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Labour's sun sets with Muscat

This article was first published in the MaltaToday on Sunday 1st November 2015, and uploaded online on www.maltatoday.com.mt on Wednesday 3rd November 2015.


http://www.maltatoday.com.mt/comment/blogs/58868/labours_sun_sets_with_muscat#.VjywNa6rT65





In periods of economic upturn, it is time to invest not consume.

While no one can deny that on a macro level the economy has kept on performing well, things are not as rosy as Muscat is trying to paint them.

Muscat inherited a strong economy. Back in 2012, Malta and Germany were the only two Eurozone countries being praised by Brussels for improving their competitiveness and fiscal stability and were the EU's best performing economies during the worst financial crisis of the past decades. We were being presented as role models for other EU members. Truly the best in Europe.

Malta ranked third among European countries when it comes to youth employment and unemployment was steadily decreasing notwithstanding the number of employees in the civil service was being constantly decreased as well. In the meantime, in the budget negotiation which saw the EU slash most of its funds, Malta managed to secure more than €1.2 billion in funds for the following six years.

Indeed, the sun did not rise in March 2013 as some want us to believe.

This government is to be credited for keeping the momentum going and not creating any economic shocks, aided by a much improved international economic situation and a huge drop in the price of oil.

One would expect though that during such an economic upturn, the government would seize the opportunity to move its expenditure away from consumption towards capital investment. This was the clear strategic path previous administrations had been taking: reducing subsidies and recurrent expenditure and increasing investment. The privatisation of the dockyards and public transport and the removal of subsides on water and electricity bills, though unpopular, allowed government to shift its expenditure towards more meaningful capital projects which benefitted the country and future generations, such as the electricity interconnector, the cleaner and more efficient BWSC electricity generation plant (now sold to Shanghai Electric), road infrastructure projects, flood relief projects, the Life Sciences Park, the Oncology Hospital and the new MCAST campus. Projects, some of which partly financed by EU funds, which have kept the economic momentum going right up into this legislature and which will bring long-term benefits.

We have truly witnessed a "clear change in direction" in this sense. Capital expenditure has been reduced budget after budget (€125 million less for 2016). Renewable energy projects have been halted. No investment schemes to aid ailing industries, which have led to a worrying €700 million decrease in the country's exports, have been earmarked. No new economic industries are being projected, while the rate of increase of jobs in the hugely successful gaming, information technology and financial services sectors has decreased, while the rate of increase of the average wage has halved in two years.

On the other hand, recurrent expenditure has increased considerably. Public service salaries have off-shot budgetary predictions by €30 million in this year alone, and will be exceeding the €800 million annual mark by next year. The number of public service employees has increased by the thousands, and according to NSO statistics mostly in public administration (including many messengers, a trade astonishingly increasing in demand in the 'progressive' age of emails) and not in health and education as the government tries to convince us. Consultancy and travel funds seem to have no limit, whilst in such positive and optimistic times students, workers and pensioners have to make do with measly increases.

So yes, the economy has grown, but it is really a pity that this is being mostly fuelled by government consumption rather than by more meaningful investment. Public debt has increased by a staggering €600 million in just two years, and there is not a single capital or infrastructure project to show up for it except the ones started by the previous administration.

Responsible parents loan out money to invest in a better education for their children or to improve the quality of their home, but not to give it away in more pocket-money, even though that would endear them with their kids. They know it is neither sustainable nor productive.

If Muscat's "ten year plan in government" is simply to make people happy and fill in the pockets of those around him, leaving future generations to face the consequences once he comfortably retires, then he is the opposite of the "statesman" his supporters describe him to be.

It is also really ironic that Muscat is currently more worried about salami and sausages, than about more worrying carcinogenic issues his government should be tackling: the excess fumes caused by traffic, the continuous increase in nitrates percolating a depleted and widely abused water-table, and further erosion of our open spaces by greedy developers aided by his disregard to ODZ protection.

I am sure he is not so scientifically illiterate as to misunderstand a WHO report, so I suspect this is simply another feeble attempt to divert discussion away from the budget and the more recent scandals plaguing this government: the visa residence rackets in both Libya and Algeria, the public funds being wasted in unnecessary consultancies and nepotistic appointments, the Gaffarena land deals and the EU funds being withheld following irregularities flagged in the Coast Road project.

After all, didn't he say that it was Busuttil who needed to learn how to read reports and not himself?



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