Malta's Socialists eye first election win in 16 years

VALLETTA Mon Mar 4, 2013 3:13pm EST

Labour Party and Opposition leader Joseph Muscat (L) and Prime Minister and Nationalist Party leader Lawrence Gonzi shake hands at the end of a political leaders debate organised by The Times newspaper at the Intercontinental Hotel in St Julian's, outside Valletta, February 26, 2013. REUTERS/Darrin Zammit Lupi

Labour Party and Opposition leader Joseph Muscat (L) and Prime Minister and Nationalist Party leader Lawrence Gonzi shake hands at the end of a political leaders debate organised by The Times newspaper at the Intercontinental Hotel in St Julian's, outside Valletta, February 26, 2013.

Credit: Reuters/Darrin Zammit Lupi

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VALLETTA (Reuters) - Malta's opposition Socialists appear set for their first election victory in more than 16 years on Saturday, capitalizing on popular anger at ministerial pay rises, high power prices and an oil kickbacks scandal.

The ruling Nationalist Party took the Mediterranean island into the European Union in 2004 and says it deserves to be re-elected for making Malta the second-best performing euro zone economy.

Newspaper opinion polls show Labour ahead by 11 percent, enough for a landslide by Maltese standards. Less than 1 percent of the vote divided the parties in the last election in 2008.

Labour's 39-year-old leader Joseph Muscat, a former European Parliament member, has modernized his party to make it more appealing to the center-ground and a business community once mostly loyal to the Nationalists.

He has brought in a more effective publicity machine that focused on a pledge to lower electricity prices, which Maltese complain are among the highest in the world, damaging living standards and businesses competitiveness.

He has also campaigned against government inefficiency, a ministerial pay raise given after the government's re-election in 2008, a botched bus service reform and the oil procurement graft scandal - even thought the government was not directly involved.

The general election was brought forward by a few months after Prime Minister Lawrence Gonzi failed to push his 2013 budget through parliament, with one of the government's own MPs voting against, denying it its wafer-thin majority.

"The Nationalist Party is the only guarantee of job creation. See our track record. See what is happening abroad," Gonzi told a gathering of his party last week, referring to the budget and employment crises in other euro zone states.

Labour has been out of government for 25 years except for a 22-month stint between 1996 and 1998.

Muscat says all parts of society will benefit from growth and is pledging to cut power prices by a quarter for households within a year and for businesses within two years.

Gonzi points out that Malta is doing relatively well compared to euro zone peers, with a budget deficit at 2.8 percent of gross domestic product and unemployment at 6 percent.

The EU's smallest member state has held its own thanks to record tourist arrivals and a growing financial services industry. Exports, mostly to the EU, have held up.

Both parties promise to bring down income tax for people earning up to 60,000 euros a year to 25 percent in three years from the current 35 percent.

Little distinguishes them on foreign affairs, with Muscat having come around in favor of Malta's EU membership after strongly opposing it before accession.

Polling on Saturday ends at 10 p.m. (2100 GMT), with first results expected on Sunday at about noon.

(Editing by Tom Pfeiffer)

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