Editorial | Tuesday, 31 October 2007

Costing the promises

Politicians are used to making promises, especially on the eve of an election. This year, and particularly after the budget announced by the Prime Minister, the leader of the Opposition has thought fit to make a large number of proposals as part of his party’s electoral programme. In keeping with our declared policy in favour of financial discipline and accountability, this newspaper considers it of paramount importance that all promises made are costed. This is of paramount importance in order to meet our requirements as established by the Maastricht criteria and the Lisbon agenda.
The Labour Party’s promise to reduce the surcharge on the utilities bills is open-ended, with no capping on the cost. Does this mean that if the price of oil reaches $100 per barrel that all 50 per cent of this amount will be reduced? Clarification on this point is called for. This blanket reduction also flies in the face of responsabilising consumers to use electricity and water supply with prudence. This promise alone will cost the public exchequer around Lm20 to 25 million yearly.
The removal of taxation from overtime payments is also a measure which will reduce government revenue by around Lm12 million pounds. This measure also needs to be thought through, as it can give rise to many abuses. Employees could persuade their employers to reduce their wages and pay the difference in overtime payments. The measure could also wreak havoc with the shift system.
Elsewhere, the proposal to make the elderly staying in government homes pay back 65 (and not 80) per cent of their pension to government will also cost the government the difference of 15 per cent. To date, no one has satisfactorily costed this proposal.
The granting of a full service pension, while praiseworthy, also has a price tag to reckon with. At no stage during his reply to the budget speech did the leader of the Opposition give any indication at all as to the cost of this benefit.
Surprisingly too, government has not concretely costed any of its own proposals. The people have a right to know how many people will be affected, and at what cost.
The restoration of public holidays falling on the weekend also comes at a price, especially as to its effect on our competitivity. The mantra of our economy should be competitivity, competitivity and competitivity. Our entry into the European Union is a golden occasion for us to grasp the opportunities. This chance will be lost unless our economy can compete. Re-introducing a number of holidays will only lessen our ability to compete. Again, we advise caution on this point.
The dream of creating two golf courses in Malta and one in Gozo is also highly controversial from an environmental point of view. It is being presented as a public private partnership, with the emphasis, quite rightly, on their being stand-alone projects. Are these to be built at public expenses and managed by the private sector? Would it not be more sensible to allow the private sector to build at its own expense if the tourism industry is so convinced that with the existence of more golf curses our country would attract higher added value tourists to our island? If built in the vicinity of any one hotel, will it not smack of a private gift to an entrepreneur? This apart from the main consideration being the amount of water, a rare commodity in Malta, required to keep these golf courses in good shape.
The proposals also include many targets, but are short on details regarding how they are likely to be achieved. How are 2,000 new jobs in manufacturing going to be created? How are investors in the IT sector to be assisted? How is the government going to help hotels? How is Air Malta going to be supported? Is there a restructuring plan in the pipeline? How are farmers and fishermen to be assisted? What further spending on family policies is there likely to be? These intentions require beefing up if they are to be taken seriously, and not perceived to be merely electioneering gimmicks.
A professional follow-up to all the proposals and targets set by the leader of the Opposition calls for a study to be publicised costing the proposals and giving them a clear target date for implementation.
The question that needs to be asked when examining any one of these proposals is whether they get us closer to fulfilling our obligations as members of the EU. To date, and on a number of points, the country is scoring very poorly in the Lisbon league tables. We are classified as laggards on a number of crucial issues. When examining the proposals made by the Opposition one needs to ask one fundamental question: will this or that proposal improve our ratings in the Lisbon agenda or not? Equally important is whether all the hard work thrown to controlling our deficit will be thrown to the wind.
We fear that many of the suggestions will make our country less and not more competitive.