When Prime Minister and Finance Minister Gonzi delivered his latest budget speech, I couldn’t help harking back to 20 August 2004, when Dr Gonzi summoned the chairmen and chief executives of government ‘extra-budgetary units’ to the Auberge de Castille.

On that day, Gonzi stressed ‘the need of accountability’, and warned that, on no account, must financial targets established in the budget be exceeded.

With a structural deficit, an accumulated Lm l.3 billion debt, and an annual debt-servicing bill exceeding Lm 70 million, Dr Gonzi was crying over spilt milk. There was no denying that the government’s finances were such that they called for remedial action.

I then thought; “How could Dr Gonzi save the day, simply by summoning to a jamboree all the heads of the 47-odd quangos, whose speciality is feathering their nests? Wasn’t there a theatrical touch to the jamboree, specifically intended to urge ‘government entities to cut costs and be more accountable’, when the PN had been in office since l987, practically without interruption, and had all the time in the world to put the world to rights?”

The government then thought it would remedy matters by setting up a special (additional) unit at the Ministry of Finance, specifically to monitor the financial performance of every government entity?

I then said to myself that he is a fool that makes a hammer of his fist.

Speaking to the media after that meeting, Dr Gonzi expressed dissatisfaction with a number of public entities that were not doing their utmost to control expenditure. He emphasised the need for scrutiny and accountability, and spoke, moreover, about an exercise, then under way, to clamp down on entrepreneurs who were evading VAT and abusing various social services. He added that the government ‘was also working on eliminating abuse’ by entrepreneurs ‘who overcharge tourists’.

Questions

Today, we are all entitled to ask by way of follow-up: What has happened since then? It is true that the deficit is now not so mountainous. It has been brought under control, in large measure, by the imposition of more and more taxes and surcharges, and through the sale of the family jewellery – not by abolishing overspending.

The mountain of debt has continued to peak higher to well over Lm l.4 billion by last August, and it is still rising. The annual servicing cost of this debt is, by itself, a deficit bigger than the Public Sector’s Borrowing Requirement.

Throughout the intervening period since 2004, there have been reports of various budget overruns, creeping corruption and loose control on business operators who overcharge tourists with abandon.

This is not a problem that can be solved by someone coming down from a mountaintop, carrying tablets with solutions etched in stone.

It is true that the fragile Maltese economy operates in a highly competitive, globalised market, and that it is exposed to pressures over which it has no control – the price of oil and cereals easily come to mind.

But it is equally true that Malta’s most serious ailments are of the government’s own making. They stem from persistent and capricious overspending, incompetence, and flying in the face of timely advice – originating from all quarters, not excluding international organisations and credit rating agencies.

The iron laws of economic rectitude have caught up with the government. It is at once pointless and unfair to try and remedy matters by paying lip service to accountability, and turning a blind eye to those who precipitated Malta’s predicament.

This is not so say that Malta’s problems could be remedied by witch-hunting or by heavy-handedness.

But it is equally ineffective to exculpate those responsible for past blunders and, at one and the same time, to exculpate those who were co-responsible with them for their misdeeds.

Cognoscenti and observers with their ears to the ground, know that the government’s euphoric claims, to the effect that its finances are fis-sod (on a sound footing) amounts to electoral poppy cock.

We would all be fooling ourselves if we run away from the obvious need for self-discipline which, in the long run, is the key to efficiency, competitiveness and survival.

It would be equally foolish to expect the broad mass of the overburdened, tax-paying electorate to accept restraint which is not proportionally shared, and which is not imposed from above without consultation.

Dr Gonzi’s dilemma

This highlights of Dr Gonzi’s dilemma. Since the last EU Parliamentary elections, he has been leading a party that has slumped conspicuously on the electoral plane.

The PN largely lost its support because its past policies have led Malta practically to a dead end, necessitating a return to the drawing board to devise a ‘Convergence Programme’ under the stern eyes of the EU.

Considering that Dr Gonzi and his tired team were co-responsible for the mistakes of the past Fenech Adami administration, can they now aspire to credibility when they launch initiatives for Malta’s economic survival without restraining their tax-and-spend policies?

The economy needs oxygen. If the government remedies its inefficiencies, and reduces its extravagances, it would be in a position to relieve the taxpaying citizen, as well as the economy, of some of their burdens.

The Gonzi administration did not opt for this route. It chose to tax and spend instead of helping the forces of production to go for growth.

How does the government expect to rally the enthusiastic support of the overtaxed electorate, when it is not even-handed in its tax policies?

Why, for example, did it not first impose taxes on ostentatious consumption before it slapped stiff surcharges on the water and electricity bills on minimum wage earners?

These issues may be raised in the course of the budget debate, or during the electoral campaign which is now in full swing. The electorate is interested in effective solutions – not in acrimonious political skirmishes, skirting round these bread and butter issues.

Beyond, the budget, the electorate has the opportunity of exercising its sovereign democratic prerogative, by seizing the moment, to show that it is master in its own house. [email protected]