Wednesday, 27 July 2005

Kissing the Better Half Goodbye

The Malta Independent - Friday Wisdom

As our parliamentarians wished each other happy holidays in the House before its summer recess, two fifths of the legislature was archived into history. As quite often the legislature does not run its full term, which would mean general elections in peak summer of 2008, then it could be argued that this legislature, which was sanctioned by the general elections of April 2003, will have passed its half way mark before parliament resumes late next September.

The question is – are we kissing goodbye the better or the worse half of the legislature?

It depends on what criteria one uses to measure the better or the worse. I go by substance and experience leads me to conclude that a legislature is normally split in two halves. The first half is where the medicine is applied; where the unpopular decisions are taken to address the country’s problems; where government generally is less popular as it suffers the mid-term blues as the electorate feels the pinch of the tough medicine without as yet perceiving the benefits of the cure.

Memory flashes back to the Labour government of 1996-1998 where it had only time to give account of the first two years where it was constrained by the inherited problems, whose fatherhood entirely belonged to the outgoing PN administrations of 1987 – 1996. One can well remember the very sensible measure of applying a token fifty cents charge on free medicine prescriptions, not as a fund raising measure, but purely to discourage waste in free medicines being claimed unnecessarily.

Surely one can easily recall the unjust criticism against such a necessary and sensible measure, with Labour being accused as having lost its social conscience. Because Labour government’s life was cut all too short as it was forced to face the electorate with a record of pain and no gain, the measure was aborted and the medicine problem remains not addressed till today.

Government’s medicine bill is going through the roof. Bills due for medical supplies to local importers mount unpaid and importers have pooled together to issue a common legal warning to government urging it to pay its dues. This is quite an unprecedented event which indicates that government finances are scraping the bottom of the barrel and that any claimed improvement in government finances ought to be taken with a pinch of salt as unpaid bills continue to mount unrecorded in government cash-based accounting system.

In the meantime the Central Bank regularly reminds the government in official speeches of its Governor, and no doubt even in private meetings, that it can only meet its Euro targets for reduction in public deficit to within the Maastricht criteria if a system of co-financing for public health services is introduced.

Co-financing in simple words means that public health service would not remain free as at present but consumers of such services will have to start making some contribution both to ease government expenditure as well as to remind consumers that non-payment does not mean it is free. There is no free lunch anywhere and someone somewhere is paying for free medicine, whether it is through our current taxes or through accumulating debt which burdens future generations.

Memory also flashes to the re-structuring that Labour government of 1996 – 1998 wanted to do in the student stipend system for our tertiary education. Knowing fully well that that system was neither sustainable nor fair, Labour wanted to shift part of the stipend payments to a loan system which students would pay back to society during their post-graduation economically active life. UK introduced similar measures by demanding co-financing top-up fees for tertiary education to keep it sustainable. Labour wanted to keep it entirely free but simply shift part of the stipend to a recoverable loan. Hell broke loose and the PN, in spite of their blame in constructing an unsustainable stipend system, was scandalised at Labour’s loss of social conscience for attempting to do what was right and necessary.

Here we are seven years later and the monetary authorities regularly have to remind the government that if its finances are to meet the criteria for Euro adoption it needs to restructure the cost of educational services.

My experience shows that if such measures are not taken in the first half of the legislature it will be difficult, unlikely and almost impossible for government to take such decisions in the second half. As the general election starts getting visible on the horizon, with electoral districts boundaries revised, agreed and all, government will become increasingly sensitive to its political fortunes and will start doing what is popular rather than what is right.

So if in the first half of the legislature we have not taken the tough measures that our economy really needs and without which we cannot make it to either joining the Euro or to achieve successful and effective economic re-structuring, so why is it that government is equally suffering mid-term blues? Why such blues if we have not taken the pain and consequently cannot expect the gain in the second half of the legislature?

The simple answer is that this is a fatigued administration that has over-promised and under-delivered. The first half of the legislature, for all the promises of the new incumbent at the helm, will be more remembered for faux pas like Malta House in Brussels rather than for any new energy in truly addressing our chronic economic ills.

A typical case of such fatigue is the administration’s inability to appoint a new Ombudsman when the current incumbent has exhausted the two terms permitted by the constitution. What efforts were made to find a name acceptable to Parliament to avoid leaving gaps in this most respected public post amongst society? Why should these efforts, if indeed any were made, not be made visible to the people to give us account that our parliamentarians and the executive are doing the minimum expected of them?

Is it reasonable to expect a better half for the remaining time of the current legislature? I think it is more reasonable to expect more of the same.

Sunday, 24 July 2005

State of Denial

The Malta Independent on Sunday 


  I always suspected it but now the proof is concrete solid. We are living in a state of denial.

Just as soon as we have travelled the long road till we achieved political consensus about Malta`s EU membership, public support for the EU as measured by Eurostat amongst the Maltese public is amongst the lowest of the new member states.` Why`

My best bet is that we have joined the EU for the wrong reasons.` We joined the EU for the prestige and for the funds, wrongly assuming that it could be an easy solution to our economic ills which will be magically solved once the EU would owe us a living.

Now we are finding out that it just does not work that way.` And we are disappointed that no one really owes us a living. And for all the opportunities which EU membership presents, nothing changes the simple fact that we have to solve our own problems, and that it is up to us to grasp the opportunities.

I was not enthusiastic about EU membership as I was dismayed by the misrepresentation that was being sold to the electorate. I always argued that should we find the self-discipline to do what we have to do, the sort of discipline which the Swiss seem well endowed with, we could do just as well or even better outside the EU.` On the other hand if we continue to miss this self-discipline, as very clearly we are, then EU membership was plausible not so much for the funds or for the prestige but at least for the discipline it imposes on us to save us from ourselves.

It is time for the great majority of us to abandon the state of denial and accept that we are simply not earning our way in the world, that we are just bumping along the bottom whilst all else around us are overtaking us ` some walking by us whilst others running or sprinting ahead of us.

Government seems bent on cultivating and spearheading this state of denial. All economic data shows a dismal picture. We have had no real growth during the four year period 2001-2004 so that the real GDP of 2004 was at the same level of 2000. Furthermore it is clear that in the composition of our GDP the two productive sectors of manufacturing and tourism have actually contracted and the slack was taken by financial services and real estate. It is questionable for how long real estate can continue to pump the economy forward given the stellar prices that property has reached and the consequential abundance of residential development in the pipeline.

Data for the first quarter GDP for 2005 shows a further real contraction.` Latest data for government budget position up to May 2005 shows deterioration rather than an improvement over last year, in spite of substantial increase of grants revenue from the EU and the Italian protocol.

The revenue side of government finances shows disquieting slowdown in all ordinary fiscal headings with the exception of VAT which in comparison to last year was enjoying better flows from the rise in VAT rate from 15% to 18% effective 1st January 2004 ( the comparative revenue for 2004 has its reporting origin backdated to 2003 with the lower VAT rate).`

Whichever way you look at it we have a chronic economic jam at a time when world economy is experiencing substantial growth.` This is not the mid-seventies or early eighties when the whole world was in a chronic recession.` It is not the early nineties when high interest rates to iron out chronic inflation slumped economic growth in most developed economies.

This is a time when economists are speaking of goldilocks economics.` Where there is good growth rate varying from 9% in China and parts of Asia, 4% in the US and 2% in Europe but without giving rise to undue inflation expectations making low interests rates apparently sustainable for the long term.` It is the best international scenario we could reasonably aspire for.

Yet we seem locked up in a vicious circle of inflation, stagnant economy and fiscal deficits. It is quite a moot point whether one calls this a recession or not. What`s in a name` What matters is that we have deficits and inflation without any growth. If recession is too offensive a term for some of us then they can call it stagflation or slowdown but this will not change the substance ` we are falling behind; we are the last of the pack; we are not operating anywhere near our true potential level.

Quite often economists and columnists like yours truly try to alert the public conscience on the true state of affairs we are in.

The state of denial is so ingrained that our political leaders, rather than acknowledge the problem and work out a consensus-based plan on how to address the problem, as the Irish did so successfully when they were in our same position in the early 90`s, they try to belittle economists who dutifully point out the undue length of our shallow recession.

Our politicians seem happy that our recession has been shallow though long and care little that our global competitors have left their shallow recession behind more` two years ago.

But the state of denial is by no means restricted to our politicians. The President of the Malta Employers Association (MEA) should know more than most the dismal state of our economic performance and that the only reason why we have no double digit unemployment is due to the under-employment we have spread across the whole public sector.`

Yet rather than build on what serious economists, not on government`s payroll, are telling us, the President of` MEA accused such economists of playing political games.

Are our corporate leaders just as much in a state of denial that they have not even learned that before one can solve a problem one at least has to accept its existence`

Friday, 22 July 2005

Alternative Employement

The Malta Independent - Friday Wisdom

Whenever a government owned enterprise, organisation, authority (or whatever name is assigned to it) hits the rocks and needs to shed labour to stem the financial haemorrhage, the unions expect, as of a right, that the government intervenes to offer alternative employment.

Scant attention is given to the need for government to run its ship more efficiently by reducing, at least through natural wastage, its own employees within central government so as to contain the irresistible creep of recurrent expenditure which has to be financed by taxes and/or borrowing.

Each and every employee who passes through the trauma of losing employment would wish for someone to offer him or her alternative employment. But whereas such expectations are almost as of right in the public sector, redundancies in the private sector offer no such protection and, more often than not, employees will have to find their own way around their hardship till they can find alternative employment or go into early retirement.

What I find hard to understand is why the unions use so much energy to defend public sector employees who suffer redundancies, as is currently the case with the employees of Interprint that has ceased operations, and do nothing to ease their ineffectiveness regarding private sector employees who suffer a similar fate.

Social justice demands that unions should be at the forefront in demanding a re-balancing of the rights of private sector employees with those of their public sector brethren.

This is also necessary as in most cases private sector employees are much more productive and efficient than public sector employees – so we have an absurd and unsustainable situation where the most efficient are the least protected and the less efficient are the most rewarded.

It is certainly not too early for a social deal to be worked out whereby the unions agree to allow more flexibility, accountability and discipline in public sector employment. This has to include the principle of regulated redundancies, in order to ensure that the public at large gets fair value for its taxes rather than seeing its taxes and debt obligations being abused to create expensive, unproductive, artificial, vote catching employment.

In compensation, government has to regulate the labour market to include more protection for private sector employees who suffer redundancy. This ought to include an obligation for the employer to make provision for termination benefits in the form of payment for re-training, in order to facilitate the transition of the affected employee into new, productive employment by enhancing skills and employability.

If government has any money to spend to cushion the pain of unemployment then such money should mostly be spent on retraining and certainly not on offering artificial alternative employment.

I repeat my often made suggestion for the creation of a retraining scheme ( a local version of Cassa Integrazione) which can absorb within its fold all the unemployed and all employees declared redundant, irrespective of whether in the public or private sector. Such a scheme is to be funded by former employers who are to be obliged to pay for the retraining of employees they discharge, while the State will pay unemployment benefits during the retraining period.

The State will then offer new employers incentives to hire employees from the retraining scheme by subsidising their wages, possibly continuing to pay the unemployment benefit even during the first years of the new employment.

I do not expect public sector employees to be overjoyed with such a proposal. Human nature being what it is, individuals are quite liberal in offering pity for the suffering of others but not quite willing to show solidarity by shedding some of their own privileges in order to ease the pain of those who suffer the social trauma of unemployment.

Yet leadership demands that something is done to address this apartheid in our labour market. In the process, we could have the added bonus of addressing the spending crawl which is the main contributor to our public budget deficit, we could generate growth as more people are put to work productively and we could bring about an overdue element of social justice in our industrial relations.

Friday, 15 July 2005

Worse than a Recesion

The Malta Independent - Friday Wisdom

The Prime Minister, during his monthly press briefing, made issue out of a claim made by colleague economist Prof. Edward Scicluna that the country has been going through the longest recession in post-war history and that the government was ill-served by those that advised entering ERM II mechanism, in preparation for the eventual adoption of the euro, at a fixed parity rate at the level existent as at end April 2005.

The Prime Minister rebutted that the country is not in a recession and that time is proving the wisdom of the ERM II decision as foreign reserves have stopped falling, signifying broad confidence in the chosen exchange regime.

Both points deserve further analysis that quite often escapes the media, short as it is of probing economic minds that can challenge irrelevant assertions made by self-serving politicians.

A recession technically results when three consecutive quarters of economic contraction are registered. So the Prime Minister can technically argue that it is not true that we are in a recession. But technicalities apart our economic performance is in substance worse than a technical recession.

For five years we have had GDP figures alternating between small contraction to small growth so that we are in real terms at the same real level of GDP as we were in the year 2000.

Source: NSO

This is worse than a recession. It is death by attrition. At least a true and proper recession would bring us to our senses and hopefully force on us a concrete resolve to address our problems in order to get back on a sustainable growth path. That is the function of economic cycles.

Unfortunately we have no cycles. We have a flat line. We have politicians who take pride at our not being in a technical recession rather than worry that we are standing still while all around us are pacing, running or sprinting forward. We have politicians obsessed by the absolutes and care little about more important figures of relative performance.

Consider also the nonchalance in the reply to criticism about the fixed parity choice of our ERM decision. We are right and critics are wrong because foreign reserves have stopped falling. How simplistically arrogant can one be?

The choice of an exchange regime cannot be conditioned solely by the need to protect foreign reserves from dwindling. The exchange rate regime has to be a component in the recipe for economic growth and stability. Stability at recessionary or economic stagnation levels is not something to be aspired for.

One aspires for stability when one is growing at or close to one’s potential for such growth. When one is growing well below one’s capacity, turbulence is better than stability as turbulence reshuffles the cards to attempt to maximise the potential. Our monetary authorities have duped the government that stability is desirable for its own sake rather than as a means to achieve growth.

When two or three years down the road it will result that the restructuring has failed to materialise, that growth remains anemic, that public deficit is still well above the three per cent of GDP, then the government and monetary authorities will either have to swallow their pride or risk locking us irrevocably into a fixed exchange regime at an uncompetitive level that acts as a barrier rather than a stimulant to economic growth, which should be the ultimate goal for which all other economic policies should be subordinated.

Our lethargy and inflexibility is forcing us to lose out to more agile and versatile competitors in a globalised world. As a contemporary example of missed opportunities we have the rise in the price of oil. Presently we are being oppressed not only by the rise in the price of oil which reached record nominal levels of 62 dollars, but also by the rise in the value of the dollar which gained 12 per cent against the euro since the beginning of 2005.

Difficult as such situation can be it also presents opportunities. It sets a perfect landscape for re-energising the public transport system by making it uneconomic for people to use private transport and attractive to shift to public transport. It would save traffic congestion and alleviate the strain on our environment. The rising price of oil should be a lease of life for our public transport system rather than its dead knell.

Economic viability of our public transport system must come from turnover growth not price increases. Quite the contrary this is time to lay an additional charge on prices of fuel at the pump to give rebates to those who opt for public transport. This could have a lasting effect in reduction of our energy bill and produce a leap in our quality of life that saves rather than costs money.

Sunday, 10 July 2005

Two Bangs

The Malta Independent of Sunday

My earliest childhood memories go back to that Maundy Thursday of 1955 when an explosion at the fireworks factory of St Philip’s Band Club at my village Zebbug claimed the lives of four young men. They left behind fatherless families that included quite a few eventual close friends who grew up without the support of a father figure in their lives.

Just as the two Zebbug band clubs dedicated to St Philip were still arguing their inability to get together and agree on a common programme to commemorate the fiftieth anniversary of this tragic event, as parochial narrow-mindedness continues to prevail even in events that should unify us rather than divide us, the fireworks factory of another Zebbug Band Club dedicated to St Joseph exploded in air on Monday 4th July.

Two fathers again lost their life in the tragedy and two other young men are still struggling for their life in hospital. Even if they make it, as I sincerely augur, life for them will never be the same again.

How tragic that it had to be a fatal live re-enactment of the 1955 tragedy to get the three Zebbug band clubs to agree on a common position on the funeral of the fresh victims! May the fireworks explode our parochial narrow-mindedness and rather than the legs and limbs of our able-bodied.

The appeal made in Zebbug Parish Church by the brother of one of the victims was clear. Do not re-build the fireworks factory, he cried out loud. Since that awful day of April 1955 in my village I can recall at least five other fireworks related fatal tragedies. How many tragedies must we count before we restore order to protect lives and save families from devastation?

Right after the funeral I had the opportunity to visit the widow of the younger victim. I had met her when I was making the political rounds in Dingli and stayed close as my better half has known her a score of years. Baby Jerome, as few months short of his first birthday was all smiles having not the slightest inkling of the tragedy that has changed his life with a bang this week.

When the tragedy falls out of the headlines, when the funeral marches go silent, when the flags start flying at full mast again, and when the feast will be celebrated again in future years with band marches fireworks and all, as undoubtedly it will, that young boy will still be asking his widowed mother questions that cannot be answered. Why? How? Who was daddy’s greatest love? Who is to blame?

We are all to blame. We need to grow out of our senseless parochial piques which force individuals to take undue risks to do better than the others. The others are us, our fathers and our brothers. If a widow has to bring her three young children without the support of a father in family it is a shame on all of us who congratulated that father year in year out for manufacturing fascinating fireworks that pleased our eye at the risk of his life.

Fireworks cannot be left to passion, amateurism and senseless pique. If we love fireworks so much as to want it in abundance in our festas than we have to pay to induce professionalism, risk management and compliance tests.

On the very same day of the funeral we had other fatal explosions in London that has so far claimed no less than fifty innocent lives with the frightening prospect of the victim list extending from the hundreds that have been seriously injured in the blasts. While the details will only emerge in the fullness of time there seems enough circumstantial evidence to attribute the tragic event to international terrorism.

Just when Spielberg is filming in Malta the re-enactment of the Munich Olympics terrorist tragedy of 1972, in many ways the first large-scale terrorist attack, London had to the join the list of New York, Bali and Madrid as the land-mark of the new invisible enemy of world peace and stability.

How telling that this had to happen less than twenty four hours after Londoners were celebrating in the streets their city being chosen to host the 2012 Olympic Games, again re-establishing the mental link with the Munich Olympics. What a difference a day and a few bangs make! The celebrations of Trafalgar Square were in no time changed into grief and confusion in the Tube Stations and in Russell Square.

How many children have been forced to share the same tragic fate of baby Jerome through the senseless passion of terrorist to make their case by hurting innocent people?

As an active participant in the financial services industry, as someone who earns a living from it, I am ambivalent about the reaction of the financial markets following this tragedy. From a performance point of view I am pleased that the terrorist attacks have not disrupted the operation of the financial markets as the New York events of 9/11 had done. In fact following a knee-jerk reaction where international equity markets dropped by more than 3% as the news of London terror attack flowed, the markets clawed back so quickly that by the evening New York markets closed in positive territory and European markets recouped all their losses by Friday even though the price of oil was hitting a nominal record of sixty two in dollar terms.

On the other hand I am almost ashamed that the markets just shrugged off the negative effects of the terror attacks reasoning that in comparison to New York. Bali and Madrid this was pretty small; that once the markets were in any case expecting for London to be hit sooner or later, the way it has been hit is quite less spectacular and negative than could have been expected in a most likely scenario.

For those victims who suffer loss of life through explosions, whether from fireworks accidents or from organised terrorism, the size of the overall event counts for nothing. For their dear ones the loss is 100% and for them nothing will ever be the same again.

Friday, 8 July 2005

Making History

The Malta Independent - Friday Wisdom

Live concerts, wrist bands, t-shirts and other memorabilia work wonders to spike temporarily the world’s attention to the problem of poverty in Africa. Unfortunately they count for little by way of making a lasting contribution to really making poverty history.

G-8 meetings could be much more effective in making poverty history if the world leaders could raise above their immediate domestic electoral impact and act in a spirit of enlightened self-interest. In short, whenever world leaders meet as they are presently doing in Scotland, they need to bear in mind that in a world that is getting smaller and smaller it is not in their own interest that a whole continent is left behind.

Making poverty history is not a zero sum game. The resources that need to be shifted to get Africa out of its poverty trap do not mean reduction in resources leading to a commensurate drop in the standard of living in the developed world. Improved earnings in Africa will inevitably flow back to the developed world by way of orders for investment and consumption exports.

Yet unfortunately, enlightened self-interest is in short supply even among world leaders. Debt cancellation and increased flow of aid are obviously important and necessary to get African countries to the bottom of the development ladder. But on its own it would provide Africa with food for a day or two.

What Africa mostly from the rest of the world can be roughly divided in two. Firstly it needs fairer and more liberal world trade regime especially in agricultural produce, so as to gain access to world markets which are presently inaccessible due to unfair competition by subsidised agriculture produce of rich nations that is dumped on world markets at uneconomic prices. This will involve gradual dismantling of protective measures by the developed world which are currently obstructing access to their markets for agriculture produce of the developing world.

Secondly and more importantly Africa needs the developed world to teach it self-help. It needs world opinion to force liberalisation of their closed economies, enhancement of intra-Africa trade by dismantling of tariff and non-tariff barriers, and the development of African leaders who fight corruption and ensure that the benefits of aid and free trade reach those most in need in the form of better food, education and housing.

This can best be done by celebrating successes where they have occurred and rewarding countries like Uganda, Ghana, Brazil, Colombia. The Philippines, India and China who have recently been endowed with quality internal leadership that has up-graded their country’s capacity for self-help and translated successes into better standards of living for their people.

Somebody innocently asked me this week why Malta does not make an effort, given the economic problems we consistently talk about, to participate in the benefits of debt-cancellation which is being planned for the poorest countries. Quite apart from the fact we thankfully do not fall in the poorest category, we simply do not have external debt that could hypothetically qualify for such cancellation.

Monstrous in magnitude as much as it is, the bulk of our national debt is internal, meaning that we owe it to ourselves - the government owing it to individual savers directly or through the intermediation of the banking system. Forgiving debt we owe one another would involve shift of resources from individuals to the State, which given the way we hate paying taxes, clearly goes beyond our understanding of altruism.

What we need is not debt-forgiveness. What we need is quality leadership that firstly accepts the proper definition of the problems that are hampering our growth potential well below our capacity, the formulation of an effective curative programme that spreads the pain of adjustment fairly to avoid particular sectors being crashed by the adjustment whilst other sectors stay exempted from participating in the unavoidable pain, and finally the execution of such programme with single-mindedness and enthusiasm towards the final goal which makes the pain en-route bearable and acceptable.

The world needs to make poverty history. Malta needs to make history the incompetent leadership that is denying us from exploiting our true potential in the global world.

Friday, 1 July 2005

People not Policy is Labour`s Problem

The Malta Independent 

This weekend`s conference of Malta Labour Party is expected to seal the Party`s coming to terms with Malta`s place in the EU. The conference is expected to vote with a substantial majority endorsing the parliamentary group`s decision to vote in parliament in favour of ratification of the EU constitutional treaty.

Neither the positive vote expected out of Labour`s general conference nor the eventual parliamentary endorsement by both sides of the House will help to revive the fate of the constitution which seems dead in the water following the rejection by the French and the Dutch in their respective referenda.

But the significance of Labour`s decision against the vehement objections of the old guard is a demonstration that finally, twenty one years after Mintoff`s Prime Ministership and party leadership and eighteen years after being ousted from government ( excluding the 1996-1998 interlude which seems a government that never was except for MP`s pension rights) Labour is finally embracing its role to participate fully in the creation of an economically viable but socially responsible EU.

Comparisons can be made between this weekend`s conference to the conference of the Britsh Labour Party in April 1995 when it finally ditched Clause IV of its constitution that till then still committed the party policies to `common ownership of the means of production, distribution and exchange`.` It was Tony Blair baptism of fire as a new Labour Leader in removing such extreme left wing credos in order to make the party again electable following four consecutive defeats at the hands of the conservatives.

It took sixteen years, four electoral defeats` (1979, 1983, 1987,1992) , four leadership changes ( Foot, Kinnock, Smith, Blair) and a lot of incremental progress until British Labour could finally present itself as a credible alternative acceptable to the British electorate. Incremental progress that changed a Party that in 1979 was anti- Europe, in favour of unilaterism and complete nuclear disarmament, in favour of nationalisation and central control, internally undemocratic in the way the Unions held block votes over its policies and choice of leadership,` into a Party that in 1995 had embraced its EU vocation, co-operated with government for more democratisation at the work place by removal of the closed shop, diluted the unions stranglehold on Labour`s financing and policies by the wider adoption of the OMOV (one man one vote) and finally by ditching the infamous clause IV in Labour`s constitution.

All this helped Blair to` give credibility to New Labour project which has since` made the conservatives unelectable in spite of three leadership changes since 1997.

The contrast however between Malta`s Labour conference and the experience of the British Labour Party is that the local conference is only being asked to approve the change of policies which unlike what happened in UK are here being promoted and pedalled by the same people who used to vehemently oppose them less than 30 months ago.

So contrary to what Labour delegates are being made to believe Labour`s` problem is not its policy change which is understandable and necessary following its consistent lack of success at the polls. Indeed it would be suicidal for Labour`s electoral prospects to reject adopting the policies that the leadership and administration are now espousing. One can understand the rigid attitude of the old guard in objecting to seeing `their` policies being abandoned. This is quite normal and understandable and eventually the old guard would have to accept that the majority needs to adopt policies that can help the Party fulfil its vocation from government as no political party can survive if it remains an eternal opposition.Unfortunately however the Labour delegates are being negated the opportunity of having these policies presented to the Maltese electorate, who ultimately will decide the fortunes of the party, by people who can make them look credible not simply opportunistic.

Splinter groups are wasting energies in fighting the adaptation of new policies rather than in addressing the need for new policies to be presented for the endorsement of the wider electorate by faces that can attract respect rather than derision at such intellectual summersaults.

If I were a Labour councillor I would most definitely vote in favour of the administration`s motion and privately counsel KMB and his team to imitate James Callaghan and Michael Foot and let the party move on from their fossilised way of thinking. But I would concurrently ask the present leader and the former two deputy leaders who authored the current reports that changes the party direction regarding the EU 180 degrees, why they behaved the way they behaved in January 2003 and in the run-up to the lost election of April 2003. In brief why they have capriciously robbed Labour of a deserved election win and handed it over to a fatigued nationalist government that knows not whether it is coming or going.

In January 2003 then Prime Minister Fenech Adami wrote an open letter to the Leader of the Opposition Sant asking him to agree on a binding referendum on the EU issue and offering concessions regarding the holding of the general election. When the MLP leader consulted the MLP executive, by a very wide majority, the counsel given was that Labour should accept the offer for a binding referendum provided this was held seriously after a general election. Dr Sant, Dr Vella and Dr Brincat, when addressing the delegates and urging them to endorse what they themselves were so much against, should` explain from where they got the idea to condition the binding referendum to a 60% vote. More than anything else this gave the PN the moral right to call the referendum on their own terms before the elections which condemned Labour to an undeserved further term in opposition and the country to a further term of sterile leadership.

Labour`s problem is people not policies.