Recently a local reporter tried to compare Lawrence Gonzi's allegedly 'upbeat' approach to that of Tony Blair. Although the two politicians hardly bear comparison in both style and substance, they seem to share one common destiny.
They both stand a chance of being out of government before the next year is out.
Dr Gonzi's hollow boast that he never lost a general election is built on sand, since he has never, as party leader, contested a general election.
What he did forget to remind us was that when his party - under his leadership - contested three consecutive local elections and the Euro parliamentary elections, it came a cropper on all four occasions.
Winding up his parliamentary reply to Alfred Sant's address to Parliament, the PM could not resist the temptation - which has now become almost a tradition - of passing snide remarks about the Budget I had presented to Parliament in November 1997.
Ignoring completely the recently revised government finance statistics, which show that when Labour assumed power in 1996 it found that the deficit had broken an all time record of Lm188.589 million, the PM went on to give the impression that 'my' budget had the most heavy taxation of all budgets.
The PM was incorrect even on this count. While in 1998 GDP stood at Lm1,362 million and tax intake at Lm432 million, in 2007 GDP is likely to stand at Lm2,163 million, with tax intake at circa Lm851 million.
This shows very clearly that in 1998, taxes as a percentage of GDP stood at 32 per cent, while in 2007 they are likely to stand at 39 per cent, mainly because while GDP has grown over the same period by 59 per cent, the tax intake has increased by 97 per cent.
When one looks at the increase in GDP as outlined in the Economic Survey (p. 28) one will find that the increase is mainly attributable to:
Lm46.9 million - changes in inventories;
Lm11.6 million - increase in government consumption expenditure; and
Lm28.3 million - increase in taxes net of subsidies.
One cannot consider the deficit figure for 2006 as realistic (Lm57 million) when Government continues to rely on cash basis accounting without having stuck to the accruals introduction timescale that former Finance Minister John Dalli had committed himself to - a process we had initiated in our own time.
Many tend to forget that Government's financial figures were queried by the Auditor-General when he recently qualified a report on Government finances.
It is pointless for Government to boast of increases in private sector employment when Maltacom has just been privatised.
At the same time commentators hardly mention the fact that out of 30,658 employed in the public sector, 1,682 work on a casual/part-time basis while 896 are on loan and/or on contract with Government.
Regarding unemployment Government has little to boast of - those registering for work have increased by 6.5 per cent or 6,200 in June 2005 to 6,600 in June this year.
Although the Budget features an increase of Lm18 million in capital expenditure there is a decisive shift from the productive sector to the infrastructural. This is confirmed by comparing the 2006 revised figure of Lm36 million with the 2007 estimate of Lm30 million; the respective figures for infrastructure are Lm58 million and Lm88 million, and those for the social sector Lm56 million and Lm50 million.
Of the Lm30 million allocated to the productive sector, only Lm16 million are directly allocated to capital development, since the rest is taken up by subsidies to tourism and industry.
One figure that the PM did not mention was that according to the estimates (pp. 6, 12), while Government was counting on Lm82.6 million in EU funds, this figure has been revised downwards by eight per cent to Lm76 million and its projections for 2007 are even more modest - Lm73 million.
Despite Government's boasts that it is reining in recurrent expenditure, figures for 2006 show that it has been revised upwards - from Lm782 million to Lm796 million, and those for 2007 targeted at Lm803 million, pending further revisions.
And since tax revenue in 2006 increased by Lm62 million, the total amount of taxes collected of Lm851 million, represents an average of Lm2,200 per capita per annum.
There are certain figures in the Budget estimates which need explaining.
How come the excise duty on petroleum is expected to go up from Lm29.7 million to Lm38.3 million? How come government is expecting revenue from motor vehicle licences and registration tax to rise from Lm32 million to Lm36.2 million, when importation of cars is unlikely to increase at this rate?
Regarding tax relief, it will be negligible for single persons earning up to Lm4,100 a year and for couples earning up to Lm6,000 which shows that this government has decided to distinguish between the lower classes, the lower middle class and the higher middle class category. All this at a time when their disposable income has continued to shrink and the real value of their modest earnings has continued to erode since 2004.
It is a pity that in his reply to Dr Sant, Dr Gonzi was far more interested in rubbishing the Labour leader and fuelling further the election mode rather than elaborating on certain home truths. This might explain why he did not even bother to mention that the number of tourist arrivals and nights spent in Malta are today far lower than they were in 1998 under a Labour government! The same applies for the gross income per capita for tourists for 2005, which in nominal terms was less than it was in 1997.
I welcome Government's intention to develop Malta into a Mediterranean hub for financial services and ICT but Government should first get its priorities right in the education sector.
This target surely cannot be achieved when comparing our youth education attainment levels, which show that in terms of percentage of population aged 20-24 having completed upper secondary education in Malta we stand at 48.1% - the lowest among all EU countries, i.e. both the new member states (82.24%) and the EU 15 (74.1%).
Which brings us to inflation, where Government's political impotence was most glaring, with the PM himself admitting that it is a big issue that hurts people's pockets, and rating agency Fitch stating that he cannot control it in the short to medium term.
Predictably, Dr Gonzi chose to gloss over the shocking contents of Professor Joseph Falzon's study on "Exports, inflation and value added", which was prepared for the GRTU as part of the consultation process on the 2007 Budget.
The main findings of this paper are indeed revealing:
• Our exports of goods and services have been declining since 2000 in both nominal and real terms.
• Our exports have witnessed price deflation and a declining share of value added in total GDP.
• The largest sector in the economy is manufacturing, which still contributes almost one-fifth of total gross value added in the whole economy. It also lost one-fifth of its workers (6,450) in the last ten years.
• Total full time employment has been constant in the last five years.
• The manufacturing and hotels and restaurants sectors decreased their share of the number of workers employed, and their share of gross value added in the total economy.
• The manufacturing sector experienced the smallest increase in the total compensation of employees from all 15 sectors in the last nine years.
• The increase in total operating surplus between 1996 and 2005 for the whole economy has only been almost half the rate of inflation.
• Similarly, the increase in operating surplus per worker employed for the whole economy was just one third of the increase in the rate of inflation between 1996 and 2005 with six sectors, including hotels and restaurants and manufacturing, registering an absolute decline in their operating surplus per worker employed.
• Net value added per worker employed for the whole economy increased by slightly more than the rate of inflation
• From base 1996, net value added per capita increased by less than the rate of inflation in 2004, and by just the same rate of inflation in 2005.
If Dr Gonzi still feels like smiling he is free to do so. But nobody can blame the electorate for concluding that in the process the man and his party have indeed taken us for a ride.
I can predict that following a Christmas period lull the PN's terminal decline will continue to accelerate, and the 'cosmetic' budgetary measures fall into place as they go on to show that Government will have failed to create a much desired feel good factor!
Footnote: Many were baffled that after the NSO had carried a statement that the budget deficit for 1996 stood at Lm188.589 million (since May 20, 2004) it coincidentally chose to issue a correction to NSO news release 95/2004 by way of a press information notice on the matter last Friday week - the day Dr Gonzi was to reply to the Opposition Leader in Parliament.
Mr Brincat, Shadow Minister of Foreign Affairs and IT, is a former Minister of Finance and Commerce.
leo.brincat@gov.mt