The gaming sector has fast become one of the major growing industries of our economy. It is surprising how Labour have transformed this idea into an adventure involving a huge bet out of the country’s resources chasing a flimsy promise of an exorbitant drop in the cost of electricity in Malta.

Malta would become another Cyprus or Greece- Kristy Debono

What exactly is at stake? Labour are inviting us to spend some €370 million to construct a new power plant. What shall we get in return? Exactly the same amount of electricity that we would consume without going through this expense. We would furthermore not utilise the available facilities, including the interconnector to , to the best extent. Labour are however promising us, somehow, that the cost of electricity will go down. Without really explaining why and how, but by putting into the game further statements which can only lead one to expect that costs will actually rise. Such as the idea of a 10-year contract for the purchase of gas, which can only be obtained, if at all, though a significant premium on the price which the country would have to pay for the fuel. Or by doing away with a sensible gas pipeline connection, and suggesting that ships would be used instead, ignoring the simple fact that such ships, were they not to be purchased, would have to be leased at even higher costs over time.

This is what in economics is called moral hazard at its best. Going for a big gamble, risking other people’s money, in a strong bid to win an election. And in the meanwhile, revealing crass incompetence in the costings of the proposal, which Minister Tonio Fenech has convincingly shown to be closer to €600 million rather than €370 million. Labour is also conveniently ignoring other crucial issues, such as the safety aspects of their proposal and whether the timetable for implementation that they are proposing is realistic. Or are they just going to do away with the due diligence needed in such a large proposal, to give us a hasty and most likely dangerous project?

Labour may furthermore claim that there will be private investment forking out the capital investment associated with their proposal. This is another clue to their short-sighted attitude. At the end of the day, if we go for a Drydocks-style white elephant, it is you and I who will have to pay for it out of our tax bill, simply to refund the investment and rate of return to a private firm building a power plant which this country does not need. But out of which the company will undoubtedly obtain a handsome profit.

From a wider perspective, this country has time and again been faced with proposals for the generation of energy which would at face value present great promise but which at the end of the day would prove not realisable. I am sure that this is just another such promise which will fizzle out as a cheap electoral ploy entailing vast expense to the country once it is subjected to serious scrutiny out of the melée of an electoral campaign.

Labour is at the end of the day revealing itself to be much ado about nothing in the question of power production as much as in its utterances on the national debt. Is our national debt a cause for alarm? Careful reading of the latest Standard & Poor’s review of the Maltese economy clearly leads to the conclusion that their downgrade was motivated purely by the uncertainty created in the economy because of the decision by Labour to vote against the Budget. A Budget which, as Labour itself admitted, was full of positive initiatives which it would be implementing were it to be elected.

This is indeed the gravest threat to the national debt which Standard & Poor’s surely have not missed. If Labour were to be elected, it would not only implement the Budget measures but spend in excess of €600m for an unnecessary power station, subsidise electricity tariffs by 25 per cent, and attempt to keep a slew of promises which would cost the earth. Malta would become another Cyprus or Greece, to face the discipline and austerity imposed by global financial institutions.

Under the economic management of the Nationalist Party, the debt is being prudently managed. It is sustainable for two reasons. Firstly, it is virtually fully in the hands of local investors and there is no risk of having to increase domestic taxes to pay back foreigners who lent to the Maltese Government. Secondly, our economy continues to grow, thereby generating the resources from which the debt can be repaid with interest to Maltese people, including many families, which are thereby benefitting from the resources being generated also thanks to the capital investments financed through this debt.

All in all, the economic policy of Labour is revealing itself to be a gamble for the country, one which it can hardly afford in these turbulent economic times.

info@kristydebono.com

Kristy Debono is an economist and PN candidate on the ninth district.

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