29 October 2003

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Toon this week: Beware the Trojan elephant

White elephants

Two weeks ago the Prime Minister went on record admitting that during the past 16 years there have been instances when the Nationalist government tried to solve problems by patching things up.
The real solutions, the ones that would have tackled the problems at their roots even if they caused discontent, were sidelined.
The Prime Minister’s statement was a bold admittance of failure, something very rare in this country. But, with such a statement and the promise to take the necessary decisions to solve the country’s financial ills, one would have expected action to follow words.
But that was not the case in the solution being proposed for the Drydocks.
In typical fashion, the details of the Drydocks restructuring solution were leaked in an English-language daily. And the details that have emerged show that the solution is anything but what the country truly needs.
The Drydocks will merge with the Malta Shipbuilding to form a new, leaner company. This has long been one of the recommendations made by experts and is definitely a wise move.
But the proposed creation of a new industrial company to absorb the 900 extra Drydocks employees is anything but wise. It smacks heavily of creating another public white elephant.
This new company, which would possibly be one of the largest employers on the Islands, has no assets of its own. It has no private shareholders to invest precious funding. Government would be the main and only investor.
And what does that mean?
The tax-paying public will have to foot the bill of yet another white elephant, which would grow fatter and fatter as time passes by. It only shows that the country has not learned from its past mistakes.
This solution has all the undertones of the late eighties and early nineties mentality when the Nationalist administration ‘solved’ the Drydocks problem by simply throwing money its way. For government, industrial peace was bought at the expense of digging deeper into its own pocket, or rather into that of the taxpayer.
The company never revived and more funds kept being pumped in. Now the exorbitant debts amassed by the Drydocks over the years are being written off. Government, other public entities and, most of all, the tax-paying public, will not see a cent from the more than Lm310 million owed by the failed company.
Government will also be forking out more millions to finance early retirement schemes.
Reality shows that almost all Drydocks workers that took the first early retirement schemes have found jobs within the private sector. It may concur to consider new schemes, although it is our firm belief that the vast majority of the 900 extra workers have side jobs and hence hold more than one possibility of being economically productive.
Today we suffer the consequences of the half-hearted decisions taken in the Nationalist administration’s past 16 years. And lest government aims to embark on a self-destructive path, it should not consider creating more white elephants.
This country needs solutions that make economic sense and ensure productivity. Wiping out debts, shoving millions in arrears under the carpet and believing that the problem never existed will get us nowhere. Golden handshakes and white elephants are anything but economically sensible.
Government, the opposition, civil society, taxpayers and constituted bodies have to realise that this country needs to pass through some difficult times. The sooner we all come to that realisation, the quicker we can start to come out of the present rut.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail