Herodotus (c. 485-425 BC), the famous Greek who Cicero described as “the father of history”, ends one of his greatest essays with the words “…because, after all, in a democracy the people are everything in everything”. I was reminded of these wise words when reading the Gżira mayor’s more than justified reaction to what is being planned for Manoel Island.
Describing the plans for this iconic part of the Sliema/Gżira environment as an exercise where Manoel Island will be developed “for the elite, not the citizens” raises a very serious issue on the whole topic and societal fabric of general developmental policies in this dear country of ours.
Let us first of all kick off from the very basic reality which I constantly hammer on about. The country is only 17 miles by nine, and with all the signs of overpopulation. Ignoring the laments of the vast masses by pursuing development or planning policies that permit either ‘elitisation’ or ‘ghettoization’ is a short road towards nurturing strong us and them divides that will simply wreck all character of unity in the citizenry of this country.
There are already various areas in the country that have the ‘elite’ rubber stamp all over them. Of course, to be factually and historically correct, in many places in Malta such distinctions have existed for a long time. The Lazy Corner in Sliema and Okkella Agius in Ħamrun were in the past far from Dingli Street, or High Street, in terms of class standings.
But ask today any average Maltese worker or pensioner about Portomaso, Pender Place, Madliena Heights, Tigné Point, et al, and the reaction will simply be that “these are places we never ever dream of going to or even seeing, because these are the enclaves of the rich and the elite”. And it’s more than a case of plus ça change, plus c’est la même chose.
These are contexts in terms of what is meant by sophisticated ghettoization, which is encouraged (consciously or unconsciously) by development which, motivated and aimed solely either for the upper classes, or for the “new incoming foreign workers who demand high- quality accommodation”, inevitably ends up creating blocks, areas, districts, parts of Malta that in any final analysis are not, and cannot, simply because of their pricing, be within the grasp of the vast masses of the people, who only earn plus or minus the €17,000 per capita average income.
There are a number of signs of a housing bubble building up in Malta. Funnily enough we seem to be doing it at the same time that similar bubbles are building up in the US (already confirmed in 29 states), key parts of Asia (e.g. India), in Australia, and elsewhere.
What is a housing bubble? Not all economists agree on a common definition, but I recently read US guru Atul Save, who argues that “a family stays in a house the price of which is four to six times its annual income”. Then he adds that “if the prices are much more then it becomes a matter of concern. Secondly, though the price rise in housing would not be exactly the rate of inflation, it shouldn’t be very high also. Further there is an opportunity cost, that is what would be the return on money invested in the house and how does it compare with the rent payable for the house.”
Any cursory look at house-selling prices in Malta shows that by no stretch of imagination do both purchase prices and rental rates follow such rules. The consequence: the Social Solidarity Minister faces a next to impossible task of building adequate (i.e. by modern standards) social housing, in sufficient quantities, and at sensible construction costs, such as will in any way create a suitable relationship and balance between elite/sophisticated housing and ‘people’s’ housing.
As to the level of rentals the State will be expecting from whatever it builds, owns, and rents out, there too his economics will only be saved if the Ministry of Finance is prepared to subsidise at levels which impact very negatively on the national budget deficit.
Lawrence Zammit in this newspaper (March 3) also gave a knowledgeable indication of what is the current situation in Malta regarding house prices. He asks whether the current price of property in Malta is right and really reflects market conditions.
He is even blunt about the issue being a matter of concern. Current prices, he says, “are not sustainable in the medium- and long-term”. And this in fact is the essence of the whole approach about “bubbling up” of our property market… and all bubbles do at some point in time burst.
Continued kowtowing to the development lobby, especially the Malta Developers Association, is sowing the seeds of social distress among vast sectors of the working population. Even as both work earnings and pensions are, thanks to the government, on a steady upward trend, the rate is not such as balancing out what are some clear signs of social division or unhappiness among many in the country’s citizenry.
The vast majority of citizens of course simply cannot afford to pay the prices asked for in the ‘elite/upmarket’ developments. And, short of some form of direct action by government to quell the present unbridled rise in the rentals that are being extracted by Maltese from Maltese, all on the altar of “there is a free market in housing”, present societal unease will continue.
The need for action that will bring back into the mainstream of available housing the still far too big number of closed off, unused, deteriorating houses in many parts of Malta doesn’t seem to feature anywhere in what the bigger developers are so occupied with.
Simple walks down High Street in Ħamrun, Naxxar Road in Birkirkara, Manwel Dimech Street in Sliema, and much more elsewhere, will show that we are having it all wrong in what is being flogged to the many foreigners who seem to want to come and live and work in Malta.
To these we are only constantly saying “upmarket, upmarket, upmarket”. Yes, but at obscenely high prices which are fattening the pockets of developers and speculators in uncontrolled manners.
The Planning Authority needs to be concerned much less with ‘development’, and ‘projects’, and much more with social and environmental concerns. In the minds of the masses the latter, and its supposed protector the Environment Authority, have been emasculated into submission, and this simply because it is a sacrilege to say that the Planning Authority should be in the business of saying more ‘no’ than ‘yes’, especially where it comes to the infamous big projects.
To fob all this off. To simply ignore it. To carry on with simply no fundamental change in the policies that govern the building industry and development in Malta and Gozo, is to ignore that, as Herodotus implies, the people, the ordinary simple Maltese masses, are not at all happy with the present situation concerning what they see the building industry as engaged in.
Expressions like those of the Gżira mayor will follow and can only increase as elite ghettoization is encouraged to go on unabated.
John Consiglio teaches economics at the University of Malta.