The size of Labour’s problem

One of the first things any new government should do is to prepare a statement of affairs to set out factually what it has inherited from the outgoing government that had not so far entered the public domain. That was essential in the case of the Labour government for a major additional reason.

The public is in a position, therefore, where it does not know, ministry by ministry, what the situation was exactly when Labour took over

Practically on entering office after the election of March 9 it was formally advised by the National Office of Statistics that the deficit for 2012 would not be 2.3 per cent as forecast by the previous Nationalist government. The deficit would, in fact, represent 3.3 per cent of the estimated Gross Domestic Product.

In statistical and operational terms that is a huge variation, enough for the European Commission, had they been aware of it, to consider instituting another excessive deficit procedure. That was not done. Instead, the Commission approved the Nationalist’s Budget for 2013. Including an anti-social income tax measure, the Budget had forecast a reduction in deficit to under the magical three per cent limit.

Once again, the Labour government found out this was not correct. As things stood, varied by two factors that, taken together, explained only a fraction of the variance, the Budget deficit would reach 3.3 per cent of GDP. The two factors were collective agreements concluded by the Nationalist government on the eve of the 2013 election, but not provided for in the Budget estimates, and a higher cost of government because Labour had a bigger Cabinet.

The Prime Minister did not set out a hue and cry over the inheritance. Instead, he had the Finance Minister assure the public that his government would bring the deficit down to 2.7 per cent of GDP.

That was good for public morale but was it wise? It retained the cut in income tax revenue due to the reduction in the top marginal tax rate for those earning up to €60,000 annually. But no statement of affairs was published to explain in detail exactly what Labour had received from the rather carefree Nationalist government.

The public is in a position, therefore, where it does not know, ministry by ministry, what the situation was exactly when Labour took over. One hears bits and pieces of claims that high bills were carried forward in the Ministry of Social Welfare, that the Foundation for Tomorrow’s Schools had financed capital building with an uncovered €70 million bank loan and other rather horrendous claims. Still and all, no official position was given.

That could have been done in a statement by the Minister of Finance after collecting all the details, perhaps with the assistance of the Audit Office.

Or a mini-Budget could have been presented before the House of Representatives where the Government and the Opposition could have had their say.

It was not to be. So the lurid details continue to trickle out. Some were brought to light by Health Minister Godfrey Farrugia in a wide-ranging interview in yesterday’s The Sunday Times of Malta.

The minister, whose labour force totals a staggering 8,000, declared that he had inherited a system where, despite outstanding debt of €63 million, he had also inherited a shortfall of €101 million to operate with. He said no money had been allocated for the emergency services introduced by the Nationalist government at St James Hospital. “We owe millions to those people,” said the minister.

Commenting on the Oncology Department, under construction, the minister said no money was allocated for the development of human resources. Such development, according to good planning, has to run in line with physical development.

The minister also spoke about the procurement of medicines by the government. He said about €8 million worth of medicines were consumed each month, €96 million annually. However, only €68 million were voted for such annual procurement.

Possibly, the Nationalists will query this narrative. But, surely, not enough to rub out at the figures detailed by the minister. Such detailing should be done by all the ministers. Not to put the Nationalist Administration in more of a black light but to demonstrate to the public the size of the problem the Labour government has to deal with.