Friday, 29 May 2009

Business as Usual - Business Unusual

 29th May 2009
The Malta Independent - Friday Wisdom

It is unusual for a bank to make “business as usual” the theme for its promotion campaign. Bank of Valletta’s “business as usual” campaign is unorthodox, ill-advised and counter-productive. It also betrays the defensive mode that its management seem to be trapped in, following the disappointing performance results reported in the financial year 2008 and the first half of the financial year 2009.

Business as usual is like the air that we breathe. It should not make headlines much less be part of a promotion campaign. The very fact of having to promote and stress “business as usual”, shows it is anything but.

Bank of Valletta is a fine bank. Compared to the stresses suffered by other international banks its performance is more than acceptable. Many of their reported losses on foreign investments, Lehman brothers excluded, will in due time flow back once the underlying investments approach their maturity without default. Unlike many other foreign banks it had no need to seek support from government or regulator. It is generously capitalised and highly liquid.

Of course it is business as usual and the bank’s management ought not stress it, just do it.

Look at our political parties. They don’t stress it is business as usual but they certainly go about it that way, hitting out at each other as we enter the last stretch of the electoral campaign for the EP and local elections. What is unusual this time is that roles have reversed. This time it is Labour setting the agenda and the PN re-acting to it. So within business as usual there are some unusual features. Unlike previous campaigns this time we are at least not discussing the lack of credibility of Labour’s alternatives. We are discussing government’s performance where Labour claim the PN is responsible for the economic crisis and the PN claiming that they have created and saved jobs.

What irks me is that both political parties keep trying to defy the laws of economic gravity. This is nowhere more evident than in the policies for universally free health services.

What should be clear without any room for doubt is that no matter who is in government, this country cannot afford to pursue universally free health services. The Central Bank has been spelling it out in its quest for government to pursue more prudent fiscal policies. Economists know it and it would be highly improbable that the politicians do not, in their heart of heart, know it too.

Yet what do we get? We have Labour accusing government that it is planning to introduce fees for the provision of health services and pledging that its own policies are to keep health services universally free, which is easier said when in opposition than done when in government. The government, rather than take people into its confidence and explain that tax money would be better spent if some contributory fee is levied from health service users that can socially afford it, continues to distance itself from the inevitable, postponing judgement day without providing realistic solutions.

Look at it objectively. Is the present system of universally free health services socially correct? God forbids you would need emergency services from Mater Dei on a weekend. Unless it’s a case of life or death, it is not unlikely that you will spend more hours than you can count on your fingers in the waiting room until, if you can afford it, you frustratingly decide to seek paid services from a private hospital rather than wait what looks like eternity for free services.

The same can be said for unduly long waiting lists for non-life threatening surgery; or in case of sub-standard service in over-crowded wards. What’s the use of having the right for free services if such right cannot be exercised without undue hardship? Would you rather have free but inaccessible health services or would you rather pay a moderate contribution to have fair access to efficient health services when needed?

And this question of free health services is illusory. There is no such thing as a free lunch! Someone somewhere is paying for it. Most members in the upper half of the social strata are in fact paying twice for having peace of mind about accessible health services. Through general taxation (direct taxes as well as VAT which had gone up from 15 per cent to 18 per cent specifically to finance free public health services, or so we were told at the time) we are paying for government’s funding of our universally free health services. And because we cannot rely on free but inaccessible health services, we pay again for private health services.

We would all be damn stupid if we pay for private health services, directly or through insurance arrangements, if such services were to be freely available and accessible. If this were so there would not be private hospitals and private health insurers. Yet reality is that these private sector providers are flourishing and multiplying. The more they do the more it is evident that public health services are not living up to their purpose.

The question of such services being provided free of charge is a recipe for waste and inefficiency. Apart from education and law and order, which are in a class of their own as by their very nature they cannot be abused or overused, no other public service is completely free of charge. We pay for water and electricity, for the roof on our head and we pay for our daily bread, and these are no luxuries. Even in insurance when we claim we have to pay for a small excess. So would it be out of this world if we start paying a small, small fee, if necessary on a means tested basis, to deliver the message that nothing is free, to cut waste and to ensure that the services are not demanded capriciously but strictly on a needs basis?

For Bank of Valletta it is business as usual without need to stress it. For health services politics it must stop being business as usual and our politicians on both sides of the fence must sit together and devise a fair system how to make our health services sustainable and accessible. This can only be done if we shift gracefully from a universally free system to some sort of co-financing arrangements or to a national health insurance scheme with contributions being means tested to ensure that the social aspect is maintained, but not beyond the point of creating waste which benefits no one.

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