The recent open declaration by the Governor of the Central Bank, to the effect that the underlying weaknesses afflicting Malta “are the result of government policy in the l990s, when growth was fuelled by government expenditure”, and the admission that “this had produced internal and external imbalances that the country has inherited today” have struck home.

The Governor confessed that the high growth rates of the 1990s had created a false sense of security “and we are paying the price now”.

Taxpayers who have been carrying the burden realise that they have been bled beyond endurance. Their abiding fear is that that there is more to pay.

Thorn in the flesh

There is no denying the fact that the Maltese economy is under pressure, and that hard decisions are called for.

The national debt, and the exorbitant servicing costs, are a thorn in the flesh. The vital tourist sector has been in decline for years, during which Malta experienced an investment fatigue. All of this made a potent brew and necessitated medicine as well as surgery.

Our ability to bear new tax burdens is related to the state of the economy and to the “managerial” ability of the government of the day.

As of now, the economy is feeble enough. Unemployment is high. We have been consuming more than we are producing. The cost of government has been running out of control in a number of areas, and the government has been forced to step up the rate of taxation for consecutive years, pushing the middle-income class to the wall, and setting back all the community, pensioners included.

Groundswell of reaction

As could be expected, a groundswell of reaction has been building up, as Dr Gonzi, Prime Minister and Finance Minister, has been making all sorts of effort to wriggle out of a situation he allowed to develop. He has a lot to answer for – and he has, so far, evaded the answers that matter.

It is not convincing on his part to blame previous Labour administrations. The Nationalist Party has been in office for the best part of 20 years; his party had plenty of time to remedy matters. As the Central Bank Governor pointed out, the Nationalist administration accentuated Malta’s problems.

It is a fact of history that when John Dalli introduced his first budget, way back in November 1992, he was seized of the economic situation, and proceeded to chart a new policy to steer the economy to safe waters.

He decreed a new strategy, and spelled out a number of measures based on the “principles of efficiency, justice and solidarity”, all of them constituting clearly-defined objectives, to be attained in the following five years.

Famous last words

These required that the government deficit be kept at a level not exceeding three per cent of GDP. Inflation was to be pegged down to between two and three per cent. The public sector workforce was to be reduced to a level equivalent to 25-30 per cent of the total number of gainfully-employed people.

These proved to be famous last words, all of them flagrantly honoured in the breach. During that time, the national debt was surreptitiously piling up, and the government’s deficit was snowballing. It was after the 1996 election that Alfred Sant and Lino Spiteri discovered a cavernous gap in the government’s finances, deliberately concealed from the electorate.

When the Sant administration made a clean breast of the situation, it was at first claimed that the hofra was a hrafa and it was after the 1998 election that John Dalli and Co. had to face the music. They tried to wriggle out of their predicament by claiming that the deficit situation was exacerbated by the New Labour administration under Dr Sant. The fact of the matter was that, for once, John Dalli owned up to the responsibility of his own government. When he delivered his budget speech on his return to office (25 November 1998) he had this confession to make: “the present financial situation has to be recognised as one of huge structural deficits built on each other over the years” (the emphasis is mine).

This much is history. The Fenech Adami administration, in office during the 1990s, was responsible not only for much of the predicament in which we now find ourselves, but also for its inability to achieve its own self-set financial and economic objectives.

Dr Gonzi inherited the hot potato. John Dalli has gone but the hot potato is still there. The prime minister has found himself hard pressed because the economy cannot deliver. Yet he has had to find the financial wherewithal for his cabinet. This he did by turning on the taxpayer who has been squeezed until the pips squeaked.

And while the hard-pressed taxpayers have been wincing all along and beseeching government to realise that blood cannot be extracted out of stone, Dr Gonzi has been claiming that the economy is doing fine, that he has been “performing miracles” and that the future is full of promise!

Embittered electors have learned that promises by politicians are like pie-crust: made to be broken.

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