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“Our company policy is to talk to our clients and not to the press,” so declared the Chairman of Skanska following his inconclusive meeting with the Prime Minister. This bullish attitude of the Chairman of one of HSBC’s blue chip companies contrasted with the sincere declaration of Lawrence Gonzi expressing his disappointment at the inconclusive talks.
The reaction of the well meaning Prime Minister has highlighted that relations between Skanska and the Malta Government are at a knife’s edge. This further ferments an already bad feeling in the country by increasing people’s scepticism over the whole project and fears about the haemorrhaging effect the opening of the hospital will have on the countries finances.
The Prime Minister is right to throw the ball back into Skanska’s court. He rightly demands that the company lets Government know what the final costs will amount to and the date when the hospital works will be completed. These requests seem extremely reasonable and if not forthcoming within the ten day period set we would favour termination of the contract inspite of the inevitable serious consequences including payment of penalty clauses, and the deterioration of the property pending the outcome of court litigation. We are certain that the breakdown of the talks carries equally dire consequences for Skanksa and its global reputation throughout business circles. This potential tarnish to its reputation should egg on the company to take the well headed advise of settling for a substantial lowering of final costs of the project.
The options facing both parties at this eleventh hour are far from rosy. Sanity demands and we are certain that following an analysis of all cost overruns arising from the sub-contracting arrangements, there will be a reduction in the price and the project can carry on within an agreed deadline set. It is clear that this is the Government’s goal. If achieved, it will be a feather in the cap of Lawrence Gonzi and a tribute to his hands on approach and determination to analysis uncover and verify every cost of this mammoth of projects. The costs have almost certainly spiralled as a direct result of Skanska’s sub-contracting of all the works. Herein lays the root of the cost overruns. The Prime Minister need look no further. The worst scenario is if Government is forced to take legal action. This will be lengthy and carries the serious consequences of the deterioration of the unused property and the tragedy of a costly project turning into an idle asset.
This worst scenario however like all clouds does have a silver lining. It should give us all the opportunity to question whether the country can really afford to meet the running costs of such a costly hospital. The present cost of running St Luke’s is Lm900,000 per week. The costs to run the new hospital is estimated to cost between one and a half to two million Malta liri per week. This cost is certainly unsustainable more so if a free health service is to be maintained. The choice at that moment in time inevitably is to either maintain the services provided at St Luke’s general hospital or to introduce a service by payment with all the social net safeguards. Any avoidance of this reality smacks of irresponsibility and carries serious consequences. Accordingly the Prime Minister need not be too preoccupied if he is forced to terminate the project or to put it on the back burner as a result of legal action. Indeed it could well turn out be our national financial moment of truth. Possibly our financial salvation.
It could also get us all to take a second look at St Luke’s. This hospital can carry on being upgraded, government land in the vicinity if unused could be put to use by the hospital, if used as in the cases of the medical school and the nurses institute these could be transferred else where to make room for an expanded St Luke’s. It is clear that we simply need to cut our dress according to the cloth available. The costly expansion of the new hospital to a general hospital with a double bed capacity appears with hind-sight as ill-thought out. It was driven by a wish list of the medical profession all too self seeking in having comfortable medical quarters and a medical centre of excellence which regrettably at this moment in time the country can ill-afford. It managed to persuade Labour Government to immediately embark on an expansion of the number of beds a decision that was stupidly quickly approved by the new Nationalist administration in 1998. The doctor driven plan expanded new hospital now stands as an incomplete, expensive monument to the incompetence of a spendthrift political class all too driven by the desire to build monuments with little thought to the sustainability of the running costs. May it serve as an eye opener before government rushes into future costly projects. The golden mean must be good house keeping balancing costs with value for money. No differently to the well run family budget we should only spend what we can afford.
Following the passing of the ultimatum deadline, all issues relating to this project need to be laid bear for public scrutiny. It should be discussed on national television; it should certainly be also discussed in Parliament. The people have a right to know. Independent media and the public interest dictates that people know what was the role played by the foundation for Medical Studies? Who was controlling the sub-contractors? Who took the decision to pass over the project hook line and sinker to Skanska? Why was such a cost plus contract entered into with Skanska? These and all relative correspondence need to be discussed openly in a public hearing preferably at the Public Affairs Committee where politicians civil servants and contractors will give evidence. Skanska may not favour talking to the press but in the public interest the independent media should demand that all the facts relating to the case are laid open to public scrutiny.
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