The Malta Independent on Sunday
Now that that Dr Fenech Adami is well ingrained in his Presidency and his image as Prime Minister is being faded out even by formalisation of his first name from the colloquial version by which he was politically commonly referred to, it is time to draw some initial conclusions on the legacy of his 17 year span as Prime Minister, interrupted only by the two year Labour government interval of 1996-1998.
Fenech Adami did not leave a clean slate for his successor. The first year of Prime Minister Gonzi has done nothing if not reveal the great magnitude of problems, generally economic but with unavoidable social and environmental connotations, that Fenech Adami left behind.` In fact the general perception is that Fenech Adami did not do Gonzi any favours in exiting at the time he did.` It would have been far more appropriate and logical if Fenech Adami exhausted the major part of his 2003 electoral mandate and brought in Gonzi in the latter half of the legislature. By doing so Fenech Adami would have honoured the mandate he demanded and obtained from the people rather than ride roughshod over the principle of delegatus no potest delegare. And he would not have burdened Gonzi with the political guilt of tough measures that have to be taken to rectify years on years of economic neglect that has eroded our work ethos and our international competitiveness.
Take the issue of reduction in public holidays. Whichever way you look at it the issue is not whether you remove the days in lieu for public holidays that fall on the weekend. The issue here is how we are going to work more without additional compensation in order to bring down the cost of one productive unit in order to make us more internationally competitive.
Now the reason why we need to take such measures is that in the heady days of the first Fenech Adami legislature he gained political mileage and weakened our culture of work by impressing us that money is really so much not a problem, that we could increase our public holidays by 5 days and our vacation leave by another 5 days in graduated steps one day a year between 1987 and 1992. 10 extra days of holidays were added without even blinking an eye-lid.` No MCESD discussions, no social pact, no second thoughts about easy pre-electoral promises.` The economy suffered no immediate damage and many started to believe that really money is no problem. But reality is that the economic adverse effect of such measures was cushioned by the beneficial effect of trade liberalisation and a leap jump in consumption financed by accumulating frightful amount of debt that changed a debt-free country into one that exceeds all limits of debt prudence.
Our international competitiveness was however effected so much `that early in the second Fenech Adami leglisature we had to swallow a 10% devaluation of the currency. This restored competitiveness and we had good growth in the following two years. However as the devaluation was not accompanied by other measures that could sustain its one-off boost to international competitiveness, its positive effects were completely exhausted by 1994. The growth registered in 1995 and 1996 is illusionary. Most of the growth was only in the measured economy rather than in the real economy as the changes in indirect fiscal system through the introduction of VAT brought to the surface various economic activities that were previously performed in the black economy.
Along the way problems continued being financed rather than solved.` Industrial peace and fake prosperity was expensively bought from exchequer funds which were translating into a huge build up of debt.
Since 1997 we have been living with a structural public fiscal deficit that seems more obstinate than solid rock and appears insensitive to the annual rises in fiscal revenues through better enforcement, better collection systems and an endless list of new tax measures under various forms and guises, sometimes increased licences, sometimes traffic fines and some other as eco contributions.
The Fenech Adami economic legacy is economic problems of crisis proportions and a national state of denial that the problem is real and that it can only be solved by painful rollback of the money no problem culture and the re-discovery of the ethos to work, the urge for efficiency and productivity even at grass roots levels to honour the tine-honoured call of having a Repubblika mibnija fuq ix-xoghol.
I am sure that many readers are by now protesting that the Fenech Adami legacy should be measured by criteria beyond the economic stables and credit should be given for the openness he brought in our society in dismantling the state command approach of his predecessor and guiding the country to EU membership.
Whilst no doubt Fenech Adami deserves credit for liberalising the economy from state commands, liberalising broadcasting from complete state control and delegating operational decisions to local council levels, one cannot but weigh such achievements against the huge economic costs brought in instigating an excessively consumerist society with highly diluted values for solidarity which are generally reserved for the occasional conscience washing Strina type of activities rather than being ingrained `in our society.
As to entry into the EU, I continue to see this as a means to an end rather than an end in itself. I have always maintained that Malta can succeed both inside as much as outside the EU. The EU would not on its own present us with any automatic assurance of our economic success and that the ingredients of success are more dependant on the quality of own leadership to instil economic discipline and re-cultivate the work culture and efficiency ethos rather than on the form of our relationship with the EU.
It is therefore not coincidental that people are now realising that the EU does not constitute the new spring that we were promised and that at best the EU could force on us the discipline which our weak leadership is unable to instil on ourselves. ` So we are definitely not getting anywhere near our maximum potential from` EU membership as we still have leaders who have difficulty in selling us the mere withdrawal of two days of public holidays which is a totally insufficient measure to address our economic crisis.` How may I ask do our leaders hope to apply the full rigour of the true medicine which is necessary to render our country competitive in order to make maximum benefit of EU membership and to ensure that we can enter the euro in a healthy state rather than enter such mechanism purely to lose yet another tool which we can use to engineer an economic recovery`
We will soon enough find out that the excesses of the Fenech Adami legacy are much harder to correct than the excesses of the Mintoff legacy.
Now that that Dr Fenech Adami is well ingrained in his Presidency and his image as Prime Minister is being faded out even by formalisation of his first name from the colloquial version by which he was politically commonly referred to, it is time to draw some initial conclusions on the legacy of his 17 year span as Prime Minister, interrupted only by the two year Labour government interval of 1996-1998.
Fenech Adami did not leave a clean slate for his successor. The first year of Prime Minister Gonzi has done nothing if not reveal the great magnitude of problems, generally economic but with unavoidable social and environmental connotations, that Fenech Adami left behind.` In fact the general perception is that Fenech Adami did not do Gonzi any favours in exiting at the time he did.` It would have been far more appropriate and logical if Fenech Adami exhausted the major part of his 2003 electoral mandate and brought in Gonzi in the latter half of the legislature. By doing so Fenech Adami would have honoured the mandate he demanded and obtained from the people rather than ride roughshod over the principle of delegatus no potest delegare. And he would not have burdened Gonzi with the political guilt of tough measures that have to be taken to rectify years on years of economic neglect that has eroded our work ethos and our international competitiveness.
Take the issue of reduction in public holidays. Whichever way you look at it the issue is not whether you remove the days in lieu for public holidays that fall on the weekend. The issue here is how we are going to work more without additional compensation in order to bring down the cost of one productive unit in order to make us more internationally competitive.
Now the reason why we need to take such measures is that in the heady days of the first Fenech Adami legislature he gained political mileage and weakened our culture of work by impressing us that money is really so much not a problem, that we could increase our public holidays by 5 days and our vacation leave by another 5 days in graduated steps one day a year between 1987 and 1992. 10 extra days of holidays were added without even blinking an eye-lid.` No MCESD discussions, no social pact, no second thoughts about easy pre-electoral promises.` The economy suffered no immediate damage and many started to believe that really money is no problem. But reality is that the economic adverse effect of such measures was cushioned by the beneficial effect of trade liberalisation and a leap jump in consumption financed by accumulating frightful amount of debt that changed a debt-free country into one that exceeds all limits of debt prudence.
Our international competitiveness was however effected so much `that early in the second Fenech Adami leglisature we had to swallow a 10% devaluation of the currency. This restored competitiveness and we had good growth in the following two years. However as the devaluation was not accompanied by other measures that could sustain its one-off boost to international competitiveness, its positive effects were completely exhausted by 1994. The growth registered in 1995 and 1996 is illusionary. Most of the growth was only in the measured economy rather than in the real economy as the changes in indirect fiscal system through the introduction of VAT brought to the surface various economic activities that were previously performed in the black economy.
Along the way problems continued being financed rather than solved.` Industrial peace and fake prosperity was expensively bought from exchequer funds which were translating into a huge build up of debt.
Since 1997 we have been living with a structural public fiscal deficit that seems more obstinate than solid rock and appears insensitive to the annual rises in fiscal revenues through better enforcement, better collection systems and an endless list of new tax measures under various forms and guises, sometimes increased licences, sometimes traffic fines and some other as eco contributions.
The Fenech Adami economic legacy is economic problems of crisis proportions and a national state of denial that the problem is real and that it can only be solved by painful rollback of the money no problem culture and the re-discovery of the ethos to work, the urge for efficiency and productivity even at grass roots levels to honour the tine-honoured call of having a Repubblika mibnija fuq ix-xoghol.
I am sure that many readers are by now protesting that the Fenech Adami legacy should be measured by criteria beyond the economic stables and credit should be given for the openness he brought in our society in dismantling the state command approach of his predecessor and guiding the country to EU membership.
Whilst no doubt Fenech Adami deserves credit for liberalising the economy from state commands, liberalising broadcasting from complete state control and delegating operational decisions to local council levels, one cannot but weigh such achievements against the huge economic costs brought in instigating an excessively consumerist society with highly diluted values for solidarity which are generally reserved for the occasional conscience washing Strina type of activities rather than being ingrained `in our society.
As to entry into the EU, I continue to see this as a means to an end rather than an end in itself. I have always maintained that Malta can succeed both inside as much as outside the EU. The EU would not on its own present us with any automatic assurance of our economic success and that the ingredients of success are more dependant on the quality of own leadership to instil economic discipline and re-cultivate the work culture and efficiency ethos rather than on the form of our relationship with the EU.
It is therefore not coincidental that people are now realising that the EU does not constitute the new spring that we were promised and that at best the EU could force on us the discipline which our weak leadership is unable to instil on ourselves. ` So we are definitely not getting anywhere near our maximum potential from` EU membership as we still have leaders who have difficulty in selling us the mere withdrawal of two days of public holidays which is a totally insufficient measure to address our economic crisis.` How may I ask do our leaders hope to apply the full rigour of the true medicine which is necessary to render our country competitive in order to make maximum benefit of EU membership and to ensure that we can enter the euro in a healthy state rather than enter such mechanism purely to lose yet another tool which we can use to engineer an economic recovery`
We will soon enough find out that the excesses of the Fenech Adami legacy are much harder to correct than the excesses of the Mintoff legacy.
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