Develop, delegate, devalue or be damned

Lawrence Gonzi's budget for 2005 is yet another tinkering exercise worthy of the best political tinker. Neither he nor his colleagues have shown the slightest hint of a competence to "think outside of the box". In light of the promises his government made to focus on job creation, it is hard to imagine a budget that is more insular and internally focused and less likely to create jobs.

Thanks to the budget the exporter has to face higher travel costs, higher utilities, higher payrolls and higher telephone bills. Whether you export potatoes or professional services, your task will be harder. Dr Gonzi's estimate that eliminating four public holidays per annum will increase productivity by two per cent and will create jobs is naïve to the extreme.

As the Association of Farmers said, "Dr Gonzi is either not aware of the reality of the situation or, worse, he is trying to give the wrong impression to avoid addressing it".

The Leader of the Opposition suggested that the lira is overvalued. Instead of giving this proposition some consideration, Dr Gonzi slammed the proposal saying it was grossly mistaken and workings showed that the consequences would be dramatic and frightening. (Remember politics is about emotions not facts.)

The workings that were published showed that a family earning Lm8,200 per annum will lose Lm18 per week, that is, 12 per cent of their gross earnings, if the lira devalues by 10 per cent. How can a 10 per cent devaluation cost 12 per cent? The farmers were right; Dr Gonzi is not aware of the reality of the situation. His response did not portray a credible Minister of Finance or a sense of leadership.

Why did the Prime Minister take the devaluation proposal so negatively? He, his predecessor and his colleagues devalued our environment, devalued the face of Malta, devalued the postal service, devalued the national airline, devalued our family values, devalued our sea shores, devalued our sea bed, devalued our competitiveness, devalued Mid-Med Bank and devalued our countryside. Why stop now?

This government has in reality already devalued the lira in our pocket because by the time we pay income tax, social taxes, Value Added Tax, eco tax, and mobile phone tax, we are left with close to 10 per cent less lira in our pockets than we had a year ago. The only problem is that this type of devaluation hurts everybody and helps nobody.

Dr Sant quoted two economists who claim that the lira is overvalued by 10 per cent. The Central Bank index says the lira is 10 per cent overvalued. On the whole, foreign visitors think Malta is an expensive place. Maltese hoteliers find it difficult to command profitable room rates. Exporters find difficulties in achieving reasonable profit margins. All Dr Gonzi can say is that the lira is a strong currency.

Why did the electric car company that Minister George Pullicino publicised with much fanfare and photographs take its business somewhere else? After all the photographs of Minister Austin Gatt with Bill Gates, and promises of Microsoft coming to Malta, why is it that Microsoft has an office in Malta with a grand total of two staff? After ex-Minister John Dalli sold Mid-Med Bank to HSBC at a huge discount, why is it that when HSBC decided to export thousands of jobs from its UK call centres, those jobs all went to India and Indonesia? Why didn't the Maltacom call centre get at least a small share of these jobs? Why didn't the Europeans beat a path to Malta to buy property after we joined the EU? Why can't the Malta Drydocks make a profit?

Probably Dr Gonzi would blame Alfred Sant in the same way he blamed him for the failure of the talks on the Malta/Gozo air link and the difficulties with Skanska. Dr Gonzi cannot see that the quality, efficiency and effectiveness of the package that Malta offers is overpriced. It will take more than Dr Gonzi's meaningless rallying cry of "Malta throughout its history had triumphed in adversity even when it did not have anything and was a colony" to move us up the competitive curve. We had a 17-year window of opportunity and we wasted it. What are some of the items on the current menu of options that could make a difference?

The first option is whether to continue with the government's way of misinforming the public, or to inform the public of the facts as they are. The public is entitled to accurate accrual accounting. We are also entitled to know how much we are spending in Brussels and how much money we are contributing to Brussels, not just how much money we are receiving from Brussels. We cannot have situations like Dr Gatt telling us how well Gozo Channel is doing and then refusing to give the Leader of the Opposition a copy of the latest financial statements. This government's credibility is very low and the public will only believe statements supported by all the relevant data. The government needs the public's support in its recovery crusade.

The second option is whether to continue with the government's way of assigning key economic posts to candidates from its circle of friends who will fulfil their master's political agenda or assign genuinely qualified people and allow them to undertake the task with no political interference. Two chairmen recently handing in their resignation to the Minister of Investments in as many months is an unacceptable high turnover rate at this level of responsibility.

The third option is to continue to increase government recurrent expenditure and continue to increase taxation, or reduce government expenditure and reduce taxes. Government waste is there for every one to see, starting from in and around ministries and continuing through every single government department.

The fourth option is to continue to invest in non-strategic projects like Dar Malta in Brussels and the proposed new Parliament building, or invest in management and worker development, which will lead to quality, efficiency and effectiveness. In addition, we need to invest in top notch representation for Maltese products and services in markets where we choose to compete.

The fifth option is to continue trying to sell the overpriced Malta products at low profitability and watch our slow deterioration, or to devalue the lira by 15 per cent, coupled with reduction of VAT to offset cost of living increases. This will give a boost to exporters, hoteliers, sagging property sales and organisations such as the Drydocks and Air Malta. The net result will be job creation, reduction in unemployment benefits, reduction in subsidies, more investment and an increase in tax revenues.

The sixth option is to continue the small minded approach to helping producers and farmers, spending more money on the administration than the actual assistance, or take some bold steps to focus and invest in areas where we have strengths.

The seventh option is to continue with the same crowd of ministers, parliamentary secretaries and government appointees that created the current problems and have been allowed to retain their jobs despite their dismal performance, or allow some fresh blood to come in and "think outside the box" and reward them for their achievements and boot them out if they do not achieve.