Government’s surprise proposal to revise electricity tariffs, and do away with a €55 million subsidy to Enemalta, has literally electrified the country.
For once, the Malta Council for Economic and Social Development was unanimous its condemnation of the proposed measures. Elsewhere, the Malta Hotels and Restaurants Association and the Chamber of Small Businesses (GRTU) lashed out at government for its failure to consult the social partners, and above all for suggesting a measure which would lead inexorably to massive job losses across the board.
Interviewed by MaltaToday, Infrastructure Minister Austin Gatt countered this criticism by reminding the public that someone, somewhere always has to foot the bill for public subsidy. And on a televised discussion programme, the same minister delivered some stinging criticism of his own: accusing the above associations of blackmail, by threatening to lay off their workers en masse.
In an ideal world, Austin Gatt’s arguments would hold a lot of water. But the world is not an ideal place at the best of times, and right now it happens to be passing through the worst economic crisis in recent history.
Before placing Gatt’s doctrine in the context of a global credit crunch scenario – where his newfound economic neo-liberalism appears at odds with the prevailing trends – it is worth remembering which sector will once again be asked to tighten their belts. As usual, when strapped for cash, the government will be putting the squeeze on the long-suffering middle class: the salaried worker, the employed professional, the small entrepreneur and businessman, the Civil Service employee... in other words, the same class of people which has traditionally supported the Nationalist party, and whom the same PN has constantly exploited to finance its way of doing politics.
Let’s face it: Malta’s habit of subsidising ailing sectors is hardly a new phenomenon. It is as though the government has suddenly woken up to the fact that these subsidies are in themselves unsustainable, when all along the same government has been more than happy to divert public money into a wide variety of dubious endeavours... either as direct financial aid, or in kind.
There are, after all, subsidies and subsidies. Few would argue against using that word to describe former PM Eddie Fenech Adami’s writing off Lm300 million in debt incurred by the Malta shipyards. But what about the leasing of government land to private enterprise, for a pittance of its worth?
Take for instance the Hilton project in St Julian’s. The developers rented 31 acres of land in a prime real estate area on a 99-year lease for Lm800,000: around the price of one single luxury apartment in the ensuing development.
Similar arrangements were made in the case of the MIDI and the Cottonera project. Do these not also count as a form of subsidy?
And while the government rightly decries the wasting of funds on unprofitable enterprises such as the Malta Shipyards, it also invited us to rejoice at the pre-electoral opening of Mater Dei Hospital: a public project which cost the exchequer Lm300 million just to build... and whose running costs may amount to Lm1 million a week.
Public money has likewise been used to subsidise low-cost airlines, and also for unnecessary recurring costs such as stipends for university students: a lavish extravagance which the Nationalist administration continues to justify, at a time when it is too cash-strapped to renew the academic’s collective agreement, expired since 2003.
All things told, then, it is difficult for Joe Public to understand why the government can no longer afford a €55 million subsidy to Enemalta... at a time when the same government seems to have unlimited funds for other, less necessary expenses.
And this does not even take into account the current world financial crisis. Such is the scale of this catastrophe, that even governments which are historically opposed to any form of State intervention in their economies – such as the United States, under a traditionally tight-fisted Republican administration – have bowed to pressure and signed off massive subsidies to bail out the stricken investment banking sector.
Similar financial packages have been agreed to also by Europe, and ironically, Finance Minister Tonio Fenech this week announced that bank deposits of up to €100,000 would be guaranteed by the central government. €50,000 of this guarantee is accounted for by the EU-wide €50 billion bailout package. The rest would presumably come from the country’s coffers, in the unlikely event that local banks would also require a bailout.
So it appears that, at a time when all countries are digging into their pockets to avert a financial catastrophe, the Maltese government alone has decided to swim against the current and actually propose removing existing subsidies: an initiative which would have devastating consequences for the very income bracket which has all along been footing the bill for other subsidies.
Something is clearly not right.