A few weeks before the budget for 2010 is presented,

Stephen Calleja sought comments from former Labour Party leader ALFRED SANT on the prevailing economic situation, the tourism industry and the way the country is being administered. This is what Dr Sant replied

The government is blaming the economic difficulties the country is going through on the international recession. How true is this? Is the government free of any blame?

The international economic and financial crisis is highlighting the deep structural problems that the Maltese economy has been carrying for some time and that were being ignored. They had been masked by the vertiginous rise of the internet gaming sector, by the government’s ongoing effort to project a feel good factor at all cost, and by the support given to gonziPN through a widespread power network in the media, the business sector, the bureaucracy and the Church.

Those sectors of the Maltese economy which largely depend on the inputs of our human resources have been losing on cost and competitiveness for quite some time. Yet nothing has been done about it, by way of effective investment incentives, productivity improvements and strategic public investment.

The decision to join the euro prematurely, taken for political reasons, tied us more firmly into these structural inadequacies. Meanwhile, the economy has had to absorb the sectoral impacts of EU membership with its ongoing push on costs, while privatisation has not delivered on more cost-effective management of our resources.

When the recession struck, the only good thing going for us was the limited exposure of our banking and financial system to the gung-ho capitalism of the global investment and banking institutions of the Western world. For the rest, we were less than prepared, and still are, to compete in the international markets where we should enjoy a national comparative advantage; these markets will have changed significantly when the crisis is really over.

What should the people expect from the Budget for 2010? Will it be a case of tightening the belt now and dishing out any goodies later on when the election approaches?

I go by what gonziPN promised in the last general election. It should be a good budget for those who were promised income tax relief plus myriad social welfare and economic incentive measures.

The curbing of public deficit and public debt is turning out to be just wishful thinking. Where has the government gone wrong?

There was never a serious strategy to deal with the challenge. Deficit reduction relied mainly on haphazard curtailment of public investment to fit in with the short-term objectives of coming within the Maastricht criteria for the public deficit, on an annual basis, in order to satisfy the technocrats in Brussels. There were also ham-fisted attempts to control recurrent expenditure; but these were blown off course as soon as the 2008 general election approached. The formal and informal commitments made by gonziPN in the run up to the 2008 election have further stoked the problem.

The tourism industry is on the decline, investment is slowing down and the planned reforms are taking too long to materialise. Is this simply a case of maladministration?

Tourism is the productive sector of the economy which, when doing well, gives the quickest stimulus to our economy, by way of jobs and internal trade. It is getting a beating, in part due to the international economic and financial crisis. But so are other tourism-based economies. Indeed in Malta the impact of the crisis on tourism has been relatively less than elsewhere, because for a number of years our tourism under-performed while that of other Mediterranean destinations was riding a wave.

Right through, gonziPN has given low priority to tourism. No plan. No commitment to improve facilities. A total neglect of Gozo. A willingness to let Bugibba and St Paul’s Bay become shanty towns and Marsascala lose all its tourism focus. Tourism should have been at the top of the administration’s agenda; instead, it is at the bottom. So, we have a parliamentary secretary in charge of tourism who was parachuted into the sector, and now has also been lumped with the mess at Mepa.

Regarding investment, we get much talk about a stimulus package, yet the real details of how it is being operated are never divulged. Even now, many of the claims being made about new investment will, I am sure, be revealed as bluff, as with SmartCity. As for the so-called reforms, all the time they hardly amount to more than a nose job, at the end of which running costs escalate, with little to no improvement in output or efficiency. Consider the public health system...

You can call all this maladministration, if you like. Just as importantly, it is a failure to adopt a coherent national plan that would seek to update our material infrastructure; really update the management and delivery of our social welfare system; and effect a meaningful streamlining of the bureaucracy. To implement this you need guts, vision, determination, a willingness to stand up to Brussels, and a solid political base that will back real reform. GonziPN does not have any of this.

Prime Minister Gonzi chose a small Cabinet, but this is turning out to be a wrong decision, as ministers have too much to cope with. Do you think that a reshuffle in the coming weeks or months is enough to put the government back on track?

There is no doubt that we are being governed very badly. The bunch who now rule us are very good at holding on to power at all costs, but they lack the vision, the will and the skills to govern well. Whether it’s a small or a large cabinet is immaterial. Probably Prime Minister Gonzi realises this much and if he decides to reshuffle, he will mainly do it in order to quieten down his restive backbenchers. I’ve said it a number of times and will say it again: gonziPN is living a lie, is living in a lie, and is living through a lie.

You relinquished the post of Labour Party leader more than a year ago and Joseph Muscat has taken your place. In what ways has the party changed since your resignation? Will the PL be in a position to win the next general election on its own merits or because people just want a change?

I was, of course, deeply involved in running Labour’s affairs up to the beginning of March 2008 and have been totally absent from that scene since then. So I am the least qualified to compare and assess changes taking place.

As to the next general election, given a level playing field – that is controls over the power of incumbency that in 2007/2008 was taken to incredible and obscene extremes in order to harvest votes for gonziPN, plus measures to ensure that people who do not have the right to vote in general elections, cannot vote like they did in March 2008 – I am confident that Labour will win the next general elections on its own merits and because people will want a change.