Year after year we are told about the need to improve productivity, yet we tolerate administrative practices that are obviously not working well. Indeed, these practices are defended as dogmas forming part of some divinely revealed truths, not to be questioned or challenged. For example:

Privatisation has worked wonders to instil efficiency;

EU funding has boosted the selection, planning and running of new essential projects.

By contrast, the need to improve productivity has been reduced to a mantra, repeated at bankers’ dinners and “business” breakfasts. The chant, usually coordinated by the Central Bank, proclaims that productivity gains will occur when wage growth is successfully curtailed and the brakes are put on social spending. Nothing else matters.

But it is obvious that other factors are also involved in the productivity stakes. They impact sectorally or through the economy as a whole. They result from the way we do things. Even if they get ignored in the statistical out-turn, such factors are felt by citizens in their everyday lives as a source of concern, cost, worry, delay and what have you.

Planning road works

Road works are a case in point. Year after year, they cause huge difficulties for people and businesses. This cannot be simply blamed on too much traffic on the roads. The planning, management and implementation of road building projects are a major part of the problem, especially when cost over-runs occur and/or the completion of projects becomes subject to huge postponements.

Actually, completion dates planned for local projects that, by European standards, are puny in scale, would be more appropriate for works requiring major feats of trans-Alpine engineering. Many wonder why doing up a strip of road less than three kilometers long needs a planned time-frame of a year or more at least, never mind that it is then completed even later than planned.

At present, we are witnessing a road works scenario that has reached a new climax of disruption. In the north of Malta, the arterial road that leads to the Gozo ferry is being redone. Similar work is being done in the “south” of Gozo, connecting with the ferry. The complications this has caused in Mellieħa have been well publicised. Less publicised are the problems for commuters and commercial traffic between Malta and Gozo, with travel time increasing by between 30 to 45 minutes.

The question arises: did these two projects – which are taking an eternity to finish – have to be undertaken at the same time? I know that part of the stock reply is that due to the requirements of EU funding procedures, the same datelines had to be set for projects to modernise our arterial roads. Even so, could this not have been taken into account at the planning stage? When, during question time in Parliament on 15 May, I asked about this, Infrastructure and Communications Minister Austin Gatt gave a pretty articulate reply. He argued that the planning process was, in his view, well run even if the implementation phase could be criticised in certain points.

Here is the gist of how he explained matters: EU funds for doing up roads come under the so-called Ten-T pan-European programme, which targets major arterial highways across Europe. Funds under the programme can only apply in Malta to the Rabat-Mġarr link in Gozo and the Ċirkewwa-Freeport arteries, thus limiting the areas where work can be launched. Moreover, such work can only be carried out during the period for which EU funds are available, subject to the respect of EU programme procedures, and after Mepa permits have been obtained. As a result, projects tend to come on stream all at once.

Moreover, Maltese tenders are too small to interest foreign contractors with superior human and technical resources to those of their Maltese counterparts. EU international tenders have been duly launched but there were no foreign takers.

Meanwhile, the number of local contractors having the capacity to undertake road works amounts to a maximum of five. They are all involved in a variety of works, sometimes winning two tenders at the same time. They tend not to have sufficient manpower or equipment.

The Minister also argued that, up to now, there have been minimal variations on the tender prices as set and agreed. In the circumstances, local contractors have no incentive to postpone the completion date because this would simply mean they have to pay more wages for no return. To reduce the duration of contract works, “theoretically” contractors would have to invest in equipment that would be much more sophisticated than what they currently hold. But this would not be viable for them and even less so at the current stage of the process, since there would be no suitable return on such investment for what remains of road contracts.

“On average”, road projects are assumed to take from nine to 12 months, but these have had to be extended due to rainy weather, this year especially, and when work hits archaeological sites – for both of which occurrences, contractors have to be allowed lee-way. End of explanation.

Chronic inefficiency

On the surface, it all sounds reasonable and down to earth. Look outside the box though, and troubling questions emerge. What we have here is a Maltese recipe for chronic inefficiency.

Few may remember that public works were the first governmental activity to be privatised. It was done without fanfare but carried through determinedly as of 1987. Work that formerly used to be assigned to the Public Works Department has been contracted out by tender to the private sector. That is what is done now across the board. The assumption has been that we are being better served. What the minister said disproves this.

In reality, what seems to have happened is that further diseconomies of scale have been injected into an already small-scale situation. In the official version we have today, the five contractors able to take up government tenders do not have the resources to give optimal results under conditions of “free” competition. Nor does it make sense for them to acquire these resources because returns on their investment would be unattractive.

Would it therefore not make better sense to have just one organisation catering for road and public works so that it could secure some measure of scale economies? Nor need this one “monopolistic” organisation be necessarily publicly owned and run. Actually on public management, we are reminded all the time about the allegedly bad workmanship for which public works were responsible in the past. But hello! Has it not been repeatedly shown in past years that private sector work can be just as shoddy?

The truth is that the privatisation of public works has not resulted in a more efficient outcome. The contrary may be the case, yet it is beyond the pale to bring up this point.

The EU factor

Consider now the claim that EU funding for public works projects has sharpened planning and implementation. The minister’s explanation indicates the opposite.

First, EU funds can apply to Malta only with reference to the restricted context of a backbone of European road infrastructure, the parameters of which basically lie outside the Maltese reality. One can understand why – unless extra attention is deployed – local projects will tend to bunch together in time and space. Planners need to take into account the fact that EU terms of reference create complications for a small peripheral island, but they clearly lack the know-how to compensate for such complications.

Indeed, the one-size-fits-all measures adopted at EU level continue to have a negative impact on the implementation of projects here.

Secondly, we are going through the admittedly serious scrutiny and assessment procedures followed by the EU regarding the award of international contracts. Procedures are lengthy and take up valuable time within the calendar imposed by the EU budgeting system for the overall implementation of projects. Yet in the end, offers come only from well-known Maltese contractors.

No firms outside Europe show any interest. So, on top of the diseconomies of scale imposed on us by size, we undergo a European procedure for the awarding of tenders that leaves us with the same choice that a local tendering process would have triggered. A few local under-resourced contractors implement the contract, operating in a less than optimal fashion within a restricted time window.

Incidentally, on an average basis, some 78 per cent of the EU payments for roads and other projects extended to Malta are counterbalanced by the payments Malta makes to the EU budget.

Which makes another outcome of the whole approach as described by the minister even more worrying, though it did not seem to faze him. There exists an inherent disincentive to invest in up-to-date road works equipment because it cannot be economically viable.

This all fits in with another feature of the Maltese economy in recent years, despite EU membership. Investment as a percentage of GDP has stayed invariably low – which is a major reason for low productivity over the same period, though it rarely gets mentioned by the Central Bank.

Finally, one notes the official satisfaction at the claim that cost overruns have been practically eliminated on road works, even if the same cannot be said for the duration of the work. Everybody seems to find it convenient to sweep under the carpet the point that too long a time horizon for works undertaken, and then the extension of completion dates, create real extra costs for the economy and society as a whole. The minister was being complacent when he claimed that contractors have no incentive to drag out the completion of works. I have heard contractors argue the contrary and from their perspective, what they said made sense.

Delays encountered by citizens and businesses when carrying out their tasks on a day-to-day basis, the extra consumption of fuel in cars having to follow lengthy diversions, the resulting pollution and other factors imply economy-wide costs. We seem not to notice this.

One reason is that a real improvement in how road building is managed à la Maltaise would require, among other things, a radical re-examination of the role of privatisation and of the implementation of EU one-size-fits-all approaches to Malta. Too many strongly vested interests would rebel against that option.