Crisis calls for Consensus

The Malta Independent 

Elections have a habit of being the dividing line between fantasy and reality. We are currently experiencing this transition. Before the elections we are informed through bold billboard messages that the country’s finances were built on strong foundations. To deliver the message visually we were presented with the heart-warming image of a handsome young boy sitting happily and securely on his father’s broad shoulders.

100 days after the election we are told that the public finances are out control, that this year’s public deficit will be 7% of GDP not 4.5% as planned, and that unless we seriously re-structure the country will risk financial collapse. The Prime Minister unashamedly told a CNBC interviewer that our social security structure is unaffordable and unsustainable, and that now we have to take the bull by the horns to bring it back to within affordable limits.

Reality is that the current size of the deficit was already there when the budget was being put together. This is how I had criticised the budget last year:.

‘The true deficit for next year is more like Lm113 million (as against the official Lm74million) and that only if new tax measures generating Lm6 million are announced out of budget. …..With this budget the Minister means to fudge the real issues and limp to the next election which will clearly come before the deficiency of the budget will have time to emerge.’

It was clear then as it is clear now that the budget was put together artificially to look decent until the election. Expenditure did not overshoot the budget. The budget was purposely undershooting expenditure already committed to and now the truth is emerging with vengeance.

As is normal when facing a crisis the government calls for consensus. It is quite understandable that certain problems are beyond government’s sole power to address and are best addressed through consensual approach. But this does not normally happen with a government that has been in office for over 16 years. The PN manufactured the crisis on their own, often abusing democracy through vote attraction by irresponsible housekeeping.

If the government seriously means to solve problems by consensus it should first profess a mea culpa and then seek a deal with the opposition through an interim power/responsibility sharing arrangement. It cannot just seek consensus where in crisis.

The Opposition on the other hand cannot just brag the “I told you so” key line and let the government to stew in its own juice. It is our juice. The problems are ours not the government’s. The government has secured tenure for another five years through misrepresentation of facts and abetted by an opposition that unwittingly bundled the EU issue which eclipsed domestic issues.

Now the EU issue is behind us and acceptable even to those who just a few months back were vehemently speaking about it in ‘allahares’ terms. But the domestic issues keep compounding themselves threatening economic decay unless crisis safeguard measures are implemented.

The opposition has to respond positively to government’s call for consensus. But it should demand rights not just responsibilities. And we cannot continue drawing rings around untouchable sacred cows if we really mean to restructure. There should be just one sacred cow i.e. that the country has to be made competitive in global terms and attractive in investment terms.

If we don’t get this right all other fenced rings round sacred cows will crumble. If we do, we can re-draw the rings in a radius that is commensurate and sustainable by true productive economic growth.