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The proposed eco-tax risks breaking apart the carefully built up working relationship between the government and the social partners. The proposed legislation arrived at after little meaningful consultation and hurriedly presented in parliament prior to the long awaited summer recess smacks of a government in a panic to plug the financial deficit.
The taxes piloted by Ministers Pullicino and Fenech will add a further burden on businesses and consumers alike. This comes at a time of increased economic uncertainty.
The Fenech Adami administration had, to its credit, built up a working relationship with both the employer organisations and the employee unions. It managed over a period of time to keep union claims to a reasonable level and lost days from industrial action did not run at an alarming rate. Although often accused of buying industrial peace - there were many occasions at which the Government refused to bite the proverbial bullet with all the added costs and increased deficit this has brought about - there can be little doubt that slowly a culture of give and take was building up with mutual trust being nurtured. This culminated in the positive setting up of the MCESD and MEUSAC, the Malta EU steering action committee.
All this progress set the groundwork for the possibility of a social pact being proposed with all the general benefits this would create to long term industrial peace and economic growth. The question must now be raised: Does all this good work risk flying with the wind?
One can well understand that Government, having rightfully placed lowering the deficit as its topmost priority, is thinking of all ways possible to raise revenue. However, raising taxation simultaneously with cutting costs can deflate the economy with all the consequences this can have on living standards.
Whatever name Government labels the eco taxes - whether as a contribution or as an aid to the environment - the fact remains that here we are talking of a tax at a time when the economy simply cannot take the imposition of any further tax hikes. The result is that most, if not all, of the consumer items are likely to go up in price and this will inevitably raise the cost of living. At this moment in time Government should be doing everything but raising taxes.
More importantly, however, than the raising of taxation, is the way the eco taxes’ abrupt introduction risks alienating all the social partners. It remains quite incredible how this Government at this particular moment in time is managing to unite all the Unions both employer and employees representatives in one common cause against the Government’s method of governing. It is very clear that the last time all the social partners were invited to Auberge de Castile just three days ago the atmosphere was far from cordial. It appears that many a frank exchange was made leaving Dr Gonzi with no doubt that the Unions intend fighting this new tax tooth and nail and to the bitter end. One may legitimately ask how Dr Gonzi can afford to risk putting himself in a corner leaving little room for manoeuvre and only two options: that of withdrawing altogether or postponing the legislation. If government withdraws totally it will appear extremely foolish, while if it postpones it will appear yet again to have caved in as it did on the smoking issue.
Government’s strategy in this first real issue facing the newly formed administration appears ill worked out, hasty and lacking in any form of co-ordination. One even gets the impression that not all the members of Government are happy with this piece of legislation which rather than appearing as a monument to government’s commitment to the environment smacks of a last minute quick fix to raise more revenue. Was this proposed legislation discussed at a Nationalist Party parliamentary group meeting?
Lawrence Gonzi cannot, at any costs, afford to break up the social harmony painfully built up by the previous Fenech Adami Government with his full hearted support.
There is the danger that the working relationship between government and the social partners is at a knife’s edge. We have indeed reached a critical point. This is all the more worrying since it is only Government together with the social partners who can turn things round for Malta’s economy. No one can do it all on its own, more so when the Opposition party has strategically decided to play a spectator role hoping that all collapses on the Government’s head.
The situation is so serious that it requires men of vision and character to achieve and to cement the much needed social pact. This hurried piece of legislation simply makes the possibility of achieving a social pact as more remote. We feel that in the Government benches there is a lack of governing culture, a lack of knowledge on just what is expected of people in Government. It is becoming more obvious daily that the Government is in office, but is not Governing.
It needs to listen to the advice of the civil service, but to decide independently of their advice. Thatcher always made her mantra that civil servants advise, but Government decides. The government must not be civil service driven. It must be its own man. Listening to public statements even from the Prime Minister only two days ago he seemed uncertain whether he was going to implement the legislation or to postpone it. He simply dilly-dallied.
This uncertainty depicts a lack of decisiveness to move ahead and to get going. Many a time the Prime Minister has been accused of indecisiveness, but if there is one political trait there was always agreement on is that Lawrence Gonzi’s Government would be a Government by consensus. Regrettably even this positive characteristic - heavily advertised in the PN leadership campaign - of Lawrence Gonzi is evaporating fast. This proposed legislation is anything but an exercise in consensual government. He is best advised to go back to the drawing board and redraft the legislation.
He most especially cannot afford to break the social harmony that is essential for economic stability in the years to come.
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