In an article I wrote for another newspaper a couple of months ago, I challenged the conventional wisdom that tourism accounts for a quarter of Malta’s economy. I did this using my own research and the work of Prof. Joseph Falzon. While Prof. Falzon established that the sector contributed some 7.5 per cent to our economy, I had asserted that the figure was perhaps as much as 10 per cent. Both were a far cry from the 25 per cent the tourism industry likes to lay claim to. A few weeks later, during its annual general meeting, the MHRA responded to my assertion by presenting a brief study by Prof. Lino Briguglio that concluded (I suspect to the dismay of most of those present) that tourism accounts for about 12 per cent of our economy. The floor challenged Prof. Briguglio whom the MHRA had commissioned. The meeting ended with the members of MHRA requesting that the council commission a more detailed study to establish the “true” percentage. I am waiting.
I had hoped that I would not have to make any more of these challenges for a while; they certainly haven’t made me more popular. However, a report placed on my desk last week has quashed that hope. The report I refer to is the “State of the Construction Industry 2005” prepared by the Building Industry Consultative Committee (BICC); the “kuntratturi” lobby group, part financed by government and chaired by PN candidate and Siggiewi mayor, Architect Robert Musumeci.
Like any other business sector, the building industry has a keen and lucrative interest in virtual self-aggrandisement. The bigger they manage to make themselves seem, the more legitimacy they are given to continue raping this country, by both the ruling class and the court of public opinion. Unlike other lobbies however, the building industry starts off with a natural advantage – its own hideous conspicuousness! Every corner of this isle is marked (or stained) with the chattels and by products of the building industry; cranes, concrete mixers, trucks, road diggers and slicers, dust, dirt and noise. Due to this nuisance, the public lives under the impression that this industry is far more economically important to Malta than it really is. I often question people how much of the country’s GDP they believe construction is responsible for. The answers I am given vary between 20 to 40 per cent. When you explain that the industry accounts for five per cent, many people are amazed. I don’t blame them – when so many of us live under the shadow of a crane tower, it is normal to assume that there is no economic existence in Malta without the “kuntratturi”!
The bare economic facts are stark. The construction industry is nowhere as big as the BICC wants us to believe. It accounts for a little bit more than the Cinderella of our economy i.e. agriculture, and less that the contribution to our economy of Bank of Valletta (who coincidentally sponsored both this report and the MHRA quarterly survey). Luckily, Mr Musumeci has no problem convincing the two major political parties about the importance of the construction industry; they are, at least metaphorically, completely bought over to the cause. However, Robert is going to face an eternal struggle trying to convince the rest of us that building and construction is the lifeblood of this country. The objective of this article is to ensure that his struggle moves in one direction – uphill!
The assertions in Mr Musumeci’s report are misleading. The report claims that the building industry accounts for 16.6 per cent of Malta’s GDP; a whopping one-sixth of our livelihood! With these numbers, who would dare object to more cranes, more noise, and more disturbances, and less countryside, less open space, less sunlight? Sadly nobody challenged this assertion. Let me explain the flaws. The report correctly states that “Mining & Quarrying” amounts to 0.3 per cent of our GDP and “Construction” another 4.1 per cent – a grand total of 4.4 per cent! The report should have stopped right there. It did not. To arrive at the figure that has been quoted in local newspapers (i.e. 16.6 per cent), the report then made the most ludicrous of assumptions. It claimed that the sector of the economy, the National Statistics Office classifies as “Real Estate, Renting and Business Activities” (amounting to another 12.2 per cent of GDP), somehow “belongs” to the building industry. At best, this assumption (of assumptions) is the fruit of ignorance; at worst an outright deception. It is grossly flawed for at least two reasons. The first reason is that the “renting” bit of the “Real Estate, Renting and Business Activities” sector has got nothing to do with the building industry. Rent received for residential or business premises cannot be attributable to the building industry. The building industry contributed to the economy by building the premises. When these were completed, the building industry stopped contributing. Rent is to the building industry what restaurants are to farmers and/or fisherman. If we are to accept and extend Robert Musumeci’s logic, then the Marsaxlokk fisherman and Rabat farmers can lay claim to all restaurants in Malta, and probably control the MHRA! Pathetic!
The second reason why the BICC cannot make any reasonable claim to the “Real Estate, Renting and Business Activities” category is that this includes a multitude of business services that have absolutely nothing to do with the building industry. Here are just a few examples: hardware consultancy, advertising, photographic activities, renting of automobiles, accounting and bookkeeping, management consultancy, and legal activities. This category is in effect a hodgepodge of activities that are bundled together because neither activity individually is large enough to warrant separate classification. Mr Musumeci has very conveniently claimed them for his lobby!
The only bit of this category that BICC can lay claim to is the work of real estate agents relating to new buildings placed on the market. The statistics are not available but I am convinced that this is not more than one to two per cent of the 12 per cent this category accounts for. Therefore, with a bit of generosity and imagination, one can conclude that construction can lay claim to five, perhaps sixper cent of Malta’s GDP. Less than “Manufacturing”, less than “Retailing”, less than “Financial Services”, less than “Tourism”, less than “Education”. Why has this country been sacrificed to the building industry? Why?