Putting our national finances in order is never a bad idea and everyone should welcome such an initiative. We all know that if we carry on with irresponsible and uncontrolled spending, as has been the case under successive PN administrations, we will end up with serious problems, eventually even causing the government to dismantle what is left of our “welfare state”.

Malta cannot afford to lose its welfare system. We cannot afford bad governance threatening our health, education and social benefits. We cannot afford to collapse economically.

It is, of course, useless to lament that when the Nationalist government regained power in 1987 it found a surplus of Lm400 million in consolidated funds, as well as a healthy foreign reserves fund. Deficits were not a headache in Labour’s time, even if the PN propaganda machine has labelled those times as “bad”.

Today, with a national debt of Lm1.4 billion, Malta’s budgetary deficit stands at Lm76 million.

Selling more assets

Much of this deficit is due to the hefty interest we pay to service the national debt. So how does this government intend to reduce the accumulated debt? By regenerating the economy, perhaps?

Prime Minister Gonzi himself chose to tell us last Wednesday evening on RTK radio while debating with Opposition leader Alfred Sant. In order to pay off some of our national debt, his government aims to sell its shareholdings in profitable entities such as BOV, Maltacom and what is left of MIA.

When Mid Med Bank and its various properties were sold for a mere Lm87 million, HSBC got their money back in just three years. Since then, HSBC has retained a profit of approximately Lm30 million annually. Was the Mid Med sell-out a bargain, or was it an admission of incompetence on the part of the government, or even Maltese banking?

So now the Prime Minister is envisaging that selling more of our family jewels will render him a measly Lm163 million. Wherever we, the people, possess profitable shares through our government, Gonzi will be sure to sell it for us to pay off some more of the debts his government has been accumulating (while continuously reminding us how good they have always been at governing this country).

Gonzi’s “sound barrier”

Two days before last Wednesday’s debate, the prime minister announced that the deficit had been reduced to 5.1 per cent last year, adding that it will be under four per cent this year. The “sound barrier”, he assured us, will be surpassed next year.

Sound barrier? For Gonzi, the sound barrier is the three per cent deficit threshold required by the EU accession treaty for membership of the eurozone.

This is the true reason behind Gonzi’s frenetic action. Taxing the people and selling profitable shares, mostly to foreign enterprises, is not Gonzi’s way of solving our financial problems. It is his way of being the compliant European he has decided to become. And the consequences are different.

This is the reasoning behind the crushing of Maltese families with an 84 per cent over two years increase on water and electricity. It is the reason behind Gonzi’s sick joke of offering an increase of 50c a week. And the poorer segment of society cannot possibly make it, especially those on a minimum wage.

Euro-zone compliant

You might recall former premier Fenech Adami euphorically proclaiming that Malta would be the first to adopt the euro. He now has a vigilant banner-bearer in his hand-picked successor.

This is not Gonzi the neo-liberal star or the post-modernist Thacherite, all out for free market endeavours. This is Gonzi whose sole aim is to reach below the three per cent deficit with a national debt not exceeding 60 per cent of our GDP, as stipulated by the EU in order to enter the eurozone. His aim is essentially to be a “good European”. This is what determines our premier’s agenda.

While other countries, including Italy, Holland and Germany, are ignoring the three per cent deficit threshold, which most economists argue is so arbitrary a figure it cannot make economic sense, we have Gonzi making it his priority to enter the eurozone by 1 January 2008.

While in Poland the president is promising a referendum over the adoption of the euro, even if the Accession Treaty offers no eurozone opt-outs for new member states, our compliant premier prefers breaking the backs of his citizens rather than having to appear “bad” by adding to the pressure against eurozone rigidity as others are doing.

While the UK, Sweden and Denmark, which still have an opt-out provision, are showing no intention whatsoever of joining the eurozone (because they are doing better than any euro-zone country), our Gonzi boasts of breaking the “sound barrier” in record time.

The benefits of Gonzi’s dream

Chopping up the deficit at the direct expense of the people, and selling government assets to reduce the national debt, might be all well and good, as long as it does not break the economic wheel and spin our national debts into a towering nightmare – all for an arbitrary figure and an arbitrary date.

But what do we get when we adopt the euro?

We get to have easier business transactions and we need not exchange our liras when travelling to other EU countries (barring the UK, Sweden and Denmark, of course).

For this privilege we will have to transfer our central bank to the European Central Bank in Frankfurt and lose all control over monetary policy, including the capacity to adjust interest rates to the economic waves influencing our small economy. Indeed, the eurozone monetary policy is one of those one-size-fits-all types – the types that do not much recognise the economy of a small offshore island state.

And who is paying for this privilege? The poorest of the poor in our society – those who might not even have the chance to use the euro anywhere else but in Malta.

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Sharon Ellul Bonici is a Labour Party candidate currently working in the European parliament in the political field