Issue link: https://maltatoday.uberflip.com/i/806571
4 MATTHEW VELLA THE Labour government's budg- et surplus for 2016 – an €8 million positive that registered the first such surplus since 1981 – set the scene for yet another exchange of barbs between the PN and the PL. Conspicuous by his absence was the PN's shadow minister for finance, deputy leader Mario de Marco, who released no state- ment from his end on the posi- tive figures. Instead, it was Op- position leader Simon Busuttil who dubbed the budget surplus a "gimmick", noting that the big dif- ference putting Malta in the black for the first time in three decades was a massive 46% cut in capital spending. Labour was quick to denigrate Busuttil's statements, saying it was rich of him to downplay an 'historic' achievement when the PN registered the highest ever deficit, €362 million, in 2012 – now zeroed in under five years. "Incidentally, capital expenditure during those years (2010 to 2012) was at the same level of 2016. A budget surplus then had remained a pipe-dream." There is however some truth behind Busuttil's keen observa- tion, although it may be more a game of intelligent planning than a mere 'populist' gimmick as the PN leader told his audience of centre-right youths during the EPP congress. You have to consider that capi- tal spending – mainly cash spent on infrastructure, social projects and EU-funded investments – tends to gradually increase every year of an administration. Under the PN, capital spending increased slowly every year from €222 million in 2008, to €363 mil- lion in 2012. Under Labour, capital spend- ing increased from €394 million in 2013, to a massive high of €581 million in 2015, and then back down to 'just' €310 million in 2016. That represents a massive 46% drop in capital spending over the past 12 months, but it also suggests that the high increase in spending in 2015 – a 33% in- crease over 2014 alone – could have rolled over in 2016… or else, Labour was planning to do just that: spend big in 2015, and then spend little in 2016 to balance the books. Reads well on the electoral playbook. The PN administration had worse weather to contend with during the financial crisis and in- ternational austerity that greeted Lawrence Gonzi's government in 2008. In 2011, income tax receipts – a mild indicator of growing in- comes (or better tax collection) – suffered a 3.1% drop, punctur- ing a trend of always increasing revenues. During that same annus hor- ribilis, capital spending fell from €311 million to €288 million (-7.3%), before picking up again in the pre-electoral year of 2012 and climbing to €363 million. Whoever you choose to believe, the numbers don't lie: Labour's surplus year is dominated by an increase in revenue of €172 mil- maltatoday, SUNDAY, 2 APRIL 2017 News Record low capital spend did influence Labour surplus Labour says massive EU fund absorption rate galvanised record €581 million capital spend in 2015, before dropping by 46% in surplus year of 2016 PN leader Simon Busuttil said Labour's surplus was a gimmick achieved by dropping capital spending by 46% in 2016. His shadow finance minister did not release a reaction to the government figures