Friday, 11 December 2009

The More Things Change

The More Things Change

11th December 2009

The Malta Independent - Friday Wisdom

Alfred Mifsud

The more they stay the same. Take the Auditor General Report on Public Accounts 2008. Much of the same remarks found in the reports of previous years recur this year with monotonous regularity giving the distinct impression that many government departments consider the Auditor General’s intervention as a mere nuisance rather than as a means to protect public funds.

What particularly struck me is the Auditor’s report regarding exposure through Letters of Comfort and Bank Guarantees given by government to cover bank and other borrowing by state owned companies, entities and corporations. The exposure increased by more than a e100 million in 2008 closing at nearly e774 million up from e673 million the previous year.

Roll memories back to the Minister’s speech in presenting the Budget for 2003 read in parliament on 25 November 2002. There it was solemnly stated that it is: “Government’s declared policy not to provide any further security or comfort or other form of undertaking to credit or loans raised by public entities.”

This leaves no room for interpretation. The Government pledged not to provide guarantees, letters of comfort or undertakings to cover borrowings made by publicly owned enterprises. Yet here we are six years later, all commitments forgotten, to discover through the Auditor’s report that in 2008 e100 million worth of indirect financing was made to Corporations like Enemalta, Housing Authority, Malta Industrial Parks, Malta Shipyards, and Foundation for Tomorrow’s School. This trickery makes a mockery of the mainstream figures related to the Consolidated Fund which purport to measure the fiscal consolidation progress or lack of it.

But things also stay the same in the wider political scene. Next week the political parties will organise the usual telethons to collect funds from their faithful. All pledges to put political party funding on a transparent footing are stuck somewhere in the inter-parliamentary committee tasked to propose measures to render democracy more effective. Current obscurity on political party funding inevitably leads to suspicions that when in government, political parties have to discount obligations towards special lobby and interest groups. One third of this legislature has gone already and it is clear that what does not get done in the first half of a legislature will not get done in the second half when all considerations get tied to the elections which start appearing down the road on the political horizon.

But strange happenings will probably recur. The PN is in government only through a wafer thin majority. It is most likely that like most governments they lose popularity in the midterm section of their mandate and especially so this year when the economic scenario has substantially deteriorated since the last elections. So by default probably the PL presently has more popular support than the PN especially given that Labour’s change of leadership has done away with old baggage and lowered barriers set by the former leadership. This is not in any way to be interpreted as any prediction on the outcome of the next elections given that these are more than three years down the road, by which time the economic scenario will probably brighten up and government can reap the benefit of the strong medicine it is administering in the first half of the legislature. It only means to suggest that at this particular point in time the PL probably commands more popularity than the PN.

Yet as sure as night follows day the PN will collect much more funds than the PL from the telethon. What is the cause of this disconnection between the size of the collection and the grass roots popularity? One could make a case that this reflects the different social strata represented by the parties. The PL followers generally emanate from the lower social strata with spending power much inferior to the higher social strata of the PN followers. One might argue that per capita, PN’s followers contribute more to their party financing. I don’t buy into such reasoning.

I am more sold on the thesis that there is an immutable reality on the local political scene that whereas the PL is a standalone political party, the PN is a political cell in a power network spread throughout society which includes business, media, church, intelligentsia, and wherever there is any meaningful power or influence among society. This leads to a situation that when the PN is in government the network has total power and in the rare instance when the PN lose political power the network still maintains substantial power even if the political power temporarily switches to the PL. In such rare instances, as was witnessed in 1996-1998 interlude, the network’s power which acts as a tailwind to a PN government switches to a headwind for a PL government.

This was nowhere more evident than in the way the The Malta Independent on Sunday’s last editorial chastised the PL for their campaign insisting on transparency on the award of a very sizeable contract for extension of the Delimara power station. Rather than make such campaign its own, demanding transparency in a very suspicious set of circumstances leading to the award of this contract to a Danish bidder, the media crucifies the opposition and imputes that Labour campaign is motivated by their being dead set against the new power station.

What new power station may I ask? Delimara is no longer new. Labour was against Delimara when the decision to base the power station was still in balance. Now that Delimara is what it is, I have not heard any Labour spokesperson arguing against extending the Delimara power station. So why does the media make such wild insinuations against the opposition rather than use their influence to control the executive? This would only happen if the media, in spite of its independent tag, considers itself as part of the power network meant to protect its political cell.

Really the more things change the more they stay the same.

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