The great expectation for the coming budget, undoubtedly like every other budget in my living memory, will be the cost of living increase that government will impose upon itself and the private sector to pay.
That so many people still consider such a miserly increase as a vital aspect of their well-being should worry the political class. Can it be so that a two-lira-per-week increase, rather than a Lm 1.50 weekly increase, is going to make that much difference to so many of us? Sadly it does, particularly to those families raising young children who just cannot make it to the end of month on their bread-line wages.
While those on very low incomes may be justified in requesting higher wage rises, the hard truth is that government cannot simply ignore economic reality and grant an unrealistic wage increase. This would risk fiscal stability, fuel inflation and may impose cost increases on businesses that are not in a position to recoup them through higher prices. The question that beckons is therefore “How can a government improve the people’s economic well-being, beyond statutory wage increases?”
Greens believe that government should not focus only on maintaining purchasing power through state-imposed wage increases, but should also look at ways of effectively reducing the cost of living through structural means. We don’t advocate price controls because they simply do not work; experience has taught everybody that. However what we believe in is state-funded facilities that offer people choices to allow more freedom in how they spend their money and live their lives. Let’s look at a topical example in our local context. Nowadays, many Maltese families own, or rather need to own, two cars – ironically, in a country where distances should not necessitate this. Why is it that people can live in a city the size of London without owning one car, but need two cars living in an island smaller than the London borough of Croydon? The answer is simple – public transport.
Malta has the most under-developed public transport system in the European Union. We have the worst form of organisation for public transport – a grossly-fragmented, owner-driven, state-funded private monopoly. Whilst our public buses may look cute on a brochure to tourists about to visit, they become a national liability after these same tourists leave with their experiences. The situation is such that, unlike every other population in the EU, the locals in Malta simply do not consider public transport as a viable option to our own hideously expensive private cars.
By the way; do you know how expensive your car is? I calculate the average car sets you back Lm6 per day – Lm2,000 per annum. Before you grab your calculator, let me explain. An average hatchback will cost you about Lm7,000 including interest, after which you will sell it (say six years later) for Lm2,000. That amounts to a loss in capital value of Lm5,000 over six years; some Lm 800 per annum. To this you must add insurance (Lm250), road licence (Lm50) and maintenance (say Lm150). Then, of course, fuel: say another Lm450 per annum. A total of Lm1,700, per annum. Now remember that you must pay this amount of money after your income has been taxed. If I can assume that your average income tax rate is 15 per cent, then you must earn as much as Lm2,000 per annum (gross), to be left with the Lm1,700 necessary to pay for your car. Lm6 per day, Lm2,000 per annum for every car. If your family runs two cars, that’s Lm4,000, every year of your life.
Now imagine for a while that the Greens are in the next coalition government. We will definitely insist on a serious and substantial reform in public transport. I am not talking here about the habitual annual tussle with the Public Transport Association, inevitably resulting in a week long strike after which some more subsidies are granted for improvements that remain virtual. We will insist that the whole system, (buses, taxis as well as other transport means such as ferries, water taxis, etc.), is reformed. The thrust of the reform will be a liberalisation drive accompanied with watertight public service obligations. We need to carry out a revolution in public transport before we choke ourselves on fumes, stuck in hour-long jams, swearing at each other, whilst scaring away more of our tourists. We should arm the country with clean, affordable, reliable and accessible public transport so that private transport becomes the inefficient, unaffordable and unreliable mode of transport. We would then be giving people a realistic choice between public and private transport.
It would not mean that people will not need a car, but should mean that each family should have a realistic choice of getting along fine with just one car, rather than two. The result is a saving of Lm2,000 per annum, for each family. It is a political reality that can be just a few months away. What will you get from a one-party government, red or blue, after the next election, apart from another paltry Lm1.50 per week?

Edward Fenech is spokesperson for Finance and the Economy of Alternattiva Demokratika – The Green Party