20 April 2005

The Web


Playing the blind faith card

And so it’s official. The PN Secretary General exerted his ‘papal bull’ to declare that the reason for the tremendous losses suffered by the party in recent elections was the hard decisions Lawrence Gonzi took since becoming prime minister.
Emotions were running high with speakers at last weekend’s general conference believing that with the passage of time the fruits of all the hard work will become evident and appreciated by the electorate, which would propel the PN to another election victory in three years’ time.
Whether this rhetoric will pacify the business community burdened with government induced costs and struggling to make profits is another matter.
At one point during the conference there was a lone voice calling for the party to swallow a small dose of humility, but Parliamentary Secretary Edwin Vassallo’s cry was swept away amid the countless biblical references and the weeding out of dissenters by the PN’s established inner core.
This leader has always encouraged the prime minister to take the necessary decisions to kick start the economy and control public finances, hard as the decisions may be. It will take courage to deliver irrespective of political fall out. But to blame the PN’s massive electoral losses on hard decisions is a simplistic way of describing the situation.
The hard decisions taken to date may be grouped into two broad categories; revenue generating and trimming public companies.
Revenue generating mechanisms such as the eco-tax, the surcharge on utilities and increased taxation on telephony and travel have done little to boost the economy. They may have increased Government’s take on an individual’s hard-earned cash but within the broader picture they are just an additional cost for households and businesses. What escapes Government’s eye is that these new taxes came after a hefty increase in VAT last year, which has had long-lasting repercussions on the cost of living.
This increase of government revenue will simply be nullified unless government simultaneously cuts its expenditure, something which it has been incapable of doing in a systematic and meaningful way.
Gonzi’s other set of hard decisions were related to the trimming of expenditure in public companies. The Air Malta cost saving plan, which was agreed to with all the unions represented at the company has worked. The wage bill has been brought down across the board and no employee has lost his job. But the restructuring at PBS and the Drydocks leave much to be desired. Indeed, despite trimming the Drydocks workforce to half what it was before, Government still shoulders a Lm3.1 million wage bill pertaining to ex-Drydocks employees now employed with IPSL, a government company.
A more concerted effort is required to streamline the various agencies and authorities that have mushroomed to date and which are a constant drain on public funds.
But what Gonzi has failed to do and which would have probably earned him the title of hard-decision taker more than anything else he has done, is come up with a blueprint for economic revival to boost competitiveness.
Yet, in the wake of a failed social pact that could have provided the necessary impetus for renewed economic growth Gonzi just went ahead implementing the public holidays measure, which many doubt will deliver the promised growth.
Regrettably during the PN conference we heard nothing about how the economy is to be revived. The only central message seemed to be ‘we know best, leave it in our hands time will prove us right’.
These comments reveal the mind set at work. Many a promise was made in almost papal infallible terms. Perhaps the secretary general quoting passages from the bible was overwhelmed by the great media coverage given to the election of the new Pope. Business simply does not work on promises. Business needs a commitment by government to reduce burdens and a clear economic vision on the way forward. Business can certainly do without a hike in interest rates.
The way forward needs a radical overhaul of how we manage our tourist product, a packet of incentives to attract foreign direct investment and a serious plan to make the public sector work in a cost-effective manner.
This is achievable but there was none of this in the PN party conference. Government is asking the business community to have blind faith in its revival plans. But when talking about an economy divine inspiration is not guaranteed to work.

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Editor: Saviour Balzan
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