Editorial

Judging by the swift and, in some cases, angry, reaction to remarks made by the governor of the Central Bank, Michael Bonello, one would think he suggested the complete withdrawal of the students’ stipend or the dismantling of social welfare. This is not what he suggested and the nature of many of the comments made indicated his words were taken out of context.

The Central Bank governor was arguing the point that a substantial, durable fiscal correction required a fundamental reappraisal of the role of the state in providing services. He raised the point, a most valid one in the circumstances, that there is need for the country to prioritise expenditure programmes. In his view, the most difficult challenges, such as how to ensure sustainable funding for tertiary education, pensions and health services, remained to be tackled.

He did not suggest the stipends be withdrawn but, since the University was short of funds, he felt one way of tackling the deficiency is to limit stipend support to students who are truly in need. What wrong is there with this argument? The money saved would go to help those who are really in need of financial support and, also, to help the University improve the quality of its services.

Of course, had Malta been a sheikdom wallowing in oil money, it would not have been a problem at all to pay a stipend, even a most generous one, to all students, irrespective of whether they need it or not. But Malta is not wallowing in oil money and needs to cut unnecessary spending in the effort to bring down the deficit in the government’s finances and, therefore, to start chipping away at the national debt that has been accumulating to well above the threshold allowed under the EU regulations.

Invariably in his speeches, Mr Bonello warns the island could not live beyond its means, a message one would have thought is easily understood today in the light of the most difficult situations a number of countries are facing. Some of these countries have had to take austerity measures of a kind that are more hard-hitting than the rise in the water and electricity rates the government here has had to resort to when it cut its subsidy to the energy corporation.

The governor, who was addressing the Institute of Financial Services, made a most telling point when he said that people in Malta continued “to expect the government to hand out money it does not have. This attitude must change, for not only can it lead to bankruptcy but it is also indefensible on moral grounds. Politicians, trade unions, NGOs and other opinion shapers must explain we do not have money for everything and that you cannot have gain without pain. The intelligent thing to do is to work together so as to minimise the pain and then ensure that it is equitably shared”.

Unfortunately, however, for most of the time, discussion of such key topics gets bogged down in irrelevant side issues or political controversy, with politicians often blatantly showing they are more interested in delivery sound bites than in analysing the situation in a dispassionate manner. While it is true recent indicators have shown an economic uptrend, it would certainly be wise to get on with tackling the structural weaknesses that both the Central Bank governor and others, including the International Monetary Fund, have been remarking upon for so long now.