The respective electoral bandwagons are gathering speed and make more and more noise. It was to be expected that they would make more and more promises to mesmerise their audiences. A stage has been reached that Prime Minister Gonzi is promising (if elected), to give, for free, five energy-saving light bulbs to each family for two years running – an additional e200 “in the pocket of every family”!

Never mind the added cost to administer such a scheme.

The heart of the matter is that this mentality explains why the cost of government has been escalating steadily under this government, and why it has been living on borrowed money for so many years. It is easy for ministers to make promises. It is the electorate that has to make good for their folly.

Diet of deficits

Ever since the late eighties, the government has been living on a diet of deficits, which it had to sustain with borrowing. Suffice it to say that Malta’s national debt which stood at Lm87 million in 1987, escalated to Lm1,300 million by 2003. (e3,039

million).

When Malta acceded to the European Union, it was called to order and told that it had to abide by the so-called Maastricht criteria. This meant that Malta’s structural deficit had to be brought under control and that the appetite for debt had to be disciplined.

An austerity programme, involving stiff taxation was launched, and the deficit has been reduced but not eliminated. It was reduced (a) because the proceeds from taxation were substantially augmented and (b) with the one-off sale of the family jewels. The national debt burden was not reduced. In fact, it has escalated steadily since Dr Gonzi took over the premiership from Dr Fenech Adami, adding a further e285 million to the bill by the third quarter of last year. The uncontrolled rise in the cost of government is the dark side of the coin.

Hidden surcharge

The public debt servicing commitment is proceeding from a trot to a gallop. Whereas the bill for public debt servicing amounted to e121 million in 1998, it escalated to e179 million last year Until that debt is redeemed, this bill has to be paid yearly out of taxation, and represents a hidden surcharge on our normal tax bill. This is clearly as unsustainable as it is burdensome.

For one thing, the public debt is a millstone round the neck of the finance ministry and of the economy.

For another, the servicing element flays the individual taxpayer who is already overstretched by other taxes and hard pressed by rising living costs. This explains why thousands of families have fallen behind

Although this is not officially admitted, the proof of the pudding is the sheer fact that the battle cry of politicians of all hues during this election campaign consists of promises that would “leave more money in the pockets” of the electorate!

The end result amounts to this: while the GDP has grown, party because the government is pumping more money into it, large slices of the national cake seem to be gobbled by a few fat cats, while the small fry get the crumbs.

The way forward

The obvious way forward is in two directions. The first is by stimulating growth that would offer new employment openings and create new sources of wealth. This calls for new initiatives that raise productivity and enhance export opportunities.

If, in the final outcome, the national cake turns out to be bigger and richer, the Exchequer will obtain a bigger slice, not least because there will be more workers and productive units earning new money and paying their share of taxes. Simultaneously, there will be reduced pressure by claimants for social security and social assistance.

Above all, new profitable investment will offer possibilities for the deployment of part of the public sector workforce in the private sector. This will reduce the cost of government and scale down the deficit.

The other way forward is to prune government expenditure. Successive annual reports by the Office of the Auditor General have interdicted the bureaucracy for its inefficiency and persistent lack of due prudence on the part of accounting officers.

High officials guilty of default should be removed from harm’s way after due process – so long as the process is expeditious and exemplary.

The Auditor General has often shed light on waste arising from lack of compliance with standing regulations and established procedures.

The government could hardly claim the moral right to extract the last drop of taxation and to expect the average citizen to take kindly to austere measures, if the public service does not put its best foot forward and lead by example by way of thrift, frugality and prudence.

This is the heart of the matter.

The time has come for the chips to fall down, and to treat the airy-fairy electoral tittle-tattle for what it is.

That’s why change is an imperative.

[email protected]