm

ent t

owar

ds fi

scal

pru

denc

e an

d al

so if

the

adm

inis

trativ

e ap

para

tus

is in

pla

ce to

sus

tain

the

rath

er m

ore

com

plex

fram

ewor

k. T

he s

ucce

ss o

f thi

s m

ulti-

annu

al b

udge

t fra

mew

ork

requ

ires

the

stre

ngth

enin

g of

the

Min

istry

for F

inan

ce

incl

udin

g its

abi

lity

to fo

reca

st a

s ac

cura

tely

as

poss

ible

futu

re

budg

etar

y de

man

ds a

nd re

sour

ce a

vaila

bilit

y.

Com

plia

nce

with

the

SG

P re

quire

men

ts re

quire

s a

med

ium

term

bud

get f

ram

ewor

k w

hich

sup

ports

th

e ac

hiev

enet

of f

isca

l tar

gets

and

ens

ures

the

appr

opria

te a

dmin

istra

tive

appa

ratu

s to

tran

slat

e th

e ag

greg

ate

fisca

l tar

gets

into

the

busi

ness

pla

ns o

f eve

ry m

inis

try a

nd th

e pr

ojec

tions

of e

xpen

ditu

re

rela

ting

to s

tatu

tory

com

mitm

ents

.

d) In

trod

uctio

n of

a s

truc

tura

l bud

get b

alan

ce ru

le in

to

natio

nal l

awTh

is w

ill b

e in

corp

orat

ed in

the

Fisc

al R

espo

nsib

ility

Act

and

will

be

in li

ne w

ith th

e pr

ovis

ions

of t

he

Fisc

al C

ompa

ct.

end

of 2

013

The

Med

ium

Ter

m B

udge

t Obj

ectiv

e w

ill s

afeg

uard

long

-term

fisc

al s

usta

inab

ility

giv

en th

e ag

eing

po

pula

tion

and

its im

plic

atio

ns o

n pu

blic

fina

nce

sust

aina

bilit

y.

e) R

each

ing

the

MTO

Ref

er to

Sta

bilit

y P

rogr

amm

e 20

13-2

016.

Ref

er to

Sta

bilit

y P

rogr

amm

e 20

13-2

017.

Ref

er to

Sta

bilit

y P

rogr

amm

e 20

13-2

018.

Ref

er to

Sta

bilit

y P

rogr

amm

e 20

13-2

019.

f) C

ompr

ehen

sive

Spe

ndin

g R

evie

wA

Com

preh

ensi

ve S

pend

ing

Rev

iew

will

form

the

basi

s fo

r the

eva

luat

ion

of b

udge

tary

pla

ns w

ith th

e ai

m o

f ide

ntify

ing

a be

tter u

tilis

atio

n of

pub

lic re

sour

ces

and

poss

ibly

iden

tify

expe

nditu

re s

avin

gs if

an

d w

here

app

ropr

iate

. The

spe

ndin

g re

view

will

als

o pr

ovid

e a

guid

e to

the

Gov

ernm

ent i

n se

tting

ou

t its

pol

itica

l prio

ritie

s w

hen

devi

sing

the

mut

i-ann

ual b

udge

t.

Ong

oing

The

adm

inis

trativ

e ca

paci

ty to

car

ry o

ut a

nd fo

llow

up

on s

uch

a re

view

nee

ds fu

rther

stre

ngth

enin

g. T

he li

nkag

e w

ith th

e to

p-do

wn

budg

et p

roce

ss is

als

o to

be

impr

oved

.

The

com

preh

ensi

ve s

pend

ing

revi

ew w

ill a

ssis

t the

Min

istry

for F

inan

ce to

pre

pare

cre

dibl

e an

d re

alis

tic fi

scal

targ

ets

whi

lst m

axim

isin

g th

e be

st u

se o

f sca

rce

reso

urce

s. T

his

will

als

o su

ppor

t a

grow

th fr

iend

ly fi

scal

sta

nce.

CSR

2:

"To

ensu

re th

e lo

ng te

rm

sust

aina

bilit

y of

pub

lic fi

nanc

es,

cont

inue

to re

form

the

pens

ion

syst

em to

cur

b th

e pr

ojec

ted

incr

ease

in e

xpen

ditu

re, i

nclu

ding

by

mea

sure

s su

ch a

s ac

cele

ratin

g th

e in

crea

se in

the

stat

utor

y re

tirem

ent a

ge, i

ncre

asin

g th

e ef

fect

ive

retir

emen

t age

by

alig

ning

th

e re

tirem

ent a

ge o

r pen

sion

be

nefit

s to

cha

nges

in li

fe

expe

ctan

cy a

nd b

y en

cour

agin

g pr

ivat

e pe

nsio

n sa

ving

s..."

1. E

nsur

ing

Publ

ic F

inan

ce S

usta

inab

ility

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

1.1.

Fis

cal p

olic

y

CSR

1:

"Spe

cify

and

impl

emen

t the

m

easu

res

need

ed to

ach

ieve

the

annu

al s

ruct

ural

adj

ustm

ent e

ffort

se

t out

in c

ounc

il re

com

men

datio

ns u

nder

the

exce

ssiv

e de

ficit

proc

edur

e in

or

der t

o co

rrec

t the

exc

essi

ve

defic

it by

201

4 in

a s

usta

inab

le a

nd

frie

ndly

man

ner,

limiti

ng re

cour

se

to o

neof

f/tem

pora

ry m

easu

res.

A

fter c

orre

ctin

g th

e ex

cess

ive

defic

it, p

ursu

e st

ruct

ural

ad

just

men

t effo

rt a

nd a

n ap

prop

riate

pac

e so

as

to re

ach

the

MTO

by

2019

..."

1.2.

Ref

orm

ing

the

fisca

l fra

mew

orks

1.3.

Ref

orm

ing

Exp

endi

ture

Pro

gram

mes

a) 2

006

Pens

ion

Ref

orm

In D

ecem

ber 2

006,

the

Hou

se o

f Rep

rese

ntat

ives

ado

pted

a s

erie

s of

refo

rms

(Act

No.

XIX

of 2

006)

in

clud

ing;

rais

ing

the

pens

ion

age

from

61

to 6

5; re

duci

ng re

tirem

ent b

efor

e pe

nsio

n ag

e; a

dopt

ing

chan

ges

to th

e tw

o-th

irds

pens

ion,

cal

cula

tion

form

ula,

the

max

imum

pen

sion

able

inco

me

and

the

cred

iting

of c

ontri

butio

ns a

s pr

ovid

ed fo

r und

er th

e pr

eced

ing

legi

slat

ive

fram

ewor

k. T

he 2

006

refo

rm

cons

titut

es th

e m

ain

polic

y su

ppor

ting

the

stru

ctur

al e

ffort

as c

once

ived

in th

e S

tabi

lity

Pro

gram

me.

Ong

oing

The

para

met

ric c

hang

es in

trodu

ced

in th

e pe

nsio

n re

form

als

o co

ntrib

ute

to ra

ise

expe

nditu

re in

the

long

term

.Th

e in

crea

se in

the

pens

ion

age,

the

incr

ease

in th

e co

ntrib

utio

n pe

riod

for f

ull p

ensi

on e

ligib

ility

and

th

e ch

ange

s to

the

bene

t for

mul

a co

ntrib

ute

to lo

wer

the

proj

ecte

d in

crea

se in

pen

sion

exp

endi

ture

. Th

e pe

nsio

n re

form

initi

ativ

e le

gisl

ated

in 2

006

is e

xpec

ted

to c

ontri

bute

mor

e in

term

s re

venu

e,

equi

vale

nt to

0.1

6 pe

r cen

t of G

DP

in 2

013,

0.1

5 pe

r cen

t of G

DP

in 2

014,

0.1

3 pe

r cen

t of G

DP

in

2015

, and

0.1

2 pe

r cen

t of G

DP

in 2

016.

In a

dditi

on, p

ensi

on re

form

initi

ativ

es a

re e

xpec

ted

to

redu

ce e

xpen

ditu

re b

y 0.

27 p

er c

ent o

f GD

P in

201

3, 0

.26p

er c

ent o

f GD

P in

201

4, 0

.25

per c

ent o

f G

DP

in 2

015,

and

0.2

4per

cen

t of G

DP

in 2

016.

Thi

s im

plie

s th

at h

ighe

r rev

enue

in te

rms

of n

atio

nal

insu

ranc

e co

ntrib

utio

ns a

s w

ell a

s lo

wer

ing

pens

ion

expe

nditu

re a

re e

xpec

ted

to p

ut p

ublic

fina

nces

on

a m

ore

sust

aina

ble

foot

ing

in th

e sh

ort t

o m

ediu

m te

rm. P

ublic

pen

sion

exp

endi

ture

to G

DP

is

expe

cted

to fa

ll m

ainl

y du

e to

low

er c

over

age

ratio

, low

er e

mpl

oym

ent r

atio

and

low

er b

enef

it ra

tio

effe

ct, w

hile

the

dyna

mic

s of

the

agei

ng p

roce

ss is

the

mai

n dr

iver

beh

ind

high

er p

ublic

pen

sion

ex

pend

iture

s.

How

ever

, at t

he s

ame

time,

the

mor

e dy

nam

ic in

dexa

tion

of th

e ce

iling

on

pens

iona

ble

inco

me,

the

stat

utor

y ch

ange

s to

inde

xatio

n fo

r old

-age

pen

sion

s an

d th

e in

trodu

ctio

n of

the

guar

ante

ed n

atio

nal m

inim

um p

ensi

on fo

r per

sons

retir

ing

from

202

6 on

war

ds c

ontri

bute

to in

crea

se

the

expe

nditu

re p

ress

ure.

Appendix Table 6.a Indications on how the measures in the DBP address CSR and the targets set by the Union's Strategy for growth and jobs CSR recommendations

27 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

b) P

ensi

on R

efor

m P

roce

ssFo

llow

ing

the

elec

tion

of th

e ne

w a

dmin

istra

tion

in M

arch

201

3, G

over

nmen

t has

exp

ress

ed it

s co

mm

itmen

t for

the

cont

inua

tion

of th

e pe

nsio

n re

form

pro

cess

in M

alta

. A J

oint

Pen

sion

s W

orki

ng

Gro

up -

the

Pens

ions

Str

ateg

y G

roup

- be

twee

n th

e M

inis

try fo

r Fin

ance

and

the

Min

istry

for t

he

Fam

ily a

nd S

ocia

l Sol

idar

ity w

as s

et u

p to

revi

ew th

e w

ork

carr

ied

out b

y th

e P

ensi

ons

Wor

king

G

roup

, in

parti

cula

r the

reco

mm

enda

tions

out

lined

in th

e P

ost-C

onsu

ltatio

n R

epor

t sub

mitt

ed to

G

over

nmen

t in

Aug

ust2

012.

Fur

ther

mor

e it

has

been

task

ed to

dra

w u

p a

holis

tic s

trate

gy a

imed

at

addr

essi

ng th

e ad

equa

cy a

nd s

usta

inab

ility

of p

ensi

ons

in M

alta

and

dev

elop

a c

omm

unic

atio

ns

stra

tegy

dire

cted

tow

ards

rais

ing

the

leve

l of p

ublic

aw

aren

ess

on p

ensi

ons

issu

es in

Mal

ta a

nd th

e ne

ed to

ens

ure

that

futu

re p

ensi

on in

com

es a

re a

dequ

ate

in o

rder

to s

usta

in a

hig

h st

anda

rd o

f liv

ing

in re

tirem

ent.

Dra

win

g up

of a

hol

istic

stra

tegy

by

Oct

ober

201

3 ai

med

at a

ddre

ssin

g th

e ad

equa

cy a

nd s

usta

inab

ility

of

pen

sion

s in

Mal

ta o

n th

e ba

sis

of th

e as

sess

men

t of

the

reco

mm

enda

tions

of t

he P

ensi

ons

Wor

king

G

roup

;Dev

elop

men

t of a

com

mun

icat

ions

stra

tegy

di

rect

ed to

war

d ra

isin

g th

e le

vel o

f pub

lic a

war

enes

s on

pen

sion

s is

sues

in M

alta

and

the

need

to e

nsur

e th

at fu

ture

pen

sion

inco

mes

are

ade

quat

e in

ord

er t o

sust

ain

a hi

gh s

tand

ard

of li

ving

in re

tirem

ent,

by

Oct

ober

201

3; T

he d

raw

ing

up a

fina

l rep

ort,s

hall

be

subm

itted

to th

e M

inis

ter f

or th

e Fa

mily

and

Soc

ial

Sol

idar

ity fo

r its

and

Gov

ernm

ent’s

con

side

ratio

n by

th

e en

d of

Sep

tem

ber 2

014.

Res

ista

nce

by th

e E

mpl

oyer

s' A

ssoc

iatio

n to

the

intro

duct

ion

of a

se

cond

-pill

ar p

ensi

on s

chem

e

c) T

hird

Pill

ar P

rivat

e Pe

nsio

nsA

n A

dvis

ory

Gro

up o

n Th

ird P

illar

Pen

sion

s ha

s be

en s

et u

p w

ith th

e vi

ew to

mak

e re

com

men

datio

ns

rela

tive

to th

e in

trodu

ctio

n of

suc

h vo

lunt

ary

sche

mes

in M

alta

. The

gro

up's

rem

it w

as to

com

e up

w

ith a

set

of e

ligib

ility

crit

eria

that

fina

ncia

l pro

duct

s w

ould

nee

d to

mee

t in

orde

r for

fisc

al in

cent

ives

to

be

gran

ted.

The

gro

up a

lso

eval

uate

d di

ffere

nt ty

pes

of fi

scal

ince

ntiv

es w

hich

wou

ld b

e of

fere

d to

sa

vers

, and

pos

sibl

y th

eir e

mpl

oyer

s, if

they

als

o he

lp s

uppo

rt vo

lunt

ary

retir

emen

t sav

ing

prov

isio

n.

The

grou

p al

so c

onsi

dere

d di

ffere

nt o

ptio

ns o

f pro

vidi

ng th

e in

whi

ch w

ay to

pro

vide

the

fisca

l rel

ief.

The

grou

p al

so re

com

men

ded

the

intro

duct

ion

of ta

x-fa

vour

ed a

ccou

nts,

whe

re in

tere

st e

arne

d on

th

ese

acco

unts

wou

ld b

e ta

x-fre

e, w

ith th

e op

tion

of c

onve

rting

suc

h ac

coun

ts in

to p

erso

nal

retir

emen

t sch

emes

. Suc

h ta

x-fa

vour

ed a

ccou

nts

wou

ld s

uppl

emen

t the

intro

duct

ion

of v

olun

tary

th

ird p

illar

pen

sion

s in

Mal

ta.

The

Adv

isor

y G

roup

has

del

iver

ed it

s re

port

to

Min

iste

r. P

ossi

ble

impl

emen

tatio

n fo

r Bud

get 2

014.

Th

e le

gisl

ativ

e fra

mew

ork

is a

lread

y in

pla

ce.

How

ever

, new

regu

latio

n m

ay b

e ne

eded

.

Ther

e w

ould

be

adde

d re

sour

ce re

quire

men

ts a

t the

app

oint

ed

regu

lato

r. Th

e gr

oup

is e

valu

atin

g di

ffere

nt ty

pes

of fi

scal

in

cent

ives

for p

erso

nal r

etire

men

t sch

emes

. Dep

endi

ng o

n th

e fis

cal i

ncen

tive

regi

me,

this

cou

ld m

ean

an im

med

iate

fisc

al

cost

s.

It is

to b

e no

ted

that

at p

rese

nt, i

n M

alta

, mos

t fin

anci

al in

vest

men

ts a

re ta

xed

on a

TTT

or T

TE

appr

oach

. Goi

ng fo

r an

EE

T re

gim

e, a

s re

com

men

ded

by th

e G

roup

, will

mea

n th

at th

ere

will

be

imm

edia

te fi

scal

cos

ts a

s ta

x re

venu

e w

ill b

e lo

st o

n co

ntrib

utio

ns m

ade

into

sch

emes

. Som

e re

venu

e w

ill a

lso

be lo

st o

n fu

ture

inve

stm

ent i

ncom

e, a

ssum

ing

that

indi

vidu

als

wou

ld h

ave

carr

ied

out t

he

inve

stm

ents

in th

e ab

senc

e of

tax

ince

ntiv

es. H

owev

er, t

he im

pact

of t

he s

econ

d is

dee

med

to b

e ne

glig

ible

in th

e sh

ort t

erm

.

Und

er a

cau

tious

sce

nario

whe

re ta

ke-u

p is

par

tial a

nd in

line

with

cur

rent

sav

ing

beha

viou

r, th

e co

st

of ta

x re

lief c

ould

be

in th

e ra

nge

of €3

.3 -

€9.9

mill

ion,

dep

endi

ng o

n th

e ty

pe o

f tax

relie

f to

be

adop

ted

by th

e A

utho

ritie

s.

CSR

2:..

.Pur

sue

heal

thca

re re

form

s to

incr

ease

the

cost

of

effe

ctiv

enes

s of

the

sect

or, i

n pa

rtic

ular

by

stre

ngth

enin

g pu

blic

pr

imar

y ca

re p

rovi

sion

. Im

prov

e th

e ef

ficie

ncy

and

redu

ce th

e le

ngth

of

publ

ic p

rocu

rem

ent p

roce

dure

s."

d) Im

prov

ing

Cos

t Effe

ctiv

enes

s in

the

Hea

lth S

ecto

r:M

easu

res

iden

tifie

d by

Gov

ernm

ent t

o in

crea

se c

ost-e

ffect

iven

ess

of th

e he

alth

sys

tem

incl

ude:

i)

Cen

tralis

atio

n of

sto

res

ii) F

aste

r Pro

cure

men

t Pro

cedu

res

resu

lting

from

the

stud

y un

derta

ken

by th

e M

anag

emen

t and

E

ffici

ency

Uni

t

The

new

adm

inis

tratio

n is

cur

rent

ly ta

king

sto

ck o

f th

e si

tuat

ion

and

plan

ning

the

way

forw

ard.

Cha

lleng

es in

clud

e H

R ,

Fina

ncia

l Res

trict

ions

, IT,

Cap

acity

C

onst

rain

ts a

nd g

ener

al re

sist

ance

to c

hang

e.C

ost e

ffect

ive

use

of m

edic

ines

incl

udin

g in

crea

sed

use

of g

ener

ics.

Stre

amlin

ed m

edic

ines

and

med

ical

dev

ices

pro

cure

men

t pra

ctic

es to

gai

n be

tter p

ricin

g an

d im

prov

e re

liabi

lity

and

depe

ndab

ility

and

redu

ce b

urau

crac

y. T

his

also

incl

udes

a re

view

of o

f the

cur

rent

di

strib

utio

n pr

oces

ses.

Impr

oved

gov

erna

nce

on th

e de

ploy

men

t of r

esou

rces

and

bed

man

agem

ent p

ract

ices

to e

nsur

e be

tter u

tilis

atio

n of

reso

urce

s an

d av

oid

was

tage

.

e) R

educ

ing

the

cost

of "

soci

al"

beds

in h

ospi

tal

A B

usin

ess

proc

ess

re-e

ngin

eerin

g ex

erci

se is

pla

nned

at M

DH

to e

nsur

e th

at a

cute

bed

s ar

e us

ed

truly

for a

cute

car

e an

d da

y su

rger

y is

util

ised

. At M

ater

Dei

Hos

pita

l the

re a

re a

ppro

xim

atel

y 70

“s

ocia

l” be

ds o

ccup

ied

by e

lder

ly p

erso

ns n

eedi

ng lo

ng te

rm c

are.

The

se b

eds

are

cost

ing

the

Min

istry

for H

ealth

app

roxi

mat

ely €

200

per d

ay. T

he a

im is

to m

ove

som

e of

thes

e oc

cupa

nts

into

co

mm

unity

nur

sing

hom

es w

here

the

cost

is s

igni

fican

tly lo

wer

.

The

Min

istry

for H

ealth

is w

orki

ng c

lose

ly w

ith th

e M

inis

try fo

r the

Fam

ily a

nd S

ocia

l Sol

idar

ity to

in

crea

se th

e ca

paci

ty o

f bed

s in

the

com

mun

ity b

oth

with

in th

e pr

ivat

e an

d th

e pu

blic

sec

tor.

The

maj

or c

halle

nge

is th

e cr

eatio

n of

new

cap

acity

in c

are

hom

es. T

he a

im th

eref

ore

is to

pro

vide

bot

h a

shor

t and

long

te

rm s

trate

gy. T

he m

ajor

risk

is a

flu

epid

emic

that

will

put

pr

essu

re o

n th

e ho

spita

l sys

tem

and

the

gove

rnm

ent h

avin

g to

re

spon

d to

find

hos

pita

l bed

s in

the

priv

ate

sect

or.

The

polic

y ch

ange

will

redu

ce th

e co

st o

f lon

g te

rm c

are

in h

ospi

tals

to a

low

er c

ost c

omm

unity

car

e.

Mal

ta’s

eld

erly

pop

ulat

ion

is g

row

ing

and

the

Gov

ernm

ent i

s co

mm

itted

to fi

nd a

long

er te

rm s

olut

ion.

CSR

4:

"Con

tinue

effo

rts

to d

iver

sify

the

ener

gy m

ix a

nd e

nerg

y so

urce

s, in

pa

rtic

ular

thro

ugh

incr

easi

ng th

e ta

ke u

p of

rene

wab

le e

nerg

y an

d th

e tim

ely

com

plet

ion

of th

e el

ectr

icity

link

with

Sic

ily...

"

a) S

trat

egic

Par

tens

hip

betw

een

Enem

alta

and

Sha

ngha

i El

ectr

ic P

ower

Gov

ernm

ent r

ecen

tly a

nnou

nced

that

it h

ad s

igne

d a M

emor

andu

m o

f Und

erst

andi

ng w

ith th

e C

hina

Pow

er In

vest

men

ts C

orpo

ratio

n (C

PIC

), on

e of

the

five

larg

est s

tate

-ow

ned

elec

trici

ty

prod

ucer

s in

Chi

na w

ith a

n A

AA

cre

dit r

atin

g. A

s pa

rt of

the

agre

emen

t, S

hang

hai E

lect

ric P

ower

, a

subs

idia

ry o

f CP

IC w

ill b

ecom

e a

min

ority

sha

reho

lder

in E

nem

alta

, pro

vidi

ng th

e M

alte

se u

tility

co

mpa

ny w

ith a

cas

h in

ject

ion

of a

roun

d €20

0 m

illio

n w

hich

will

impr

ove

its fi

nanc

ial p

ositi

on a

nd

redu

ce th

e G

over

nmen

t's c

ontin

gent

liab

ilitie

s.

The

parti

al p

rivat

isat

ion

will

sup

port

the

rest

ruct

urin

g pr

oces

s, in

ject

the

nece

ssar

y liq

uidi

ty in

the

corp

orat

ion.

A s

trate

gic

parn

er w

ill a

lso

assi

st e

nem

alta

to re

stru

ctur

e its

ope

ratio

ns, p

rovi

de te

chni

c aas

sist

ance

and

allo

w E

nem

alta

to b

ecom

e a

prof

itabl

e an

d pr

oduc

tive

com

pany

als

o by

tapp

ing

new

m

arke

ts fo

r ins

tanc

e in

the

rene

wab

le e

nerg

y se

ctor

. Thi

s co

uld

also

pro

vide

an

oppo

rtuni

ty fo

r hig

h va

lue

adde

d em

ploy

men

t gen

erat

ion.

b) F

inan

cial

Res

truc

turin

gA

pla

n to

rest

ruct

ure

Ene

mal

ta’s

deb

t was

app

rove

d by

Par

liam

ent o

n D

ecem

ber 2

012.

The

pla

n al

low

ed E

nem

alta

to s

moo

th o

ut it

s re

paym

ents

on

outs

tand

ing

oblig

atio

ns a

nd b

ette

r alig

n th

em w

ith

cash

flow

s fro

m ta

riff i

ncom

e. A

s pa

rt of

the

trans

actio

n, th

e co

mpa

ny s

old

asse

ts to

a S

peci

al

Pur

pose

Veh

icle

, ref

inan

ced

its lo

ans

from

the

proc

eeds

and

leas

ed th

e as

sets

bac

k at

a re

nt o

f ab

out €

20 m

illio

n a

year

, whi

ch is

equ

ival

ent t

o th

e ca

pita

l and

inte

rest

pay

men

ts d

ue o

n th

e re

finan

ced

loan

s. T

he re

stru

ctur

ing

enab

led

Ene

mal

ta to

spr

ead

out €

318.

5 m

illion

in lo

an

repa

ymen

ts o

ver 2

5 ye

ars

in p

lace

of t

hree

bul

let r

epay

men

ts d

ue in

201

1, 2

015

and

2018

. The

tra

nsac

tion

allo

wed

Ene

mal

ta to

con

tinue

its

oper

atio

ns.

2012

as a

bove

c) S

truc

tura

l ref

orm

s ad

dres

sing

Ene

mal

ta's

cos

t and

reve

nue

base

i) Th

e co

mpa

ny e

xpec

ts to

gen

erat

e €36

mill

ion

in s

avin

gs fr

om th

e re

cent

ly in

stal

led

dies

el-r

unpo

wer

pla

nt. T

his

has

cut t

he c

ost o

f ele

ctric

ity g

ener

atio

n to

11

cent

s/un

it, fr

om 1

7-18

cen

ts.

ongo

ing

as a

bove

ii) T

he 2

00M

W 2

30kV

HV

AC

sub

-sea

inte

rcon

nect

or b

etw

een

Mal

ta a

nd S

icily

is e

xpec

ted

to b

e co

mpl

eted

bef

ore

the

end

of 2

014.

It in

clud

es th

e m

anuf

actu

re a

nd la

ying

of 1

00km

of t

he s

ub-s

ea

HV

AC

cab

le, t

he c

onst

ruct

ion

of a

new

230

kV s

ubst

atio

n at

Mag

htab

in M

alta

toge

ther

with

all

nece

ssar

y sw

itch

gear

, tra

nsfo

rmer

s an

d re

acto

rs to

con

nect

to th

e M

alte

se 1

32kV

dis

tribu

tion

syst

em a

nd u

pgra

ding

of t

he T

erna

230

kV s

ubst

atio

n at

Rag

usa

in S

icily

toge

ther

with

20k

m o

f un

derg

roun

d ca

ble

in S

icily

.

2014

Furth

er d

elay

s in

the

impl

emen

tatio

n of

the

proc

ess

espe

cial

ly in

S

icily

The

inte

rcon

nect

or w

ill a

lso

enab

le E

nem

alta

to b

road

en it

s en

ergy

mix

and

mak

e it

less

vul

nera

ble

to

fluct

uatio

ns in

oil

pric

es. A

cces

s to

the

Eur

opea

n gr

id w

ill a

lso

allo

w E

nem

alta

to b

enef

it fro

m th

e m

ore

com

petit

ive

pric

es a

ssoc

iate

d w

ith a

larg

er m

arke

t.

iii) S

mar

t met

ers

are

bein

g in

stal

led

for e

very

ele

ctric

ity c

onsu

mer

in M

alta

. Thi

s is

exp

ecte

d to

lead

to

a re

duct

ion

in e

nerg

y co

nsum

ptio

n by

cha

ngin

g co

nsum

er b

ehav

iour

thro

ugh

info

rmat

ion

on

ener

gy c

onsu

mpt

ion.

Thi

s pr

ojec

t was

sta

rted

in 2

009

and

it is

exp

ecte

d th

at th

e co

mpl

ete

repl

acem

ent o

f all

275,

000

elec

trici

ty m

eter

s (o

rigin

ally

245

,000

but

incr

ease

d du

e to

new

con

sum

ers

and

PV

sys

tem

s) s

houl

d be

com

plet

ed w

ithin

thre

e ye

ars.

A to

tal o

f 204

,000

met

ers

are

curr

ently

in

stal

led.

mid

201

4U

nloc

ated

or c

lose

d pr

emis

es a

nd p

robl

em c

onsu

mer

s ca

n hi

nder

the

full

impl

emen

tatio

n of

the

inst

alla

tion

prog

ram

me.

Mor

eove

r the

inve

stm

ent i

n sm

art m

etre

s w

ould

ena

ble

the

gove

rnm

ent o

wne

d en

ergy

pro

vide

r to

redu

ce th

e ex

tent

of e

lect

ricity

sup

ply

that

goe

s un

bille

d. A

ny g

ains

in th

is re

gard

, has

ben

efic

ial

effe

cts

on th

e co

st o

f pro

duct

ion.

iv) M

anag

emen

t see

s fu

rther

reve

nue

boos

ting

pote

ntia

l thr

ough

an

ongo

ing c

ost-r

educ

tion

exer

cise

, set

tling

and

reso

lvin

g a

num

ber o

f lock

ed a

nd p

ast-d

ue a

ccou

nts,

gre

ater

bill

ing

effic

ienc

y, a

nd th

e be

nefit

s de

rived

from

the P

PPs,

sav

ings

from

the

new

gen

erat

ion

engi

nes,

the

inte

rcon

nect

or a

nd p

oten

tial s

ale

of n

on-s

trat

egic

ass

ets

whi

ch c

ould

gen

erat

e ne

arly

€75

milli

on.

Ong

oing

Som

e of

the

ongo

ing

rest

ruct

urin

g m

easu

res

such

as

the

new

die

sel-p

ower

ed p

lant

, the

gra

dual

cl

osur

e of

the

Mar

sa P

ower

pla

nt a

nd th

e in

trodu

ctio

n of

sm

art m

eter

s ha

ve a

lread

y im

prov

ed

Ene

mal

ta’s

cas

h-flo

w s

ituat

ion.

By

2014

, Ene

mal

ta s

houl

d re

gist

er a

n un

derly

ing

loss

of

appr

oxim

atel

y €17

mill

ion,

exc

ludi

ng th

e sa

le o

f pla

nt a

sset

s to

a p

rivat

e pa

rtner

whi

ch w

ould

resu

lt in

a

shift

to p

rofit

abili

ty fo

r the

yea

r. B

y 20

15, f

orec

asts

env

isio

n th

e co

mpa

ny p

rodu

cing

a s

mal

l pro

fit.

d) E

nerg

y R

efor

ms

The

Gov

ernm

ent's

pla

n is

to s

witc

h M

alta

’s e

nerg

y ge

nera

tion

faci

litie

s fro

m L

iqui

d Fu

el O

ils to

N

atur

al G

as th

roug

h th

e co

nstru

ctio

n of

a n

ew h

ighl

y ef

ficie

nt g

ener

atin

g pl

ant a

nd L

ique

fied

Nat

ura

Gas

(LN

G) i

nfra

stru

ctur

e. T

he p

lan

is a

t adv

ance

d st

age

whe

re th

ree

cons

ortia

out

of n

inet

een

bidd

ers

whe

re s

hort-

liste

d w

hich

are

: Ele

ctro

Gas

Mal

ta C

onso

rtium

, Yild

rim T

ecni

cas

Pow

er a

nd G

a sC

onso

rtium

and

End

eavo

r Ene

rgy,

Exo

dus

Cru

ssin

g an

d B

B E

nerg

y C

onso

rtium

. Th

is p

roje

ct is

ex

pect

ed to

redu

ce th

e co

st o

f ele

ctric

ity m

akin

g th

em in

line

with

EU

leve

ls.

The

inve

stm

ent i

n a

new

gas

fire

d ge

nera

ting

plan

t will

lead

to c

onsi

dera

ble

impr

ovem

ents

in re

spec

t of

effi

cien

cies

in th

e ge

nera

tion

of e

lect

ricity

. Thi

s ha

s di

rect

and

indi

rect

ben

efits

on

publ

ic fi

nanc

es.

Mor

eove

r, th

e hi

gher

effi

cien

t pla

nt w

ould

redu

ce th

e lik

elih

ood

that

the

ener

gy p

rovi

der w

ould

nee

d t

reso

rt to

gov

ernm

ent s

ubve

ntio

ns in

situ

atio

ns w

here

it is

not

abl

e to

cov

er it

s co

st o

f pro

duct

ion

whe

n th

e pr

ice

of o

il ex

hibi

ts e

leva

ted

leve

ls. H

isto

rical

ly s

uch

subv

entio

ns h

ave

been

a s

ourc

e of

ne

gativ

e va

rianc

e in

pub

lic fi

nanc

es.

i) N

atur

al G

as P

lant

The

gas

plan

t is

expe

cted

to b

e an

LN

G s

tora

ge a

nd re

-gas

ifica

tion

faci

lity

whi

ch w

ill m

eet t

he to

tal

gas

supp

ly re

quire

men

ts o

f: th

e ne

w c

irca

200M

W g

as-fi

red

base

load

gen

erat

ing

plan

t; an

d E

nem

alta

’s g

as re

quire

men

ts to

ope

rate

its

149M

W D

iese

l Eng

ine

plan

t whi

ch w

ill b

e co

nver

ted

to

oper

ate

on G

as.

mid

201

5as

abo

ve

1.4.

Res

truct

urin

g S

tate

Ow

ned

Ent

erpr

ises

28 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

iii) G

as In

terc

onne

ctio

nA

com

preh

ensi

ve s

tudy

that

incl

udes

a c

ost-b

enef

it an

alys

is to

det

erm

ine

the

com

mer

cial

via

bilit

y of

ga

s in

terc

onne

ctio

n, a

s w

ell a

s its

effe

ct o

n th

e M

alte

se e

cono

my,

is c

urre

ntly

bei

ng p

repa

red.

The

st

udy

will

als

o lo

ok in

to o

ther

ext

erna

litie

s of

the

proj

ect s

uch

as s

ecur

ity o

f sup

ply,

com

petit

iven

ess,

su

stai

nabi

lity,

and

sha

ll id

entif

y th

ose

aspe

cts

that

mak

e it

a po

tent

ial P

roje

ct o

f Com

mon

Inte

rest

(P

CI)

as d

efin

ed b

y th

e pr

opos

ed R

egul

atio

n on

gui

delin

es fo

r tra

ns-E

urop

ean

ener

gy in

frast

ruct

ure

(whi

ch re

peal

s D

ecis

ion

1364

/200

6/E

C o

n TE

N-E

). Th

e st

udy

may

be

used

to s

uppo

rt an

app

licat

ion

to th

e E

urop

ean

Com

mis

sion

for f

inan

cial

ass

ista

nce

from

the

‘Con

nect

ing

Eur

ope

Faci

lity’

fund

ing

inst

rum

ent u

nder

the

Com

mis

sion

’s e

nerg

y in

frast

ruct

ure

pack

age.

2013

as a

bove

e) R

estr

uctu

ring

of A

ir M

alta

The

Air

Mal

ta R

efor

m is

focu

sed

on tw

o m

ain

area

s na

mel

y co

st c

uttin

g m

easu

res

and

initi

ativ

es to

bo

ost r

even

ue.

Mea

sure

s to

cut

cos

ts in

clud

e am

ongs

t oth

ers

initi

ativ

es to

redu

ce in

fligh

t cat

erin

g co

sts

in p

artic

ular

on

eco

nom

y cl

ass

trave

l. O

ther

initi

ativ

es a

re b

eing

intro

duce

d to

pro

mot

e fu

el e

ffici

ency

and

bet

ter

depl

oym

ent o

f res

ourc

es w

ithou

t affe

fting

saf

ety

and

qual

ity o

f ser

vice

. Con

tract

neg

otia

tions

with

th

irdpa

rties

sho

uld

also

resu

lt in

a r

educ

tion

in g

roun

d ha

ndlin

g an

d la

ndin

g co

sts.

Initi

ativ

es to

re

duce

cos

t inc

lude

als

o ai

rcra

ft su

blea

sing

and

sav

ings

on

insu

ranc

e pr

emiu

ms

in p

artic

ular

on

low

ris

k po

licie

s.

Futh

erm

ore

a nu

mbe

r of o

ngoi

ng m

easu

res

are

bein

g im

plem

ente

d to

ens

ure

a be

tter r

even

ue.

Thes

e in

clud

e am

ongs

t oth

ers

Net

wor

k pl

anni

ng a

nd fl

eet d

eplo

ymen

t opt

imis

atio

n to

geth

er w

ith a

n ef

fect

ive

pric

ing

stra

tegy

sup

porte

d by

mar

ketin

g ta

ctic

s. T

he s

igni

ng o

f new

cha

rter f

light

con

tract

s w

ill a

lso

cont

ribut

e to

incr

ease

Air

Mal

ta's

reve

nue.

Mor

eove

r a b

ette

r pro

cess

con

trol p

artic

ular

ly in

O

utst

atio

ns to

geth

er w

ith In

itiat

ives

to in

crea

se o

nflig

ht s

ales

(mea

ls a

nd o

ther

pro

duct

s) s

hall

also

co

ntrib

ute

to ra

sie

reve

nue.

New

con

tract

s w

ere

also

sig

ned

in re

latio

n to

Han

dlin

g an

d E

ngin

eerin

g S

ervi

ces

offe

red

to th

ird p

artie

s.

Ong

oing

as

per b

udge

t tim

e pl

an T

he c

halle

nges

may

incl

ude

resi

stan

ce to

cha

nge

by

empo

yees

,col

lect

ive

agre

emen

t neg

otia

tions

, con

tract

con

stai

nts

and

will

ingn

ess

by th

ird p

artie

s to

neg

otia

te te

rms.

Fut

her

chal

leng

es m

ay b

e po

sed

by o

ther

mar

ket f

orce

s (C

ompe

titio

n;

geop

oliti

cal e

nviro

nmen

t; cu

rren

cy m

ovem

ent).

Thes

e m

easu

res

will

resu

lt in

con

side

rabl

e in

crea

se in

reve

nue

and

also

sav

ings

on

curr

ent c

osts

.

CSR

1:

"...E

nsur

e co

ncre

te d

eliv

ery

of

mea

sure

s ta

ken

to in

crea

se ta

x co

mpl

ianc

e, fi

ght t

ax e

vasi

on, a

nd

take

act

ion

to re

duce

the

debt

bia

s in

cor

pora

te ta

xatio

n..."

a) C

onso

lidat

ing

the

vario

us fu

nctio

ns o

f Gov

ernm

ent

Rev

enue

into

one

aut

horit

yC

erta

in s

ervi

ces

whi

ch a

re p

rese

ntly

giv

en b

y di

ffere

nt d

epar

tmen

ts in

diff

eren

t loc

atio

ns w

ill b

e pr

ovid

ed b

y on

e m

erge

d en

tity

to p

rovi

de c

entra

lised

con

trol i

n m

easu

res

to c

omba

t tax

eva

sion

and

ta

x av

oida

nce

and

to g

ain

econ

omie

s in

adm

inis

tratio

n le

adin

g to

sub

stan

tial c

ost r

educ

tions

.

a) c

onso

lidat

ion

of a

cces

s to

onl

ine

porta

ls o

f the

V

AT

Dep

artm

ent a

nd In

land

Rev

enue

Dep

artm

ent

(IRD

) (D

ecem

ber 2

013)

b) im

plem

enta

tion

of n

ew A

ccou

ntin

g sy

stem

s (D

ecem

ber 2

013)

c) im

plem

enta

tion

of th

e do

cum

ent i

mag

ing

syst

em

of IR

D w

ithin

VA

T D

epar

tmen

t(Feb

ruar

y 20

14)

d) d

evel

opm

ent o

f int

erfa

ces

to im

prov

e Ta

xpay

er

Ser

vice

s (M

arch

201

4)e)

impl

emen

tatio

n of

Deb

t col

lect

ion

proc

edur

es

(Mar

ch 2

014)

f) co

nsol

idat

ion

of C

ash

Offi

ce S

yste

ms

(Apr

il 20

14)

g) U

ser M

anag

emen

t (A

pril

2014

)h)

Rev

enue

Ris

k M

anag

emen

t (IR

D a

nd V

AT

Dep

artm

ent t

o co

nsol

idat

e w

ith T

ax C

ompl

ianc

e U

nit

(TC

U))

(Sep

tem

ber 2

014)

(a) B

udge

ts fo

r IT

impl

emen

tatio

n to

the

Mal

ta In

form

atio

n Te

chno

logy

Age

ncy

(MIT

A) m

ust b

e al

loca

ted

at th

e ea

rlies

t suc

hth

at M

ITA

will

pro

cure

the

nece

ssar

y re

sour

ces.

(b

) Con

solid

atio

n of

pro

cedu

res

may

requ

ire s

hifti

ng o

f offi

ces

from

VA

T D

epar

tmen

t to

IRD

. Th

is m

ay b

e a

chal

leng

e in

vie

w

of th

e of

fice

spac

e av

aila

bilit

y an

d re

-org

anis

atio

n of

dut

ies

with

in

the

new

dire

ctor

ates

.

Com

mis

sion

er fo

r Rev

enue

is s

impl

ifyin

g an

d ha

rmon

isin

g th

e le

gisl

atio

n of

VA

T D

epar

tmen

t and

IR

D to

geth

er w

ith th

e su

ppor

ting

proc

esse

s. T

his

will

resu

lt in

sim

pler

com

plia

nce

proc

esse

s an

d m

ore

effe

ctiv

e ta

xpay

er s

ervi

ces.

A p

lann

ed s

trate

gy is

bei

ng p

repa

red

to im

prov

e m

etho

ds a

dopt

ed in

car

ryin

g ou

t tax

aud

its. T

his

stra

tegy

incl

udes

the

follo

win

g m

easu

res:

Pro

cess

es a

re u

nder

way

A s

impl

ified

fisc

al le

gisl

atio

n w

ill le

ad to

mor

e co

mpl

ianc

e an

d co

st c

uttin

g; E

nfor

cem

ent o

ffice

rs n

eed

to b

e tra

ined

in o

rder

to

be k

now

ledg

able

and

effe

ctiv

e; T

he T

echn

ical

and

Leg

al S

ectio

n sar

e co

llabo

ratin

g to

war

ds a

hol

istic

tax

legi

slat

ion.

A s

impl

ified

tax

law

sho

uld

redu

ce th

e ov

eral

l bur

den

of ta

xatio

n an

d pr

omot

ed c

ompl

ianc

e; T

imel

y co

llect

ion

will

elim

inat

e th

e ris

k of

pre

scrip

tion;

Tax

legi

slat

ion

is to

mov

e al

ongs

ide

curr

ent t

rend

s.

(i) R

isk

asse

ssm

ent

Sep

t 201

3 : a

naly

sis

of re

duct

ion

in a

dmin

istra

tive

burd

en th

roug

h th

is m

easu

re.

Tran

spar

ency

and

equ

ity

(ii) e

ncou

rage

use

of e

lect

roni

c fo

rms

2014

: co

stin

gs o

f red

uctio

n in

adm

inis

trativ

e bu

rden

us

ing

the

Sta

ndar

d C

ost M

odel

will

be

perfo

med

by

the

Bet

ter R

egul

atio

n U

nit (

BR

U).

Som

e ta

xpay

ers

still

pre

fer t

o us

e st

anda

rd p

aper

and

mai

l fo

rmat

s fo

r cor

resp

onid

ng w

ith IR

D.

Tran

spar

ency

and

equ

ity

Aud

it ca

se s

elec

tion

thro

ugh

liais

on w

ith o

ther

Gov

ernm

ent d

epar

tmen

ts a

nd e

ntiti

es s

uch

as

Trea

sury

.O

ngoi

ngFu

ll ca

se d

etai

ls c

anno

t be

divu

lged

by

the

Fina

ncia

l Int

ellig

ence

A

naly

sis

Uni

t (FI

AU

) to

IRD

(law

rest

rictio

ns);d

ata

held

in

diffe

rent

form

at th

an th

at a

naly

sed

by IR

D.

Diff

icul

ty in

acq

uirin

g sp

ecifi

c da

ta fr

om c

erta

in s

ourc

es.

crea

te n

ew in

-hou

se a

udit

tool

sen

hanc

emen

t of d

ata

war

ehou

seIn

crea

se ta

x in

spec

tions

and

enh

ance

tax

colle

ctio

n th

roug

h th

e re

crui

tmen

t of r

even

ue o

ffice

rs

who

se d

utie

s w

ill in

clud

e fie

ld a

udits

/insp

ectio

ns. T

he h

uman

reso

urce

com

plem

ent w

ill a

lso

be

supp

orte

d by

the

recr

uitm

ent o

f acc

ount

ants

to s

treng

then

the

Tax

Com

plia

nce

Uni

t.

The

call

is in

the

proc

ess

of b

eing

issu

ed in

ord

er to

ha

ve a

com

plet

e co

mpl

emen

t.Fi

eld

insp

ectio

ns/a

udits

nee

d to

be

perfo

rmed

on

a pr

ofes

sion

al

basi

s in

ord

er to

acq

uire

the

desi

red

resu

lts.

Tim

ely

and

effe

ctiv

e fie

ld a

udits

and

insp

ectio

ns in

vie

w o

f lim

ited

reso

urce

s; in

vest

men

t in

hum

an

reso

urce

s w

ill e

ase

the

burd

en o

f man

agem

ent b

y cr

isis

.

Pro

vide

bet

ter g

uida

nce

and

info

rmat

ion

to ta

xpay

ers

thro

ugh

the

tax

audi

t boo

klet

. The

tax

audi

t bo

okle

t lis

ts ri

ghts

and

resp

onsi

bilit

ies

of ta

xpay

ers,

obj

ectio

n pr

oced

ures

, inf

orm

atio

n on

the

pena

lties

incu

rred

afte

r an

audi

t and

redr

ess

proc

edur

e of

com

plai

nts.

The

issu

e of

freq

uent

and

sim

plifi

ed in

form

atio

n to

ta

xpay

ers

thro

ugh

diffe

rent

med

ia s

ourc

es.

Dis

cuss

ions

on

how

to in

trodu

ce th

e co

ncep

t of a

Pub

lic

Rel

atio

ns o

ffice

with

in th

e in

tegr

atio

n pr

oces

s.A

Pub

lic R

elat

ions

Offi

ce is

a s

trate

gic

mov

e in

the

right

dire

ctio

n fo

r the

ben

efit

of a

ll.

Trai

ning

and

sem

inar

s w

ill b

e pr

ovid

ed to

aud

it st

aff.

Tim

etab

le o

f tra

inin

g ru

ns th

roug

h th

e en

d of

201

3.A

ttend

ance

of a

udit

staf

f to

train

ing

and

sem

inar

s.Ta

x A

udits

/Tax

Com

plia

nce

Uni

t per

sonn

el n

eed

to b

e aw

are

of le

gisl

atio

n up

date

s an

d cu

rren

t bu

sine

ss/fi

scal

tren

ds.

Liai

son

with

fore

ign

tax

auth

oriti

es is

bei

ng s

treng

then

ed. P

rovi

sion

s th

at a

llow

the

exch

ange

of

info

rmat

ion

betw

een

the

Mal

tese

gov

ernm

ent a

nd th

e go

vern

men

ts o

f oth

er c

ount

ries

wer

e st

reng

then

ed, i

n lin

e w

ith M

alta

's in

tern

atio

nal o

blig

atio

ns. T

his

is a

noth

er w

ay th

roug

h w

hich

the

Com

mis

sion

er o

f Inl

and

Rev

enue

may

acq

uire

info

rmat

ion

from

fore

ign

tax

auth

oriti

es th

at c

ould

be

used

to c

omba

t tax

eva

sion

. In

addi

tion,

Mal

ta a

lso

prov

ides

info

rmat

ion

to fo

reig

n ta

x au

thor

ities

. D

oubl

e ta

x ag

reem

ents

will

be

mai

ntai

ned

as a

n on

goin

g pr

oces

s by

the

Inte

rnat

iona

l Tax

Uni

t.

Com

plet

ed -

Am

endi

ng th

e IT

MA

by

inse

rting

a n

ew

artic

le 1

0A (1

8/01

/200

8) a

nd ru

les

entit

led

"Coo

pera

tion

with

Oth

er J

uris

dict

ions

on

Tax

Mat

ter s

Reg

ulat

ions

" (22

/07/

2011

).

Pos

sibl

e is

sues

with

resp

ect t

o ac

cess

to th

ird p

arty

info

rmat

ion;

Is

sues

rela

ted

to re

sour

ces

and

time

cons

train

ts to

neg

otia

te ta

x tre

atie

s.

Wid

er tr

eaty

net

wor

k pr

omot

es in

vest

men

t; tim

ely

prov

isio

n of

info

rmat

ion

exch

ange

.

The

Com

mis

sion

er o

f Inl

and

Rev

enue

will

mak

e us

e of

new

lega

l too

ls w

hich

ena

ble

him

to re

ques

t in

form

atio

n fro

m th

e ta

xpay

er, a

nd in

cas

e th

e ta

xpay

er re

fuse

s to

coo

pera

te, t

he in

form

atio

n ca

n be

re

ques

ted

from

third

par

ties

who

hav

e as

sets

, pro

perty

, acc

ount

s, e

tc o

f the

taxp

ayer

.

Com

plet

ed -

Am

endm

ents

to A

rt.14

of t

he IT

MA

(In

com

e Ta

x M

anag

emen

t AC

T) m

ade

thro

ugh

the

Bud

get M

easu

res

Impl

emen

tatio

n A

ct, 2

011

(22/

3/20

11).

The

prov

isio

ns o

n tra

nsfe

r of s

hare

s w

hich

are

sub

ject

to c

apita

l gai

ns w

ere

stre

ngth

ened

thro

ugh

spec

ific

mea

sure

s th

at w

ere

intro

duce

d to

tax

so-c

alle

d "v

alue

shi

fting

" and

"deg

roup

ing"

. The

abu

se

in th

is a

rea

has

thus

bee

n su

bsta

ntia

lly re

duce

d. T

he s

ame

mea

sure

s w

ere

intro

duce

d ag

ains

t sim

il aab

uses

whe

n tra

nsfe

rrin

g sh

ares

in a

par

tner

ship

.

Com

plet

ed -

Am

endm

ents

to A

rt. 5

and

5A

of t

he

ITA

wer

e in

trodu

ced

thro

ugh

the

Bud

get

impl

emen

tatio

n A

ct 2

009,

201

0. a

nd 2

011

(4/3

/200

9, 1

6/4/

2010

and

22/

3/20

11)

N/A

The

Inla

nd R

even

ue D

epar

tmen

t beg

un c

rimin

al p

roce

edin

gs a

gain

st th

ose

empl

oyer

s th

at d

o no

t pr

ovid

e de

tails

on

the

tax

dedu

cted

from

the

sala

ries

of th

eir e

mpl

oyee

s to

the

Com

mis

sion

er. T

his

step

was

und

erta

ken

afte

r hav

ing

give

n th

ese

empl

oyer

s a

last

cha

nce

to re

gula

rise

thei

r pos

ition

w

ith th

e de

partm

ent a

nd p

ay th

e FS

S ta

x fo

r the

ir em

ploy

ees

thro

ugh

a sc

hem

e th

at g

ave

them

a

spec

ified

per

iod

to p

ay a

nd a

void

a s

igni

fican

t par

t of t

he fi

nes

impo

sed.

Com

plet

ed -

From

201

0 th

e pr

ovis

ions

of c

ourt

proc

eedi

ngs

star

ted

bein

g ap

plie

d as

per

Art.

23(

13)

of th

e IT

MA

(and

FS

S re

late

d re

gula

tions

).

N/A

1.5.

Ref

orm

ingT

ax A

dmin

istra

tion

b) In

crea

se ta

x co

mpl

ianc

e an

d fig

ht ta

x ev

asio

n

29 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

Fine

s w

ere

incr

ease

d su

bsta

ntia

lly a

nd a

mar

ker f

or fu

el s

old

on th

e lo

cal m

arke

t was

est

ablis

hed.

C

ompl

eted

- A

ct N

o 1

of 2

010

impl

emen

ting

vario

us

estim

ate

mea

sure

s an

d ot

her a

dmin

istra

tive

mea

sure

s. S

ectio

n V

I- A

men

dmen

ts to

the

Exc

ise

Dut

y A

ct C

AP

.382

Arti

cles

54,

55, 5

7,58

, 59,

60,

61

, 62,

63,

64,

65.

; Com

plet

ted

- Exc

ise

Dut

y A

ct

(Cap

.382

)- L

.N. 9

6 of

201

0, E

xcis

e D

uty

Act

(A

men

dmen

t of S

ixth

Sch

edul

e) R

egul

atio

ns,2

010-

A

rticl

es 2

, 3, 4

, 17B

; Com

plet

ted

- Exc

ise

Dut

y A

ct

(Cap

.382

)- L

.N. 9

6 of

201

0, E

xcis

e D

uty

Act

(A

men

dmen

t of S

ixth

Sch

edul

e) R

egul

atio

ns,2

010-

A

rticl

es 2

, 3, 4

, 17B

.

N/A

A n

ew fe

e w

as in

trodu

ced

for t

he is

suin

g of

a s

tam

p to

be

affix

ed o

n dr

ink

bottl

es o

r pac

kets

of

ciga

rette

s to

repl

ace

the

orig

inal

sta

mp

that

was

lost

, sto

len

or fo

r som

e ot

her r

easo

n w

ent m

issi

ng.

Com

plet

ed -

Exc

ise

Dut

y A

ct (C

ap.3

82)-

L.N

207

of

2012

, Exc

ise

Dut

y A

ct (A

men

dmen

t of S

ixth

S

ched

ule)

Reg

ulat

ions

,201

2- A

rticl

es 2

and

3 p

ara

(h) (

iii) (

c).

N/A

A n

ew c

once

pt w

as in

trodu

ced

for t

he s

eizi

ng o

f mob

ile a

nd im

mob

ile p

rope

rty, w

hen

item

s on

whi

ch

exci

se d

uty

due

has

not b

een

paid

are

foun

d. In

cas

e of

shi

ps u

sed

in th

e co

ntra

band

, with

a n

et

wei

ght o

f mor

e th

an 2

50 to

nnes

, a d

epos

it of

€25

,000

sha

ll be

requ

este

d in

stea

d of

the

seiz

ure

of th

esh

ip u

ntil

the

sent

ence

is fi

nalis

ed.

Ong

oing

N/A

Enh

anci

ng th

e ris

k an

alys

is p

rogr

amm

e w

hich

iden

tifie

s ca

ses

of p

oten

tial t

ax e

vasi

on/a

void

ance

to

be re

ferr

ed fo

r inv

estig

atio

n. T

his

prog

ram

me

anal

yses

VA

T de

clar

atio

ns, a

lloca

tes

poin

ts a

ccor

ding

to

est

ablis

hed

para

met

ers

and

subs

eque

ntly

rank

s ca

ses

to b

e in

vest

igat

ed a

ccor

ding

to ta

x ris

k.

The

proj

ect i

s te

mpo

raril

y on

hol

d as

it w

ould

then

be

inte

grat

ed u

nder

one

fram

ewor

k w

ith IR

D ri

sk

anal

ysis

in th

e am

bit o

f the

mer

ger.

Ris

k A

naly

sis

- Cur

rent

ly th

e on

ly ri

sk w

hich

is e

nvis

aged

is th

e la

ck o

f res

ourc

es (a

t MIT

A) t

o en

able

the

Dep

artm

ent t

o pr

ocee

d w

ith th

is p

roje

ct.

Ris

k A

naly

sis

- mor

e ta

rget

ed p

erfo

rman

ce.

Add

ress

ing

risks

rela

ted

to th

e P

oint

of S

ales

Sys

tem

and

EC

Rs

as o

utlin

ed in

reco

mm

enda

tions

m

ade

whi

ch in

clud

e th

e se

tting

up

of a

poo

l of I

T sk

ills

at th

e M

inis

try fo

r Fin

ance

to c

omm

ence

sp

ecifi

c au

dits

on

PO

S s

yste

ms,

trai

ning

of V

AT

insp

ecto

rs in

fore

nsic

wor

k an

d pe

riod

chec

ks o

n E

CR

s an

d P

OS

s.

Mee

tings

are

bei

ng h

eld

regu

larly

and

the

proj

ect

is

envi

sage

d to

be

conc

lude

d in

the

regi

on o

f tw

elve

m

onth

s fro

m n

ow.

PO

S -

The

new

pro

cedu

res

will

be

seen

as

incr

easi

ng th

e bu

rden

(bot

h fin

anci

al a

nd a

dmin

istra

tive)

on

busi

ness

es.

PO

S -

bette

r con

trols

Am

endm

ent o

f the

VA

T A

ct, A

rticl

e 48

(5):

The

pow

er to

requ

est a

nd re

mov

e fro

m a

ny p

erso

n re

cord

sin

clud

ing

elec

troni

c da

ta.

Com

plet

ed -

Am

endi

ng A

ct: A

ct IV

. 200

7.37

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

. A

men

dmen

t of t

he V

AT

Act

Arti

cle

52(2

): A

n ob

ligat

ion

on tr

ansp

orte

rs o

f goo

ds to

be

in p

osse

ssio

n of

iden

tific

atio

n do

cum

ents

and

invo

ices

, del

iver

y no

tes,

etc

. ind

icat

ing

the

deta

ils o

f the

goo

ds b

eing

tra

nspo

rted.

Com

plet

ed -

Am

endi

ng A

ct: A

ct X

IX. 2

007.

2N

/ATh

is m

easu

re is

exp

ecte

d to

low

er th

e V

AT

gaps

- as

sta

ted

in th

e st

udy

com

mis

sion

ed b

y th

e C

omm

issi

on w

hich

was

issu

ed th

is m

onth

, Mal

ta h

as in

fact

one

of t

he lo

wes

t VA

T ga

ps in

the

EU

, pr

opor

tiona

tely

spe

akin

g, a

s a

perc

enta

ge o

f Gro

ss D

omes

tic P

rodu

ct.

Am

endm

ent o

f the

VA

T A

ct A

rticl

e 53

(a):

To s

top,

ent

er a

nd in

spec

t any

mea

ns w

hich

is tr

ansp

ortin

g go

ods

or a

ny m

eans

for t

he tr

ansp

ort o

f goo

ds, t

o di

rect

the

deliv

ery

of th

e sa

id m

eans

to a

noth

er

loca

tion

and

to o

pen

the

said

goo

ds a

nd to

ver

ify th

e qu

antit

y an

d va

lue

of g

oods

with

invo

ices

, boo

k sre

cord

s or

doc

umen

ts re

latin

g to

suc

h go

ods.

Com

plet

ed -

Am

endi

ng A

ct: A

ct X

IX. 2

007.

3N

/ATh

is m

easu

re is

exp

ecte

d to

low

er th

e V

AT

gaps

- as

sta

ted

in th

e st

udy

com

mis

sion

ed b

y th

e C

omm

issi

on w

hich

was

issu

ed th

is m

onth

, Mal

ta h

as in

fact

one

of t

he lo

wes

t VA

T ga

ps in

the

EU

, pr

opor

tiona

tely

spe

akin

g, a

s a

perc

enta

ge o

f Gro

ss D

omes

tic P

rodu

ct.

Am

endm

ent o

f the

VA

T A

ct A

rticl

e 63

(5):

Giv

es p

ower

to th

e C

omm

issi

oner

whe

re it

app

ears

ne

cess

ary

to p

rote

ct re

venu

e to

requ

est a

gua

rant

ee fr

om s

omeo

ne to

sup

ply

good

s or

ser

vice

s so

ato

sec

ure

the

paym

ent o

f the

tax.

Com

plet

ed -

Am

endi

ng A

ct: A

ct IV

. 200

7.40

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

. A

men

dmen

t of t

he V

AT

Act

Arti

cle

77(p

): A

n ob

ligat

ion

on c

redi

t ins

titut

ions

to s

uppl

y th

e de

tails

of

supp

liers

of c

onst

ruct

ion/

refu

rbis

hing

pro

ject

s w

hom

the

cred

it in

stitu

tion

wou

ld h

ave

paid

on

beha

lf of

a lo

an a

ccou

nt h

olde

r.

Com

plet

ed -

Am

endi

ng A

ct: A

ct IV

. 200

7.42

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

. A

men

dmen

t of t

he V

AT

Act

Arti

cle

77(d

): P

rovi

des

for c

rimin

al c

onvi

ctio

n if

a pe

rson

is in

pos

sess

ion

of o

r sup

plie

s to

ano

ther

per

son

any

softw

are

appl

icat

ion

that

wou

ld e

rase

, des

troy,

dam

age

or

conc

eal a

ny s

tore

d in

form

atio

n or

any

suc

h re

cord

s, d

ocum

ents

or a

ccou

nts.

Com

plet

ed -

Am

endi

ng A

ct: A

ct IV

. 201

1.76

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

.

Am

endm

ent o

f the

VA

T A

ct A

rticl

e 77

(e):

Pro

vide

s fo

r crim

inal

con

vict

ion

if a

pers

on fa

ils to

pro

vide

to

the

Com

mis

sion

er, w

ithou

t any

val

id re

ason

, all

copi

es o

f any

use

d or

unu

sed

man

ual f

isca

l re

ceip

ts w

here

requ

ired

by th

e C

omm

issi

oner

.

Com

plet

ed -

Am

endi

ng A

ct: A

ct IV

. 201

1.76

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

.

Am

endm

ent o

f the

VA

T A

ct A

rticl

e 77

(o):

Pro

vide

s fo

r crim

inal

con

vict

ion

if a

pers

on fa

ils to

pro

vide

to

the

Com

mis

sion

er, w

ithou

t any

val

id re

ason

, all

copi

es o

f any

use

d or

unu

sed

man

ual f

isca

l re

ceip

ts w

here

requ

ired

by th

e C

omm

issi

oner

.

Com

plet

ed -

Am

endi

ng A

ct: A

ct V

. 201

2.66

N/A

This

mea

sure

is e

xpec

ted

to lo

wer

the

VA

T ga

ps -

as s

tate

d in

the

stud

y co

mm

issi

oned

by

the

Com

mis

sion

whi

ch w

as is

sued

this

mon

th, M

alta

has

in fa

ct o

ne o

f the

low

est V

AT

gaps

in th

e E

U,

prop

ortio

nate

ly s

peak

ing,

as

a pe

rcen

tage

of G

ross

Dom

estic

Pro

duct

.

CSR

3:

"Con

tinue

to p

ursu

e po

licy

effo

rts

to re

duce

ear

ly s

choo

l lea

ving

, no

tabl

y by

set

ting

up a

co

mpr

ehen

sive

mon

itorin

g sy

stem

, an

d in

crea

se th

e la

bour

mar

ket

rele

vanc

e of

edu

catio

n an

d tr

aini

ng

to a

ddre

ss s

kill-

gaps

, inc

ludi

ng

thro

ugh

the

anno

unce

d re

form

of

the

appr

entic

eshi

p sy

stem

."

a) E

arly

Sch

ool L

eavi

ng S

trat

egy

• Set

ting

up o

f int

er m

inis

teria

l com

mitt

ee.

• Int

rodu

cing

a s

cree

ning

pro

cess

of a

ll Fo

rm I

stud

ents

by

Gui

danc

e te

ache

rs.

• Int

rodu

ctio

n of

tabl

ets

to im

prov

e lit

erac

y an

d en

gage

men

t of s

tude

nts

• Nat

iona

l Lite

racy

stra

tegy

• Im

plem

enta

tion

of J

ob P

lus

sche

me

• Oct

ober

201

3

• O

ctob

er 2

013

• Oct

ober

201

4• J

anua

ry 2

014

• Jan

uary

201

4

Lack

of h

uman

reso

urce

s to

refe

r stu

dent

s at

risk

Bet

ter c

o-or

dina

tion

of in

itiat

ives

.

Stu

dent

s at

risk

will

be

help

ed to

eng

age

in e

duca

tion.

b) C

ompr

ehen

sive

Mon

itorin

g Sy

stem

in re

latio

n to

ear

ly

scho

ol le

aver

s Th

e an

alys

is o

f tra

cer s

tudy

on

5th

Form

ers.

The

mon

itorin

g of

You

th In

c an

d M

CA

ST

drop

outs

for a

cade

mic

yea

r 201

2/20

13.

Dec

embe

r 201

3

Oct

ober

201

3

Low

resp

onse

rate

to tr

acer

stu

dy

Iden

tify

the

drop

outs

and

enc

oura

ge th

em to

join

Job

s pl

us S

chem

e

c) N

atio

nal L

itera

cy S

trat

egy

The

inte

ntio

n of

the

Gov

ernm

ent i

s to

do

its u

tmos

t to

ensu

re th

at M

alte

se c

itize

ns a

re p

rovi

ded

with

th

e be

st o

ppor

tuni

ties

to a

cqui

re th

e re

quire

d lit

erac

y sk

ills.

Thi

s go

al w

ill b

e ac

hiev

ed th

roug

h a

Nat

iona

l Lite

racy

Stra

tegy

for A

ll.

Q4

2013

: Dra

win

g up

the

polic

y fro

m re

ports

su

bmitt

ed b

y di

ffere

nt w

orki

ng g

roup

sP

ublic

con

sulta

tion

abou

t the

pol

icy

Dra

win

g up

of a

ctio

n pl

ans

acco

rdin

g to

the

diffe

rent

ag

e gr

oups

Dis

sem

inat

ion

of th

e st

rate

gic

fram

ewor

k w

ith

educ

ator

s

Ens

urin

g th

e ne

cess

ary

capa

city

bui

ldin

g fo

r the

impl

emen

tatio

n of

the

mea

sure

sFu

ndin

g –

for i

nitia

tives

in li

ne w

ith th

e N

SL

and

actio

n pl

ans

Ens

urin

g ad

equa

te o

wne

rshi

ip o

f stra

tegy

by

stak

ehol

ders

Inte

rnat

iona

l stu

dies

repo

rts a

nd lo

cal (

natio

nal a

nd s

choo

l bas

ed) a

sses

men

ts s

houl

d in

dica

te

impr

ovem

ent i

n le

vels

d) S

chol

arsh

ip S

chem

esi)

Mas

ter i

t!M

aste

r it!

is a

imed

to s

uppo

rt an

incr

ease

in th

e n

umbe

r of s

tude

nts

follo

win

g po

st-g

radu

ate

cour

ses

at M

aste

rs le

vel.

The

sch

eme

impr

oves

the

fram

ewor

k co

nditi

ons

and

acce

ss to

fina

nce

for r

esea

rch

and

inno

vatio

n so

as

to e

nsur

e th

at in

nova

tive

idea

s le

arnt

can

be

turn

ed in

to p

rodu

cts

and

serv

ices

th

at c

reat

e gr

owth

and

jobs

.

Firs

t cal

l was

issu

ed in

May

201

3. R

anki

ngs

and

awar

d of

sch

olar

ship

s ar

e ex

pect

ed to

be

anno

unce

dby

the

end

of S

epte

mbe

r 201

3.

The

mai

n ch

alle

nge

is th

at a

s E

SF

fund

s 20

07-2

013

com

e to

an

end

in 2

015

and

that

pro

ject

s fo

r the

201

4-20

20 p

erio

d ar

e no

t lik

ely

to b

e ap

prov

ed b

efor

e Q

1 20

15, t

here

is a

pos

sibi

lity

that

in

2014

suc

h op

portu

nitie

s fo

r sch

olar

ship

s w

ill b

e la

ckin

g.

Prio

rity

area

s of

stu

dy w

ere

iden

tifie

d. T

he a

reas

iden

tifie

d ar

e: H

igh-

End

Man

ufac

turin

g; L

ife

Sci

ence

s; E

duca

tiona

l Ser

vice

s; F

inan

cial

Ser

vice

s; T

rans

porta

tion

& A

dvan

ced

Logi

stic

s ; H

ighe

r Q

ualit

y To

uris

m; C

reat

ive

Indu

strie

s; E

nviro

nmen

t; an

d IC

T.

2. R

aisi

ng p

oten

tial o

utpu

t, in

par

ticul

ar th

roug

h pr

oduc

tive

capi

tal i

nves

tmen

t, ra

isin

g sk

ill a

nd e

duca

tion

leve

ls, p

rom

otin

g lif

elon

g le

arni

ng a

nd in

crea

sing

labo

ur fo

rce

part

icip

atio

n.

2.1.

Rai

sing

labo

ur p

rodu

ctiv

ity

2.1.

1. In

vest

ing

in h

uman

cap

ital (

rais

ing

skill

and

edu

catio

n)

In a

sm

all i

slan

d st

ate

whe

re e

duca

tion

cont

inue

s to

pla

y an

impo

rtant

par

t of t

he e

cono

mic

and

soc

ial a

gend

a, G

over

nmen

t has

con

tinue

d to

inve

st in

the

peop

le's

con

tinui

ng p

rofe

ssio

nal d

evel

opm

ent v

ia a

num

ber o

f sch

olar

ship

pro

gram

mes

:

30 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

ii) S

trate

gic

Edu

catio

nal P

athw

ays

Sch

olar

ship

Sch

eme

(STE

PS

)Th

e S

trate

gic

Edu

catio

nal P

athw

ays

Sch

olar

ship

Sch

eme

(STE

PS

) was

laun

ched

in J

anua

ry 2

009.

Th

is E

SF

fund

ed s

chem

e w

as in

tend

ed to

offe

r bur

sarie

s to

add

ress

are

as o

f nat

iona

l prio

rity.

Th

e fo

ur p

riorit

y a

xis

of t

he s

aid

prog

ram

me

wer

e: C

apac

ity B

uild

ing

in E

duca

tion;

Add

ress

ing

Ski

ll M

ism

atch

es; R

esea

rch

and

Inno

vatio

n in

Sci

ence

and

Tec

hnol

ogy;

and

Info

rmat

ion

and

Com

mun

icat

ions

Tec

hnol

ogy.

The

fund

s al

loca

ted

to th

e S

TEP

S s

chem

e am

ount

ed to

9,9

48,4

33

Eur

os.

Com

plet

ed:

This

sch

eme

cam

e to

a c

losu

re w

ith th

eis

suan

ce o

f the

eig

ht a

nd fi

nal c

all i

n M

ay 2

012.

N

/AD

urin

g th

e ei

ght c

alls

, a to

tal o

f 863

sch

olar

ship

s w

ere

awar

ded,

of w

hich

82

scho

lars

hips

wer

e aw

arde

d to

app

lican

ts w

ho w

ishe

d to

pur

sue

stud

ies

at d

octo

ral l

evel

and

781

sch

olar

ship

s w

ere

awar

ded

to a

pplic

ants

who

wis

hed

to p

ursu

e st

udie

s at

Mas

ters

Lev

el.

iii) M

alta

Gov

ernm

ent S

chol

arsh

ip S

chem

e (M

GS

S) P

ost G

radu

ate

The

MG

SS

PG

was

laun

ched

in 2

006.

The

key

obj

ectiv

es o

f thi

s sc

hem

e ar

e to

: ass

ist e

xcep

tiona

l ap

plic

ants

to p

ursu

e fu

rther

leve

ls o

f aca

dem

ic re

sear

ch; e

ncou

rage

and

pro

mot

e m

ore

parti

cipa

tion

at a

pos

tgra

duat

e le

vel o

f aca

dem

ic re

sear

ch b

oth

loca

lly a

nd in

tern

atio

nally

; con

tribu

te to

war

ds

rese

arch

in id

entif

ied

area

s of

nat

iona

l prio

rity;

incr

ease

rese

arch

act

ivity

at t

he U

nive

rsity

of M

alta

; an

d in

crea

se th

e ca

paci

ty a

nd le

vel o

f res

earc

h, in

nova

tion

and

deve

lopm

ent a

ctiv

ity in

Mal

ta.

Ong

oing

Sin

ce 2

006,

148

sch

olar

ship

s w

ere

awar

ded

lead

ing

to P

hD a

nd 1

69 s

chol

arsh

ips

wer

e aw

arde

d le

adin

g to

Mas

ters

.

iv) M

alta

Gov

ernm

ent S

chol

arsh

ip S

chem

e (M

GS

S) U

nder

grad

uate

pr

ogra

mm

eTh

is s

chem

e al

low

s fo

r por

tabi

lity

of s

tude

nt s

uppo

rt in

the

form

of a

sch

olar

ship

, for

stu

dent

s at

tend

ing

degr

ee le

vel s

tudi

es in

the

priv

ate

high

er e

duca

tion

sect

or b

oth

loca

lly a

nd a

broa

d. T

he

MG

SS

Reg

ulat

ions

wer

e ch

ange

d to

allo

w th

ose

over

the

age

of th

irty

and

thos

e w

ho a

lread

y st

arte

d an

und

ergr

adua

te c

ours

e to

be

elig

ible

for t

he s

chem

e. L

imits

to th

e nu

mbe

r of a

pplic

ants

for t

his

sche

me

wer

e al

so re

mov

ed a

long

with

the

poin

t sys

tem

of r

anki

ngs.

Ong

oing

Sin

ce it

was

laun

ched

in 2

007,

622

stu

dent

s w

ere

supp

orte

d un

der t

his

sche

me.

v) M

alta

Arts

Sch

olar

ship

Sch

eme

This

sch

eme

aim

s to

pro

vide

mor

e op

portu

nitie

s to

sup

port

indi

vidu

als

who

are

exc

eptio

nally

tale

nted

in

the

prom

otio

n of

pro

fess

iona

l per

form

ance

spe

cial

isat

ion

in th

e ar

ts.

Thea

tre, m

usic

, dan

ce, d

esig

n, c

reat

ive

writ

ing,

film

, the

vis

ual a

rts o

r any

com

bina

tion

ther

eof a

re

bein

g gi

ven

prio

rity.

Ong

oing

. C

all f

or A

pplic

atio

ns fo

r 201

3 ha

s no

w

been

clo

sed

and

a ne

xt c

all f

or a

pplic

atio

ns is

en

visa

ged

to b

e la

unch

ed in

201

4.

N/A

A v

ibra

nt a

rts s

ecto

r und

erpi

ns a

hea

lthy,

ope

n, c

onte

mpo

rary

soc

iety

. An

ener

gise

d, g

row

ing

and

sust

aina

ble

arts

com

mun

ity, w

hich

spa

ns a

ll ar

t for

ms

and

deliv

ers

qual

ity o

utco

mes

, will

sus

tain

an

even

mor

e de

man

ding

leis

ure

indu

stry

and

is v

ital t

o en

sure

the

futu

re c

ultu

ral,

soci

al, i

ntel

lect

ual a

nd

econ

omic

wel

lbei

ng o

f Mal

ta.

vi) S

port

Sch

olar

ship

s sc

hem

eTh

is s

chem

e w

as in

trodu

ced

in F

ebru

ary

2012

.O

ngoi

ng.

Cal

l for

App

licat

ions

for 2

013

has

now

be

en c

lose

d an

d a

next

cal

l for

app

licat

ions

is

envi

sage

d to

be

laun

ched

in 2

014.

N/A

The

prom

ulga

tion

of s

ports

at a

pro

fess

iona

l lev

el w

ill p

rom

ote

the

deve

lopm

ent o

f hig

h pe

rform

ance

at

hlet

es w

ho w

ill e

vent

ually

repr

esen

t Mal

ta in

inte

rnat

iona

l com

petit

ions

. Th

e el

evat

ion

of th

e st

atus

of

spo

rt in

Mal

ta w

ill n

ot o

nly

brin

g ab

out a

wid

er in

tern

atio

nal r

ecog

nitio

n w

ith p

ositi

ve e

cono

mic

be

nefit

s fo

r the

tour

ism

indu

stry

but

will

als

o en

cour

age

the

upta

ke o

f spo

rt an

d ph

ysic

al a

ctiv

ity

acro

ss th

e co

untry

resu

lting

in o

vera

ll im

prov

emen

ts in

hea

lth a

nd w

ell-b

eing

of t

he p

opul

atio

n as

a

who

le.

a) T

rain

ing

Pays

Trai

ning

will

be

offe

red

to e

mpl

oyee

s w

ho a

re o

n lo

w-in

com

e an

d w

ith n

o or

low

ski

lls. A

n al

low

ance

w

ill b

e pr

ovid

ed to

all

elig

ible

par

ticip

ants

who

wan

t to

impr

ove

thei

r job

mob

ility

pro

spec

ts. T

hrou

gh

this

initi

ativ

e, b

enef

icia

ries

will

hav

e th

e op

portu

nity

to a

vail

them

selv

es o

f tra

inin

g w

hile

rece

ivin

g th

e eq

uiva

lent

of t

he m

inim

um w

age,

or p

ro-r

ata

depe

ndin

g on

the

dura

tion

of th

e co

urse

.

This

mea

sure

s is

exp

ecte

d to

sta

rt in

201

4.Th

e im

plem

enta

tion

of th

e m

easu

re d

epen

ds o

n th

e al

loca

tion

of

both

nat

iona

l and

Eur

opea

n fu

nds.

Thro

ugh

this

initi

ativ

e, e

mpl

oyee

s w

ho h

ave

low

inco

me

with

no

or lo

w s

kills

will

gai

n th

roug

h bo

th a

fin

anci

al in

cent

ive

for t

he tr

aini

ng fo

llow

ed, a

nd th

roug

h in

crea

sed

job

mob

ility

pro

spec

ts b

y de

velo

ping

furth

er th

eir s

kills

and

com

pete

nces

.

b) L

ifelo

ng L

earn

ing

Stra

tegy

The

Life

long

Lea

rnin

g S

trate

gy is

aim

ed to

pro

vide

a fr

amew

ork

for t

he p

rovi

sion

of a

dult

educ

atio

n;

brin

g ab

out c

oord

inat

ion

in th

is s

ecto

r by

mak

ing

optim

al u

se o

f div

erse

life

long

lear

ning

op

portu

nitie

s.

A d

raft

Life

long

Lea

rnin

g S

trate

gy is

pla

nned

by

Q4

of 2

013.

The

mai

n ch

alle

nges

and

risk

s ar

e to

brin

g ab

out t

he m

ajor

se

rvic

e pr

ovid

ers

in li

ne w

ith th

is s

trate

gy a

nd th

e st

akeh

olde

rs

(mai

nly

empl

oyer

s) to

par

ticip

ate.

The

Stra

tegy

is p

lann

ed to

offe

r sec

ond

chan

ce e

duca

tion

and

toge

ther

with

the

ES

L S

trate

gy

prop

ose

new

pat

hway

s to

redu

ce th

e nu

mbe

r of e

arly

sch

ool l

eave

rs.

c) In

vest

ing

in S

kills

This

trai

ning

initi

ativ

e is

exp

ecte

d to

enc

oura

ge fi

rms

to in

vest

mor

e in

thei

r wor

kfor

ce th

ough

trai

ning

ac

tiviti

es. G

rant

s w

ill b

e pr

ovid

ed a

ccor

ding

to th

e sp

ecifi

c co

urse

acc

redi

tatio

n.

This

initi

ativ

e is

exp

ecte

d to

com

men

ce in

201

4.Th

e im

plem

enta

tion

of th

is m

easu

re d

epen

ds o

n th

e al

loca

tion

of

both

nat

iona

l and

Eur

opea

n fu

nds.

Apa

rt fro

m th

e fin

anci

al b

enef

its, e

mpl

oyer

s w

ill a

lso

bene

fit fr

om a

hig

her s

kille

d w

orkf

orce

, and

em

ploy

ees

will

hav

e th

e op

portu

nity

to in

crea

se th

e sk

ills

and

com

pete

nces

nee

ded

in th

e la

bour

m

arke

t.d)

Enh

anci

ng E

mpl

oyab

ility

thro

ugh

Trai

ning

Pro

gram

me

The

aim

of t

his

mea

sure

is th

e re

inte

grat

ion

of jo

b se

eker

s an

d in

activ

e pe

rson

s in

to th

e la

bour

m

arke

t. H

owev

er, t

his

prog

ram

me

also

offe

rs th

e op

portu

nity

to a

ctiv

ely

empl

oyed

per

sons

as

wel

l as

pers

ons

of p

ensi

onab

le a

ge to

furth

er th

eir e

xist

ing

skill

s in

ord

er to

ada

pt to

cha

ngin

g la

bour

mar

ket

dem

ands

and

to in

crea

se th

eir j

ob m

obili

ty p

rosp

ects

.

Cal

ls fo

r the

Tra

inin

g S

ubsi

dy S

chem

e an

d Tr

aini

ng

Sub

sidy

Sch

eme

Aca

dem

ic w

ere

re-is

sued

in th

e th

ird w

eek

of A

ugus

t 201

3. T

he n

ew p

rogr

amm

e is

ex

pect

ed to

sta

rt in

the

first

qua

rter o

f 201

4 .

The

fors

een

pote

ntia

l cha

lleng

e in

clud

es m

atch

ing

the

hete

roge

nous

ski

lls o

f the

app

lican

ts w

ith th

e de

man

d of

the

labo

ur m

arke

t. A

pot

entia

l ris

k m

ay b

e an

ina

dequ

ate

dem

and

foco

urse

s, o

r an

inad

equa

te q

ualif

ied

elig

ible

trai

ners

.

Thro

ugh

this

pro

gram

me,

par

ticip

ants

will

acq

uire

the

skill

s ne

eded

to fu

rther

thei

r em

ploy

abili

ty

pros

pect

s w

hils

t als

o en

ablin

g ol

der p

erso

ns to

be

prov

ided

with

the

oppo

rtuni

ty to

incr

ease

thei

r co

mpe

tenc

es a

nd s

kills

and

take

an

activ

e pa

rt in

soc

iety

.

e) W

ork

and

Trai

ning

Exp

osur

e Sc

hem

e (G

ozo)

The

Wor

k an

d Tr

aini

ng E

xpos

ure

sche

me

is s

peci

fical

ly ta

rget

ed a

t the

Goz

o La

bour

Mar

ket.

Per

son

who

are

inac

tive

and/

or re

gist

erin

g on

par

t one

will

be

give

n th

e op

portu

nity

to g

ain

wor

k an

d tra

inin

g ex

perie

nce

with

the

priv

ate

sect

or.

a) A

pplic

atio

ns w

ere

clos

ed in

Jun

e 20

13 d

ue to

the

high

am

ount

of a

pplic

atio

ns a

nd a

bsor

ptio

n of

fund

s

b)

Mth

li

bt

ffd

id

tll

The

envi

sage

d ch

alle

nge

is th

e m

atch

ing

of th

e de

man

d an

d su

pply

in e

mpl

oym

ent i

n G

ozo

follo

win

g pa

rtici

patio

n in

this

sc

hem

e.

Thro

ugh

this

sch

eme

parti

cipa

nts

will

incr

ease

thei

r em

ploy

abili

ty p

rosp

ects

thro

ugh

the

train

ing

and

prac

tical

exp

erie

nce

achi

eved

at t

he p

lace

of w

ork.

f) Em

ploy

abili

ty P

rogr

amm

eTh

e E

mpl

oyab

ility

Pro

gram

me

con

sist

ed o

f a n

umbe

r of t

rain

ing

initi

ativ

es a

imed

to a

ssis

t jo

bsee

kers

, the

inac

tive,

and

the

empl

oyed

who

are

inte

rest

ed in

upg

radi

ng th

eir k

now

ledg

e. T

he

initi

ativ

es w

ill c

onsi

st o

f bas

ic s

kills

, wor

k or

ient

atio

n, re

train

ing

prog

ram

mes

, tra

inee

ship

s, a

trai

ning

su

bsid

y sc

hem

e an

d a

skill

s as

sess

men

t sys

tem

.

App

licat

ions

hav

e cl

osed

. Dis

burs

emen

ts to

take

pl

ace

till D

ecem

ber

2014

.N

/ATh

roug

h th

is p

rogr

amm

e, p

artic

ipan

ts a

cqui

red

the

skill

s ne

eded

to fu

rther

thei

r em

ploy

abili

ty

pros

pect

s.

g) T

rain

ing

Aid

Fra

mew

ork

The

Trai

ning

Aid

Fra

mew

ork

gave

fina

ncia

l ass

ista

nce

to th

ose

com

pani

es th

at in

vest

ed in

the

train

ing

of th

eir w

orkf

orce

. Thi

s sc

hem

e is

ava

ilabl

e fo

r com

pani

es in

the

priv

ate

sect

or a

nd th

e su

bsid

y w

ill v

ary

acco

rdin

g to

the

type

of t

rain

ing

and

the

size

of t

he e

nter

pris

e.

App

licat

ions

hav

e cl

osed

. Dis

burs

emen

ts to

take

pl

ace

till D

ecem

ber

2014

.N

/A A

part

from

the

finan

cial

ben

efits

, em

ploy

ers

bene

fited

from

a h

ighe

r ski

lled

wor

kfor

ce, a

nd

empl

oyee

s ha

d th

e op

portu

nity

to in

crea

se th

e sk

ills

and

com

pete

nces

nee

ded

in th

e la

bour

mar

ket.

CSR

3:

"...C

ontin

ue s

uppo

rtin

g th

e im

prov

ing

labo

ur m

arke

t pa

rtic

ipat

ion

of w

omen

by

prom

otin

g fle

xibl

e w

orki

ng

arra

ngem

ents

, in

part

icul

ar b

y en

hanc

ing

the

prov

isio

n an

d af

ford

abili

ty o

f chi

ldca

re a

nd o

ut o

f sc

hool

cen

tres

."

a) U

nive

rsal

and

free

Chi

ldca

re C

entr

esA

t pre

sent

, the

re is

a m

ixtu

re o

f fee

-pay

ing

priv

ate

child

care

cen

tres

and

Gov

ernm

ent-s

ubsi

dise

d ch

ildca

re c

entre

s. C

hild

care

ser

vice

s ar

e of

fere

d to

chi

ldre

n ag

ed b

etw

een

thre

e m

onth

s an

d th

ree

year

s.

T

hrou

gh a

pub

lic p

rivat

e pa

rtner

ship

, gov

ernm

ent w

ill o

ffer f

ree

child

care

to th

ose

pare

nts

who

are

in w

ork.

A C

ost-B

enef

it A

naly

sis

was

pre

sent

ed in

S

epte

mbe

r 201

3 w

ith th

e ai

m to

stu

dy th

e fin

anci

al

and

econ

omic

al fe

asib

ility

of f

ree

child

care

cen

tres.

Th

e m

easu

re w

ill b

e an

noun

ced

in th

e B

udge

t for

20

14.

Rea

chin

g ou

t to

the

targ

et p

opul

atio

n.M

ake-

wor

k-pa

y fo

r low

inco

me

earn

ers.

Impr

ove

wor

k-lif

e ba

lanc

e fo

r tho

se w

ho a

re in

wor

k. T

he

CB

A fi

nds

that

if c

hild

care

cen

tres

are

free,

mot

hers

in e

mpl

oym

ent w

ill in

crea

se h

ours

of w

ork

by

22%

(or 2

79,2

92 h

ours

), an

d 40

.3%

(or 4

89,0

96 h

ours

) will

incr

ease

chi

ldca

re h

ours

. The

CB

A a

lso

disc

lose

s: th

at 5

1.5%

of i

nact

ive

mot

hers

will

wor

k if

child

care

cen

tres

are

free,

of w

hich

60.

4% w

ill

wor

k le

ss th

an 1

5 ho

urs.

Afte

r fac

torin

g in

the

requ

ired

extra

car

er h

ours

, fre

e ch

ild c

are

incr

ease

s th

e nu

mbe

r of h

ours

wor

ked

per a

nnum

by

325,

841

hour

s or

173

full-

time

equi

vale

nt jo

bs.

The

CB

A e

stim

ates

that

offe

ring

free

child

care

to a

ll th

ose

who

are

in w

ork

wou

ld re

quire

a b

udge

t al

loca

tion

of €

6.1m

whi

le u

nder

the

scen

ario

whe

re fr

ee c

hild

care

cen

tres

are

avai

labl

e to

full-

timer

s on

ly, i

t will

cos

t €2.

6m.

b) F

amily

-frie

ndly

mea

sure

s in

the

publ

ic a

nd p

rivat

e se

ctor

ai

med

at e

ncou

ragi

ng th

e us

e of

chi

ldca

re fa

cilit

ies

and

thus

re

duci

ng th

e em

ploy

men

t im

pact

of p

aren

thoo

d - C

urre

nt a

nd

New

mea

sure

s

Mat

erni

ty le

ave

has

been

incr

ease

d fro

m 1

4 to

16

wee

ks in

201

2 an

d fu

rther

incr

ease

d fro

m 1

6 to

18

wee

ks in

201

3. E

mpl

oyee

s ar

e en

title

d to

thei

r ful

l sal

ary

for t

he fi

rst 1

4 w

eeks

. Th

e ex

tra w

eeks

are

paya

ble

from

pub

lic fi

nanc

es w

ith a

fixe

d w

eekl

y ra

te o

f EU

R 1

60.

In a

dditi

on, e

mpl

oyee

s w

ho w

ere

on m

ater

nity

leav

e on

1 J

anua

ry 2

013

but h

ave

com

men

ced

the

mat

erni

ty le

ave

befo

re th

e sa

id d

ate

wer

e al

so a

utom

atic

ally

ent

itled

to th

is in

crea

se. I

n ad

ditio

n, G

over

nmen

t has

als

o ad

opte

d a

num

ber

of fa

mily

-frie

ndly

mea

sure

s in

clud

ing

pare

ntal

leav

e.

All

fam

ily-fr

iend

ly m

easu

res

are

curr

ently

in fo

rce.

Alth

ough

it m

ay m

inim

ise

inco

nven

ienc

e to

som

e of

the

empl

oyer

s w

ho b

enef

it fro

m th

e m

entio

ned

fam

ily-fr

iend

ly

mea

sure

s; o

ther

wor

kers

may

feel

unf

airly

trea

ted

Ent

ities

are

ass

esse

d on

a s

et o

f crit

eria

in o

rder

to b

e aw

arde

d th

e ‘E

qual

ity M

ark’

. Th

ese

crite

ria

incl

ude

the

prov

isio

n of

fam

ily fr

iend

ly m

easu

res

for e

mpl

oyee

s w

ith c

arin

g re

spon

sibi

litie

s; p

olic

ies

and

initi

ativ

es o

n eq

ualit

y an

d se

xual

har

assm

ent;

empl

oyee

equ

ality

repr

esen

tativ

es; e

qual

ity in

ca

reer

and

per

sona

l dev

elop

men

t opp

ortu

nitie

s; g

ende

r equ

ality

in th

e ac

cess

to a

nd s

uppl

y of

goo

ds

and

serv

ices

.

With

rega

rd to

fam

ily-fr

iend

ly m

easu

res,

thes

e ne

ed to

be

cont

inuo

usly

sup

porte

d w

ith th

e in

frast

ruct

ure

to p

ursu

e po

licy

effo

rts to

enc

oura

ge th

e us

e of

chi

ldca

re fa

cilit

ies

and

thus

redu

cing

th

e em

ploy

men

t im

pact

of p

aren

thoo

d.

c) A

ftern

oon

Scho

ol S

ervi

ce/P

rogr

amm

es in

the

Com

mun

ityA

n af

ter-

scho

ol c

are

serv

ice

– K

labb

3-1

6 - w

hich

aim

s to

pro

vide

an

afte

r-sc

hool

hou

rs' s

ervi

ce

with

in s

choo

l stru

ctur

es; t

o br

idge

the

gap

betw

een

day

scho

ol a

nd re

gula

r wor

king

hou

rs o

f par

ents

in

em

ploy

men

t; an

d to

util

ise

scho

ols

afte

r reg

ular

sch

ool h

ours

. It i

s a

serv

ice

for s

choo

l-age

chi

ldre

n(3

to 1

6 ye

ars

old)

whi

ch ru

ns th

roug

hout

the

year

.

Sep

tem

ber /

Oct

ober

201

3: O

peni

ng a

furth

er 9

ce

ntre

s to

hav

e a

tota

l of 3

0 K

labb

3-1

6 ce

ntre

s in

M

alta

and

Goz

o. R

ecru

itmen

t of H

omew

ork

Tuto

rs

to a

ssis

t chi

ldre

n w

ith th

eir h

omew

ork

whi

lst a

t K

labb

3-1

6. P

layw

orke

r Cou

rse

at M

CA

ST

to b

e of

fere

d to

cur

rent

pla

ywor

kers

em

ploy

ed w

ith F

ES

.

Oct

ober

- D

ecem

ber 2

013:

Con

solid

ate

the

serv

ice

by d

evel

opin

g N

atio

nal S

tand

ards

for A

fter-

Sch

ool

Car

e. O

utre

ach

wor

k w

ith p

aren

ts to

pro

mot

e th

e se

rvic

e.

Rec

ruitm

ent o

f hom

ewor

k tu

tors

(qua

lifie

d te

ache

rs):

the

chal

leng

e is

find

ing

enou

gh tu

tors

to c

over

all

the

cent

res.

Pla

ywor

ker c

ours

e: s

ince

this

is o

ptio

nal,

ther

e is

a ri

sk th

at n

ot

man

y pl

ayw

orke

rs w

ould

be

will

ing

to ta

ke u

p th

e co

urse

.

Out

reac

h w

ork:

risk

is lo

w p

artic

ipat

ion

of p

aren

ts.

The

incr

ease

in th

e nu

mbe

r of K

labb

3-1

6 ce

ntre

s m

eans

that

the

serv

ice

beca

me

mor

e ac

cess

ible

to

pare

nts

who

cou

ld n

ot o

r wou

ld n

ot u

se th

e se

rvic

e in

oth

er lo

calit

ies.

Hav

ing

a ne

twor

k of

30

cent

res

(incl

udin

g 3

in G

ozo)

, will

pro

vide

an

oppo

rtuni

ty fo

r par

ents

who

had

diff

icul

ty w

ith b

alan

cing

thei

r w

orki

ng a

rran

gem

ents

with

the

offic

ial s

choo

l hou

rs. T

his

mig

ht le

ad to

an

incr

ease

in p

aren

ts

chan

ging

thei

r wor

king

hou

rs (f

or e

xam

ple,

from

redu

ced

hour

s to

full-

time)

or p

aren

ts w

ho w

ould

se

ek e

mpl

oym

ent o

r atte

ndin

g tra

inin

g/st

udie

s w

hils

t the

ir ch

ildre

n ar

e be

ing

take

n ca

re o

f.

The

MG

SS

sch

eme

has

a re

lativ

ely

low

bud

get.

In fa

ct in

201

3,

it is

like

ly th

at 1

0% o

nly

of th

e ap

plic

atio

ns c

an b

e aw

arde

d a

scho

lars

hip.

Tho

se o

ptin

g to

con

tinue

thei

r stu

dies

at d

octo

ral

leve

l are

mor

e at

risk

.

2.1.

2. L

ifelo

ng le

arni

ng a

nd T

rain

ing

2.2.

Incr

easi

ng L

abou

r For

ce P

artic

ipat

ion

2.2.

1. R

aisi

ng F

emal

e P

artic

ipat

ion

31 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

d) C

hild

Dev

elop

men

t Cen

tre

in G

ozo

Con

stru

ctio

n, S

ervi

cing

, Fin

ishi

ng a

nd c

omm

issi

onin

g of

a c

entre

offe

ring

child

and

you

th re

late

d se

rvic

es in

Goz

o.

ME

PA

per

mits

hav

e be

en a

ppro

ved

and

turn

-key

te

nder

ing

proc

edur

es w

ere

issu

ed a

nd s

ucce

ssfu

lly

com

plet

ed. C

ontra

ct s

igne

d an

d co

ntra

ctor

in

stru

cted

to c

omm

ence

wor

ks o

n si

te. E

xcav

atio

n w

orks

are

cur

rent

ly in

pro

gres

s, w

ith c

onst

ruct

ion

wor

ks c

omm

enci

ng in

the

com

ing

wee

ks. F

Inis

hing

w

orks

and

ser

vici

ng o

f the

bui

ldin

g sh

all t

hen

com

men

ce. O

nce

the

build

ign

near

s co

mpl

etio

n,

tend

ers

for t

he fu

rnis

hing

of t

he b

uild

ing

shal

l be

issu

ed.

Con

stan

t mon

itorin

g of

the

proj

ect i

s es

sent

ial t

o en

sure

that

the

proj

ect i

s co

mm

issi

oned

with

in s

peci

fied

timef

ram

es. T

o da

te,

dela

ys h

ave

been

enc

ount

ered

in th

e C

omm

issi

onin

g ph

ase

and

due

to A

rcha

eolo

gica

l mon

itorin

g on

site

.

It is

env

isag

ed th

at s

ince

par

t of t

he b

uild

ign

shal

l hou

se a

chi

ld c

are

cent

re, t

his

wou

ld e

ncou

rage

an

d in

crea

se fe

mal

e pa

rtici

patio

n in

the

Goz

itan

labo

ur m

arke

t. Th

e bu

ildin

g sh

all a

lso

help

on

the

soci

al fo

rmat

ion

of y

outh

s an

d ad

olos

cent

s an

d th

us w

ill c

ontri

bute

to a

con

tinue

d so

cial

dev

elop

men

t of

the

isla

nd.

e) P

aren

ting

Cre

dits

Par

ents

bor

n be

twee

n 19

52 a

nd 1

961

who

took

/take

a c

aree

r bre

ak to

car

e fo

r the

ir ch

ildre

n w

hile

un

der t

he a

ge o

f 6 w

ill b

e en

title

d to

one

yea

r of c

redi

t per

chi

ld g

iven

they

retu

rn to

em

ploy

men

t at

leas

t for

the

num

ber o

f yea

rs e

ntitl

ed to

cre

dits

. P

aren

ts o

f sev

erly

dis

able

d ch

ildre

n w

ho ta

ke s

aid

care

er b

reak

will

be

entit

led

to tw

o ye

ars

of c

redi

ts p

er c

hild

.

Com

plet

edN

/ATh

roug

h th

is m

easu

re, p

aren

ts w

ill in

crea

se th

e c

ontri

butio

n av

erag

e an

d th

eref

ore

will

be

entit

led

to

a hi

gher

rate

of p

ensi

on.

f) R

evis

ion

of M

eans

Tes

ting

for S

ocia

l Ass

ista

nce

Bef

ore

2011

, wom

en w

hose

hus

band

s re

ceiv

e so

cial

ass

ista

nce

wer

e di

scou

rage

d fro

m e

nter

ing

the

labo

ur m

arke

t, ev

en o

n a

part

time

basi

s, s

ince

inco

me

from

suc

h a

part

time

job

was

con

side

red

in

thei

r mea

ns te

st fo

r soc

ial a

ssis

tanc

e, a

nd s

o th

e so

cial

ass

ista

nce

they

rece

ive

wou

ld b

e re

duce

d or

in

som

e ca

ses

even

dis

cont

inue

d sh

ould

they

dec

ide

to s

eek

empl

oym

ent.

The

syst

em w

as c

reat

ing

disi

ncen

tives

for w

omen

to s

eek

empl

oym

ent o

ppor

tuni

ties

or e

nter

into

the

form

al e

cono

my.

Th

eref

ore,

in o

rder

to a

ddre

ss th

is s

ituat

ion,

as

from

Jan

uary

201

1, p

art o

f the

inco

me

from

wor

k fo

r pe

ople

who

are

rece

ivin

g so

cial

ass

ista

nce

star

ted

not t

o be

con

side

red

any

long

er in

the

finan

cial

m

eans

test

for t

he fa

mily

to q

ualif

y fo

r soc

ial a

ssis

tanc

e. T

he a

mou

nt o

f wag

es w

hich

sta

rted

to b

e ex

empt

ed fr

om th

e m

eans

test

is e

qual

to th

e di

ffere

nce

betw

een

the

natio

nal m

inim

um w

age

and

the

full

soci

al a

ssis

tanc

e ra

te a

pplic

able

for t

wo

peop

le.

Com

plet

ed: T

his

mea

sure

was

impl

emen

ted

by

mea

ns o

f a le

gal a

men

dmen

t int

rodu

ced

by A

ct IV

of

2011

.

N/A

The

pote

ntia

l im

pact

of t

his

mea

sure

was

est

imat

ed a

t 300

em

ploy

ees.

Due

to th

e em

ploy

men

t po

tent

ial,

the

mea

sure

was

exp

ecte

d to

be

reve

nue

enha

ncin

g, p

oten

tially

gen

erat

ing

arou

nd

€180

,000

per

ann

um.U

p to

end

of J

uly

2011

, ove

r 68

wom

en w

hose

hus

band

was

in re

ceip

t of s

ocia

l as

sist

ance

hav

e be

nefit

ed fr

om th

is m

easu

re.

g) P

ro-R

ata

NI C

ontr

ibut

ion

for P

art-T

ime

Self-

Empl

oyed

W

omen

Bef

ore

2011

, the

obl

igat

ory

min

imum

nat

iona

l ins

uran

ce c

ontri

butio

n fo

r sel

f-em

ploy

ed p

eopl

e w

as

resu

lting

in a

num

ber o

f wom

en e

ither

cho

osin

g no

t to

ente

r the

labo

ur m

arke

t or t

o w

ork

in th

e in

form

al m

arke

t to

thei

r ow

n de

trim

ent i

n th

e ev

ent o

f sic

knes

s or

inju

ry a

t the

wor

kpla

ce.

In o

rder

to

enco

urag

e th

ese

wom

en to

ent

er th

e fo

rmal

labo

ur m

arke

t, as

from

201

1, s

elf-e

mpl

oyed

wom

en

wor

king

on

a pa

rt-tim

e ba

sis

star

ted

to b

e gi

ven

the

oppo

rtuni

ty to

cho

ose

to p

ay a

15%

pro

rata

co

ntrib

utio

n on

thei

r inc

ome,

as

in th

e ca

se o

f em

ploy

ed p

erso

ns, i

nste

ad o

f the

min

imum

cur

rent

ly

stip

ulat

ed b

y la

w. T

his

pro

rata

con

tribu

tion

also

gra

nts

pro

rata

righ

ts fo

r som

e so

cial

ben

efits

be

nefit

s be

ing

retir

emen

t, su

rviv

ors,

inva

lidity

pen

sion

s an

d un

empl

oym

ent,

spec

ial u

nem

ploy

men

t, si

ckne

ss a

nd in

jury

ben

efits

.

Com

plet

edN

/ATh

is m

easu

re w

as p

roje

cted

to in

crea

se th

e nu

mbe

r of w

omen

in p

art-t

ime

self-

empl

oym

ent b

y ar

ound

375

. Bec

ause

of t

he s

igni

fican

t em

ploy

men

t pot

entia

l of t

his

mea

sure

, its

net

fisc

al c

ost w

as

expe

cted

to re

ach €

216,

000

per a

nnum

.

a) M

akin

g W

ork

Pay

In M

alta

ther

e ar

e ap

prox

imat

ely

12,0

00 u

nem

ploy

ed p

erso

ns –

41%

of w

hich

are

def

ined

as

long

te

rm u

nem

ploy

ed. T

he a

im o

f thi

s m

easu

re is

to re

duce

the

dura

tion

of lo

ng te

rm u

nem

ploy

men

t th

roug

h th

e ta

perin

g of

the

bene

fit s

yste

m s

o th

at c

laim

ants

do

not l

oose

100

% b

enef

it as

they

ent

er

the

labo

ur m

arke

t.

Bot

h th

e M

inis

try fo

r Em

ploy

men

t and

Edu

catio

n an

d th

e M

inis

try fo

r the

Fam

ily a

nd S

ocia

l Sol

idar

ity

are

stud

ying

the

impa

ct o

f thi

s pr

opos

al w

ith th

e ai

m

of i

ntro

duci

ng a

sys

tem

dur

ing

2014

.

The

mea

sure

s m

ight

giv

e ris

e to

ano

mal

ies

betw

een

low

-inco

me

earn

ers

that

are

alre

ady

in th

e la

bour

mar

ket a

nd th

e ne

w

entra

nts

beca

use

of th

e ta

perin

g sy

stem

.

The

aim

is to

redu

ce lo

ng te

rm u

nem

ploy

men

t and

redu

ce th

e bu

rden

of c

laim

ants

.

Fam

ilies

whe

re th

e pr

imar

y ea

rner

is a

min

imum

wag

e ea

rner

, will

ben

efit

from

an €

850

in-w

ork

bene

fit fo

r eve

ry c

hild

(the

ben

efit

can

be g

iven

a d

iffer

ent n

ame)

if th

e sp

ouse

take

s up

a jo

b (w

orki

ng fo

r a m

inim

um o

f 20

hour

s an

d ea

rns

a m

inim

um w

age

or le

ss).

This

mea

sure

is in

tend

ed

to a

ddre

ss fa

mili

es w

ith c

hild

ren

who

are

at-r

isk-

of-p

over

ty .

Fam

ilies

whe

re b

oth

pare

nts

are

alre

ady

in-w

ork

and

are

on a

min

imum

wag

e w

ould

stil

l ben

efit

from

th

is m

easu

re. T

he m

easu

re a

lso

appl

ies

to s

ingl

e pa

rent

s w

ho a

re in

-wor

k.

Und

er c

onsi

dera

tion

by th

e A

utho

ritie

s w

ith th

e po

ssib

ility

of i

ntro

duci

ng th

is in

iativ

e in

201

4.Th

is m

easu

re is

not

exp

ecte

d to

hav

e a

nega

tive

budg

etar

y im

pact

bec

ause

the

addi

tiona

l soc

ial s

ecur

ity c

ontri

butio

ns p

aid

by th

e em

ploy

ee a

nd th

e em

ploy

er a

re e

noug

h to

cov

er th

e in

crea

se o

f €85

0 (a

ssum

ing

they

hav

e on

ly 1

chi

ld).

How

ever

to

ensu

re ‘s

ocia

l fai

rnes

s’ it

is a

dvis

able

that

fam

ilies

whe

re b

oth

pare

nts

are

alre

ady

at w

ork

and

are

on m

inim

um w

age,

wou

ld

still

ben

efit

from

this

mea

sure

. Thi

s be

nefit

cou

ld b

e al

so

exte

nded

to s

ingl

e pa

rent

s in

-wor

k an

d on

low

inco

me.

This

mea

sure

is a

imed

at i

ncre

asin

g th

e ag

greg

gate

em

ploy

men

t lev

el a

nd h

ence

redu

cing

de

pend

ence

on

soci

al a

ssis

tanc

e in

the

long

run.

Prim

ary

earn

ers

who

se s

pous

es a

re o

ver 4

0 ye

ars

of a

ge a

nd e

nter

into

wor

k af

ter a

n ab

senc

e of

5

year

s or

mor

e fro

m th

e la

bour

mar

ket,

wou

ld s

till b

e el

igib

le to

mak

e us

e of

mar

ried

tax

rate

s, w

hile

th

e in

com

e of

the

spos

e is

not

take

n in

to c

onsi

dera

tion

for i

ncom

e ta

x pu

rpos

es. T

his

mea

sure

is

inte

nded

to e

limin

ate

the

incr

ease

in th

e im

plic

it ta

x ra

te fa

ced

by th

e pr

imar

y ea

rner

bec

ause

of a

ch

ange

in ta

x co

mpu

tatio

n (fr

om m

arrie

d to

sin

gle

tax

rate

s). T

his

mea

sure

will

last

for 5

yea

rs

Und

er c

onsi

dera

tion

by th

e A

utho

ritie

s w

ith th

e po

ssib

ility

of i

ntro

duci

ng th

is in

iativ

e in

201

4.Th

is m

easu

re is

not

exp

ecte

d to

hav

e a

nega

tive

budg

etar

y im

pact

.Th

is m

easu

res

is a

imed

at i

ncre

asin

g th

e ag

greg

gate

em

ploy

men

t lev

el.

b) P

aren

t Inc

ome

Tax

Com

puta

tion

In it

s bu

dget

for 2

012,

Gov

ernm

ent c

arrie

d ou

t an

impo

rtant

refo

rm o

f the

inco

me

tax

syst

em in

ord

er

to m

ake

the

labo

ur m

arke

t mor

e at

tract

ive

to w

omen

. Hen

ce, b

esid

es th

e si

ngle

and

join

t co

mpu

tatio

ns, M

alta

has

intro

duce

d a

new

cat

egor

y ca

lled

the

“Par

ent C

ompu

tatio

n”.

In o

rder

to

qual

ify fo

r thi

s ne

w p

aren

t com

puta

tion,

a p

aren

t mus

t sat

isfy

thes

e co

nditi

ons:

• Mai

ntai

ned

unde

r his

/her

cus

tody

a c

hild

or p

aid

mai

nten

ance

(est

ablis

hed

or a

utho

rised

by

cour

ts)

in re

spec

t of h

is o

r her

chi

ld.

• Suc

h ch

ild w

as n

ot o

ver 1

8 ye

ars

of a

ge, o

r not

ove

r 21

year

s if

rece

ivin

g fu

ll-tim

e in

stru

ctio

n at

a

terti

ary

educ

atio

n es

tabl

ishm

ent.

• Suc

h ch

ild d

id n

ot e

arn

inco

me

in e

xces

s of

€2,4

00 fr

om g

ainf

ul o

ccup

atio

n.

Com

plet

ed: T

his

fisca

l mea

sure

was

intro

duce

d th

roug

h A

ct V

of 2

012

enac

ted

on 1

4 M

ay 2

012.

Th

is is

the

Act

to im

plem

ent B

udge

t mea

sure

s fo

r th

e fin

anci

al y

ear 2

012

and

othe

r adm

inis

trativ

e m

easu

res.

N/A

It w

as e

stim

ated

that

mar

ried

coup

les

with

chi

ldre

n w

ill s

ave

betw

een €

150

and

€840

in in

com

e ta

x ye

arly

pay

men

ts a

nd th

at m

ore

than

55,

000

fam

ilies

will

ben

efit

thro

ugh

this

mea

sure

whi

ch w

ill

resu

lt in

a d

ecre

ase

of €

10 m

illio

n in

gov

ernm

ent t

ax re

venu

e. H

owev

er, t

he a

ctua

l im

pact

of t

his

mea

sure

can

onl

y be

effe

ctiv

ely

gaug

ed in

the

last

qua

rter o

f 201

3 w

hen

the

rela

tive

tax

retu

rns

for

the

year

201

2 ar

e pr

oces

sed.

CSR

2:

"...T

ake

mea

sure

s to

incr

ease

the

empl

oym

ent r

ate

of o

lder

wor

kers

by

fina

lisin

g an

d im

plem

entin

g a

com

preh

ensi

ve a

ctiv

e ag

eing

st

rate

gy...

"

a) A

ctiv

e A

gein

g Po

licy

On

3rd

May

201

3, a

nat

iona

l Com

mis

sion

for A

ctiv

e A

gein

g w

as s

et u

p to

adv

ise

the

Gov

ernm

ent

with

rega

rds

to th

e N

atio

nal P

olic

y fo

r Act

ive

Age

ing:

Mal

ta 2

014-

2020

. The

Com

mis

sion

will

be

follo

win

g a

'bot

tom

-up'

, par

ticip

ator

y ap

proa

ch w

ith a

ll re

leva

nt s

take

hold

ers,

as

wel

l as

the

gene

ral

publ

ic. T

he p

olic

y pa

per i

s pl

anne

d to

be

final

ised

by

the

four

th q

uarte

r of 2

013.

A fi

nal d

raft

docu

men

t is

bein

g co

mpl

eted

and

will

be

pres

ente

d to

the

Par

liam

enta

ry S

ecre

tary

for t

he

Rig

hts

of P

erso

ns w

ith D

isab

ility

and

Act

ive

Age

ing,

an

d su

bseq

uent

ly, t

o th

e C

abin

et fo

r app

rova

l.

The

key

chal

leng

es in

impl

emen

ting

the

reco

mm

enda

tions

in th

e A

ctiv

e A

gein

g P

olic

y in

clud

e th

e ef

ficie

nt c

oord

inat

ion

of v

ario

us

Min

istri

es a

nd s

take

hold

ers

in w

orki

ng to

geth

er to

war

ds m

eetin

g th

e go

vern

men

t's v

isio

n, a

nd th

e al

loca

tion

of p

ublic

fund

s fo

r the

en

actm

ent o

f som

e of

the

reco

mm

enda

tions

.

The

impl

emen

tatio

n of

the

reco

mm

enda

tions

inhe

rent

in th

e A

ctiv

e A

gein

g P

olic

y w

ill e

nsur

e th

at

Mal

tese

citi

zens

exp

erie

nce

bette

r lev

els

of s

ucce

ssfu

l and

pro

duct

ive

agei

ng. T

his

will

ens

ure

that

th

e qu

ality

of l

ife o

f age

ing

and

olde

r per

sons

impr

oves

dur

ing

the

com

ing

year

s.

b) C

omm

unity

Wor

k Sc

hem

eTh

is s

chem

e pr

ovid

es th

e lo

ng-te

rm u

nem

ploy

ed th

e op

portu

nity

to u

nder

take

com

mun

ity w

ork

unde

r th

e di

rect

ion

of lo

cal c

ounc

ils, N

GO

s an

d G

over

nmen

t ent

ities

.O

ngoi

ng m

easu

re: I

nter

view

s an

d en

gagi

ng m

ore

regi

stra

nts

to p

erfo

rm c

omm

unity

wor

k.A

lthou

gh it

is a

ckno

wle

dged

that

this

sch

eme

assi

sts

the

long

-te

rm u

nem

ploy

ed to

re-in

tegr

ate

into

the

labo

ur m

arke

t thr

ough

a

wor

k ex

perie

nce,

it is

reco

gnis

ed th

at it

is s

till a

cha

lleng

e fo

r th

ese

peop

le to

find

em

ploy

men

t fol

low

ing

parti

cipa

tion

in th

e sc

hem

e.

Thro

ugh

this

sch

eme

olde

r wor

kers

will

be

able

to u

pgra

de o

r obt

ain

furth

er s

kills

and

impr

ove

thei

r em

ploy

abili

ty c

hanc

es w

hich

will

indi

rect

ly e

xpan

d th

e co

untry

's e

cono

mic

pot

entia

l.

c) R

emov

al o

f cap

ping

on

earn

ings

from

a g

ainf

ul o

ccup

atio

n fo

r per

sons

in re

ceip

t of a

retir

emen

t pen

sion

Thro

ugh

this

mea

sure

, pen

sion

ers

star

ted

to b

enef

it fro

m a

full

pens

ion

rate

with

out a

ny d

educ

tions

irr

espe

ctiv

e of

the

rate

of e

arni

ngs

from

suc

h ga

infu

l occ

upat

ion.

A

s fro

m J

anua

ry 2

014,

the

grad

ual i

ncre

ase

in

pens

ion

age

will

effe

ctiv

ely

star

t for

per

sons

bor

n be

twee

n 19

52 a

nd 1

955

whe

n bo

th m

ale

and

fem

ale

pers

ons

will

reac

h pe

nsio

n at

age

62.

Fur

ther

mor

e,

the

cont

ribut

ion

accu

mul

atio

n fo

r the

aw

ard

of a

full

pens

ion

will

incr

ease

from

30

to 3

5 ye

ars

as w

ell.

To a

ttrac

t old

er w

orke

rs in

lega

l em

ploy

men

t and

aw

ay fr

om th

e bl

ack

eceo

nom

y.M

ore

olde

r wor

kers

rem

ain

in e

mpl

oym

ent.

d) P

ensi

oner

s w

orki

ng p

art-t

ime

for t

he g

over

nmen

t will

pay

15

% in

com

e ta

xTh

e ai

m o

f thi

s m

easu

re w

as to

enc

oura

ge o

lder

peo

ple

to re

mai

n ac

tive

by w

orki

ng lo

nger

and

re

tirin

g la

ter.

In th

is re

gard

, am

endm

ents

wer

e in

trodu

ced

in th

e pa

rt –

time

tax

rule

s so

that

pe

nsio

ners

wor

king

par

t-tim

e w

ith th

e G

over

nmen

t will

als

o be

com

e en

title

d to

the

15%

inco

me

tax

rate

whi

ch is

alre

ady

avai

labl

e to

thos

e w

orki

ng p

art –

tim

e in

the

priv

ate

sect

or.

Com

plet

ed: A

ll th

e ne

cess

ary

task

s re

late

d to

this

m

easu

re a

re n

ow c

ompl

eted

. The

legi

slat

ion

regu

latin

g pa

rt-tim

e w

ork

was

als

o am

ende

d. T

his

was

don

e th

roug

h th

e pu

blic

atio

n of

a L

egal

Not

ice

320

of 2

012

on 2

8 S

epte

mbe

r 201

2.

N/A

The

impa

ct o

f thi

s m

easu

re c

an o

nly

be e

ffect

ivel

y ga

uged

in th

e la

st q

uarte

r of 2

013

whe

n th

e re

lativ

e ta

x re

turn

s fo

r the

yea

r 201

2 ar

e pr

oces

sed.

2.2.

2. M

akin

g W

ork

Pay

Mea

sure

s

2.2.

3. L

abou

r Act

ivat

ion

Pro

gram

mes

32 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

f) A

cces

s to

Em

ploy

men

tP

artia

l wag

e su

bsid

isat

ion

for d

isad

vant

aged

peo

ple

with

no,

or l

imite

d sk

ills,

in p

artic

ular

thos

e ag

ed

over

40.

This

mea

sure

is e

xpec

ted

to s

tart

in 2

014.

The

impl

emen

tatio

n of

this

mea

sure

dep

ends

on

the

allo

catio

n of

bo

th n

atio

nal a

nd E

urop

ean

fund

s.Th

is s

chem

e w

ill a

ssis

t peo

ple

who

are

mor

e at

risk

of b

eing

exc

lude

d fro

m th

e la

bour

mar

ket t

o ac

quire

the

skill

s an

d ex

perie

nce

need

ed to

faci

litat

e th

eir i

nteg

ratio

n in

to th

e fo

rmal

eco

nom

y.

Hen

ce th

is w

ould

ena

ble

a su

stai

nabl

e re

duct

ion

over

the

long

-term

of t

he n

umbe

r of b

enef

its b

eing

pa

id to

dis

adva

ntag

ed p

erso

ns.

a) M

ariti

me

Stra

tegy

Dev

elop

an

Inte

grat

ed n

atio

nal s

trate

gy fo

r Mal

ta.

In c

olla

bora

tion

with

the

rele

vant

sta

keho

lder

s, th

e In

tegr

ated

Mar

itim

e N

atio

nal S

trate

gy w

orki

ng

Dev

elop

the

stra

tegy

by

June

201

4N

one

The

stra

tegy

will

pro

vide

a c

lear

fram

ewor

k fo

r blu

e gr

owth

b) M

ariti

me

Hub

Dev

elop

men

t of f

orm

er M

arsa

shi

pbui

ldin

g si

te a

s a

Mar

itim

e H

ub.

(a) C

all f

or E

xpre

ssio

n of

Inte

rest

(EO

I) C

once

ssio

n fo

r the

Dev

elop

men

t, O

pera

tion

and

Man

agem

ent o

f the

form

er M

arsa

shi

pbui

ldin

g si

te to

be

deve

lope

d as

a M

ariti

me

Hub

; (b

) Com

men

ce e

valu

atio

n an

d ad

judi

catio

n of

EO

I;

(c) F

orm

ulat

e ut

ilisa

tion

polic

y of

form

er M

arsa

Shi

pbui

ldin

g si

te;

(d) F

inal

ise

EO

I adj

udic

atio

n pr

oces

s;

(e) I

ssue

Req

uest

for P

ropo

sals

.

(a) 5

th A

ugus

t 201

3;

(b) 2

2 A

ugus

t 201

3;

(c) 1

6 S

epte

mbe

r 201

3;

(d

) 14

Oct

ober

201

3;

(e) 2

5 O

ctob

er 2

013.

(a) T

he u

nava

ilabi

lity

of c

ompl

ete

and

full

info

rmat

ion

from

pr

opon

ents

may

del

ay p

roce

ss.

(a) U

tilis

atio

n of

unu

sed

reso

urce

s (i.

e. fo

rmer

Mar

sa S

hipb

uild

ing

site

); (b

) Em

ploy

men

t opp

ortu

nitie

s fo

r ski

lled

and

unsk

illed

per

sons

; (c

) Gen

erat

ion

of e

cono

mic

act

ivity

; and

(d

) Fac

ilita

tion

of th

e gr

een

econ

omy

thro

ugh

the

poss

ible

par

tial u

tilis

atio

n of

the

site

for t

he

gene

ratio

n of

alte

rnat

ive

ener

gy.

c) L

and

recl

amat

ion

Land

recl

amat

ion

is in

tegr

al to

furth

erin

g th

e in

frast

ruct

ural

dev

elop

men

t of t

he c

ount

ry.

Hen

ce a

n In

tern

atio

nal C

all f

or E

OI f

or L

and

Rec

lam

atio

n w

ill b

e is

sued

.(i)

Col

lect

ion

of E

OI b

y th

e 6/

9/13

; (ii

) 30/

9/13

- C

losi

ng d

ate

for e

nqui

ries

and

requ

ests

fo

r cla

rific

atio

ns;

(iii)

30/1

0/13

- D

eadl

ine

for r

eplie

s to

cla

rific

atio

ns;

Mar

itim

e an

d en

viro

nmen

tal c

onst

rain

ts

a) to

enc

oura

ge s

ocia

lly a

nd e

cono

mic

ally

via

ble

proj

ects

that

may

con

tinue

to e

nhan

ce M

alta

’s p

re-

exis

ting

infra

stru

ctur

al s

etup

;

(b) t

o en

hanc

e de

velo

pmen

t of l

ocal

indu

stry

and

cre

ate

empl

oym

ent o

ppor

tuni

ties

in M

alta

; d)

SM

E Fi

nanc

ing

i) M

icro

Gua

rant

eeTh

e M

icro

Gua

rant

ees

sche

me

shal

l pro

vide

elig

ible

und

erta

king

s w

ith th

e po

ssib

ility

to a

cces

s fu

nds

requ

ired

for t

he a

cqui

sitio

n of

tang

ible

inve

stm

ents

, int

angi

ble

asse

ts a

nd w

orki

ng c

apita

l lin

ked

to

such

acq

uisi

tions

. Th

e M

icro

Gua

rant

ee m

ay o

nly

be u

sed

to s

uppo

rt a

new

loan

, use

d to

fina

nce

inve

stm

ent c

osts

app

rove

d by

the

Mal

ta E

nter

pris

e, w

hich

in to

tal d

o no

t exc

eed €

100,

000.

Th

e sc

hem

e is

mad

e po

ssib

le th

roug

h th

e co

llabo

ratio

n of

par

ticip

atin

g ba

nks

that

will

pro

vide

the

loan

fa

cilit

ies

cove

red

by th

e M

icro

Gua

rant

ee S

chem

e.

Mal

ta E

nter

pris

e w

ill n

ot re

quire

any

sec

urity

fro

m th

e be

nefic

iary

in re

spec

t of t

he g

uara

ntee

that

will

be

issu

ed to

the

bank

. H

owev

er,

the

bank

gr

antin

g th

e lo

an m

ay re

quire

that

the

bene

ficar

y se

cure

s up

to 1

0% o

f the

loan

am

ount

.

To b

e de

term

ined

In o

rder

to im

prov

e th

e av

aila

bilit

y of

fund

s fo

r SM

Es

and

to

achi

eve

max

imum

out

reac

h to

suc

h en

terp

rises

, suc

h su

ppor

t in

stru

men

ts m

ust b

e at

tract

ive

for t

he fi

nanc

ial i

nter

med

iarie

s. In

th

is re

gard

, the

obl

igat

ions

and

the

bene

fits

for t

he fi

nanc

ial

inte

rmed

iarie

s w

ould

hav

e to

be

wel

l-bal

ance

d in

ord

er to

attr

act

them

to a

pply

for s

uch

inst

rum

ents

.

Lim

ited

avai

labi

lity

of fu

nds

man

y tim

es p

rohi

bits

sm

all b

usin

ess

from

car

ryin

g ou

t new

inve

stm

ent

proj

ects

and

may

con

sequ

ently

lead

to th

e lo

ss o

f bus

ines

s op

portu

nitie

s. T

he M

icro

Gua

rant

ee

Sch

eme

has

the

obje

ctiv

e to

acc

eler

ate

the

grow

th b

y fa

cilit

atin

g ac

cess

to d

ebt f

inan

ce fo

r sm

alle

r bu

sine

ss u

nder

taki

ngs.

ii) B

. Sta

rtA

s pe

r bud

get s

peec

h, th

e sc

hem

e w

as in

tend

ed to

enc

oura

ge e

xist

ing

busi

ness

es to

ben

efit

from

a

tax

redu

ctio

n of

up

to €

30,0

00 fo

r the

inve

stm

ent i

n a

new

sta

rt-up

com

pany

(see

d ca

pita

l).To

be

dete

rmin

edIn

ord

er to

impr

ove

the

avai

labi

lity

of fu

nds

for S

ME

s an

d to

ac

hiev

e m

axim

um o

utre

ach

to s

uch

ente

rpris

es, s

uch

supp

ort

inst

rum

ents

mus

t be

attra

ctiv

e fo

r the

fina

ncia

l int

erm

edia

ries.

In

this

rega

rd, t

he o

blig

atio

ns a

nd th

e be

nefit

s fo

r the

fina

ncia

l in

term

edia

ries

wou

ld h

ave

to b

e w

ell-b

alan

ced

in o

rder

to a

ttrac

t th

em to

app

ly fo

r suc

h in

stru

men

ts.

Lim

ited

avai

labi

lity

of fu

nds

man

y tim

es p

rohi

bits

sm

all b

usin

ess

from

car

ryin

g ou

t new

inve

stm

ent

proj

ects

and

may

con

sequ

ently

lead

to th

e lo

ss o

f bus

ines

s op

portu

nitie

s.

iii) Q

ualit

y+Th

e Q

ualit

y+ s

chem

e ha

s be

en e

stab

lishe

d to

enc

oura

ge S

mal

l and

Med

ium

-siz

ed E

nter

pris

es

(SM

Es)

to c

ontin

uous

ly im

prov

e th

e qu

ality

of t

heir

prod

ucts

, ser

vice

s an

d pr

oces

ses.

Mal

ta

Ent

erpr

ise

may

app

rove

tax

dedu

ctio

ns (a

redu

ctio

n of

the

inco

me

subj

ect t

o ta

x) re

pres

entin

g on

e hu

ndre

d an

d fif

ty p

erce

nt (1

50%

) of t

he e

ligib

le e

xpen

ditu

re in

curr

ed fo

r ach

ievi

ng th

e re

quire

dim

prov

emen

t.

The

obje

ctiv

e of

this

ince

ntiv

e is

to s

uppo

rt un

derta

king

s in

:a.

impl

emen

ting

qual

ity m

anag

emen

t pro

cedu

res

b. e

nhan

cing

pla

nnin

g an

d pe

rform

ance

;c.

incr

easi

ng c

usto

mer

sat

isfa

ctio

n or

d. im

prov

ing

effic

ienc

y of

func

tions

and

pro

cess

es.

This

ince

ntiv

e w

ill b

e av

aila

ble

until

the

31st

D

ecem

ber 2

013,

yet

app

licat

ions

for t

he a

pplic

able

fis

cal b

enef

it w

ill b

e ac

cept

ed b

y M

alta

Ent

erpr

ise

until

the

31st

Mar

ch 2

014.

N/A

The

fisca

l sup

port

that

will

be

avai

labl

e th

roug

h th

is s

chem

e sh

ould

mak

e it

easi

erfo

r bus

ines

ses

to c

arry

out

inve

stm

ents

that

lead

to s

uper

ior p

rodu

cts,

ser

vice

s of

hig

her v

alue

or

mor

e ef

ficie

nt p

roce

sses

.

e) B

road

enin

g A

cces

s to

Edu

catio

nTh

e C

otto

nera

Res

ourc

e C

entre

e, U

nive

rsity

of M

alta

, was

offi

cial

ly in

augu

rate

d in

Jan

uary

201

3. I

ts

rem

it is

to e

mpo

wer

resi

dent

s in

a s

ocia

lly d

epriv

ed a

rea,

nam

ely

Cot

tone

ra a

nd K

alka

ra, s

o th

at th

ey

cons

ider

con

tinui

ng w

ith th

eir e

duca

tion

beyo

nd th

e co

mpu

lsar

y st

age.

Yout

hs:T

he a

cade

mic

yea

r 210

3-20

14 w

ill fe

atur

e a

driv

e to

find

mor

e sp

onso

rs w

illin

g to

giv

e m

oney

fo

r a li

brar

y w

ith re

adin

g an

d ot

her a

udio

-vis

ual

mat

eria

l whi

ch m

ight

enc

oura

ge y

outh

to h

elp

educ

ate

them

selv

es.

If th

e ne

cess

ary

fund

s ar

e fo

und,

a s

mal

l int

erne

t caf

e m

ight

be

set u

p si

nce

this

will

ena

ble

yout

h fro

m th

e ar

ea to

furth

er th

eir

educ

atio

n on

thei

r ow

n in

itiat

ive.

Adu

lts &

Eld

erly

: N

on-C

redi

t cou

rses

will

stil

l be

offe

red

to th

e co

mm

unity

for p

erso

nal d

evel

opm

ent

and

inte

rest

. Dur

ing

2013

-201

4 th

ere

will

be

disc

ussi

ons

with

the

Uni

vers

ity o

f Mal

ta to

find

out

w

heth

er th

ere

is th

e po

ssib

iity

that

thos

e ad

ults

who

at

tend

a n

umbe

r of c

ours

es m

ight

be

give

n a

form

of

educ

atio

nal a

ccre

dita

tion.

In O

ctob

er 2

013

a pr

epar

ator

y co

urse

, com

pris

ing

info

rmat

ion,

rele

vant

ski

lls, s

ome

guid

ance

and

oth

e rsu

ppor

t will

be

give

n to

adu

lts w

ho a

re in

tere

sted

in

furth

erin

g th

eir e

duca

tion

at u

nive

rsity

but

do

not

have

the

nece

ssar

y en

try re

quire

men

ts.

In O

ctob

er 2

013

elde

rly re

side

nts

from

the

area

will

be

giv

en th

e op

portu

nity

to a

ttend

the

Uni

vers

ity o

f th

e Th

ird A

ge a

t the

Cot

tone

ra R

esou

rce

Cen

tre.

The

Cot

tone

ra R

esou

rce

Cen

tre is

aw

are

of th

e st

rong

role

gra

ndpa

rent

s pl

ay in

the

lives

of t

heir

child

ren

and

gran

dchi

ldre

n. B

y ed

ucat

ing

this

age

gr

oup

we

mig

ht e

ncou

rage

som

e of

thes

e el

derly

ad

ults

to fu

rther

thei

r edu

catio

n an

d/or

inst

ill th

e lo

ve

of e

duca

tion

amon

g th

eir k

in. T

he fe

ar is

that

sin

ce a

go

od p

ortio

n of

the

resi

dent

s ca

nnot

affo

rd th

e fe

e, a

go

od n

umbe

r of t

hem

will

not

eve

n th

ink

abou

t si

gnin

gup

The

impl

emen

tatio

n of

the

mea

sure

dep

ends

on

the

avai

labi

lity

of

fund

ing.

To in

crea

se p

artic

ipat

ion

in p

ost-s

econ

dary

and

terti

ary

educ

atio

n in

regi

ons

with

low

leve

l of

parti

cipa

tion,

with

a p

artic

ular

focu

s on

Cot

tone

ra, t

here

by im

prov

ing

the

skill

s pr

ofile

of a

seg

men

t of

the

labo

r for

ce. T

he a

rea

bein

g ta

rget

ed is

a s

ocia

lly d

epriv

ed a

rea

and

henc

e an

y im

prov

emen

ts in

em

ploy

abili

ty a

re b

ound

to d

ecre

ase

the

burd

en o

n pu

blic

cof

fers

thro

ugh

a de

crea

se in

the

num

ber

of b

enef

it cl

aim

ants

.

3. P

riorit

isin

g th

e pr

omot

ion

of a

div

ersi

fied

and

bala

nced

eco

nom

y

3.1.

Div

ersi

ficat

ion

and

Com

petit

iven

ess

33 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

iv) E

xten

sion

of J

ER

EM

IEA

furth

er E

UR

2m

wer

e al

loca

ted

to th

e JE

RE

MIE

initi

ativ

e. I

t is

estim

ated

that

this

add

ition

will

tra

nsla

te in

to a

pot

of a

roun

d E

UR

11.

36m

. (E

UR

2m

-2%

EIF

adm

inis

trativ

e fe

e x

5.8,

whi

ch is

our

m

ultip

lier e

ffect

). J

ER

EM

IE lo

ans

can

rang

e fro

m a

s lit

tle a

s E

UR

25,

000,

up

to th

e m

axim

um

allo

wed

am

ount

EU

R 5

00,0

00, h

owev

er a

vera

ge lo

ans

are

norm

ally

of a

roun

d E

UR

70,

000

to E

UR

80

,000

. Th

eref

ore

this

add

ition

al p

ot w

ill p

oten

tially

tran

slat

e in

to a

n ad

ditio

nal 1

40 fa

cilit

ies.

The

adde

ndum

to th

e or

igin

al fu

ndin

g ag

reem

ent

was

sig

ned

on 1

9 S

epte

mbe

r 201

3 an

d th

e fin

anci

al

inte

rmed

iary

was

sel

ecte

d.

Ther

e sh

ould

not

be

any

imm

edia

te ri

sks

sinc

e th

e sy

stem

is

'trie

d an

d te

sted

' with

the

curr

ent J

ER

EM

IE a

lloca

tion.

Th

e fo

rese

en im

pact

s ar

e th

e av

aila

bilit

y of

mor

e fa

vour

able

loan

s fo

r SM

Es

and

star

t ups

. Th

e fir

st

JER

EM

IE in

itiat

ive

was

a ru

naw

ay s

ucce

ss a

nd th

e cu

rren

t allo

catio

n w

as e

xhau

sted

by

June

201

3,

that

is w

ell b

efor

e th

e en

d of

the

proj

ecte

d im

plem

enta

tion

perio

d an

d th

eref

ore

ther

e w

as a

nee

d an

d de

man

d fo

r a fu

rther

allo

catio

n to

be

able

to a

ccom

odat

e ne

w lo

ans.

e) F

amily

Bus

ines

s A

ctD

evel

opin

g an

d dr

aftin

g th

e Fa

mily

Bus

ines

s A

ct:

(a) C

onsu

ltatio

n E

xerc

ise

(b) C

omm

ittee

dis

cuss

ions

and

eva

luat

ions

(c) D

rafti

ng a

nd re

visi

on o

f leg

isla

tion

(d) C

onsu

ltatio

n an

d ap

prov

al fr

om re

leva

nt q

uarte

rs(e

) Whi

te P

aper

(f)

Red

rafti

ng a

nd fi

nal a

men

dmen

ts if

nec

essa

ry(g

) Pre

sent

atio

n of

Bill

to P

arlia

men

t

(a) J

uly-

Sep

tem

ber 2

013

(b) O

ctob

er –

Dec

embe

r 201

3(c

) Jan

uary

– J

une

2014

(d) J

uly

– S

epte

mbe

r 201

4(e

) Oct

ober

201

4(f)

Nov

embe

r – D

ecem

ber 2

014

(g) J

anua

ry 2

015

Del

ays

or li

mite

d fe

edba

ck a

t eac

h pr

oces

s(a

) Rec

ogni

tion

of fa

mily

bus

ines

s(b

) Cur

tailm

ent o

f abu

se(c

) Sec

urity

and

long

evity

of f

amily

bus

ines

s(d

) Mor

e ec

onom

ic a

nd fi

nanc

ial s

tabi

lity,

regu

latio

n an

d co

ntro

l

f) G

loba

l Res

iden

ce P

rogr

amm

eP

ropo

sal t

o in

trodu

ce a

new

tax

prog

ram

me

for i

ndiv

idua

ls fr

om n

on-E

U, n

on-E

EA

and

non

-Sw

iss

(third

-cou

ntry

nat

iona

ls) w

ho s

atis

fy m

inim

um c

riter

ia a

s es

tabl

ishe

d an

d w

ho a

re n

ot in

an

empl

oym

ent r

elat

ions

hip.

Suc

h in

divi

dual

s m

ay a

lso

hold

non

-exe

cutiv

e po

sts

on th

e bo

ard

of a

co

mpa

ny re

gist

ered

in M

alta

or p

arta

ke in

act

iviti

es re

late

d to

any

inst

itutio

n, tr

ust o

r fou

ndat

ion

of a

pu

blic

cha

ract

er o

r of a

ny s

imila

r org

anis

atio

n or

bod

y of

per

sons

, als

o of

a p

ublic

cha

ract

er, w

hich

is

enga

ged

in p

hila

nthr

opic

, edu

catio

nal,

rese

arch

and

dev

elop

men

t wor

k in

Mal

ta.

The

prop

osed

legi

slat

ion

shou

ld k

ick

star

t the

resi

denc

e pr

oces

s w

ith n

on-E

U n

atio

nals

.

Don

eN

one

It w

ill h

ave

undo

ubte

dly

a be

nefic

ial e

ffect

on

SM

Es

in M

alta

and

Goz

o as

it is

wel

l kno

wn

that

thes

e ty

pe o

f res

iden

ts in

ject

fund

s th

e ec

onom

y.

a) M

CA

ST E

SF-fu

nded

pro

ject

s

CSR

3:

"...I

ncre

ase

the

labo

ur m

arke

t re

leva

nce

of e

duca

tion

and

trai

ning

to

add

ress

ski

ll-ga

ps, i

nclu

ding

th

roug

h th

e an

noun

ced

refo

rm o

f th

e ap

pren

tices

hip

syst

em."

i) E

SF

1.34

- A

ddre

ssin

g S

kills

Mis

mat

ches

in th

e A

viat

ion

Mai

nten

ance

Indu

stry

The

aim

of t

his

proj

ect w

as th

at o

f offe

ring

a nu

mbe

r of c

ours

es in

the

avia

tion

mai

nten

ance

sec

tor.

The

train

ing

and

impl

emen

tatio

n of

the

proj

ect w

ere

com

plet

ed b

y M

arch

201

3.A

prin

cipa

l cha

lleng

e, w

hich

has

bee

n su

cces

sful

ly o

verc

ome,

w

as th

e cr

eatio

n of

the

nece

ssar

y te

achi

ng c

apac

ity in

Avi

atio

n M

aint

enan

ce a

t MC

AS

T.

This

pro

ject

had

a d

irect

impa

ct o

n th

e cr

eatio

n of

the

appr

opria

te h

uman

reso

urce

bas

e in

avi

atio

n m

aint

enan

ce in

dust

ry in

Mal

ta.

ii) E

SF

2.85

- In

dust

rial N

eeds

and

VE

T to

Opt

imis

e H

uman

Cap

ital T

hrou

gh th

is p

roje

ct, M

CA

ST

is p

rovi

ding

targ

ette

d tra

inin

g to

add

ress

cur

rent

ski

lls s

horta

ges

in 1

0 ke

y ec

onom

ic s

ecto

rs.

Trai

ning

opp

ortu

nitie

s w

ill b

e pr

ovid

ed u

ntil

Q1

2015

.Low

par

ticip

atio

n ra

te o

f tra

inee

s m

itiga

ted

thro

ugh

the

impl

emen

tatio

n of

ext

ensi

ve p

ublic

ity m

easu

res.

Pro

ject

is a

ddre

ssin

g sk

ills

shor

tage

s in

10

key

econ

omic

sec

tors

: Pha

rmac

eutic

als

and

Che

mic

als,

Fi

nanc

ial S

ervi

ces,

ICT,

Fur

nitu

re, P

rintin

g, In

frast

ruct

ure,

Foo

d, B

ever

ages

, Mar

itim

e an

d P

last

ics.

iii) E

SF

1.33

– In

crea

sing

ICT

Stu

dent

Cap

acity

in M

alta

Th

e ov

eral

l obj

ectiv

e of

this

pro

ject

is th

at o

f ens

urin

g th

at th

ere

is a

ski

lled

and

train

ed w

orkf

orce

tha

is c

apab

le o

f ful

fillin

g th

e m

arke

t nee

ds in

the

ICT

sect

or.

It is

env

isag

ed th

at th

e pr

ojec

t will

be

com

plet

ed in

20

14.

A c

halle

nge,

whi

ch h

as b

een

over

com

e, w

as li

nked

to th

e pr

ocur

emen

t of t

he tr

aini

ng s

ervi

ces.

Th

roug

h th

is p

roje

ct, M

CA

ST

will

ens

ure

the

avai

labi

lity

of a

ski

lled

hum

an re

sour

ce b

ase

in th

e IC

T se

ctor

. iv

) ES

F 1.

36 –

Pro

fess

iona

l Dev

elop

men

t Pro

gram

mes

for M

CA

ST

Sta

ff an

d S

tude

nts’

Top

-Up

Deg

rees

T

he a

im o

f thi

s pr

ojec

t is

that

of e

nhan

cing

the

prof

essi

onal

dev

elop

men

t of a

cade

mic

and

ad

min

istra

tive

staf

f at M

CA

ST

and

the

laun

chin

g of

voc

atio

nal d

egre

e pr

ogra

mm

es fo

r stu

dent

s.Th

e la

st tw

o de

gree

pro

gram

mes

hav

e be

en

com

plet

ed d

urin

g th

e la

st a

cade

mic

yea

r. Th

e co

ordi

natio

n an

d th

e ef

fect

ive

impl

emen

tatio

n of

thes

e ac

tiviti

es.

Thro

ugh

the

impl

emen

tatio

n of

this

pro

ject

MC

AS

T is

now

in a

pos

ition

to o

ffer v

ocat

iona

l deg

rees

an

d as

a re

sult

prov

ide

an a

dditi

onal

pro

gres

sion

rout

e fo

r stu

dent

s.

b) J

ob P

ract

ice

Sche

me

for y

oung

gra

duat

esY

oung

gra

duat

es o

ften

find

it di

fficu

lt to

mak

e th

e tra

nsiti

on fr

om e

duca

tion

to w

ork

beca

use

they

lack

the

wor

k ex

perie

nce

requ

ired

by e

mpl

oyer

s. T

his

initi

ativ

e w

ill p

rovi

de g

radu

ates

/stu

dent

s a

porto

folio

of

ski

lls a

nd e

xper

ienc

e to

impr

ove

thei

r job

find

ing

pros

pect

s.

An

Em

ploy

abili

ty In

dex

will

be

publ

ishe

d ne

xt y

ear.

It w

ill s

erve

to id

entif

y un

dere

mpl

oym

ent a

nd tr

ends

in

labo

ur m

arke

t dem

and.

The

inde

x's

outc

ome

will

pr

ovid

e th

e ba

sis

for t

he s

chem

e's

desi

gn.

Fund

ing

is s

ubje

ct to

ES

F.Im

prov

ed re

turn

s on

the

hum

an c

apita

l inv

estm

ent.

c) T

appi

ng F

utur

e D

eman

d fo

r hig

h sk

illed

jobs

Th

e fo

reca

stin

g of

ski

ll ga

ps is

ess

entia

l to

redu

ce la

bour

mar

ket m

ism

atch

es. T

he a

vaila

bilit

y of

a

skill

ed w

orkf

orce

is p

aram

ount

to e

nsur

e go

od q

ualit

y de

man

d fo

r lab

our.

This

sch

eme

is in

tend

ed to

id

entif

y an

d ad

dres

s fu

ture

ski

lls g

aps

of p

artic

ular

val

ue a

dded

.

An

Em

ploy

abili

ty In

dex

will

be

publ

ishe

d ne

xt y

ear.

It w

ill s

erve

to id

entif

y un

dere

mpl

oym

ent a

nd tr

ends

in

labo

ur m

arke

t dem

and.

The

inde

x's

outc

ome

will

pr

ovid

e th

e ba

sis

for t

he s

chem

e's

desi

gn.

Fund

ing

is s

ubje

ct to

ES

F.Im

prov

ed re

turn

s on

the

hum

an c

apita

l inv

estm

ent.

a) F

inan

cial

ince

ntiv

es in

par

ticul

ar fo

r sol

ar te

chno

logy

(i) F

eed-

in ta

riffs

for P

Vs

not s

uppo

rted

thro

ugh

othe

r fun

ding

In it

s bu

dget

for 2

013,

the

gove

rnm

ent h

as a

nnou

nced

a F

IT fo

r PV

s no

t sup

porte

d th

roug

h ot

her

fund

ing

(ER

DF

or o

ther

wis

e). T

hese

are

pub

lishe

d on

the

MR

A w

ebsi

te: h

ttp://

mra

.org

.mt/r

egul

ated

-ta

riffs

/feed

-in-ta

riffs

/

Late

st F

ITs

publ

ishe

d as

per

LN

253

/201

3 pu

blis

hed

on 2

7 A

ugus

t 201

3.La

ck o

f aw

aren

ess.

Hel

p M

alta

ach

ieve

its

RE

S a

nd E

E ta

rget

s, th

ereb

y re

duci

ng ri

sk o

f inf

irnge

men

t pro

ceed

ings

. Th

roug

h in

crea

sed

gene

ratio

n of

ele

ctric

ity fr

om R

ES

redu

ce (i

f min

imal

ly) r

elia

nce

on fo

ssil

fuel

s.

(ii) N

ew s

chem

e fo

r PV

pan

els

in h

ouse

hold

sG

over

nmen

t pro

vide

s fin

anci

al in

cent

ives

in th

e fo

rm o

f gra

nts

on th

e in

itial

cap

ital i

nves

tmen

t mad

e th

roug

h gr

ant s

chem

es la

unch

ed fr

om ti

me

to ti

me.

La

st s

chem

e pu

blis

hed

in M

ay 2

013

and

will

run

up

to th

e en

d of

Dec

embe

r 201

3.Lo

w ta

ke-u

p. S

chem

e ru

ns a

long

sam

e lin

es o

f pre

viou

s sc

hem

es.

as a

bove

b) W

ind

This

mea

sure

add

ress

es tw

o co

mpo

nent

s of

win

d en

ergy

:

a) M

acro

-win

d en

ergy

: The

re a

re th

ree

prop

osed

win

d fa

rms:

A 7

2MW

-95M

W o

ffsho

re w

ind

farm

at

Sik

ka l-

Baj

da. T

he id

entif

ied

site

itse

lf fa

ces

envi

ronm

enta

l cha

lleng

es. T

he e

nviro

nmen

tal i

mpa

ct

asse

ssm

ent h

as in

dica

ted

that

the

prop

osed

dev

elop

men

t mig

ht h

ave

a ne

gativ

e en

viro

nmen

tal

impa

ct o

n av

ifaun

a, th

e si

te b

eing

a m

ain

rafti

ng s

ite fo

r the

pro

tect

ed Y

elko

uan

She

arw

ater

. In

orde

r to

add

ress

this

issu

e, fu

rther

stu

dies

hav

e be

en re

com

men

ded

and

gove

rnm

ent h

as a

pplie

d fo

r E

RD

F fu

nds

to fi

nanc

e a

prot

otyp

e w

ind

turb

ine

for m

easu

ring

pote

ntia

l im

pact

s. H

owev

er, f

unds

for

this

pro

ject

hav

e no

t bee

n ap

prov

ed. T

he c

omm

ents

that

wer

e ra

ised

by

the

loca

l env

ironm

ent a

nd

plan

ning

aut

horit

y to

the

subm

itted

env

ironm

enta

l im

pact

ass

essm

ent w

ere

subm

itted

in F

ebru

ary

2013

.

The

othe

r tw

o w

indf

arm

s w

ill b

e lo

cate

d in

al

Far

and

Wie

d R

ini.

On

the

form

er, c

once

rns

have

be

en e

xpre

ssed

on

the

impa

ct o

f its

dev

elop

men

t on

bird

s an

d ba

ts. A

n ap

prop

riate

ass

essm

ent f

or

bird

s ha

s ex

pres

sed

conc

ern

abou

t the

she

arw

ater

spe

cies

.Sin

ce th

e le

vel o

f kno

wle

dge

of th

e in

tera

ctio

n of

spe

cies

and

win

d tu

rbin

es is

low

, the

pre

caut

iona

ry p

rinci

ple

appl

ies.

The

mai

n co

ncer

ns re

late

to th

e di

spla

cem

ent/d

istu

rban

ce e

ffect

s du

ring

the

oper

atio

nal p

hase

of t

he p

roje

ct.

The

appr

opria

te a

sses

smen

t for

this

pro

ject

is re

ady

for s

ubm

issi

on to

the

Mal

ta E

nviro

nmen

t and

P

lann

ing

Aut

horit

y (M

EP

A).

The

envi

ronm

enta

l im

pact

ass

essm

ent f

or W

ied

Rin

i hav

e be

en

com

plet

ed in

Feb

ruar

y an

d ha

ve b

een

subm

itted

to M

EP

A.

(b) M

icro

-win

d en

ergy

: Mic

ro-w

ind

(less

than

20

KW

) as

defin

ed b

y M

EP

A g

uide

lines

.

With

rega

rd to

the

win

d fa

rm a

t Sik

ka l-

Baj

da, M

EP

A

has

issu

ed a

sec

ond

set o

f rev

iew

com

men

ts,

indi

cativ

e tim

efra

mes

, and

a m

emo

high

light

ing

EP

D's

pos

ition

on

late

st E

IA a

nd A

A s

ubm

issi

ons.

Th

e m

emo

also

hig

hlig

hts

the

emer

ging

diff

icul

ties

vis-

a-vi

s th

e pr

ojec

t, so

me

of w

hich

are

rela

tivel

y cl

ear d

espi

te th

e in

com

plet

e E

IS,

with

a v

iew

tow

ard

assi

stin

g th

e M

inis

try in

dec

idin

g w

heth

er to

pro

ceed

fu

rther

with

the

proj

ect a

nd to

wha

t ext

ent.

A d

efin

ite

EIA

cer

tific

atio

n da

te is

pre

mat

ure,

sin

ce th

is la

rgel

y de

pend

s on

the

even

tual

dec

isio

ns o

n th

e w

ay

forw

ard,

and

the

suffi

cien

cy o

f the

con

sulta

nts'

su

bmis

sion

s. W

ith re

gard

s to

the

win

d fa

rm a

t al

Fa

r an

AA

has

bee

n re

cent

ly s

ubm

itted

by

Min

istry

fo

r Ene

rgy

and

is c

urre

ntly

bei

ng re

view

ed. M

EP

A

plan

s to

com

plet

e its

feed

back

in th

e co

min

g 2

wee

ks. F

or th

e w

ind

farm

at W

ied

Rin

i, th

e C

ase

is

still

pen

ding

the

subm

issi

on o

f a 1

st d

raft

EIS

. M

inis

try re

pres

enta

tives

hav

e re

cent

ly b

een

upda

ted

on th

e st

atus

of t

he re

quire

d su

bmis

sion

s.

Env

ironm

enta

l Con

cern

s w

ith a

stro

ng ri

sk th

at p

roje

ct m

ay h

ave

to b

e sh

elve

d.as

abo

ve

4. E

nhan

cing

the

com

petit

iven

ess

and

tran

spar

ency

of t

he p

rodu

cts

and

serv

ices

mar

kets

whi

lst s

treg

hten

ing

cons

umer

pro

tect

ion.

4.1.

Add

ress

ing

skill

-gap

s

Bet

wee

n th

e pe

riod

2008

and

201

5 M

CA

ST

has

bene

fited

from

a n

umbe

r of E

urop

ean

Soc

ial F

und

(ES

F) p

roje

cts

with

a to

tal a

lloca

tion

of o

ver E

UR

30

mill

ion.

Thr

ough

thes

e pr

ojec

ts, M

CA

ST

is m

akin

g a

tang

ible

con

tribu

tion

tow

ards

the

redu

ctio

n of

the

early

sch

ool l

eavi

ng ra

te a

nd th

e br

idgi

ng o

f gap

s in

the

labo

ur

mar

ket

Som

eof

the

proj

ects

whi

chad

dres

sth

epr

oble

mof

skill

gaps

are

the

follo

win

g

4.2

. Rai

sing

effi

cien

cy in

the

gene

ratio

n an

d us

e of

ene

rgy

CSR

4:"

Con

tinue

effo

rts

to d

iver

sify

the

ener

gy m

ix a

nd e

nerg

y so

urce

s, in

pa

rtic

ular

thro

ugh

incr

easi

ng th

e ta

ke u

p of

rene

wab

le

ener

gy...

Mai

ntai

n ef

fort

s to

34 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

BR

O to

take

the

nece

ssar

y m

easu

res

to e

nsur

e th

at m

inim

um e

nerg

y pe

rform

ance

requ

irem

ents

for

build

ings

or b

uild

ing

units

are

set

with

a v

iew

to a

chie

ving

cos

t-opt

imal

leve

ls.

The

Bui

ldin

g R

egul

atio

n O

ffice

(BR

O),

on b

ehal

f of

the

Bui

ldin

g R

egul

atio

n B

oard

(BR

B)

has

com

mis

sion

ed c

ost-o

ptim

al s

tudi

es o

n th

e ex

istin

g na

tiona

l min

imum

requ

irem

ents

. The

se s

tudi

es w

ill

be c

arrie

d ou

t as

per m

etho

dolo

gy d

escr

ibed

in

Com

mis

sion

Del

egat

ed R

egul

atio

n (E

U) 2

44/2

012.

The

follo

win

g te

nder

s ha

ve b

een

issu

ed b

y th

e B

RO

:• C

omm

issi

onin

g of

stu

dy to

est

ablis

h co

st-o

ptim

al

ener

gy p

erfo

rman

ce le

vels

in n

ew a

nd e

xist

ing

resi

dent

ial b

uild

ings

(Adv

ert 1

8/20

13, c

losi

ng d

ate

22/0

2/20

13).

• Com

mis

sion

ing

of s

tudy

to e

stab

lish

cost

-opt

imal

en

ergy

per

form

ance

leve

ls in

new

and

exi

stin

g O

ffice

bui

ldin

gs (A

dver

t 22/

2013

, clo

sing

dat

e 01

/03/

2013

).

Furth

er d

elay

s in

pro

duci

ng c

ost-o

ptim

ality

stu

dies

as a

bove

The

Gov

ernm

ent

plan

s to

com

pile

an

inve

ntor

y of

cen

tral g

over

nmen

t bui

ldin

gs a

s re

quire

d by

D

irect

ive

2012

/27/

EU

of t

he E

urop

ean

Par

liam

ent a

nd o

f the

Cou

ncil

of 2

5 O

ctob

er 2

012

on e

nerg

y ef

ficie

ncy,

am

endi

ng D

irect

ives

200

9/12

5/E

C a

nd 2

010/

30/E

U a

nd re

peal

ing

Dire

ctiv

es 2

004/

8/E

C

and

2006

/32/

EC

.

Pre

sent

atio

ns o

n th

e su

bjec

t wer

e m

ade

to a

ll P

erm

anen

t Sec

reta

ries

and

the

info

rmat

ion

is in

the

proc

ess

of b

eing

com

plie

d se

rvic

e-w

ide.

In o

rder

to m

eet w

ith th

e ne

cess

ary

prov

isio

ns re

quire

d to

im

plem

ent t

he E

U D

irect

ive

in g

aini

ng 3

% a

nnua

l ene

rgy

effic

ienc

y in

crea

se fr

om g

over

nmen

t-ow

ned

prop

ertie

s be

ing

used

by

Gov

ernm

ent D

epar

tmen

ts a

s ad

min

istra

tive

offic

es,

it is

pr

opos

ed th

at a

new

uni

t to

cate

r for

this

wor

k m

anne

d by

em

ploy

ees

who

hav

e ex

perti

se in

this

fiel

d be

set

up.

The

G

over

nmen

t Pro

perty

Dep

artm

ent (

GP

D) w

ill a

lso

be e

xplo

ring

the

poss

ibili

ty o

f obt

aini

ng E

U fu

nds

to im

plem

ent t

he E

U

dire

ctiv

e on

oth

er g

over

nmen

t ow

ned-

prop

ertie

s w

hich

are

not

co

vere

d by

EU

Dire

ctiv

e 20

12/2

7/E

U.

If th

e in

form

atio

n re

ques

ted

is g

iven

and

the

Dep

artm

ent i

s eq

uipp

ed w

ith th

e ne

cess

ary

expe

rtise

an

d re

sour

ces

it co

uld

mov

e to

gai

n an

ene

rgy

effic

ienc

y in

crea

se fr

om G

over

nmen

t-ow

ned

build

ings

.

Bui

ld U

p S

kills

Mal

ta p

roje

ct P

illar

I, "N

atio

nal Q

ualif

icat

ion

Pla

tform

s an

d ro

adm

aps

to 2

020"

:

Nat

iona

l Sta

tus

Quo

repo

rt co

mpl

eted

. P

re-fi

nal d

raft

of "R

oadm

ap fo

r Ene

rgy

Trai

ning

of

Wor

kers

in

the

Bui

ldin

g In

dust

ry"

com

plet

ed. P

roje

ct id

entif

ies

exte

nt o

f tra

inin

g ne

ed re

quire

men

ts a

nd

prop

osed

mea

sure

s. D

ocum

ents

and

oth

er in

form

atio

n av

aila

ble

from

: ww

w.b

uild

upsk

illsm

alta

.com

Fina

l dra

ft of

<R

oadm

ap fo

r Ene

rgy

Trai

ning

of

Wor

kers

in th

e B

uild

ing>

to

be

conc

lude

d in

O

ctob

er. B

uild

Up

Ski

lls M

alta

pro

ject

(P

illar

I) w

ill

clos

e in

Dec

embe

r 201

3.

Hel

p M

alta

ach

ieve

its

RE

S a

nd E

E ta

rget

s, th

ereb

y re

duci

ng ri

sk o

f inf

irnge

men

t pro

ceed

ings

. Th

roug

h in

crea

sed

gene

ratio

n of

ele

ctric

ity fr

om R

ES

redu

ce (i

f min

imal

ly) r

elia

nce

on fo

ssil

fuel

s.

Bui

ld U

p S

kills

Mal

ta p

roje

ct (P

illar

II):

"Qua

lific

atio

n an

d Tr

aini

ng S

chem

es";

The

Bui

ldin

g In

dust

ry

Con

sulta

tive

Cou

ncil

(BIC

C) t

oget

her w

ith o

ther

par

tner

s to

sub

mit

appl

icat

ion.

Pro

ject

fund

ed u

nder

In

telli

gent

Ene

rgy

Eur

ope.

Dea

dlin

e fo

r sub

mis

sion

of a

pplic

atio

ns is

28

Nov

embe

r 201

3.It

is a

com

petit

ive

proc

ess.

Sel

ectio

n su

bjec

t to

the

subm

issi

on

of a

goo

d ap

plic

atio

n an

d co

mpe

titio

n fro

m o

ther

cou

ntrie

s.

as a

bove

Trai

ning

for W

orke

rs in

the

cons

truct

ion

indu

stry

: BIC

C in

tend

s to

see

k fu

ndin

g th

roug

h E

SF

usin

g th

e ou

tcom

e of

Bui

ld U

p S

kills

- P

illar

I an

d ev

entu

ally

Pill

ar II

, to

supp

ort a

nd ju

stify

requ

ests

for

fund

s.

See

king

of E

SF

fund

s fo

r tra

inin

g -

ongo

ing.

(i) In

suffi

cien

t aw

aren

ess

of th

e im

porta

nce

of v

ocat

iona

l tra

inin

g to

ena

ble

Mal

ta to

ach

ieve

202

0 ta

rget

s.

(ii) s

igni

fican

t num

ber o

f peo

ple

for w

hom

trai

ning

will

be

requ

ired

and

henc

e th

e am

ount

of r

esou

rces

requ

ired.

N

ote:

Bui

ld U

p S

kill

Pro

ject

fund

s ar

e no

t for

the

actu

al tr

aini

ng

cour

ses;

Tra

inin

g w

ill h

ave

to b

e fu

nded

from

oth

er s

ourc

es li

ke

for e

xam

ple

ES

F

(iii)

Rel

ucta

nce

of c

ontra

ctor

s an

d bu

ildin

g in

dust

ry w

orke

rs to

sp

end

time

and

reso

urce

s on

trai

ning

.

as a

bove

Mal

ta E

nter

pris

e pr

ovid

es in

tere

sted

firm

s (fr

ee o

f cha

rge)

the

serv

ices

of a

n ex

pert

to c

arry

an

ener

gy a

udit

of th

e ap

plic

ant f

irms

and

iden

tify

oppo

rtuni

ties

for e

nerg

y sa

ving

. Aud

itors

wou

ld

prov

ide

advi

se o

n po

tent

ial e

nerg

y sa

ving

mea

sure

s, in

dica

tive

impl

emen

tatio

n co

sts,

and

est

imat

ed

savi

ngs

that

may

be

gain

ed fr

om th

e im

plem

enta

tion

of th

e re

com

men

ded

mea

sure

s.

Ong

oing

.Lo

w ta

ke-u

pas

abo

ve

NE

EA

P b

eing

revi

sed.

June

201

4.

HR

lim

itatio

nsas

abo

ve

Ener

gy E

ffici

ency

in T

rans

port

i)

Bio

fuel

s in

road

tran

spor

tA

bio

fuel

sub

stitu

tion

oblig

atio

n ha

s be

en im

pose

d on

impo

rters

/who

lesa

lers

of f

uel f

or th

e tra

nspo

rt se

ctor

(EN

590

and

EN

228)

to p

lace

on

the

mar

ket,

as a

min

imum

, an

incr

easi

ng s

hare

of

sust

aina

ble

biof

uel a

s a

perc

enta

ge o

f the

tota

l ene

rgy

cont

ent o

f pet

rol a

nd d

iese

l. Th

e ob

ligat

ory

shar

e fo

r 201

2 w

as e

qual

to 2

.5%

and

that

for 2

013

is e

qual

to 3

.5%

. The

goa

l to

achi

eve

10%

by

2020

.

LN 2

78/2

010

as a

men

ded.

Impo

rters

may

face

diff

icul

ties

in th

e fu

ture

. Low

Vap

our

Pre

ssur

e pe

trol i

s no

t dev

elop

ed a

nd m

ade

avai

labl

e in

the

Med

iterr

anea

n ar

ea; t

he s

mal

l mar

ket r

equi

rem

ent o

f Mal

ta

mak

es th

e de

liver

y of

bio

fuel

to M

alta

mor

e ex

pens

ive;

the

ISO

st

anda

rd fo

r mar

ine

fuel

s do

es n

ot s

ugge

st b

iofu

els

for m

arin

e us

e, re

sulti

ng in

the

curr

ent a

nom

aly

that

ther

e ar

e no

offi

cial

gu

idel

ines

for b

iofu

el u

se in

the

mar

ine

sect

or; t

he a

vera

ge a

ge

of th

e ve

hicl

e fle

et in

Mal

ta is

hig

her t

han

EU

ave

rage

whi

ch

pres

ents

a fu

rther

cha

lleng

e re

latin

g to

com

patib

ility

of t

hese

new

fuel

s to

old

er v

ehic

les.

Hel

p M

alta

ach

ieve

its

RE

S a

nd E

E ta

rget

s, th

ereb

y re

duci

ng ri

sk o

f inf

irnge

men

t pro

ceed

ings

. Th

roug

h in

crea

sed

gene

ratio

n of

ele

ctric

ity fr

om R

ES

redu

ce (i

f min

imal

ly) r

elia

nce

on fo

ssil

fuel

s.

(ii) E

ncou

ragi

ng s

mal

ler a

nd c

lean

er m

odes

of t

rans

port

The

aim

of t

he re

form

ed ta

x is

to fu

rther

ince

ntiv

ise

a yo

unge

r, sm

alle

r and

less

pol

lutin

g fle

et o

f ve

hicl

es in

the

Mal

tese

Isla

nds,

with

out c

ausi

ng u

nnec

essa

ry d

isto

rtion

s in

the

mar

ket.

It is

als

o a

mai

n so

urce

of r

even

ue fo

r the

Gov

ernm

ent.

This

mea

sure

is a

n on

goin

g on

e an

d do

es n

ot h

ave

an e

nd d

ate,

as

it is

the

Gov

ernm

ent's

bel

ief t

hat t

he

Mot

or V

ehic

le R

egis

tratio

n Ta

x is

a to

ol to

miti

gate

th

e ne

gativ

e en

viro

nmen

tal i

mpa

ct a

nd c

onge

stio

n pr

oble

ms

pose

d by

mot

or v

ehic

les.

N/A

It is

env

isag

ed th

at th

ere

will

be

an in

crea

se in

the

dem

and

for E

uro

5/6

M1

vehi

cles

and

mot

orcy

cle s

This

is e

xpec

ted

to b

e co

uple

d w

ith a

redu

ctio

n in

the

dem

and

of E

uro

4 or

old

er c

ars

and

an in

crea

sein

Eur

o V

/VI l

ight

com

mer

cial

veh

icle

regi

stra

tions

, res

ultin

g in

low

er C

O2

emis

sion

s.

(iii)

Scr

appa

ge s

chem

eTh

e sc

hem

e ai

ms

to in

cent

ify o

wne

rs o

f old

pas

seng

er c

ars

(M1)

and

old

ligh

t com

mer

cial

veh

icle

s (N

1) to

scr

ap th

ese

old

vehi

cles

and

buy

a n

ew v

ehic

le in

the

sam

e ca

tego

ry a

s th

e on

e sc

rapp

ed

with

the

new

pur

chas

ed v

ehic

le b

eing

Eur

o 5/

6 an

d m

eetin

g es

tabl

ishe

d lo

wer

CO

2 em

issi

ons.

The

ol

d ve

hicl

e m

ust b

e at

leas

t ten

yea

rs o

ld. T

he s

chem

e ta

kes

the

form

of g

rant

of €

500

and

the

sche

me

is o

pen

to a

max

imum

of 1

,000

new

puc

hase

d ve

hicl

es o

n a

first

com

e fir

st s

erve

d ba

sis.

The

star

ting

date

of s

uch

a sc

hem

e is

01/

01/2

013

and

the

end

date

is 3

1/12

/201

3 or

ear

lier w

hen

1,00

0 va

lid a

pplic

atio

ns fo

r the

gra

nt a

re re

ceiv

ed.

Non

e; a

s lo

ng a

s th

ere

is s

uffic

ient

take

up

of th

e sc

hem

e.Le

ss C

O2

emis

sion

s co

min

g fro

m v

ehic

les.

(iv) A

utog

as c

onve

rsio

n sc

hem

e Th

is m

easu

re in

volv

es a

one

-tim

e gr

ant o

f EU

R 2

00 to

cov

er p

art o

f the

Aut

ogas

con

vers

ion

cost

s.

This

mea

sure

is in

the

proc

ess

of b

eing

im

plem

ente

d an

d is

pla

nned

to b

e la

unch

ed b

y th

e en

d of

Sep

tem

ber 2

013.

Dis

cuss

ions

are

cur

rent

ly u

nder

way

bet

wee

n Tr

ansp

ort M

alta

, th

e Fi

nanc

e M

inis

try a

nd th

e M

alta

Res

ourc

es A

utho

rity

to

final

ise

the

laun

ch o

f the

sch

eme.

Incr

ease

shi

ft to

Aut

ogas

use

to p

rom

ote

clea

ner t

rans

port.

(v) P

ublic

Tra

nspo

rt R

efor

mFo

llow

ing

the

laun

ch o

f the

cur

rent

pub

lic tr

ansp

ort s

yste

m in

201

1 th

e nu

mbe

r of p

asse

nger

s ca

rrie

d ha

s in

crea

sed

(201

0 - 3

1.3

mill

ion

pass

enge

rs to

201

2- 3

4 m

illio

n pa

ssen

gers

). Fu

rther

im

prov

emen

ts to

the

syst

em s

houl

d ai

m a

t inc

reas

ing

pass

enge

rs. T

he G

over

nmen

t has

ent

ered

into

di

scus

sion

with

the

oper

ator

in o

rder

to tr

y an

d fin

d ar

eas

whe

re th

e se

rvic

e ca

n be

impr

oved

.

Ong

oing

Pas

seng

er c

onfid

ence

, pub

lic re

sist

ance

to b

us p

riorit

y

mea

sure

s, in

clud

ing

limits

in ro

ad s

pace

.Im

prov

ed s

ervi

ce re

sulti

ng in

mod

al s

hift,

ther

eby

addr

essi

ng g

ener

al ro

ad c

onge

stio

n an

d im

prov

ing

trans

port

effic

ienc

y an

d co

ntrib

utin

g fu

rther

to a

ir qu

ality

impr

ovem

ents

.

CSR

5:

"...I

mpr

ove

the

over

all e

ffici

ency

of

the

judi

cial

sys

tem

, for

exa

mpl

e by

re

duci

ng th

e tim

e ne

eded

to

reso

lve

inso

lven

cy c

ases

."

Just

ice

Ref

orm

A re

view

of t

he n

atio

nal j

udic

ial s

yste

m w

ith th

e ai

m o

f rec

omm

endi

ng re

form

s as

nec

essa

ry. T

he

reco

mm

ende

d m

easu

res

incl

ude:

inve

stm

ent i

n IC

T te

chno

logy

and

cap

acity

pla

nnin

g; re

furb

ishm

ent

of e

xist

ing

cour

ts a

nd th

e bu

ildin

g of

a n

ew c

ourt

in G

ozo.

The

final

reco

mm

enda

tions

on

the

Just

ice

Ref

orm

to

be p

rese

nted

to G

over

nmen

t for

it to

take

co

rres

pond

ing

deci

sion

s is

pla

nned

for e

nd o

f O

ctob

er 2

013.

The

Jus

tice

Ref

orm

is o

n tra

ck w

ith

the

set t

arge

t dat

es.

Gov

ernm

ent i

s try

ing

to ta

p fu

nds

from

the

2014

- 20

20 fu

ndin

g in

rela

tion

to th

e na

tiona

l jus

tice

refo

rm. I

f MT

does

not

obt

ain

the

full

fund

s, th

e M

alte

se G

over

nmen

t will

hav

e to

pro

vide

for f

rom

its

ow

n fin

anci

al re

sour

ces.

The

reco

mm

enda

tions

whi

ch e

mer

ged

from

the

publ

ic C

onsu

ltatio

n w

ith a

ll st

akeh

olde

rs w

ill f

ocus

on

refo

rms

on a

ll th

e ad

min

istra

tive

aspe

ct o

f the

Jus

tice

syst

em.

4.4.

Jus

tice

Sys

tem

Ref

orm

c) E

nerg

y Ef

ficie

ncy

in B

uild

ings

4.3.

Tra

nspo

rt P

olic

y

35 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

CSR

2:

"...I

mpr

ove

the

effic

ienc

y an

d re

duce

the

leng

th o

f pub

lic

proc

urem

ent p

roce

dure

s."

Gov

ernm

ent c

lear

ly s

tate

d its

inte

ntio

ns th

at it

is n

ot o

nly

goin

g to

con

tinue

with

the

driv

e to

redu

ce

adm

inis

trativ

e bu

rden

s bu

t it i

s go

ing

to s

tep

up g

ear a

nd s

ee th

at it

look

s at

all

the

face

ts o

f bu

reau

crac

y. U

pon

taki

ng o

ffice

Gov

ernm

ent a

ppoi

nted

a P

arlia

men

tary

Sec

reta

ry re

spon

sibl

e fo

r Pla

nnin

g an

d S

impl

ifica

tion

of A

dmin

istra

tive

Pro

cess

es. S

impl

ifica

tion

rem

ains

on

top

of th

e ag

enda

, thu

s th

e de

cisi

on to

reta

in th

e si

mpl

ifica

tion

activ

ities

with

in th

e O

ffice

of t

he P

rime

Min

iste

r. G

over

nmen

t op

ted

to g

o a

step

furth

er b

y ap

poin

ting

a C

omm

issi

oner

for S

impl

ifica

tion

so a

s to

focu

s sp

ecifi

cally

on

this

driv

e. T

o co

mpl

emen

t thi

s dr

ive,

Gov

ernm

ent i

nten

ds to

intro

duce

the

Sun

set C

laus

e fo

r any

ne

w le

gisl

atio

n w

hich

it w

ill b

e en

actin

g. G

over

nmen

t is

also

wor

king

on

the

intro

duct

ion

of th

e on

e-in

-on

e-ou

t prin

cipl

e fo

r leg

isla

tion.

25%

redu

ctio

n in

exi

stin

g bu

reau

crat

ic p

roce

dure

s th

roug

h th

e be

tter u

se o

f IC

T an

d th

roug

h th

e el

imin

atio

n of

repe

ated

requ

ests

for i

nfor

mat

ion

from

di

ffere

nt g

over

nmen

t ent

ities

Rev

isio

n of

law

s re

latin

g to

the

com

mer

cial

sec

tor

will

be

unde

rtake

n in

ord

er to

ens

ure

that

any

dea

d w

ood

is e

limin

ated

.

Rev

isio

n of

all

exis

ting

legi

slat

ion

with

the

aim

of

repe

alin

g an

y irr

elev

ant l

egis

latio

n an

d m

odify

ing

the

othe

r leg

isla

tion

so a

s to

refle

ct p

rese

nt re

aliti

es

Elim

inat

ion

of u

nnec

essa

ry b

urde

ns o

n th

e bu

sine

ss

sect

or th

roug

h th

e re

-eng

inee

ring

of p

roce

sses

to

redu

ce th

e tim

e to

obt

ain

perm

its

In o

rder

to re

duce

del

ays

Gov

ernm

ent w

ill e

nhan

ce

the

effic

ienc

y an

d co

nsol

idat

ion

of it

s re

venu

e st

ream

s th

roug

h th

e am

alga

mat

ion

of th

e va

rious

en

titie

s in

to a

sin

gle

auth

ority

with

out c

ompr

omis

ing

the

priv

acy

right

s of

the

citiz

en.

N/A

Red

uctio

n in

exi

stin

g bu

reau

crat

ic p

roce

dure

s w

ill s

uppo

rt th

e G

over

nmen

t’s o

vera

rchi

ng o

bjec

tive

of

achi

evin

g su

stai

nabl

e ec

onom

ic g

row

th.

The

adm

inis

trativ

e bu

rden

on

busi

ness

es in

ten

sele

ct p

riorit

y ar

eas

was

mea

sure

d in

acc

orda

nce

with

a p

an-E

U m

etho

dolo

gy, c

alle

d th

e S

tand

ard

Cos

t Mod

el. M

inis

tries

, Dep

artm

ents

, and

A

utho

ritie

s ag

reed

on

sim

plifi

catio

n m

easu

res

and

thei

r ass

ocia

ted

redu

ctio

ns in

acc

orda

nce

with

the

sam

e m

etho

dolo

gy.

As

part

of th

e E

urop

ean

Soc

ial F

und

(ES

F) p

roje

ct, M

alta

car

ried

out a

ll th

e m

easu

rem

ents

of t

he

adm

inis

trativ

e bu

rden

cos

ts in

a n

umbe

r of c

hose

n pr

iorit

y ar

eas.

Thi

s re

veal

ed th

at th

e co

sts

invo

lved

for t

he c

ompl

ianc

e w

ith le

gisl

ativ

e ob

ligat

ions

am

ount

s to

€116

mill

ion.

Adm

inis

trativ

e co

sts

in th

e ar

ea o

f env

ironm

ent,

com

pany

law

and

val

ue a

dded

tax

(VA

T) re

pres

ente

d 66

% o

f the

tota

l ad

min

istra

tive

cost

s in

the

sele

cted

prio

rity

area

s.

Ach

ieve

dM

alta

had

com

mitt

ed it

self

to re

duce

bur

dens

by

15%

.R

educ

tion

in a

dmin

istra

tive

burd

ens

was

redu

ced

by 1

5.6%

.

b) N

atio

nal H

ealth

Sys

tem

s St

rate

gyTh

e dr

awin

g up

a N

atio

nal H

ealth

Sys

tem

s S

trate

gy (N

HS

S) f

or th

e pe

riod

2014

to 2

020.

The

ov

erar

chin

g ai

m o

f thi

s st

rate

gy is

to e

nabl

e ev

ery

indi

vidu

al to

ben

efit

from

qua

lity

heal

thca

re o

ffere

d th

roug

h an

acc

essi

ble,

sus

tain

able

hea

lth s

yste

m th

us c

ontri

butin

g to

the

oppo

rtuni

ty to

lead

a

heal

thy

and

activ

e lif

e.

To d

ate

the

Nat

iona

l Hea

lth S

yste

ms

Stra

tegy

(N

HS

S) h

as n

ot b

een

laun

ched

. The

NH

SS

is in

an

adva

nced

sta

ge o

f dev

elop

men

t. P

oliti

cal a

nd

finan

cial

cle

aran

ce w

ill b

e so

ught

dur

ing

Oct

ober

20

13.

Cha

lleng

e de

layi

ng it

s pu

blic

atio

n &

ado

ptio

n in

clud

e ou

tcom

e of

co

nsul

tatio

ns;re

actio

n fro

m s

take

hold

ers

and

gene

ral p

oliti

cal

cons

ider

atio

ns.

Mal

ta w

ill h

ave

a co

mpr

ehen

sive

stra

tegy

doc

umen

t for

its

natio

nal h

ealth

sys

tem

for t

he p

erio

d 20

1 420

20.

c) M

onito

ring

of h

ealth

sys

tem

per

form

ance

The

setti

ng u

p of

a H

ealth

Sys

tem

Per

form

ance

Ass

essm

ent F

ram

ewor

k in

col

labo

ratio

n w

ith th

e W

orld

Hea

lth O

rgan

isat

ion

(WH

O).

The

Min

istry

is in

the

proc

ess

of s

ettin

g up

a

mee

ting

with

WH

O e

xper

ts to

kic

k-st

art w

ork

on th

is

proj

ect.

Cha

lleng

es in

clud

e H

R ,

Fina

ncia

l Res

trict

ions

, IT,

Cap

acity

C

onst

rain

ts.

A h

ealth

sys

tem

per

form

ance

agr

eem

ent f

ram

ewor

k pr

ovid

ing

Gov

ernm

ent w

ith u

pdat

ed a

nd g

ranu

lahe

alth

info

rmat

ion

that

is

nece

ssar

y to

ens

ure

that

reso

urce

s ar

e be

ing

effic

ient

ly u

tilis

ed.

d) Im

prov

e th

e ef

ficie

ncy

and

redu

ce th

e le

ngth

of p

ublic

pr

ocur

emen

t pro

cedu

res:

i) Fu

ll tra

nsiti

on to

ele

ctro

nic

proc

urem

ent a

cros

s G

over

nmen

tW

here

as th

e in

trodu

ctio

n to

e-p

rocu

rem

ent c

omm

ence

d in

late

201

1 an

d co

ntin

ued

in 2

012,

this

ye

ar a

ll te

nder

s pu

blis

hed

by th

e D

epar

tmen

t of C

ontra

cts

wer

e e-

tend

ers.

By

the

end

of 2

013

all t

ende

rs a

bove

the

EU

th

resh

old

will

be

publ

ishe

d el

ectro

nica

lly.

In fa

ct,

Con

tract

s C

ircul

ar 9

/201

3 ha

s al

read

y co

nvey

ed th

is

mes

sage

to a

ll G

over

nmen

t Dep

artm

ents

and

in th

e co

min

g w

eeks

a fu

rther

Con

tract

s C

ircul

ar w

ill

expl

icitl

y ta

rget

par

ticul

ar C

ontra

ctin

g A

utho

ritie

s w

hich

unt

il no

w h

ad n

o ob

ligat

ion

to is

sue

e-te

nder

s.

The

risks

are

par

ticul

arly

rela

ted

to th

e se

nsiti

vity

of t

he s

ubje

ct

itsel

f, be

ing

publ

ic p

rocu

rem

ent.

The

tran

sitio

n is

pro

gres

sing

re

lativ

ely

smoo

thly

and

one

sho

uld

not e

xpec

t all

stak

ehol

ders

to

embr

ace

the

initi

ativ

e im

med

iate

ly.

The

com

plet

e tra

nsiti

on w

ill m

oder

nise

the

way

in w

hich

the

Gov

ernm

ent p

rocu

res

its s

uppl

ies,

se

rvic

es a

nd w

orks

.

ii) Im

prov

e th

e ef

ficie

ncy

of p

ublic

pro

cure

men

tTh

e fu

ll tra

nsiti

on to

e-p

rocu

rem

ent w

ill u

ndou

bted

ly b

ring

abou

t inc

reas

ed e

ffici

enci

es o

ver a

num

beof

yea

rs.

Thro

ugh

e-pr

ocur

emen

t, ef

fect

iven

ess

in te

rms

of s

avin

gs a

nd re

duce

d lit

igat

ions

will

be

achi

eved

.

In te

rms

of e

-pro

cure

men

t the

inte

ntio

n is

to

com

plet

e th

e tra

nsiti

on in

the

shor

test

tim

e po

ssib

le

but t

his

mus

t not

be

done

at t

he c

ost o

f goo

d go

vern

ance

. Th

eref

ore,

pla

nned

ste

ps w

ill b

e ta

ken

to c

ompl

ete

the

trans

ition

by

the

end

of 2

014.

In

resp

ect o

f the

oth

er c

ompl

imen

tary

mea

sure

s to

in

crea

se e

ffici

ency

tool

s w

ill b

e in

pla

ce e

arly

nex

t ye

ar to

mon

itor t

he p

rogr

ess.

Ris

ks a

re re

late

d to

the

dead

lines

for t

rans

ition

to e

-pro

cure

men

t th

e D

epar

tmen

t has

set

on

itsel

f and

the

vario

us G

over

nmen

t O

rgan

isat

ions

. Th

is is

par

ticul

arly

rela

ted

to th

e av

aila

bilit

y of

the

right

sta

ff at

the

right

tim

e to

dea

l with

the

trans

ition

in a

n ef

ficie

nt a

nd e

ffect

ive

way

.

By

mea

surin

g th

e pe

rform

ance

of e

-pro

cure

men

t, G

over

nmen

t will

hav

e th

e ne

cess

ary

info

rmat

ion

in

hand

impl

emen

t the

righ

t pol

icie

s. A

lso,

pro

gres

s ca

n be

ben

chm

arke

d w

ith th

at a

chie

ved

by o

ther

E

U M

embe

r Sta

tes.

A m

ain

indi

cato

r in

term

s of

effe

ctiv

enes

s is

the

savi

ngs

mad

e by

Gov

ernm

ent

thro

ugh

publ

ic p

rocu

rem

ent,

that

is, t

he a

ctua

l pric

e pa

id a

gain

st th

e re

serv

e pr

ice.

5. E

nsur

ing

that

the

publ

ic s

ervi

ce is

not

onl

y ef

ficie

nt a

nd c

ost-e

ffect

ive,

but

del

iver

s a

qual

ity s

ervi

ce.

5.1.

Enh

anci

ng th

e ef

ficie

ncy

and

cost

-effe

ctiv

enes

s of

pub

lic s

ervi

ce

a) S

impl

ifica

tion

Proc

ess

36 Malta: Draft Budgetary Plan 2014

Fore

seen

impa

cts

List

of m

easu

res

Des

crip

tion

of th

e m

easu

reTi

met

able

on

upco

min

g st

eps

Spec

ific

chal

leng

es/ri

sks

in im

plem

entin

g th

e m

easu

res

Qua

litat

ive

elem

ents

Mai

n ob

ject

ives

and

re

leva

nt C

SRs

Info

rmat

ion

on p

lann

ed a

nd a

lread

y en

acte

d m

easu

res

iii) R

educ

e th

e aw

ard

lead

tim

eG

over

nmen

t int

ends

to re

duce

the

awar

d le

ad ti

me

by m

eans

of s

ever

al a

dmin

istra

tive

mea

sure

s,

incl

udin

g as

a la

st re

sort,

the

canc

ella

tion

of a

cal

l for

tend

ers

in th

e ab

senc

e of

a re

com

men

datio

n fo

r aw

ard

with

in a

reas

onab

le ti

me.

Th

ese

actio

ns re

flect

Gov

ernm

ent’s

vis

ion

to d

evel

op fu

rther

the

stra

tegi

c ca

pabi

litie

s, te

chno

logi

es a

nd le

ader

ship

in p

ublic

pro

cure

men

t.

To th

is e

nd, i

n A

pril

2013

Gov

ernm

ent c

omm

issi

oned

a re

port

whi

ch e

xam

ined

the

curr

ent s

trate

gy

and

oper

atio

ns o

f the

Dep

artm

ent o

f Con

tract

s an

d id

entif

ied

a nu

mbe

r of a

ctio

ns in

tend

ed to

im

prov

e th

e ef

ficie

ncy

and

capa

bilit

y of

the

Dep

artm

ent a

nd p

ublic

pro

cure

men

t in

gene

ral.

The

repo

rt at

tribu

tes

poor

effi

cien

cy in

pub

lic p

rocu

rem

ent p

roce

sses

to le

ngth

y ev

alua

tion

times

, po

or p

rocu

rem

ent p

lann

ing,

qua

lity

of te

nder

doc

umen

ts a

nd o

f eva

luat

ion

boar

ds, l

ack

of k

now

ledg

e of

pro

cure

men

t reg

ulat

ions

, mis

sing

cap

abili

ty in

bot

h C

ontra

ctin

g A

utho

ritie

s an

d th

e D

epar

tmen

t of

Con

tract

s, a

s w

ell a

s cu

stom

er s

ervi

ce.

The

repo

rt is

pro

posi

ng th

e fo

llow

ing

solu

tions

:

• a d

eman

d pl

anni

ng p

roce

ss s

houl

d be

put

in p

lace

• s

impl

ifica

tion

of p

roce

dure

s• s

ettin

g in

tern

al ti

mef

ram

es fo

r del

iver

y in

the

tend

er v

ettin

g an

d pr

oces

s ch

ain

• est

ablis

hing

an

inte

rnal

qua

lity

assu

ranc

e •

set

a ta

rget

to s

igni

fican

tly re

duce

the

proc

ess

time

• inc

reas

e pe

rform

ance

-orie

ntat

ion

acro

ss th

e bo

ard

and

deve

lop

ICT-

enab

led

man

agem

ent s

yste

ms,

sc

orec

ards

, and

tim

e-ba

sed

serv

ice

char

ter

• e

nfor

ce th

e si

x-w

eek

limit

on ‘n

orm

al’ t

ende

r ev

alua

tions

• re

-eng

inee

r rev

iew

pro

cess

es to

min

imis

e re

view

tim

e• s

et a

targ

et to

redu

ce d

rast

ical

ly th

e re

-eva

luat

ion

time

• res

ourc

e C

ontra

ctin

g A

utho

rity

proc

urem

ent

man

ager

s an

d m

issi

ng p

ositi

ons

with

in th

e D

epar

tmen

t of C

ontra

acts

• sta

rt de

velo

ping

a Q

ualit

y M

anag

emen

t Sys

tem

• Im

prov

e ro

tatio

n of

tend

er e

valu

atio

n co

mm

ittee

m

embe

rs• O

n an

ong

oing

bas

is, i

ncre

ase

ePro

cure

men

t tak

e up

.

The

mai

n po

tent

ial r

isk

is re

late

d to

the

non-

com

plia

nce

or la

ck o

fco

mpl

ianc

e by

Con

tract

ing

Aut

horit

ies.

The

pote

ntia

l ben

efits

of t

his

mea

sure

incl

ude:

• the

redu

ctio

n in

the

leng

th o

f the

ent

ire p

rocu

rem

ent p

roce

ss, i

nclu

ding

the

eval

uatio

n an

d re

view

an

d re

- eva

luat

ion

timef

ram

es• m

ore

man

agem

ent c

ontro

l• r

educ

tion

of e

rror

s an

d re

wor

k• a

bas

is fo

r im

prov

ing

capa

bilit

y m

atur

ity• b

ette

r per

form

ance

mon

itorin

g on

inte

rnal

and

ext

erna

l sta

keho

lder

s• r

educ

tion

in th

e tim

e ta

ken

to c

olle

ct a

nnua

l pub

lic p

rocu

rem

ent s

tatis

tics.

a) S

tren

gthe

ning

the

bank

ing

sect

orTh

e B

anki

ng S

uper

visi

on U

nit's

rem

it en

com

pass

es o

vers

ight

ove

r pot

entia

l ris

k ar

eas

with

in th

e lo

caba

nkin

g se

ctor

whi

ch c

ould

dem

onst

rate

hei

ghte

ned

leve

ls o

f ris

k an

d w

hich

cou

ld p

ossi

bly

have

a

nega

tive

impa

ct o

n th

e ba

nkin

g sy

stem

sho

uld

such

risk

eve

nts

mat

eria

lise.

To

this

effe

ct c

urre

ntly

bo

th th

e M

FSA

and

the

CB

M a

re u

nder

taki

ng d

ue a

naly

sis

with

in th

e ar

eas

of lo

an lo

ss p

rovi

sion

ing

and

conc

entra

tion

risk

stem

min

g pr

inci

pally

from

exp

osur

es to

real

est

ate

lend

ing,

par

ticul

arly

with

in

the

area

of c

omm

erci

al a

nd s

pecu

lativ

e re

al e

stat

e le

ndin

g.

The

envi

sage

d m

easu

res

will

be

intro

duce

d th

roug

h ch

ange

s to

cur

rent

Ban

king

Rul

es B

R/0

9 an

d B

R/1

2. D

raft

text

s ha

ve a

lread

y be

en d

iscu

ssed

be

twee

n th

e M

FSA

and

the

CB

M a

nd it

is e

xpec

ted

that

thes

e w

ill b

e di

strib

uted

for a

one

mon

th

cons

ulta

tion

perio

d w

ith th

e in

dust

ry d

urin

g S

epte

mbe

r 201

3. F

ollo

win

g th

is c

onsu

ltatio

n pe

riod,

th

e B

anki

ng R

ules

and

the

prov

isio

n th

ereo

f will

co

me

into

forc

e by

the

end

of th

e cu

rren

t cal

enda

r ye

ar fo

r app

licat

ion

by b

anks

for f

inan

cial

yea

r 201

3. T

he m

ain

chal

leng

e po

sed

by th

eam

endm

ents

is to

cre

ate

a ba

lanc

e be

twee

n ap

plyi

ng a

mor

e st

ringe

nt a

ppro

ach

to c

redi

t ris

k w

ithou

t exe

rting

und

ue p

ress

ure

on th

e ba

nks'

inte

rmed

iatio

nro

le in

the

econ

omy.

Thes

e m

easu

res

will

ser

ve to

incr

ease

the

bank

s' p

rovi

sion

s an

d th

e al

loca

tion

of c

apita

l buf

fers

w

here

requ

ired

to s

uppo

rt th

e re

leva

nt ri

sks.

b) E

nsur

e st

rict b

anki

ng s

ecto

r sup

ervi

sion

incl

udin

g fo

r the

no

n co

re d

omes

tic a

nd in

tern

atio

nally

orie

nted

ban

ksTh

e M

FSA

doe

s no

t dis

tingu

ish

betw

een

the

diffe

rent

cat

egor

ies

of b

anks

and

the

regu

lato

ry a

nd

prud

entia

l req

uire

men

ts a

re id

entic

al fo

r all

the

cred

it in

stitu

tions

, irr

espe

ctiv

e of

thei

r cat

egor

y. In

this

rega

rd, t

he p

roce

ss a

nd p

roce

dure

s ap

plie

d to

the

dom

estic

ally

orie

nted

ban

ks w

ith re

gard

to th

e M

FSA

's o

vers

ight

, are

als

o ap

plie

d si

mila

rly to

the

non-

core

ban

ks a

nd th

e in

tern

atio

nally

orie

nted

in

stitu

tions

.

N/A

N/A

N/A

Furt

her s

tren

gthe

ning

the

prov

isio

ns fo

r loa

n im

pairm

ent

loss

esD

raft

mea

sure

s w

ithin

the

BR

/09

are

inte

nded

to fu

rther

stre

ngth

en th

e im

pairm

ent a

llow

ance

s ag

ains

t im

paire

d fa

cilit

ies

to c

over

the

unco

llate

ralis

ed p

ortio

ns. W

ithin

the

met

hodo

logy

of B

R/0

9,

bank

s w

ill b

e re

quire

d to

app

ly m

ore

cons

erva

tive

valu

atio

ns o

f suc

h co

llate

ral b

acki

ng im

paire

d lo

an

faci

litie

s. A

s in

dica

ted,

col

late

ral i

s a

dete

rmin

ing

fact

or in

est

ablis

hing

the

exte

nt o

f im

pairm

ent

allo

wan

ces

that

nee

d to

be

crea

ted

whe

neve

r rec

over

y of

a c

redi

t fac

ility

is in

ser

ious

dou

bt. T

his

aspe

ct m

ay b

e co

nsid

ered

as

the

first

pill

ar w

hich

has

bee

n se

t with

in th

e dr

aft B

R/0

9 w

hich

dic

tate

s th

at b

anks

sho

uld

appl

y ca

utio

n an

d be

con

serv

ativ

e w

hen

taki

ng in

to c

onsi

dera

tion

the

valu

atio

ns o

f th

e im

mov

able

pro

perty

.

The

expe

cted

impl

emen

tatio

n da

tes

are

in li

ne w

ith

wha

t has

bee

n st

ated

abo

ve. A

men

dmen

ts to

the

Cen

tral B

ank

Act

to a

ppoi

nt d

eput

y G

over

nor o

n fin

anci

al s

tabi

lity

and

reco

gnis

ed b

y la

w th

e cu

rren

t fia

ncia

l sta

bilit

y bo

ard

betw

een

the

MFS

A a

nd th

e C

BM

.

As

abov

eA

s ab

ove

f) G

loba

l Res

iden

ce P

rogr

amm

eP

ropo

sal t

o in

trodu

ce a

new

tax

prog

ram

me

for i

ndiv

idua

ls fr

om n

on-E

U, n

on-E

EA

and

non

-Sw

iss

(third

-cou

ntry

nat

iona

ls) w

ho s

atis

fy m

inim

um c

riter

ia a

s es

tabl

ishe

d an

d w

ho a

re n

ot in

an

empl

oym

ent r

elat

ions

hip.

Suc

h in

divi

dual

s m

ay a

lso

hold

non

-exe

cutiv

e po

sts

on th

e bo

ard

of a

co

mpa

ny re

gist

ered

in M

alta

or p

arta

ke in

act

iviti

es re

late

d to

any

inst

itutio

n, tr

ust o

r fou

ndat

ion

of a

pu

blic

cha

ract

er o

r of a

ny s

imila

r org

anis

atio

n or

bod

y of

per

sons

, als

o of

a p

ublic

cha

ract

er, w

hich

is

enga

ged

in p

hila

nthr

opic

, edu

catio

nal,

rese

arch

and

dev

elop

men

t wor

k in

Mal

ta.

The

prop

osed

legi

slat

ion

shou

ld k

ick

star

t the

resi

denc

e pr

oces

s w

ith n

on-E

U n

atio

nals

.

Don

eN

one

It w

ill h

ave

undo

ubte

dly

a be

nefic

ial e

ffect

on

SM

Es

in M

alta

and

Goz

o as

it is

wel

l kno

wn

that

thes

e ty

pe o

f res

iden

ts in

ject

fund

s th

e ec

onom

y.

6.2.

Stre

ngth

enin

g pr

ovis

ions

for l

oan

impa

irmen

t los

ses

6. S

afeg

uard

ing

the

succ

esse

s ac

hiev

ed b

y th

e M

alte

se fi

nanc

ial s

ecto

r and

ens

urin

g it

cont

inue

s to

follo

w ri

goro

us p

ract

ices

.

6.1.

Mai

n re

gula

tory

effo

rt in

fina

ncia

l ser

vice

s su

perv

isio

n

CSR

5:

"Tak

e m

easu

res

to fu

rthe

r st

reng

then

the

prov

isio

ns fo

r loa

n im

pairm

ent l

osse

s in

the

bank

ing

sect

or to

miti

gate

pot

entia

l ris

ks

aris

ing

from

exp

osur

e to

the

real

es

tate

mar

ket.

Mai

ntai

n po

licy

effo

rt to

ens

ure

stric

t ban

king

se

ctor

sup

ervi

sion

, inc

ludi

ng th

e no

n-co

re d

omes

tic a

nd

inte

rnat

iona

lly o

rient

ed b

anks

..."

37 Malta: Draft Budgetary Plan 2014

Expenditure and Revenue Targets(General government expenditure by function)

Appendix Table 4.c.i

General government expenditure on education, healthcare and employment

Year t Year t+1

% GDP % general government expenditure % GDP % general government

expenditureEducation 1 6.2 13.9 6.3 13.9Health 1 5.9 13.3 6.0 13.3

1 These expenditure categories should correspond respec vely to items 9 and 7 in table 4.c.ii)

Expenditure and Revenue Targets(General government expenditure by function)

Appendix Table 4.c.ii % GDPClassifi cation of the functions of the Government

Functions of the Government COFOG Code 2013 2014

1. General public services 1 7.0 7.1

2. Defense 2 0.9 0.9

3. Public order and safety 3 1.5 1.6

4. Economic affairs 4 5.1 5.2

4. Environmental protection 5 1.4 1.4

6. Housing and community amenities 6 0.3 0.3

7. Health 7 5.9 6.0

8. Recreation, culture and religion 8 0.9 0.9

9. Education 9 6.2 6.3

10. Social protection 10 15.3 15.5

11. Total Expenditure (= item 2 in Table 4.a) TE 44.6 45.3

4. Distributional Implications of Budget Measures

41Malta: Draft Budgetary Plan 2014

4. Distributional Implications of Budget MeasuresThe new Government is committed to the principle that economic prosperity and wealth should be felt and enjoyed by all. This principle underpins the plans for fi scal consolidation outlined in the Draft Budget for 2014. The Budget is presenting a set of tax-benefi t measures which address the social dimension by addressing the following policy objectives.

4.1 Improving EmployabilityBeing in employment is a key factor in determining the standard of living of households and helps reduce poverty. Statistics from the Survey on Income and Living Conditions 2011 indicate that the risk of poverty rate is negligible for households in employment. This Government is proposing a series of policy changes in the benefi t system aimed to reduce disincentive to work for specifi c groups, in particular widows, single parents, the long term unemployed and older workers. The Government is seeking to introduce the tapering-off of benefi ts for the long-term unemployed to remove the high marginal tax rate for persons entering the labour market. Government is also continuing, with the widening of the income tax bands for the 25 per cent tax bracket to include a proportion of those who were previously in the 35 per cent tax bracket. This measure will also contribute to raise incentive to work, by raising post-tax disposable income of many middle income earners.

Investment in human capital is also important in determining the employability of the workforce. In this regard, Government is planning specifi c work and training programmes addressing particular groups with a specifi c emphasis on the problems of the Gozitan labour market. Government is also committed to raise the number of persons in tertiary education through the development of scholarship schemes and the launching of Lifelong Learning Strategy.

Enabling a better work-life balance is also important in enabling specifi c groups, notably parents, to remain in the labour market, whilst fulfi lling their family responsibilities. In this regard, Government is widening access to childcare facilities to allow working mothers to enter the labour market and the introduction of initiatives to open school earlier and provide support for longer hours to help working parents with childcare.

4.2 Improving Quality of Life for Senior CitizensGovernment is committed to improve the quality of life for our senior citizens, in particular by supporting the income of specifi c groups of pensioners as well as the services offered for the care of elderly. In this regard, Government is investing in the facilities for the care of the elderly, both the long-term care residences as well as day care centres. Many of the social measures are intended to assist the elderly to stay at home thus helping ease the burden on government institutions.

4.3 Improving Quality of Life for Persons with DisabilityGovernment is also committed to enhance the quality of life for persons with disability. This will be carried out by supporting the benefi ts received by parents of children with disability, as well as enabling households to continue providing care to disabled persons within the confi nes of their home. Any provision in home will not only benefi t the person with special needs but will also lower the cost of the care required.

Government is also extending the services provided by public agencies in investing further in facilities, extending the provision of community-based residences, extending the capacity of day centres and expanding respite care for parents of persons with disability.

42 Malta: Draft Budgetary Plan 2014

4.4 Improving Quality of Life for FamiliesThe Government makes it its priority to improve services aimed at addressing the family by consolidating existing services, the provision of crisis intervention, other support beyond offi ce hours and the development of further community-based services. Government is providing additional resources for public housing. This Administration is also introducing taxation measures intended to incentivise voluntary third pillar pension savings, thus enabling individuals to enhance the future adequacy of their retirement incomes.

Government is also enhancing the quality of life of Maltese families and households through the extension of incentives aimed at raising energy effi ciency as well as measures to reduce the use of energy at home. Such measures will help reduce household expenditure on energy and thus support disposable income.

4.5 Illustration of the Quantitative Impact of a Selection of Budget Measures

4.5.1 Revenue MeasuresFocusing on a selection of indirect tax measures being proposed in this document, data from the latest Household Budgetary Survey indicates that the share of consumption for the product categories affected by the tax measures is the lowest amongst households in the bottom quintile of the income distribution, with the strongest impact being for persons in the fourth quintile. As illustrated in Chart 4.1, these statistics indicate that the incidence of taxation for a selected group of products for which quantifi cation could be applied, fi nds that this selection of indirect tax measures is rather progressive.

At the same time, Government is continuing, with the gradual marginal widening of the income tax band announced in the original 2013 Budget. This widening in the income tax bands, programmed over three years, will not affect household income after taxation for persons living in households in bottom and the second quintile. In fact, the majority of the benefi ts from the widening in the income tax bands will accrue to persons living in households in the top quintiles of the income distribution.

Government is aware of the regressivity of this measure and has partly mitigated its impact by ensuring that as from 2013, persons earning a chargeable income from employment not exceeding the national minimum wage, including the statutory bonus, would be excludable from income taxation.

Chart 4.1

Source: NSO, Household Budgetary Survey

0

1

2

3

4

5

6

7

8

9

Bottom Quintile Group

Second Quintile Group

Third Quintile Group

Fourth Quintile Group

Fifth Quintile Group

per cent Share of Household Consumption

43Malta: Draft Budgetary Plan 2014

Chart 4.2

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

P20 P40 P60 P80

Estimated increase in Household Income

4.5.2 Expenditure MeasuresThe impact of a selection of expenditure measures addressing social cohesion is assessed on the basis of a simulation based on SILC 2012. It is estimated that the bottom 20 per cent household income earners (P20) and the P40 household income earners will experience a relatively stronger increase in income when compared to households in the top quintiles of the distribution, as shown in Chart 4.2. This fi nding indicates that these measures will have a progressive impact on the distribution of income. Furthermore, the upper threshold of income of the bottom 20 per cent household income earners will increase more sharply than that the bottom thresholds of richest 20 per cent households. From this we can expect that relative poverty stands a good chance to decrease a little bit because of these measures. In addition, simulations indicate that these measures are expected to be effective in lifting some elderly persons (living in households) out of poverty.

Excluded from this analysis is the promised measure whereby Enemalta, a government owned corporation, would be reducing the electricity tariff by 25 per cent. While this will be carried out without any funding from the government it will have a signifi cant progressive effect on disposable income.

As indicated above, this quantitative analysis is partial since not all measures could be included. Further work will be carried out in this fi eld.