Drydocks and political

The Malta Independent

Drydocks and politics

Fourteen and a half years and a handful of hundreds of millions of wasted liri later government swears it is getting serious about devising a real solution for Drydocks. This week`s task force report proposes halving the work force, launching of early retirement schemes and other measure to promote voluntary resignations.

At the risk of being unfair in not giving this plan a chance to unfold,` my early warning system indicates` that government is yet again using Drydocks as a political pawn. Government long term benign neglect of the Drydocks problem has created a situation where` a wide cross section of the population have had it up to their ears seeing so many millions being burnt annually in subsidies leading to nowhere.` Strange as it may seem` rather than being condemned for taking so long and wasting so much to address this problem, Government`s` popularity increases whenever it pretends to stand up to the Drydocks Section of the GWU .

So whenever government needs to leverage its popularity it pulls the Drydocks political levers. In pretending it is standing up to cut the waste and cashing on Labour`s understandable` unwillingness to cross swords with the GWU,` the government plays the Drydocks political game with admirable perfection.

The fact that it brought the Drydocks problems again on the fore-front of the agenda is indicative that government needs to leverage its political support in case it decides to go for the option of an election before the financial crisis blows the budget cosmetics apart.

And what more plausible reasons to go for elections than to stimulate industrial unrest at the Drydocks,` hope for some violence for good measure, and turn to the country for a mandate to administer to the shipyards the medicine which the patient` irresponsibly continues to refuse`

Drydocks is a serious problem. I strongly believe that Drydocks has the potential to be commercially viable if well managed. Eternal operational subsidies are no real solution for Drydocks. As a nation we just cannot afford them, certainly not at the level of recent years. Drydocks needs investment, serious training programmes for its workforce and a strong commercial direction leading the Drydocks to maximise its strengths and address its weaknesses. This can only be achieved if accompanied by responsible trade union practices removing resistance to efficiency and helping to control waste.` The ratio of directly productive to unproductive/indirectly unproductive has to be righted` to not more than 4:1.

But on a macro-economic basis the problem of the Drydocks is quite insignificant.` One of the arguments I can never rebut when I argue in favour of serious re-structuring is why so much emphasis is put on Drydocks whilst other sections of the public sector which are equally or even more wasteful are just allowed to get away uncensored and unchallenged.

How can you accept that government is serious in its intentions about Drydocks if it then allows Gozo Channel to continue with wasteful recruitment` when the whole transport sector between the two islands is subsidised annually by over Lm4 million for servicing the interest on the new ferry loans;` and when Gozo Channel returns no profit even though it is using these vessels without incurring any interest or depreciation charges.

How can you accept that the government has good intentions for Drydocks when it allows Freeport to get away with murder and allows Air Malta to be the only airline in the world that has increased its workforce in the last quarter of 2001.` How can you be convinced about government`s good intentions when such re-structuring is normally implemented in the first half of any legislature rather than in the last couple of years.

Solving the Drydocks issue is a priority but can only be done with the necessary fairness to win broad support if it is conducted as an integral part of a much wider re-structuring plan. Failing this,` my bet is that government is just using the Drydocks issue to further its political ends. This could be quite savvy politically but it is far from being the real solution which the country desperately needs.

Both sides of Father Christmas

The Malta Independent on Sunday Both Sides of Father Christmas

What would Christmas be without Santa` But Santa cannot make it alone. He needs the children to deliver presents to. Santa and the children create the great material spirit of Christmas which inevitably accompanies the underlying religious message of the birth of Our Lord.

This December the Budget Minister has decided to play both roles.` Both Santa and the children. The donor and the recipient.

He is the recipient for the extraordinary amount of taxation he has to collect in the last two months of this year. This week the National Statistics Office published the Government finance figures for October 2001. When confronted with the revised figures for the whole of 2001 announced the week before during the presentation of the budget for 2002, it results that the government has an uphill struggle to meet the revised revenue` figures.

According to these figures whilst in the last 2 months of last year the government collected Lm84 million from Income Tax, Vat and Social Security in the same 2 months of the current year it plans to collect from the same sources Lm103 million. An increase of Lm19 million equivalent to 23% has to be sucked by government from the private economy which is at best not increasing but more probably is in real outright contraction.

Loading this steep increase in transfer of funds to government on the sharp cash flow problems which have been plaguing the private sector for the last two or three years and coupled with the general reluctance of the banks to assist the corporate sector out of its dire straights, presents poor prospects for the private sector this Christmas.` We collectively have to play Father Christmas to the Minister of Finance who cannot resist Twist`s habit of always coming back for more.

It does not mean that it is this way with one and all. The Minister willingly inverts the role and dons the red robe of Father Christmas quite willingly when it comes to certain minority sectors of society.

When it comes to the funding of MIC the Minister has no problem in funding a 200% increase to provide an additional Lm600,000 to finance their publicity campaign in favour of Malta`s membership in the EU.

As Chairman of the commercial organisation running Labour`s Super One radio and TV I refused to accept MIC`s advertising bookings unless they agreed to spend pound for pound to inform also on Labour`s policy of special relationship with the EU. MIC conveniently refused this as they maintain that their brief is strictly to act within the objective of full membership.

I am more than sure that a chunky size of the additional budget conveniently passed on MIC in preference to much more deserving claimants, will be spent on additional` advertising` on the PN`s media in the most classical example of preaching to the converted.

But the implications are far deeper. This could be a covert way of using public funds to finance a political party and undermining the real essence of democracy. While Labour will have to turn on its faithful to garner a few tens of thousands of liri to finance their EU special membership campaign and eventually their general election,` the PN helps itself to easy access to our tax money to finance their EU policy and eventually also their general election campaign.

This is a serious threat to our democracy which Labour must seriously challenge through all democratic means by invoking the provisions of the Broadcasting Act and if necessary of the Constitution.

The Minister of Finance is also playing Father Christmas at the donor end when it comes to our privatisation programme.` Within the next 4 weeks in which there are left 18 working days. whilst many will be on a deserved break from the monotonous regularity of everyday economic problems, the Minister has committed himself to conclude delicate and detailed negotiation for sale of national assets to the private sector generating Lm47 million one-off privatisation revenues.

Boxing himself` in a tight financial corner like this leaves little room for manoeuvring negotiations to ensure that as a nation we get the most from our assets and that we will not have a repeat of the Mid-Med Bank shameful sale. And the supposed transparency with which such negotiations should have been conducted is notable by its absence.` We are not even aware of the parameters within which the offers are being considered. It would have costed quite a few thousand liri merely to get hold of the document which was accessible to the privileged few who are eager to pounce on their Christmas presents.

Words and fiigures still disagree

Maltastar

Words and figures continue to disagree

Government heaps glory on itself for the supposed achievement in reducing government structural budget deficit. In so doing it claims that the starting position at the end of 1998 ( government was sworn in on the 8th of September 2001) was Lm150 million.

The myth was belatedly but effectively smashed by Labour when it proved conclusively that the parting position was far from Lm150 million. Effectively it was planned to be Lm115 million at the budget stage presented in November 1997 and actual structural deficit as at Sept 1998 was Lm88 million broadly in line with original projections.

In the last quarter of 1998 as soon as Min John Dalli had time to re-organise his desk and switch on his computer once the re-election euphoria had died down, he` went on to a careful window-dressing exercise shooting up the budget deficit for 1998 to the maximum to create an advantageous starting position` with which to measure his supposed eventual` achievements.

But why should we take the parting position as December 1998` I think it is more realistic` to take the parting position as the end September 1998 when the Minister had still not cooked the books.` As can be seen from the table accompanying this article the structural deficit for the 9 months to Sept 1998 was Lm88,011,000. The structural deficit for the 9 months to Sept 2001 was Lm88,107,000.

There has not been a single lira of deficit reduction on a true like for like figures of the National Statistics Office in spite of having contributed to government Lm98 million more in tax under the headings of Customs and Excise, VAT & replacement, Income Tax and Social Security in the 9 months of2001 than in the same period of 1998. We also collectively paid some Lm15 million more on fees, licences or whatever term the Minister pleases to describe the government charges for the services it renders to its citizens. An increase in ordinary revenue of more than Lm113 million and not one lira drop in the structural deficit! How dare the government claim success in reducing the deficit`

Having smashed the myth that the deficit is effectively being addressed the Prime Minister shifted his defences by claiming that under Labour`s 22 months inter-regnum between his nearly 15 year stretch in government,` Labour did not manage to control and reduce the deficit.

Even this claim has to be challenged as not supported by official figures. Yet another case of words and figures disagree.

Labour was sworn into government on 28th October 1996.` Lest anybody dares claim that in the last 3days of October Labour played some `John Dalli` type of window dressing tricks in the accompanying table,` I also give official National Statistics Office figures for the government deficit on` January to September basis of 1996 and 1997.

The structural deficit of the first 9 months of 1996 under an outgoing nationalist government was already Lm106,442,000 and eventually finished the year at Lm124 million instead of the Lm38 million which John Dalli had planned when presenting the 1996 budget in November of 1995.

In 1997 Labour contained the deficit within the same figure of Lm106,553,000 in spite of passing special loans of Lm24 million to Malta Drydocks accounted for under Capital Expenditure.` It then effectively reduced this deficit to the Lm88,011,000 earlier mentioned in the first 9 months of 1998.

In two years between September 1996 to September 1998 largely under a Labour government the true structural deficit was reduced from Lm106,442,000 to Lm88,011,00 a reduction of` Lm18,431,000 equivalent 17%.` During the same period government ordinary revenue increased by Lm42,120,000.` So out of every Lm1 of additional revenue from taxation Labour government applied nearly 44 cents to reduce the structural deficit.

Compare this to the present government record where with Lm113 million more in ordinary revenue this year than in the same period of 1998 it did not reduce the deficit by a single lira.

It is high time that Labour starts challenging the void claims of success in deficit reduction with real facts and figures which show the exact opposite.

While the nationalist government is scoring successes in tax collection and enforcement by taxing the salaried middle income class,` its lax expenditure habits is blowing it all away.` No wonder the official national debt now stands at Lm1,023,000,000 apart from another Lm400 million hidden in the Treasury Clearance Funds and in dead bank loans guaranteed and serviced by government. And no wonder privatisation is now being approached in a sense of crisis having practically fully exhausted the country`s borrowing capacity.

The problem is that when the roof will financially and unavoidably cave in it will again be the lower and middle class that will be forced to carry the brunt of the damage`..unless a serious Labour government is elected in time to engineer a rescue operation from the impending` crisis.