Will the spending of €80 million on the city gate project boost the economy? On the face of it, it seems like a €20 million per year financial injection into the economy until the projected completion date in 2013. At other times when government was embarking on major infrastructural works, the country was invited to ponder the positive effects on the economy in general of a significant expenditure of public funds. When the government was giving the go ahead to major private projects similar attempts were made to earn the admiration or gratitude of the public through claims that the expected investments would lead to economic growth and general happiness.
In line with this thinking the claim made by the Building Industry Consultative Council (BICC) that its sector’s contribution to GDP came to 15% of the whole was as much an expression as a reinforcement of the myth. In fact the construction sector contributes something between 3% and 5% to GDP, certainly significant but not the dominating sector it made itself out to be. To view things in perspective it takes only the reflection that agriculture the poor relation in the Maltese economy contributes around 3% to GDP.
Hard to believe? Well, agricultural production while remaining very hard and largely unrewarding work takes place in remote places without the presence of large numbers of people and often at very odd hours. Some of us may never notice a farmer at work for years on end.
On the other hand the construction industry is hard to miss. For those of us not directly involved, cranes, heavy vehicles and assorted juggernauts on our roads make their presence felt as do traffic diversions and the jammering vibrations of excavators near our abodes or places of work. The construction industry is the most obviously busy sector of the economy without a doubt.
Still our near silent farmers beat the builders hands down. Their secret is sunshine. They don’t have to pay for their most crucial import. Water they generally steal. Machinery fuel, fertilizers and pesticides they have to pay for while they are usually their own bosses and pay themselves absurdly low wages. The sun makes their gardens grow allowing the highest value added production in the country.
Construction is at the other end of the scale. The input from the domestic economy is derisory when set against the total investment. Labour from the design stage to the mortar mixing level is not a major concern. For the rest the only locally procured materials are stone in blocks or as gravel for concrete and water, both ridiculously undervalued. Every other material whether tools, plant and equipment or finishing materials, is imported and must be deducted when computing contribution to GDP.
Agriculture makes low capital demands in relation to value added while construction does just the opposite. The tortoise beats the rabbit in GDP terms. For the operators themselves it is a different story. Farmers’ gains are modest and their custom is always to complain. Builders’ gains have been more than modest until very recently and their habit has been to flaunt their success.
Coming back to the City Gate project, we can expect most of the €80 million to take flight out of the Maltese economy almost immediately with only a small proportion remaining in labour costs to provided the much vaunted multiplier effect. Considering that these are public funds in high proportion raised from the taxation of labour at middle and low income levels, it is no small sacrifice.
Having said all this there is more to architecture than money. More so when we are considering a project involving what should be the highest institution in the land in the most prominent site. There is no reason to believe that it will last for 200 years as some politician blurted out in an excess of enthusiasm but it should serve us long and well if not as a boost to a slowing economy.