Time for two-pronged attack on recurrent expenditure

After the optimistic predictions made at the end of last year, it now appears that the government deficit will deteriorate to 7.6 per cent of gross domestic product this year and that the gross debt ratio will reach 66 per cent of our GDP. This is a far cry from Minister John Dalli's predictions, made in his budget speech for 2003, a year which he termed as the year of destiny.

Our GDP was expected to rise by 2.8 per cent. We are now being informed that it will in fact grow by only 0.8 per cent! This is a massive variance.

What is perhaps even more worrying is the fact that it is the lowest rate of growth among the 10 countries acceding to the EU next May.

Making an analogy with football, we are last in the league and risking relegation. A few months ago, I had called on the government to periodically embark on benchmarking exercises to evaluate the country's relative performance. The European Commission has vindicated my call by informing us that we are falling behind every other acceding country!

Can we turn this situation around? I will leave it to more learned contributors to offer a detailed analysis of Malta's woes but I would nonetheless like to offer my views as a layman and a businessman.

It seems to me that Malta's finances need to be managed with a much tighter rein. It will be futile and counter-productive to raise current levels of taxation as this action will put further brakes on an already sluggish economy.

I believe however that what we desperately need at this critical time is a determined two-pronged attack on recurrent expenditure. The government cannot go on spending money as if there were no tomorrow. To make matters even worse for the public, little of this expenditure can be felt or seen and we are tired of reading about the pitiful state of our environment.

I am sure that, given the will, the government can cut its expenditure substantially by reviewing all its cost centres with a fine comb and challenging the status quo at every opportunity.

In 2002, the government spent a total of Lm825 million to run enterprise Malta so that even an overall saving of five per cent would make a very welcome cut of nearly Lm50 million.

It must have efficient and accountable cost cutting managers in place to ensure that public money is spent as intended and not diverted to some other use or destination. I recently questioned how Lm40 million or Lm50 million were spent on road works in three years when I yet have to see worse roads than ours!

These are just a few of the matters that raise questions in the minds of the public and lead to a general decline in the public perception of politicians in general.

It would also not be amiss for the government to "lead by example". The government must learn to "travel coach rather than club class" in all that it does.

By way of example, the government would do well not to be so generous when renewing leaseholds of public property as it did in the case of the Casino Maltese.

Why was PBS allowed to lose millions of liri in such a short time? Why are public corporations allowed to spend millions on consultancies?

At the end of the day it is all about "more bang for your buck".

Unless we take the bull by the horns and learn how to achieve the same output with less expenditure by controlling costs and eradicating all forms of abuse, we shall remain in a downward spiral.