As fate would have it, it had to be the first Gonzi budget that precipitated the ruling Nationalist administration into the eye of the storm, rather than the long years of hype and puff and spin that claimed that “the economy was moving in the right direction”.

True enough, Gonzi is still insisting today that the economy is in good shape – but no one believes him. His budget measures belie him, and taxpayers and consumers who are feeling the pinch know that they are right!

For them, seeing is believing.

For the best part of the last l7 years, the Fenech Adami administration invested considerable funds and effort to put the issue of EU membership at the top of the Maltese agenda. Time has taken most of the lustre from the initial grand design. The initial enthusiasm has been dampened by the erosion of the years. The outlook of some electors has been tempered by their personal experience. Others still have formed new perceptions in the light of threats to their interests.

On the other hand, the Maltese electorate has become progressively more restless as taxation bites deeper into its flesh and as the main economic indicators emit clear warning signals

The heart of the government

With ministers listening to the lobbies and pressure groups, with special interests claiming that their spending is uncuttable, with government departments failing to collect large sums from tax evaders, and with increasing outlays squandered on a proliferation of quangos, things have gone from bad to worse.

Revenue and expenditure is the heart of the government. Govern-ments need revenue to run, and they cannot run without spending. But, as Lord Gladstone warned repeatedly, public expenditure has an “inherent” tendency to rise with “overwhelming force” in the absence of the “utmost vigilance”. A “money-no-object” philosophy constitutes the original sin of government, whose consequences are inescapable.

A point has been reached where public debt has sky-rocketed to a historic level of Lml.36 billion by the end of November last. In l986, the national debt stood at Lm86 million, which means that it increased 16-fold since this administration took office!

It must be stressed that this situation was driven by escalating public expenditure, outpacing the steep rise in taxation (represented by total ordinary revenue) from Lm330 million in 1990 to Lm824 million in 2004. It is expected to leap upwards to Lm914 million this year.

The government’s inability to impose effective control on its finances has been beyond belief. It flew in the face of public warnings by the governor of the Central Bank, let alone the more responsible media commentators. By stepping up taxation to saturation point, it reduced disposable income systematically, dried up liquidity and arrested the flow of business activity.

The dearth of investment – particularly foreign investment – did not make things any better. Whether all this was due to immobility or mismanagement is immaterial. The end result is that, in various important sectors, the electoral sheep looked up and were not fed.

The situation has been compounded by the yawning gap between electoral promises and actual performance. Alienation and political polarisation have edged out dialogue and transparency.

Where is the meat?

Businessmen and trade unionists, particularly those who rode on the government’s band-wagon, are asking themselves: “Where is the meat?”

The sharp, steady increase in tax levels has severely shaken the economic structure. Business liquidity is so tight that debts are mounting and some businessmen have been resorting to barter deals. Consumer spending power has been denuded and demand weakened. If anything, all this constitutes a significant disincentive to investment.

The politicians in charge seem to be condemned, by weakness and political cleavages, to stagnation, being thereby bound to espouse a static system for fear of loss of votes.

The leadership has grown old in harness, wedded to errors that mask what was once its glory. It has been long in speeches but short in action.

In the broad environmental sector, starting from the massive problem of waste management to its impotence in solving the problem of black dust that has troubled the south of Malta for so long, it has dilly-dallied without producing results.

The departments responsible for Malta’s heritage, not excluding Valletta, have distinguished themselves by their inertia. In many instances, the state of the roads continues to be lamentable, to say the least, and Malta’s public transport leaves much to be desired.

There is unacceptable delay in the courts. The drug problem defies solution and manifests itself mainly in related crime.

No amount of political sugar-coating will wipe out the economic realities that beset Malta. They must be sorted out by the Maltese in Malta – no panacea produced in Brussels or elsewhere will do the trick. The government must take the bull by the horns, but it cannot do the job single-handed. It must secure the cooperation of the social partners – and the way to that is by taking them into its confidence and taking on board their legitimate aspirations.

We need efficient, working institutions to deliver growth and new employment. We need to attract foreign investment with export potential. At all costs, Malta must maintain and enhance its foreign earnings. Its tax regime and its administrative machine must be trimmed and primed to sustain competitiveness. This calls for concentrated initiative on the part of enterprise and the government alike.

Above all, it presupposes a sense of businesslike purpose on the part of responsible ministers who must focus on the problems in hand – rather than on partisan politics.

There is no short-cut to economic survival. But there are obvious possibilities as to how immediate action could be taken to recuperate.

The venerable virtues

The biggest imperative is to reduce public spending. It defies comprehension that a government which labours under a structural deficit, and which has incurred public debt to an unprecedented level, continues to consume resources well beyond its revenue

Even more incomprehensible is its extravagance in throwing away public funds on hospitality and travel and the purchase of property overseas. Essentials are inevitable commitments, but there is no substitute for frugality.

The abandon with which ministers have recruited numerous “consultants” has reached staggering proportions and defies belief. The level of expenditure through the engagement of consultants, incurred without prior parliamentary authority, has broken all local historical records.

A mere 10 years ago, it would have exceeded the wildest nightmare in terms of the numbers recruited and the salaries or fees paid to them. Today, it is routine.

It must be stressed that this situation was driven by deliberate and escalating public spending on a consistent scale

There will be no cure, unless we start practicing the venerable virtues: frugality, economy, prudence, cutting one’s coat according to one’s cloth. An avaricious government is the enemy of its own people.

Our unprecedented level of public expenditure – and so of taxation – recalls the famous observation by Sydney Smith in the Edinburgh Review at the end of the great wars against Bonapartist aggression.

Taxation, he wrote “slapped duty on every article which enters into the mouth or covers the back, or is placed under the foot; taxes upon everything which is pleasant to see, hear, feel, smell or taste; taxes upon warmth, light and locomotion; taxes upon everything on earth and the waters under the earth; on everything that comes from abroad or is grown at home; taxes on raw materials; taxes on every fresh value that is added to it by the industry of man; taxes on the sauce that pampers man’s appetite and the drug that restores him to health; on the ermine which decorates the judge and the rope that hangs the criminal; on the poor man’s salt and the rich man’s spice; on the brass nails of the coffin and the ribands of the bride; at bed or board, couchant or levant, we must pay; the schoolboy whips the taxed top, the beardless youth manages his taxed horse with a taxed bridle on a taxed road. The dying Englishman pours his medicine which has paid seven per cent, into a spoon that has paid l5 per cent, and flings himself on his bed which has paid 22 per cent, to expire in the arms of an apothecary who has paid a licence of l00 pounds for the privilege of putting him to death. His whole property is then immediately taxed from two to 10 per cent. Besides the probate, large fees are demanded for his burial. His virtues are handed down to posterity on taxed marble, and then he is gathered to his fathers, to be taxed no more”.

Ordinary wage-earners, pensioners, businessmen and all sorts of consumers have become accustomed, but never resigned, to surrendering a big chunk of their income in tax, which is often squandered.

The great majority of the people everywhere, rich and poor, high and lowly, want taxes kept low and, if low taxation is insufficient to cover government expenditure, then they want expenditure reduced.

This has been a central popular axiom of politics wherever taxpayers have a say.

Unbearable taxation is a dangerous dragon. Many a time in history, taxpayers have been known to unite to slay the dragon for their own safety.

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