Labour blows golden opportunity

I was not surprised by the knee-jerk reaction to the address by Central Bank Governor Michael Bonello to the Institute of Financial Services.

I cannot say I expected it would lead to the spectacle of a carefully organised march on the Auberge de Castille by some University students purportedly delighted that their stipend was not threatened, the theatrical descent by the Prime Minster down the auberge steps and the farcical lifting of him on the their shoulders by the jubilant students.

I did not expect it because I continue to see Lawrence Gonzi as someone different from the persona he nowadays constantly projects to the political public. In that sense I would have felt that the theatrical and the farcical were not quite within his style. One grows and learns.

I was not surprised by the anger raised by the governor’s analysis because it has become normal for his studied remarks not to be properly digested before they are spat out as if they were poison. The simple summary of the reaction to what he had to say was that the governor wanted to do away with stipends to students, and to emasculate the health and social services.

One may not agree with all that he had to say, or the way he said it all. But at no point was Bonello proposing what was so quickly concluded by a number of those who receive stipends, get or are working towards a pension, and enjoy public health care services.

Of the early reactions what struck me most was that by opposition leader Joseph Muscat and other Labour Party spokesmen. They focused on the speaker’s salary. He should lead by example, they said, and take a look at his very substantial salary, which they put at around €163,000 annually.

I do not know what Bonello actually earns, but I do know a few things about him that have some bearing on that. He is an Oxford graduate, the holder of one of the most respected degrees around, if I may say that, since I too was lucky enough to gain it. In the UK they make a lot of the fact that the Prime Minister, the Chancellor of the Exchequer and the opposition leader boast that background.

He had extensive experience in the Research Department of the Central Bank from the time it was set up and shaped by a high-calibre American economist, to whom Bonello, Manuel Ellul, a former governor, and I owe a huge debt of gratitude for the skills he imparted to us.

Bonello then moved on to gain practical exposure to applied economics in the private sector, with one of our leading companies. From there he moved into the United Nations orbit, enjoying pay and conditions which help that institution attract some of the best international brains.

It was from that orbit that he was persuaded to return to Malta to head the Central Bank. He was appointed on merit and with a pay package which could not be less than what he was earning at the time, and the prospects ahead of him.

Anyway, it is not pay that counts, but quality. The value of what a professional produces. Bonello has been a good governor, also saying his piece as he saw fit from the technical national standpoint, steering away from politics as if it were the plague. His piece in his address to those involved in the provision of financial services was basic reality: he spoke about setting public spending priorities within the limits of what the country can afford, while cutting the deficit.

The governor’s message can be summarised in one word – sustainability. Whatever benefits are given should not be seen simply in the present; they have to be sustainable in the future.

One criterion to ensure that, given that we are not, say, Abu Dhabi and our financial resources are scarce, these resources should start with being allocated according to need. Example: give stipends to students who need them, give the University and Mcast the resources they need to improve their level, take more students who with efficient training become good graduates who, together with a skilled workforce, will be essential to secure the country’s future.

Is that not being done? one might ask. Not really. For the simple reason that what is being done today may not be – probably will not be – sustainable tomorrow.

I would have expected the Labour Party to focus on that, rather than Bonello’s salary. On the fact that we have it on the authority of the governor of the Central Bank that, almost 23 continuous years of Nationalist government have produced a tertiary education system, social services and public health provision which are not sustainable.

That lack of sustainability, by the way, will appear more clearly in a few years’ time when the political pendulum swings, as it must eventually, and Labour takes office.

When Labour was last elected in 1996, the unsustainable financial situation revealed to Prime Minister Eddie Fenech Adami in a secret document by Finance Minister John Dalli – which made the PM call an early election – was made known to me, the hapless incoming Finance Minister, because a conscientious civil servant brought it to my notice.

This time round, the Labour opposition could take the latest in a series of technical warnings given publicly by the Central Bank governor and interpret them for the very worrying message they incorporate, and doing so without being partisan, to boot.

Instead, the focus was placed on the size of Bonello’s tax-free salary. The government was more cunning. Finance Minister Tonio Fenech quickly dissociated himself from the governor’s analysis. The Prime Minister allowed a bit of theatre to be engineered for him to be carried shoulder high.

Labour should think more deeply. Opportunities like this do not abound.