It is one thing for politicians to commit themselves about the future with the risk of being caught in the fullness of time — like those who pronounced that civil aircraft will never fly.

It is another when politicians are temporarily (or conveniently) bereft of their political antennae and make statements which are belied by their own performance.

There is a time-honoured Italian saying which, freely translated, holds that, between saying and doing, there is a great divide.

In such cases, reality pulls the rug from under the perpetrator.

Famous last words

Former finance Minister John Dalli made one such foray in the world of political make-belief when he delivered his famous last words in November l992.

On that memorable day, he was delivering his first budget speech in Parliament. He was manifestly making a declaration which was supposed to be a clean cut away from his predecessor in office. He outlined a five-year programme to sanitise the economy.

His programme was concise and unambiguous. The deficit, then running to Lm 29 million was to be reduced to three per cent of GDP. Unemployed was to be reduced to the level of four per cent

That speech was supported by a red alert. The Governor of the Central Bank went out of his way to lament publicly that we had been consuming beyond our means “for several years”

A Nationalist government has presided continuously in office ever since that day, except for the 21 short months, when Labour was in office between l996 and l998.

Real Performance

Since then there has been a precipitous increase in tax levels. Public expenditure swallowed up the steep increase in revenue. The government’s voracious appetite necessitated a dramatic increase in public debt.

If the Government has been “delivering”, the economy has been edging dangerously in the direction of a black hole. It has to change direction, and the change must be at the top.

I do not wish this to be interpreted as ad hominem criticism. But the change at the top of the Nationalist government that has since taken place. The arrival of Lawrence Gonzi as Prime Minister and Minister for Finance, has precipitated Malta predicament in terms of sustained deficit spending and, more conspicuously, in terms of taxation and public debt.

Eloquent Statistics

The cost of government, expressed in total budget expenditure, rose from Lm 388 million in l982 to Lm 651 million in the year 2000 (the beginning of this millennium), to an estimated Lm l, 047 in next year’s budget.

Total revenue stood at Lm 358 in l992 and rose to 554 million in 2000. It is estimated to rise to a level of Lm l,023 million next year,

This extravagance was sustained by heavy borrowing. Malta’s public debt figure sky rocketed from Lm 246 million in l992, to Lm 679 million in the year 2000. At the end of last year, this figure made a substantial leap to reach Lm 1,440 million or 74.2 per cent of GDP!

This obliged Dr.Gonzi to hypothecate close to Lm 77 million in servicing costs. This figure is substantially higher than the deficit and has to be put aside each year, unless it is reduced It could, of course, be reduced in proportion to any future reduction of debt servicing costs.

But, ,until it is significantly reduced, the debt servicing burden will haunt the Exchequer who, in turn, will continue to flog the taxpaying community specifically to make good for the government’s money no problem profligacy.

Debt burden

Fourteen years after John Dalli’s famous last words we have not yet tamed the deficit by reducing it to a point below 3 per cent of GDP, although the Government has come quite close to it, at 3.2 per cent. This has been achieved at the cost of steep taxation, mainly in response to EU convergence demands. The exercise has set back thousands of citizens and, decimated marginal businesses. Many businesses had to recoup part of their increased costs by prices rises which, added up, had a bearing on the inflation index.

In the light of the above, Dr. Gonzi’s feigned elation, and his artificial smiles, as he was claiming that his Government has been “performing miracles”, beggars belief.

The tax-paying community in these Islands has been, for some time, prostrate under a tax burden that became steadily heavier as the Government persisted in overspending.

That explains the electoral rude awakening, demonstrated with consistency in all electoral consultations held since the last general elections.

No hiding place

There is still a long way to go before the harm, arising from the excesses of the money no problem syndrome, is remedied.

It could not be satisfactorily remedied before the debt burden, and the associated servicing costs, are reduced to manageable proportions.

During Dr Gonzi’s watch, gross government debt escalated from Lm l,076 million at the start of 2003, to an estimated Lm 1,349 million at the end of this year.

For politicians carrying this baggage, there is no hiding place!

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