While carrying out my political work, I am repeatedly meeting people who have voted PN all their lives and are in never-again mood. Their stories suggest that this government’s fortunes are on the turn. The grievance that tops the list is that the government cannot carry on as it is, expecting this and the next generation of taxpayers to pick up the tab for its excesses.
...it simply switches government investment to an intricate, unaccountable form of service hire-purchase- Helena Dalli
Let’s take the latest government oeuvre: a new parliament building where again, typically, the emphasis is on the form and definitely not the substance as we have seen in these last months, where Parliament has been, at best, dysfunctional. Last week a law was carried for the setting up of a financial special purpose vehicle to fund the City Gate project. Those interested in the issue – and are not blinded by political partisanship – have understood this enterprise as being nothing more than vapour aimed at clouding the appearance of the direct government debt situation.
The stories churned out by the PN propaganda machine and fed to the various media – which invariably serve the government well – are now really losing traction in the face of the real situations closer to home. With one calamity after the other and learning nothing from their errors, misjudgements and wrongdoing, GonziPN continue to dig a deeper hole.
In literature on special purpose vehicles, proponents of the system argue that the private sector brings in new capital resources and also management expertise. Those against the method say that it simply switches government investment to an intricate, unaccountable form of service hire-purchase.
Not for us here this kind of debate though. In Parliament we only heard the finance minister singing the praises of special purpose vehicles. He ignored completely the glaring fact that this system is being used purely and simply because the government wants to borrow money without it showing up as government debt on the national balance sheet at the end of the year. The special purpose vehicle in this case is merely an instrument to hide it. Public debt shouldn’t exceed 60 per cent of GDP, according to the Maastricht treaty, but ours is already at 72 per cent.
So while Maastricht tells us to reduce debt, we work around this and instead hide our debt. This is the situation and the European Commission has already warned us that our debt shouldn’t rise any further. What is unacceptable is that the minister will not come out with the true reason for resorting to this special purpose vehicle business.
Thus instead of seriously tackling the debt problem, we are compounding it by adding another vehicle through which to channel it. We therefore have direct government debt, the debt of government entities and that of special purpose vehicles. The latter on an infrastructural project, in this case, which will not add value to Malta’s capacity to generate economic growth. That is why this venture does not make sense from the economic priorities point of view when the country is in dire need of productive investment.
Special purpose vehicles could be useful when a project is profitable and there are growth prospects, which is obviously not the case with the new parliament building. Also, the fact that we are discussing the financing of this project when it is more than half-way through shows that this was a late-in-the-day ‘solution’. Normally the financing of a project is decided before it starts and not when it is nearly finished. This also goes to show the tacky manner in which the government is going about its business.
At the end of the parliamentary debate I was even more convinced that the government has opted for this method of funding the City Gate project to circumvent the usual process used in capital projects of this kind. There have been many capital projects and the government never used the special purpose vehicle system. Why now? This question, for obvious reasons, was ignored. As was the advice given by former PN minister and current governor of the Central Bank, to look at other options, such as the setting up of a development bank.
While the finance minister would rather that the debt incurred for this whimsical project is not shown as general government debt, for the taxpayer it makes no difference: we have to shoulder the burden either way even though in the special purpose vehicle case the debt will not feature in the government debt statistics. Benjamin Disraeli was so right when he came out with the phrase: there are lies, damned lies and statistics.
As we saw in the special purpose vehicle parliamentary debate, the Nationalists continue to excel when it comes to manipulating words, facts, minds and perceptions. They have the skill to manufacture stories that some would buy, but in reality what matters to them in this case is to leave their mark by building a new House. It doesn’t matter that in the process they fool the people by not augmenting the figures in the direct government debt books but are burdening us and future generations with more debt nonetheless.
It seems that GonziPN have gleaned nothing from their impressive array of blunders of this legislature and will plod on regardless, learning zilch.
Dr Dalli is shadow minister for the public sector, government investments and gender equality.