We are continually reminded that the economy is doing well and that the government’s finances are in balance. But the Labour speakers never remind us that this is all thanks to previous Nationalist administrations who, following Malta’s accession to the EU, gave our economy a great boost. Let’s not forget that following the 2008 international economic crisis, because of the many initiatives taken by the Gonzi administration, Malta and Germany were the only two EU members that were growing economically.
The present government’s decision to stick by the 2013 budget presented to Parliament in November 2012 contributed to a sense of continuity.
And let us not forget that the government’s financial team manouvered at a premium: low fuel costs gave the Labour administration hefty profits and lower interest rates translated into a lower expenditure on public debt servicing even though the public debt went haywire.
But do not believe all the Labour government’s boistering about the financial situation. Some figures will show that not everything is a bed of roses in our finances.The Prime Minister was recently quoted as saying that they were paying back the debt accumulated by previous administrations. A statement very far from the truth. According to official figures the national debt at the end of 2012 reached €4,649 million going up to €5,766 million at the end of 2016 – an increase of €1,117 million, or 24 per cent. At the end of December 2016 government debt increased by €144.4 million over the same quarter of 2015.
To balance the budget the government is reducing the capital expenditure. It has invested less in education, health and infrastructure year after year. In 2015, the government’s capital expenditure was €622.5 million. It went down to €365.1 million in 2016 and this year €361.9 million are estimated to be spent.
The only project launched by this government aimed at increasing revenues was Malta’s cash-for-passports scheme
This reduction meant that not a single new school was built. It meant that no new hospital was built. Not only, three of our hospitals, St Luke’s, Karen Grech and the Gozo General Hospital were privatised. After four years our road network is in shambles.
The only project launched by this government aimed at increasing revenues was Malta’s cash-for-passports scheme. But where are the millions collected from this scheme going?
Justice Minister Owen Bonnici said in Parliament on October 31, 2016, that the government made almost €310.5 million from the sale of Maltese citizenship, a sum that does not include the cuts and fees taken by Henley & Partners and by commission agents and ‘recommenders’ in Malta and abroad.
This scheme is shrouded in mystery. The government set up a National Development and Social Fund which holds €216.8 million coming from the programme. This leaves us with €90.5 million which are unaccounted for. But this is only the tip of the iceberg.
If the government intends to extend the 1,800 mark for the sale of the Maltese citizenship the sum collected by now should be double or even treble that collected so far. The question is obvious. How many Maltese passports were sold under the programme? What happened to the millions collected and which were not deposited in the NDSF? If our government finances were in such good shape why did the European Commission recommend that in view of the high risk of a significant deviation, Malta should achieve an annual fiscal adjustment of 0.6 per cent of GDP towards the medium-term budgetary objective in 2016 and 2017, by taking the necessary structural measures? Considering our GDP, this measure means a fiscal adjustment in the region of €60 million yearly.
Is this euphoria about the government finances reaching those who really need the administration’s attention? Some figures show the contrary.
The medium wage rose by about four per cent in 2011 and 2012 but this rise went down to two per cent in 2015.
Expenditure on social protection as a percentage of the gross domestic product went down from 14 per cent in 2012 to 12.4 per cent in 2015.
According to the country report on Malta published by the European Commission, in absolute terms, 14,000 more people were at risk of poverty and social exclusion in 2015.
During the past four years the gainfully occupied increased by 30,000 of which 21,000 were foreigners. Nothing wrong in employing foreigners. These are a source of revenue and enrich our country. What is wrong is that most highly paid salaries are taken by foreigners and Maltese are employed on a minimum wage. As the 600 workers employed in precarious work by the GWU.
Things do not look as positive as Labour want us to see them. But even when something goes wrong it’s not the government’s fault. And the Prime Minister puts the blame on others.
No Mr Prime Minister. Do not blame the lady from Bidnija for the bad press Malta is getting, and the economic woes that will ensue. Put the blame on you. And on the gang of four at Castille.
Joe Zahra is a former editor of In-Nazzjon.