Alex Borg wants his cake and to eat it (‘The truth about construction and property in Malta’, January 6). His and his party’s (and the government’s) attitude towards the property and construction sector is symptomatic of the state of politics in this country. Some sacred cows are untouchable.
Borg, the PN’s Gozo spokesperson, is determined not to rock the boat. Worse still, his underlying argument is, without having to read much between the lines, “handle with care, because the sector increases the GDP and provides jobs”. Forget any meaningful efforts to reform.
Despite his criticism of Finance Minister Clyde Caruana, the truth is that the PN and the PL in this are in coalition: a coalition of complacency. Borg shamefully defends business as usual. He wants more and more construction and the continued subsidising of speculators.
Borg criticises Caruana’s claim “that we don’t need to sustain the current rate of construction to prosper”. Now, it’s not as if the Labour government, of which Caruana forms a principal part, has done anything meaningful to cut the construction/speculation/tourism throuple down to size. Borg too dismisses any serious attempts for a so-called ‘new economic model’ despite his party’s rhetoric.
There is no magic wand here and changes in the economy involve changes in taxation structures, and which sectors are incentivised, and which are not. No serious politician or party should avoid discussing taxation.
Instead, we have a Labour government and PN opposition which repeatedly go down the damaging, populist and sheer irresponsible route of solemnly declaring that the tax structure will ‘never’ be touched.
As the KPMG report quoted by Borg, and, indeed, various Central Bank of Malta reports, points out, rents and house prices have leapt forward, massively outpacing rise in incomes. That is why we need real reform, meaning changes in planning or, more precisely, actual urban planning rather than simply a ‘permitting authority’. Urban planning means ensuring the availability of the right types of properties to ensure that everyone who wants a home can afford one.
PN and PL are in a coalition of complacency
It means restricting the waste of the precious resource of land by refusing permits for what are clearly properties for speculative activities. Reform involves reversing the 2006 ‘rationalisation’ scheme. Labour voted against expanding the development zone back then but reversed their opposition once in government.
Reform also involves a change in mindset, seeing housing as a social and community issue rather than vehicles for speculation. Family homes are homes, anything more should be treated as any other asset and taxed as all other income from employment and self-employment. It is simply not true that, for example, reduced taxes on property lead to cheaper rents or reasonably priced houses.
Government financial incentives end up in the pockets of speculators, since the value of the incentive is simply added to the price of the property. How about flooding the market with affordable housing or taxing the hoarding of property? What’s happening at the Foundation for Affordable Housing? How about effective disincentives for short lets and incentives for long lets; the longer the period the greater the incentives? Another policy measure can be the incentivising of the setting up of housing cooperatives.
Successive governments’ policies allowing the conversion of hotels into speculative luxury developments and schemes incentivising the sale of property to foreign investors and multimillionaire Maltese passport purchasers have exacerbated the situation. It is simply corporate welfare for speculators at the expense of all of us. In the meantime, the needs of the majority of people living and working in Malta are largely ignored.
Indeed, some time ago, Borg himself, shamefully, lamented regulations imposing limits on multiple occupancy in rental properties. Regulations should go further, place further limits on occupancy and classifying what are clearly dormitories as hostels, with strict regulations on hygiene and proper facilities.
No single housing policy can succeed in isolation. What is needed is an integrated strategy aimed at reorienting the housing system away from the pursuit of profits above all and towards meeting the social need for housing. Economic incentives should be redirected to sectors which invest in the training of their workers, in technologies which increase energy efficiency and efficient use of resources and which are investing in the circular economy and providing socially useful products and services.
The hoarding of ‘value’ in dormant assets should be actively discouraged, disincentivised and taxed. The income from these taxes can be redirected towards socially and ecologically useful investments.
The problem is that even supposedly ‘new’ and ‘fresh’ politicians engage in the usual transactional, centrist neither-here-nor-there politics. They refuse to propose, refuse to make policy choices. They refuse to discuss in depth and in detail the much-needed reforms lest they step on toes.
It’s only all about image, coffee mornings and TikTok.
Ralph Cassar is ADPD secretary general.