The past and the future

This was the week for Labour MPs to rehash every imaginable argument against Malta's membership of the European Union, and sometimes against the EU itself - all compressed in their half of a week's worth of parliamentary debate. We were already accustomed to their depiction of destitution in the EU, replete with homelessness and child poverty.

Labour wants to keep warning us that those ills plus many more will be visited on us after membership. They talk of employment and rampant inflation - and that's the tip of the iceberg that our ship will slam into with membership. There's also the collapse of the educational system, the end of agriculture and fisheries, disaster in the health sector. Gozo will be in shambles, there will be a meltdown in public finances, tourism will be in trouble, and on and on. If Labour were only half-right, the EU will end up with a new situation on its hands: a destitute member state, requiring emergency relief to stave off starvation and the collapse of society as we know it.

In EU membership, Labour sees yet another opportunity to sow paranoia and fear, a skill it has honed since day one in opposition. Over the last several years, it has constantly projected impending economic failure, especially recently, as the economy sailed through turbulent international waters with relative success.

Now on the eve of EU membership, the Opposition anticipates and even gloats in the presumed inability of our workers, entrepreneurs, administrators, students, and the rest of us to exploit the same opportunities in the EU that the member states have taken advantage of.

Lessons from the past

Coincidentally, this was the week when Labour came back full circle to where it got off six or seven years ago, when their government repealed the value added tax. Last week, common sense prevailed and the party's leadership finally embraced VAT. We had been promised that a decision on whether to retain or ditch VAT would be left up to the party's general conference, a neat way to cloak an awkward about-turn with the mantle of party democracy. But the decision to keep VAT is apparently a done deal, decided upon by the party's top brass. At least, we do not have to worry about the risk of another Mickey Mouse experiment in indirect taxation, a repeat of the CET foibles of 1997.

In his recant, the man at the top did not admit an error in judgment. Yet that is what the facts show. There was a lapse in judgment in his dogged fight against VAT, and there was another error in judgement in the Labour government's over-assessment of its ability to engineer and construct a substitute. The worst was that the MLP pandered to tax cheats who understood that Labour's 1996 election victory was the green light they had sought to trash their cash registers and go about their business.

Last week's change of policy was more than an embarrassing U-turn. It was more like an own goal, a longwinded saga of self-inflicted damage. Alfred Sant will find it difficult to mention one good or positive thing to come out of his anti-VAT journey. The whole episode chewed up a huge amount of government resources and energy, wasted a lot of political capital, and generated plenty of uncertainty. And worst of all, the substitute was an embarrassing failure.

Back then, Labour described VAT as unjust and unsuitable for Malta. Should we now conclude that the party is knowingly endorsing an unfair tax? Or is it that the unfairness argument was a pile of nonsense from the very start?

In fact, there was never anything unfair or socially unjust about VAT. The argument is that a tax on consumption expenditure hits relatively more lower-income persons. In turn, this is because consumption spending takes up a proportionally larger part of their income.

Yet this argument misses the rest of the picture. In reality, VAT took the place of various customs duties, and these too were a tax on consumption items. Another important aspect of VAT is that it extends coverage beyond goods to services. Before VAT, there was a tax on television sets, but no tax on most services as, for example, meals at restaurants. Now how is that socially just? Extending indirect taxation to services is appropriate for reasons of social justice.

Why is it?

Why is it that on so many matters Labour has to be dragged, kicking and screaming, into the 21st century? The Labour Party objected to liberalisation, with doomsday scenarios of terrible "killing fields" in industries that lost levy protection. They were against liberalisation of broadcasting.

There was a time when they meant to tear down the new power station as well as the new hospital. On these and so many other issues, they ended up chewing their own words, but not before causing great uncertainty or delays.

U-turn on Europe?

Voters should beware of any parallel between Labour's original objection to VAT, and its current opposition to EU membership. While an eventual somersault on the EU is possible, the country will pay dearly for letting Labour regain the reins of office and then wait until the light of reason shines on Labour's EU policy. It is dangerous to let Labour take its time to repent and see the error of its ways.

If a Labour government ever were to get the chance to abort the march towards membership, the damage would be irreparable. If we get off this accession bus, a later change of heart won't do much good. It will be extremely difficult to climb back aboard. Negotiating with a community of 15 was hard enough. Another episode of stop/go, and negotiations with an EU of 25 countries will be impossible.

Stability

Labour's anti-VAT history was the kind of policy instability and vacillation that the nation can ill afford to repeat. It is one more reason to look forward to the institutional and political stability that will come when our policy-making is anchored in the EU's institutions.

Expressions of support for the adoption of the euro are based on the same yearning for the maturity and stability in national economic management that will come with membership. At an even more fundamental level, EU membership will be a safeguard against a repeat of the anti-democratic events that occurred in the Seventies and Eighties in Malta.

Reason at the GWU

At a recent meeting of the national council of the General Workers Union, the vote was evenly split, aside from the abstentions. At one end were those with the slogan, "Membership is not in your interest". On the other, moderates supported the slogan proposed by the Union's central administration: "Stop - think - decide", a slogan that sums up the sentiments of membership supporters across Malta. Yet, with the casting vote of the council's president, the Union adopted an anti-membership platform.

The proponents of the second slogan have facts on their side, as can be seen from improvements in employment regulations that have just been put into effect as part of the adoption of EU regulations.

The following is just a sampling of the new rules, and one has to keep in mind that this set of rules is not the only one affording additional protections.

Now part-timers have to be afforded conditions that are as favourable as those provided to comparable full-time workers. Three months of unpaid parental leave is available to full-time, part-time and fixed-contract workers, both male and female. The same benefit is available also to adoptive parents and legal custodians. This benefit comes with the right to return to the same job. In the case of business insolvency, claimed wages are protected. Workers are now accorded certain rights in the case of collective redundancies.

Surely, even the GWU's hard-liners will agree with the value of such protection. Furthermore, should one need to remind the anti-EU faction within the GWU of the Seleco case where a manufacturer of television sets had to close down because the conditions to operate in a non-EU member country could not be met. The result was that the company moved to an EU member country while Malta suffered a loss of over 150 jobs. Why should Maltese workers be disadvantaged in this way?