Interview | Sunday, 24 May 2009

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The moderate face of Labour

Economist, lecturer and widely respected independent pollster, EDWARD SCICLUNA surprised everyone by emerging as Labour’s frontrunner for the European elections. He talks about his reasons for entering politics, as well as Gonzi’s ‘disastrous’ handling of the economy

For years, we have grown used to Professor Edward Scicluna making appearances on television to announce the general election result. Like the ‘Man from del Monte’, he would come on the screen with his clipboard and his deadpan voice, analysing the earliest samples and accurately predicting the election result.
“My predictions have clearly irked the Gonzi administration,” he tells me with a smile as he leafs through a small mountain of newspaper cuttings at his San Pawl Tat-Targa home. In one cartoon, the placid economics professor is even portrayed as Gonzi’s worst nightmare, pricking the Prime Minister’s conscience with reminders of a long overdue economic reform.
But while he has long been a keen critic of government economic policy, Prof. Scicluna only nailed his political colours to the mast after last year’s budget... when Finance Minister Tonio Fenech accused him of “leaning towards Labour”, for failing to share the government’s optimism for Malta’s economic future.
It was in a sense a self-fulfilling prophecy: but does he now regret his decision to contest the election? Hasn’t he just gone and thrown away a painstakingly constructed reputation for impartiality, which – let’s face it – he will probably never be able to reclaim?
“I would have preferred to remain independent, certainly,” he replies. “It’s more comfortable. I could have very easily carried on doing what I was doing before: conducting studies for the private sector, like the evaluation of EU funding I was commissioned to do by an auditing firm...”
So what made him go out for politics precisely now?
“After Labour’s third consecutive electoral defeat last March, I felt the democratic deficit was too significant to ignore,” he begins. “On the one hand you have the Nationalist party which is projecting the image of ‘party is king’. They act as though they own the country, and will be in government forever. On the other hand, there was an Opposition whose morale was rock-bottom, absolutely zilch...”
From this perspective, Scicluna argues that the difference between the two parties goes well beyond the demographic split that separated them in the last election.
“The 2,000 votes are immaterial really,” he says. “The truth is that one half of Malta’s political establishment had simply collapsed. This creates a dangerous imbalance, and you don’t have to look very far to see the consequences...”
To illustrate the gravity of the situation, Scicluna invites me to consider a global analogy. “When did the United States start behaving questionably and making mistakes... like, for example, the invasion of Iraq?” he asks. The answer, he claims, goes back to the collapse of the Soviet Union in 1989. “After one side collapsed, the other had free reign to do as it pleased...”
By inference, Scicluna suggests that after the collapse of the Labour Opposition in 2008, the Nationalist government no longer felt it was accountable to anyone, and started to behave in an almost dictatorial, uncompromising fashion that – according to Prof. Scicluna – is now becoming dangerous.
He lists out a number of recent “incidents” that helped consolidate his impression.
“The first was the gov.mt issue,” he begins: alluding to the revelation last September that 20,000 email passwords had been stolen from the government server, allowing the hackers access to highly sensitive email accounts throughout public administration, including the Malta Police Force, the Armed Forces, the judiciary and parliament.
IT minister Austin Gatt himself later read out a report in parliament which confirmed that the theft had been successful, and that the passwords had been accessed by unauthorised persons for as long as three whole months before the breach had been discovered.
“It’s astounding,” Scicluna continues. “We forget so easily... things which are fundamental to the basic running of the State. How can we ignore something so serious? How can we pretend that nothing happened? And yet, to this very day, nothing has been done about it...”
The second incident – revealed when PN general secretary Paul Borg Olivier accidentally sent his Labour Party counterpart a confidential email – involved the extent of the incestuous relationship that now clearly exists between the government and the Nationalist Party.
“What emerged from that email was that officials from OPM held a meeting with PN officials at the Stamperija in Pieta’,” he explains. “How can you have government officials dancing like that into the PN headquarters to pass on sensitive information about private citizens? It’s scandalous. But what happened as a result? Absolutely nothing...”
The third issue is not so much a single event, but rather an entire attitude that has been allowed to spiral out of control in recent years, to the extent that even committed Nationalist supporters are starting to worry about it. Prof. Edward Scicluna, like many others outside the PN’s inner sanctum, is increasingly appalled at the levels of blind prejudice currently being displayed towards non-Nationalist politicians and sympathisers.
“People who support Labour are talked about almost as though they are a separate species: sub-humans, second-class citizens, ‘hamalli’...” he comments with distaste. “The language currently being used to describe Laburisti is a disgrace. If it were directed at people because of their skin colour or religion, it would be considered illegal. How can an entire category of people be disparaged like that? This is half the country’s population we are talking about here...”
Prof. Scicluna explains that on his home visits, he meets Nationalist supporters who tell him they are ashamed of this sort of thing.
“I know it’s a hackneyed and overused word, but this is arrogance, plain and simple,” he continues. “Faced with all this, I felt I had to do something. I couldn’t simply stand by and watch the country degenerate like this...”
And yet, this represents a curious reversal of roles from the situation many of us remember in the 1970s and 1980s. Back then it was the Labour party that had been in power for what felt like forever... and it was the Nationalists who bore the full brunt of discrimination and prejudice.
I ask Edward Scicluna if he feels the Labour Party might be directly responsible for its current predicament. After all, isn’t it payback time for the Nationalists after the humiliations of yesteryear? And couldn’t it be argued that the Labour Party made itself unelectable, simply because of the memory of those years?
Edward Scicluna acknowledges the point, but counters that the PN propaganda machine has blown it out of proportion for its own advantage.
“Were it not for the PN, Labour would already have put all that behind,” he says, reminding me how Joseph Muscat has already made overtures to the victims of Labour violence in the 1980s. “But at the same time, the Labour Party grassroots are unwilling to let go of the image they have of their party back then. They still have their pride. They don’t want to throw out the baby with the bathwater... a lot of good was done in those years, and they are justifiably proud of that...”
Ironically, though, his own popularity within the party appears to also signify a change in Labour. I ask Prof. Scicluna if he was as surprised as I to discover that independent polls place him ahead of incumbent MEPs and other party stalwarts. After all, he is hardly a typical ‘Laburist’, at least in the way a typical Nationalist would reason...
“I believe my candidature appeals to a lot of ordinary people who want moderation in politics. I get that sort of feedback from Nationalists too.”
Scicluna also freely admits that the party had to change, not just for the sake of reassuring frightened Nationalist voters, but also for the good of the country’s political balance.
“If we are to have a two-party system, I would like to see two well-prepared parties: two parties that can assume power, without disruption or upheaval. Two parties that can be trusted to administer the country...”
Labour, no doubt, believes it is now ready to govern under Muscat. In order to do so, however, it will still have to reach out across the political divide and convince at least a small proportion of Nationalists that it can be trusted. But has it reached that stage yet? Has Muscat’s earthquake of change shaken the political establishment enough to make Labour electable?
There is a tiny moment of silence. “More work needs to be done,” he admits at length. “But it has already started. This is what the think tanks were all about. You can argue that the change has not to date been far reaching enough – personally I suspect that the MEP election itself got in the way, and that we will see considerably more change after June 7 – but the Labour Party has undertaken to build a new platform on a wide variety of policy issues...”
Do you think your own candidature is part of a strategy to make the Labour Party ‘less scary’ to Nationalist voters?
“Yes, definitely,” Scicluna replies without a second’s hesitation. “It is also partly why I contested in the first place. I want to change the way people look at the Labour Party. Look at how Britain’s Tony Blair managed to reinvent ‘New Labour’ in the 1990s. He turned it around from a militant, old-fashioned institution to a more business-friendly political party. There is a tendency to think that, being a workers’ party, Labour will always look negatively at business. But this is not true today... it is perfectly possible to champion worker’s rights, while also acknowledging that jobs are created by the private sector...”
But Edward Scicluna also argues that in today’s economy, Maltese businesses have a good deal more to worry about than the mere prospect of a Labour administration.
“We have never had the economy so badly mismanaged as the last 10 years,” he says, with a bluntness that takes me by surprise. “Prime Minister Lawrence Gonzi forgot the economy when he took over the finance minister’s portfolio in 2004. The EU told him to concentrate on deficit reduction, and that’s all he did. He forgot everything else. Words like ‘economic growth’ and ‘divergence’ were simply not in his vocabulary...”
Scicluna insists that from a restructuring perspective, deficit reduction is useless on its own. “Cutting the deficit? We can do it,” he says with a shrug. “It’s easy: the IMF provides a blueprint for it how can be done, by decreasing expenditure without raising taxation. But what was needed was the restructuring of our economy. That, by way of contrast, is not easy at all. It is hard and painful. But it can’t be avoided. The longer you postpone it, the more painful it will be.”
Scicluna shows me a series of graphs to illustrate what he refers to as the government’s “disastrous” handling of the economy. One of these graphs, representing the deficit curve over the past five years, resembles an almost perfect boomerang.
“Here you can see the deficit as it stood in 2004, at 4.7%. Then it was reduced gradually over the next two years... only to grow again by the last quarter of 2008 to reach 4.7%.”
For Scicluna, this was the inevitable result of bad economic management, and points out a whole raft of questionable measures to account for it. “Instead of emulating other countries like Sweden, the USA, etc., government took the easy way out and increased VAT to 18%. It negotiated a five-year collective agreement with UHM, providing for an immediate (nominal) wage increase, and promising further wages increases over the next five years. This was just before 2008, when we joined the Eurozone...”
And then, the election came along. “In the 2008 budget, government voted enough expenditure to win the election. They covered their tracks by estimating revenue increases of almost €200 million. But even at the time, as an economist I asked: what if those increases do not materialise? And sure enough, they never did. We have now come full circle: the deficit is back to 2004 levels, the EU is now initiating infringement procedures against Malta. How can anyone call this good economic management?”
Still, while Scicluna is scathing about the Gonzi’s administration’s economic skills, it remains debatable whether a Labour government will heed his own advice, and embark on the necessary reforms: which include a revision of the university stipend system, and also control of expenditure on public health. What does Edward Scicluna recommend for a political hot potato like stipends?
“It would be very presumptuous of me to say that we should ‘do away’ with stipends,” he replies cautiously. “But even a recent European Commission document suggests that they are a burden on the system. But these are things the taxpayer has to decide. Does the taxpayer want to keep subsidising university students? If not, there are a number of ways the system can be revised. They could be converted to loans, or grants, or part-loans, part-grants... it’s not up to me to decide how to reform the system.”
However, Scicluna argues the biggest haemorrhage is not stipends but government wastage and inefficiency... referring to the recent scandal involving the issue of direct orders at Mater Dei hospital.
“It gives a bad example throughout the economy,” he says. “These are basic issues of accountability and transparency. They affect the entire country.”
And yet, while Scicluna presents convincing economic arguments (to a layman’s ears, at any rate), the level of debate in the country appears to be more concerned with how Labour candidates voted in the last European election in 2004. Unprompted, he takes the opportunity to smash the PN’s current – albeit somewhat outdated – witch-hunt for closet Euro-sceptics within the Labour fold.
“I will not reveal how I voted in the 2004 referendum,” he asserts emphatically. “But only for one reason: to show how utterly irrelevant this argument has become. I have gone on record on countless occasions to say that EU membership would be beneficial to the economy. I was interviewed in November 1996 – two months after Labour won the election – and went on record saying that the Labour party would eventually come round to accepting EU membership... and I have been proved right on this, too. But why grace the question with an answer? It is an irrelevance, nothing more, nothing less.”

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