Government Spending is No Way to Measure Performance

24^th September 2006
The Malta Independent on Sunday

The Prime Minister’s speech to close off the PN’s festivities to mark the 42^nd anniversary of independence reminded me of the experience I had when a labour government, as soon as it was elected in autumn of 1996, tasked me to conduct a strategic audit review of the then MSU.

I had reported how the then MSU management used to measure their performance by the amount of money they extracted from central government to spend on IT even though a good slice was in fact spent on refurbishing, embellishing and maintaining their headquarters, then at Villa Portelli in Kalkara. In my report I had recommended an approach where MSU had to be paid and get measured by what it delivers rather than by how much it spends. It is satisfying that most of my recommendations in that report were adopted and implemented and they survived till this very day even though I would have expected MITTS, the new name I had given to MSU, to expand and sell its competences internationally rather than continue to rely solely or mostly on government contracts for its commercial viability.

In the same way the Prime Minister devoted a good part of his speech singing self praise for the increased government spend on various votes, recurrent and capital, expecting the people to judge performance by how much of our money the government spends rather than by the mileage we get for the amount of our money the government chooses to spend.

Clearly we are still doing politics the same old stale way. We use national feasts to divide us rather than unite us; to deprecate opponents rather than attempt to bridge over differences to ensure we can overcome external threats and challenges with singularity of purpose conserving our energies to progress together rather than to fight on how to share the spoils. In the same breadth that we are told that we should not get into an election mode so early as the election is probably some 18 months away, the Prime Minister delivers a fully loaded political speech in perfect election mode rather than deliver the vision of a national leader.

I don’t think we should be impressed because the government is spending so many millions on education more than what Labour had spent in their the last full year in government in 1997. What fails to deliver the bacon is the fact that of all EU members, in spite of our very substantial spend on education, we have the highest percentage of early school leavers (those who leave school with a low secondary level education and abandon all further studies) in the age group between 18 and 24.

In reality the amounts devoted to the recurrent spend on education gets absorbed largely by student stipends that are then spent mostly on ordinary consumption. All this while we starve practically all funding to our research libraries and devote pretty little to R&D and innovation.

I am little impressed by the far too may millions we have spent on the Mater Dei hospital which is probably holding the world record for the longest project under development. It took the Americans less time from inception to completion to land on the moon in the sixties than it will take to have our Mater Dei reasonably operational. And in the process, medical equipment excluded, the hospital will cost at least three times the investment needed to construct in fully operational mode a five star hotel of similar size if it were to be built with today’s money on the same site.

What the government will be judged upon is not how much money we are spending to build some decent roads but why is this being done in the 17^th year, nearly consecutive, of the PN in government after these roads were done and redone several times literally throwing our money down the drain. What hurts our pride is the total absence of common sense of when such road works should be started and how soon they should get finished. This summer it has been a shame each time I had to go to the airport to welcome foreign guests struggling my way through the totally disorganised deviations in the main road artery just outside the airport.

The St Paul’s Bay bypass was again started off just before summer and now that summer is gone one wonders we did bother to start it off at this awkward time when so little work thereon has been completed.

Strangely the Prime Minister in his politically loaded speech could not find the time to refer to the problem which is pre-occupying all who realise that standard of living improvement must be based on sustainable economic growth which in our circumstances must necessarily co-exist with a strong performance in our tourism industry. Surely we deserved some re-assurance that government is sensitive to the problems in this crucial sector where we are falling behind just as our main competitors are moving ahead.

I hope we have not built any false illusions that low-cost airlines on their own will be enough to return our tourism industry to a growth path. The problem is much deeper than that and we have to ensure that we realise our strengths and weaknesses and then focus on the market segment that can appreciate our strengths and overlook our weaknesses. What has caused the malady in our tourism performance is that we have kept selling ourselves to the same old price-sensitive segment which has now a wider choice at a cheaper price. We need to know what we can offer that distinguishes us from competitors and build value in that distinctive competence and project our marketing strategy to the sector which could be interested to pay a premium price for our uniqueness.

Lovely weather, sun, sea, sand and hotel rooms offer no comparative advantages. It is our unique history, our culture, our way of doing things, our hospitality ( is it still there?), our joie de vivre and our ability to converse in several languages that should be the basic ingredients to our long term brand building. But we cannot start by selling the brand before polishing the basic ingredients that go into our brand recipe.

I suggest that the next time government checks with the people whether it has earned its stripes for its performance it uses different benchmarks than the mere quantum of spending of our money. I strongly suggest that government offers to get measured by the progress being made in achieving the targets of the Lisbon agenda to which we are committed but which remain as elusive as ever.