Logical consequences of a great conference

The Conference held by the Chamber of Commerce and Enterprise last month at the Corinthia will doubtlessly leave its mark.

The speakers all analysed in detail the concept of corporate social responsibility as a further expression of responsible entrepreneurship.

They also provided practical economic information about how far they were involved in meeting the demands of corporate social responsibility in Malta and, what is more important, while expressing their adherence to this principle, they affirmed their willingness to take over more of this burden if Government were to make this possible by appropriate tax cuts.

A great moment

This is a great moment indeed in Maltese economic and social history. The hardworking Chamber of Commerce has descended into Malta's economic and political arena of its own free will, and it has expressed its intentions through the mouths of its leading members.

This was Malta's plutocracy talking and not just its managerial class. Nobody had solicited it to do so. Its action was voluntary. It was, as I wrote in my article last month, "Regenerating a great tradition", the voice of the founders of the august Chamber speaking through the mouths of the present members after more than a hundred years.

Men such as Marchese Bugeja and Marchese Scicluna, besides being Malta's richest men, also had the greatest degree of corporate social responsibility. They were practically the Department of Social Welfare of their time. Since the demise of these great men, and the era of astonishing Victorian prosperity that produced them, the world has engaged either in populist or socialist political and economic engineering, in meeting the corporate social responsibilities of the nation.

If the 20th century was the one when the state moved forward to provide sustenance from the cradle to the grave, the 21st century is going to be a very different one indeed, whether we like it or not. The main pension guarantee for the nation is not going to be a state one.

The reason is because most nations, even the rich ones, will in the near future not be able to pay a pension to their people. Every day we see the unholy spectacle of almost all the European nations struggling with an unsustainable budget deficit.

John Brown, the UK's finance minister, is openly speaking of the failure of the EU single market. It was ascertained by the Financial Times in a recent article that most of the world's nations would be bankrupt if their solvency would be calculated on the principle of their ability to pay their public debt plus the meeting of their pension liabilities. Malta is one of them.

Pension liabilities

Malta's public debt position is well known. It is far from being as dangerous as government's mounting pension liabilities. The reason is because, parallel to Malta's public debt position, which is largely in terms of local currency, the island has one of the highest foreign currency reserves per capita in the world. One has only to compare Malta's foreign currency reserves with those of Japan, which is the world's top country in terms of foreign currency reserves, to realise how strong Malta's international financial position is.

This is the main reason why Malta receives such as excellent international credit rating at the hands of Moody's and S&P. These rating agencies have to advise their international clients on Malta's solvency.

Malta at present can take into its maw many more than one financial blunder but this does not mean that it can take all the financial blunders the devil can invent.

Surefire victim

Future generations of the Maltese nation will hail the building of the Mater Dei Hospital, for which Dr Alfred Sant shares massive responsibility, as a great feat of social engineering though not of financial enterprise.

What is certain is that if this hospital is run efficiently it will lengthen our average lifespan considerably. Such an eventuality will further accelerate the nation's future pension and public health financial requirements.

Social responsibility in Malta is a surefire victim of its own extraordinary success. The Mater Dei phenomenon is indeed extraordinary, not least because it can rebound in many unexpected ways.

The average lifespan in Malta is also going to be lengthened significantly by Government's anti- smoking campaign, which if successful will give it enough reason for re-election.

About a third of the island's adults are heavy smokers. These include a large number of pregnant women. Smoking is collective, slow suicide. It is to the infinite merit of Government that it is fighting this plague of the 21st century, but its success will ensure a much more serious pension position in the coming years.

It is well known in medical circles that the average smoker shortens his life by six years. This is admitted by the tobacco companies. However, Malta's Good Samaritan policy can easily be translated into financial chaos.

Such a situation is a breeding ground of political revolutions from either the right or the left. There is no way Government can get away from its pension liabilities except by seeking to unload them on the private sector with the help of appropriate tax cuts. Government has failed and it will make good sense on its part to realise it has failed.

In September 1997 Lino Spiteri wrote three articles in The Times entitled 'Anatomy of a Problem'. He argued then that the state of Malta's finances were comparable to the volcanic eruptions on the island of Monserrat.

Seven long years have passed and the Maltese economy has continued to grow until it seems there will be more cars in Malta than stones in our untidy rubble walls. Mr Spiteri has recently repeated his Monserrat assertion. Again, I believe he is mistaken. Financial blunders are not a 'Monserrat' situation. Malta is not Argentina.

It can meet its international obligations, but to give Mr Spiteri his due, although Malta's financial position is not a 'Monserrat' one, it will become so if everybody in the island on both sides of the political and economic spectrum try to bring about its realisation.

That is, if nobody thinks hard how Government can disengage itself from its impossible future pension liabilities, which it is creating by its undisputed success in increasing the lifespan of the Maltese people. Both Mr Spiteri and Government are wrong.

One is preaching his 'Monserrat' doomsday scenario, the other has not forgotten the demagogic phrase "Money no problem". Money is a problem, which behaves in unexpected ways. That is what the science of economics and demography is about.

Money can be a problem even in a rich country, when it is administered in a childish way.

The Chamber's solution

The Chamber of Commerce, unlike Mr Spiteri, has a solution to offer to a 'Monserrat' situation that Malta can possibly face in the next few years. Financial disaster can be averted by putting money in the hands of those who, through past experience, have provided evidence that they can take care of the needs of the poor without creating a black hole in our finances.

Communism fell in Russia because it was squandering the resources of that great country. I remember Lord Balogh telling me when I worked close to him 30 years ago, and when he met the international 'Corruption Study Conference' directed by Professor Boissevain, how there was no hope for Soviet Russia because of its rampant corruption, but that there was hope for China because of its genius in calling a state capitalist system 'communist' when it was capitalist after all, especially the system of Communist 'princelings' in Hong Kong.

Russian Communism fell, but that of China has survived because by the most queer turns of history. It was saved by capitalist Hong Kong. Hong Kong took over China and not China Hong Kong. That is why the share price of HSBC has flourished and will continue to flourish for as long as it cares to repeat on the mainland the leadership it has displayed in Hong Kong.

That is as long as its Communism continues to be cynical, like certain brands of socialism.

The evidence

The motivation of last month's Chamber of Commerce conference was purely voluntary. The evidence is manifested in the sense of corporate social responsibility of the likes of Simonds Farsons Cisk.

SFC has shown energetic and diplomatic ability in administering the Marchese Vincenzo Bugeja Trust within the ambit of the Chamber of Commerce and Enterprise. This included a by no means negligible detail, such as the restitution of the mislaid silver chalice with a Verdala coat-of-arms to the chapel of the Conservatorio Vincenzo Bugeja complex at St Venera.

There was also the return of the missing diamond and gold stellario inscribed "Conservatorio Vincenzo Bugeja", which was returned to adorn the statue of Our Lady at Fgura.

This last episode is only distantly linked to the Chamber of Commerce and Enterprise, but it has certainly a bearing on the prestige Malta's commercial community imparts to the Conservatorio Vincenzo Bugeja, still a symbol of plutocratic magnificence in Malta.

It is significant that the Verdala conference was led by SFC, which is paying an enormous tribute in ensuring the happiness of its employees, both present and past.

The SFC annual accounts were available at the conference. These have long shown that strains of an overly generous corporate social responsibility policy. SFC points the way; Malta's plutocracy can be trusted with Malta's money. It will help the poor to the point of strain, just as Marchese Bugeja did more than a hundred years ago.

Mr Azzopardi Vella has promoted the Malta Development Fund and advised S&P. E-mail: johnazzopardivella@hotmail.com.