Now that we have returned from the summer recess, what are the main problems facing the country?

The economic and financial situation is very bad, the government has shown that it is incapable of handling the country’s affairs. So there is a lack of investment, a downsizing in lots of operations, tourism is not on the mend like we hoped it would be, and the government is still not in control, not in charge. Quite a big mess, actually.

How do you gauge Gonzi government’s performance on these issues? Did a new government bring fresh solutions or not?

Not at all. The problem they face is that for long years they said everything was going well, now they have to persuade people that the contrary position is in fact the case. Dr Gonzi was deputy head of the team which left things in the soup for so long. So he now has a problem of credibility – having said for long years that things are going very well, thank you very much, he has to convince people that drastic action needs to be taken. And of course, much of the drastic action will hit his own supporters and he is not succeeding in convincing them that he is being coherent.

What are the solutions being offered by Labour on these issues? Is it only just an issue of criticising?

No. We say that there has to be a two-pronged economic and financial strategy.

The first important thing is to get the economy moving again. You do so in the first place by working on those areas which can best generate a good outturn relatively fast, namely in tourism. So there has got to be a radical programme in tourism to make movement happen. Cut out the bureaucracy with a top-level political commitment to do so – go for it.

At the same time, you have to work hard to improve operational and investment conditions in industry. That too has to be micro-managed by the top political operators, if they know how to do it. They have to be interested in these things; they have to be hands-on – there is no other way. Improving investment (tax) allowances and incentives, helping industry to cut through the red tape, slashing and helping them slash costs. And that must apply across the board, from SMEs to the biggest industrial units, both for those industrial units we have and for those we expect to host by way of new industrial investment. The top priority must be to – stimulate investment, stimulate work, stimulate business, stimulate new opportunities.

The second prong of the strategy should aim at getting the government into good shape again. Government is in bad trim – it takes bad decisions, it defends bad decisions, like the Dar Malta fiasco, and it is becoming increasingly, increasingly inefficient.

The government is not learning from its own mistakes. A big problem has arisen from the creation of too many government agencies which create more bureaucracy, create more delays, create more red tape, increase the costs of public administration. The government is still repeating the mistakes of the past – like last week, for instance, they just set up a new quango... a quango for archives.

So the government must get its affairs in order, rationalise its operations, cut down on the friends of friends who are sucking good money out of the government system. You control the government deficit by improving operations – government must give good value for good money.

How would this be done concretely by a Labour government?

As far as tourism is concerned, we have to, first, work with the private sector to get new business developing.

Second, we have to invest in improving the general state of the island – we cannot go on operating like a third class, fourth class destination that is studded with five-star hotels – which is the case right now. Across the board you must set tourism as a strategic priority – everything thatís done in all productive and infrastructural sectors, must take into account the fact that really, we need as a nation, to promote tourism.

Where industry is concerned, we must work hard to get investment going by showing a deep interest in all that can be done to improve the operating conditions of industrial units. When we were in government between 1996 and 1998, despite the bad economic situation we faced, we were able to secure by being hands-on, three big investments for Malta.

Where bureaucracy is concerned, in line with the second prong of our strategy, there has to be a whole review of the quango structure – from MEPA to all the other authorities, agencies, foundations that clutter the landscape, create more costs and do not deliver...

So is increasing taxes the solution?

Of course not. One of the problems we have is that we are not competitive because we are too costly. Increasing taxes would mean increasing costs. Increasing costs would mean becoming less competitive. Becoming less competitive means you won’t get new investment. What the government has to do is cut its expenditures and eventually cut taxation. You can’t go on with a situation where the economy goes down and the tax take goes up.

On the question of added costs, we’re now hearing about a rise in the price of electricity. Minister Austin Gatt said that Enemalta is losing Lm7 million more than expected this year and this has to come from somewhere – either from the people’s taxes or by increasing rates. Do you agree with this?

The economy is subject to the tensions of international price rises, thatís obvious. Oil has gone up in price – that’s something you cannot contradict. The problem though is that there used to be a mechanism in the past by which we could have been buffered from much of the price increase. There used to be a system introduced by Labour, by which the price of oil was “hedged” – you insured yourself against price rises; that system was scrapped by this government. Was it a good idea or was it a bad idea? It was a very good idea – it could have been of course updated, better implemented, but it was just scrapped. Now we have to face the consequences of that bad decision. And all the time it’s the same – wherever you look, the government has been taking bad decisions and then the people are asked to pay for them.

Speaking of important decisions, one important decision the government is always mentioning is the question of pensions and health reform. Labour says that the welfare can be reformed without being dismantled...

The government is saying this: that within the next 30 years or so, we will be facing a pensions crisis; that there will be more people expecting to get their pensions paid, than people in a position to contribute to that payment load 30 years down the line. All this depends on lots of calculations about how the population is going to develop, about how work patterns will stretch, about the participation of people in the workforce, and so on and so forth.

Many of those calculations are tenuous – change the assumptions a bit and the whole scenario changes. Of course, other countries are discussing the issue; but this doesn’t mean that we have the same kind of problems that they have.

And the priority, in my view, certainly is this: that we face much bigger, immediate problems than what is going to happen 30 years or 25 years from now. Especially as the whole point is that what we need to do now is increase, somehow, the investments coming into our economy and the work opportunities that would be generated on their basis. If we project into the future our performance of today, then weíre going to crash, not just on pensions but right across the line.

So the whole point is first, get our priorities right, get today’s situation and tomorrow’s situation into shape, before you try to, sort of, convince people that you’re doing something about the situation, not tomorrow but 30 years from now.

Much of what is being said, in my view, could amount actually to a kind of trick meant to raise taxation now to cut the present deficit, on the pretence that unless we do so, 30 years into the future, there would be a pensions crisis.

Until a year ago, the European Union issue was a sort of Nationalist Party enclave. Yet Labour won the European Parliament elections last June after a shift in policy only seven months after the last general election. Do you think that Labour won because people believed that it can do a better job in Europe that the Nationalist Party?

There was no shift in Labour policy. Right from the start, about five to six years ago, we had said that we would accept the verdict of the people in a general election on this issue. And this is what we did. The people voted the way they did last year, and we said okay, now that the people have voted in an election – not a referendum – for a government that would take Malta into the European Union, that issue has been, as far as we are concerned, decided. We may not agree with the decision, but we accept it and we will work within that parameter.

Now when we came to the European Parliament elections this June, we ran on two platforms: the first platform being exactly that we were accepting the verdict given on the EU by the electorate, and would be working within its parameter.

Secondly, we said that given the conditions within which Malta was placed and continues to be placed, the priorities should be set quite clearly on job generation and on social protection in line with what the European Socialists have been saying right across Europe. That was a theme we played against the background of how the present government is performing, and the result was the result we expected and planned for.

How much do you think did the new Labour administration – including yourself – and its more media-friendly policy contribute to this win actually?

Everything helps, everything counts. What we obtained resulted from a political approach that fitted the mood and circumstances of the last months. Labour has always been pro-active in focusing on issues that interest the people and that highlight ways of tackling problems people face. The whole business of politics relates to questions that people are interested in – it’s useless having the “best” approach if you discuss points that people are not interested in.

You have a double challenge for the next general election – convincing the core Labour vote which was disaffected in the last general election while attracting those Nationalist voters who are disgruntled with the government’s policies. And these are two different constituencies. What is Labour doing to convince them both at the same time?

But that is the challenge that every political party faces. It’s being faced by the Republicans and the Democrats in the US presidential election. It’s always the same kind of challenge.

As far as one can interpret for instance the last general election results, the decision was clearly taken by a majority of people – not a big majority, but a majority nevertheless – on the basis of the European Union issue. Now that this issue is, so to speak, out of the way, other things, other important points that Labour have long emphasised on, have come to the fore. And what has been happening over the last 12 months or so is that many people who thought that we were exaggerating, who had swallowed the Nationalist strategy of at all costs demonising Labour including myself, have now come face to face with the realities we laid out.

Our strategy has always been, and will continue to be, that of insisting on telling the truth, of saying things the way we see them. We should address our message both to Labour’s core voters, as well as those people who would like to visit Labour at the next election for the first time.

Recently, Labour proposed a national conference on illegal immigration, with government saying that this was not the right approach about it. Why cannot we even agree on such a sensitive subject?

I don’t think you should ask that question to me, you should ask it to Prime Minister Gonzi.

If there is one thing on which a national front can develop, it is precisely the issue of illegal migration, because it affects us as an island, as an island State. It is certainly not within the control of any political force in Malta. It affects all citizens. International cooperation is important but is not as of now, providing much relief.

So we need to have a national strategy that is not going necessarily to solve the problem but that minimises its fall-out. We need to discuss not just the whole question of open centres or detention centres, etcetera, but the whole question of homeland security and how we can marshall our resources – the police, army, backup medical, social welfare and public health facilities, other sectors as well, such as the Church – in an effort to see how we can contain as much as possible the damage that this situation might provoke. Not least because we must not allow this situation to provoke a backlash of racist or extremist opinion among our own population.

Another issue that was recently in the news was the purchase of Malta House in Brussels. At the end of the hearings in the Public Accounts Committee, both parties claimed that they had been proven right. What is Labour’s take on this?

The point that we made right through was as follows: that when are in the bad financial position we are in, and you are looking for an embassy in Brussels or wherever, you don’t go for the most expensive lot that is available. You go for something that makes sense in your circumstances. And ten million plus is an exaggerated sum to pay for an embassy in Brussels. This was demonstrated by the experience of other countries, bigger than ours, which have facilities that certainly did not cost ten million.

Our criticism has proven to be justified, because as transpired in the Public Accounts Committee nobody from the Prime Minister down ever asked the question: “But can we do better with a cheaper option? Can we buy a lot, a property that doesn’t cost ten million but would cost three?” None of the decision makers involved, I repeat, from the Prime Minister down ever asked that question or put that question through.

Secondly, we criticised fact that it was as if the whole process of the purchase of the Brussels embassy was guided by just one person, ambassador Cachia Caruana, and was manipulated by him through his contacts, behind a screen of quangos, departments, Cabinet committees. And that criticism too was vindicated, since it actually came out that he had been the big player when the big decision was taken.

Coincidentally, there was also the employment as consultants of people within Cachia Caruanaís circle of friends which confirms what we have been saying over the years. Part of the system that is leading to bad decisions on such a consistent basis for this country, is a circle of friends of friends within the PN administration, or the PN system itself if you like, that works on the basis of “scratch my back and I’ll scratch yours”. All the time they’re taking these bad decisions.

For instance, all the time they are announcing that what theyíre doing – when they liberalise, when they privatise, when they change some systems or other – is going to lead to a decrease in costs, is going to lead to improvements.

Look around you and you’ll see one after the other, the problems with the decisions that they have taken.

Chambray? A big disaster for the past twelve years.

Maltapost, supposedly privatised with a New Zealand agency as strategic partner? It’s a big mess.

HSBC: we got HSBC in Malta instead of Mid-Med to secure new foreign investment and to cut costs for consumers, right? None of this has happened. No new investment has come in. In the meantime bank charges have gone up quite substantially.

At Malta International Airport, it’s the same thing. We had privatisation with a so-called strategic partner, and charges have gone up. Has the system improved? Hardly. But we get the same rigmarole right through.

Consider for instance the Cargo Handling situation. The government is saying we have to take out this monopoly, rub Cargo Handling out of the system and then costs will drop and things will become more efficient. What’s likely to happen is that the monopoly will still be there – only it will be operated by a private-sector company, and quite likely its owners will be close to the Nationalist Party. After a year, we’ll find that port charges instead of declining, have increased. And thatís the way itís been going all over for a long time.

Another area where costs have risen over the years but we do not have a scheduled opening date yet is the Mater Dei Hospital. When Labour raised this issue, you were accused of undermining Government’s negotiations with Skanska...

Well, we’re used to this approach by the Nationalists – Fenech Adami used to do it and Gonzi is still doing it: they demonise me whenever I say something that cuts close to the bone. They try to make it out like I’m King Lucifer or something like that. It’s been happening all the time.

We need only to go back to the year 2000. There were lots of problems at the Tal-Qroqq hospital before that – which we had to face in 1996 when Labour came to government – but let’s start with 2000.

In 2000 we told Fenech Adami and Gonzi: the way you’re handling this project, giving all controls over it to Skanska, is wrong. You’re giving control of the project to the contractors who are to build it – so they design, they build, they charge. The longer it takes, the more they make because they get paid on a cost-plus basis.

When Labour was in government, Skansa offered us the same deal, and we turned it down flat. Now, even some Nationalists are saying that the agreement was a gross mistake. Michael Falzon, the former Nationalist Minister, has now said it was nonsense to operate on that basis.

When we came up with the criticism in 2000 and we were as usual demonised. Three/four years down the line, exactly what we predicted is happening. And the same people who let this mess develop, mainly the people responsible at the Foundation for Medical Services, are roped in to carry out the negotiations with Skanska and get paid for it. So it’s a cost-plus situation for them as well.

Then it turns out that among the people chosen by direct Prime Ministerial order to “help” with the negotiations, two – one, an architect who is still the deputy chairman of FMSS and the other a lawyer – are direct cousins of Dr Gonzi. I mean, where is the ethical stand or even a basic sense of prudence in the conduct of public affairs, that the Prime Minister should have taken on this matter? Nowhere.

And then they demonise me by saying: “Look at Sant, these are very good guys, ta, so why attack them? It’s indecent.”

What is indecent is the way in which, first, the government allowed the Tal-Qroqq project to shoot out of control. And secondly, the way government’s own negotiators who were responsible for the mess, get paid very good rates for “helping” to unravel that same mess.

There are a substantial number of Nationalist voters who are disgruntled with the performance of the present government This was clearly demonstrated with the Nationalist Party's showing at the European Parliament elections. How can you convince them that Labour is a viable alternative?

If you go back to 1996 – 1998, we faced many problems inherited from the previous PN administration. Solutions that we tried then, which were rubbished by Drs Fenech Adami and Gonzi, are now being recycled by the present government. Take the university stipends system, for example. Take the charge of fifty cents on free medicine we tried to introduce then, which was demonised by the PN. Today, Dr Gonzi says public health is a problem, we are spending too much on health, on provision of supplies, and so on...

Look at the deficit – they said the deficit didn’t exist. Now they say it is out of control. All the time you go back to points that we faced up to, that we created solutions for, and that were undermined by the Nationalists. Now they are aiming to “solve” them – at least, that is what they say – after having allowed the same problems to become much bigger than they were in the late 1990s.

When Labour was in government its top priority was tourism and investment promotion. We started getting results out of that. But everything stalled again after 1998. So yes, we can deliver. We have been on the ball all the time, criticising the government on what it is doing and providing alternative solutions.

For instance, only this summer we had a policy document that is now being discussed both internally and externally by Labour. It sets out new lines regarding how to wed economic necessities with social priorities. We are also working internally to consolidate our structures to make them more effective.

For instance, local councils. Labour has the majority of councillors on local councils. It is not just the biggest party nationwide as far as the popular vote is concerned but it is also the biggest party on local councils. In local affairs, we have performed very well. We are very proud of our record of success: we implement most of what we promise. Yesterday we held the first congress of Labour councillors which discussed new ways of facing the upcoming challenges of managing local councils. We intend to continue strengthening and building on our success.

On a range of issues, like the environment, policies we promoted over the years have become the policies that people believe in, such as that on waste management – another area which has been neglected by this government but which, as we emphasised, needed to be tackled through a long-term strategy from the ground up.

We are convincing people – Nationalists included – that Labour makes sense because they are starting to understand that only Labour can make Malta work.

A final question. How did you spend the summer months?

I was in Malta most of the time, helping with the co-ordination of political activities and analysing certain policy areas on which we are concentrating. For a break, I spent two weeks in Germany.

For one of those intensive language courses?

Yes. I followed a “superintensive” course, as they call them, organised by the Goethe Institute in downtown Frankfurt-am-Main. It is a splendid city. The course was tough but most interesting, and my German went up the curve but there is still loads of room for improvement. Overall, it was a very good holiday.

Thank you very much...

You're welcome.

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