Fake battle cries

The official measure of annual consumer price increases is the 12-month moving average inflation rate. Detail aside, inflation is a comparison of current with past prices.

Officially however, price levels are averaged for the most recent 12 months and that average is compared with that for the previous 12 months. On Thursday, the National Statistics Office announced that this moving average had reached 3.62% in March.

Though officially measured inflation rose in March, there is plenty to suggest that inflation has peaked and is actually falling. A simpler and more current measure of inflation compares consumer prices in March 2002 with March 2001.

Prices were 3.17% higher, and this more up-to-date rate of inflation was down from 3.69% in February. When the inflation rate is slowing down, as it is now, the 12-month moving average overstates the most recent inflation rate because previous higher price increases are part of the moving average.

The comparison with a year ago is the preferred measure for spotting turning points in inflation, because it tells you how the latest prices compare with those from a year before. Like the moving average, the comparison with the same month of last year is immune to seasonal bias.

But the moving average changes more slowly from month to month because it is lumbered with past inflation rates. The official March inflation rate was biased upwards by the price figures for August, September and December of last year as well as January, 2002.

The information on March prices suggests that the rate of consumer inflation is slowing down. As important is the cause of recent price increases. For example, the overall price increase between February and March was due mostly to fruit prices.

In fact, had fruit prices remained unchanged, the overall price level would actually have dropped during the month. Without March`s fruit price hike, prices in March would have been up 2.98% from the year-ago level. Another factor is reduced retail competition, as a result of the closure of a food store chain.

Seasonal factors and weather conditions cause shortages in domestic agricultural supplies, but restrictions on agricultural imports reduce the ability of foreign supplies to fill the gap. In the process the consumer is the loser.

But although import restrictions raise the cost of living and reduce living standards, they are not likely to cause a self-propelling inflation problem, despite all the Labour Party propaganda to turn this into another fake and alarmist battle cry.

Recent price increases cannot be blamed on policy mismanagement, unless you include in the latter import restrictions whose gradual removal is contemplated by current policy.

The Labour Party on the other hand is hell-bent on keeping these restrictions, and it is even threatening to reintroduce protection. This is about as injudicious as the continuing vacillation on the value added tax.

Investment

Projects approved by the Malta Development Corporation between 1999 and 2001 had total projected investment of Lm64.8 million along with 4,677 in additional employment.

Between January and April 2002, the MDC approved projects with anticipated investment outlays of Lm15 million and a projected employment increase of 663.

Brand new operations include Arrow Pharmaceuticals, which is expected to employ 120 workers and invest Lm4.8 million. It has been advertising its vacancies in the papers.

Another newcomer is Delta Research and Development, which is projecting a workforce of 38 and an investment of over Lm2.5 million.

De La Rue chose to shift their Singapore operations to Malta. De La Rue is anticipated to hire 120 additional employees and to invest Lm3.8 million.

Besides De La Rue, a number of other expansions are clear signs of investors whose decisions to locate in Malta proved wise enough for them now to be able and willing to expand local operations.

Genius

The genius of the Labour Party`s misinformation campaign is the ability to look the camera straight in the eye, and with a straight face twist the facts around, trying to turn past party disasters and the party`s most vulnerable points into propaganda coups.

They whip up an artificial storm about the present and in the process they hide their shameful past. There is no doubt that the party`s recent two years in office were marked by a drying up of foreign investment. You would think that the same cast of characters would be the last to cast aspersions on current FDI flows. But their brazenness knows no limit.

Part of their genius, if you want to call it that, lies in the constant hammering of the same untruths. Labour`s sham propaganda about recent investment flows is not an isolated case.

Take water and electricity prices. The last Labour Government rashly decided to at least double consumer utility rates, and to raise industrial rates astronomically, threatening to send the economy into a tailspin.

Given that, you`d think that today their party would not have the gall to mount a campaign charging the present government of imposing stiff financial burdens on a weary public. But that`s precisely what they are doing.

The icing on the cake is that they accuse this government of raising utility rates, when in fact the first thing this government did was to take utility rates for the average consumer almost entirely back to their original levels. Electricity and water users were given a significant rebate on the bills that had been paid under Dr Sant`s ill-fated and error-prone government.

Higher electricity and water usage will obviously attract higher payments and progressively higher rates. As income levels rise and the standard of living improves, heavy users end up paying higher bills for greater consumption. But these higher bills are far below what Sant had dictated.

Keep in mind also that the massive electricity price hikes of 1997 were the Labour government`s response to crude oil prices that averaged $16 per barrel in 1997-1998. One must ask what electricity price structure would satisfy Dr Sant today, when crude is at $26.

Is it too much to ask the Labour Party to declare their position now and state whether they made a grave error which only their electoral defeat resolved. Would a Labour government take prices back into the stratosphere?

Given Labour`s professed concern about the burdens on the public, and given Dr Sant`s penchant for obstinate and rash action, is it too much to ask for a commitment on this matter?

Another fake battle cry has to do with the so-called burdens of financing the adoption of the acquis. Apparently for the Labour Party, raising Malta`s standards to EU levels is a waste of time and energy.

Presumably a Labour government will regard workers` safety standards as unnecessary, and it will view product standards as undesirable. For Labour, Malta apparently deserves third-world conditions.

Yet what truly offends the intelligence of the citizen is when Labour Party mouthpieces blabber away about the "burden" of such projects when they know that EU pre-accession funds are financing most of these endeavours.

They have been told this over and over again, and only their anti-EU obsession explains why they keep pretending they do not know the truth. Labour seems to prefer fake battle cries to reasoned, objective discussion on the EU.