What went wrong?

Just two years ago Malta was covered with billboards telling us that our finances were on a sound footing. Prime Minister Fenech Adami was telling us that his government was well on target to solve the structural deficit. He was promising us that a returned Nationalist government would not increase any taxes. He was guaranteeing everybody's jobs.

He declared that a new spring was to dawn on us: our quality of life would improve, our country would be one of the best governed in the world with a healthy environment, better roads, prosperity and a top European way of life.

Then everything fell apart. The deficit was found to be larger than reported. This time it was not the Labour Party saying it but the European Commission. The Commission also said that the country's finances were in a poor state because of the Nationalist government's policies over the years.

The European Commission report published last year concluded that "the excess of the general government deficit over the three per cent of GDP reference value does not result, in the sense of the Stability and Growth Pact, from an unusual event outside the control of the Maltese authorities, nor is it the result of a severe economic downturn."

In simple and blunt language the European Commission is saying that government created this deficit and had to take steps to reduce it. The Nationalist government did not attack the European Commission and called it "liars", "idiots", "imbeciles", "stupid", "false prophets" and a string of other insults that Labour politicians were subjected to by Nationalist politicians over 11 years ago when they started pointing to the unsustainable deficit and public debt that were being created by the reckless policies of the NP government.

To make it worse now, Malta is going through a sharp economic slowdown. Factories started closing and unemployment went up. More tourists are arriving but most of them on cheap bargain holidays. Our hoteliers see their expenses rising mostly due to government-induced costs while their income remains stagnant or declines. Few hotels are remaining viable to make enough profits to plough into reinvestment. Foreign direct investment has dried up. Malta Enterprise, the agency set up to attract investment, has not secured any headline-grabbing new investments since it was set up.

Government is being forced to address the deficit problem, as it does not want to face European Commission sanctions. But as the country's economy is shrinking instead of growing, government has conveniently forgotten its electoral pledge not to raise any taxes. VAT rates were raised to 18% and extended to hundreds of products and services.

New taxes are raising the cost of petrol, diesel, paraffin, water, gas and electricity. So called 'eco taxes' were introduced without lowering other taxes to compensate. Public transport and Gonzo Channel trips cost more. The departure tax has also been raised. New taxes were introduced on the property parents acquire for their children, and on mobile phones. The list goes on and on.

In the meantime Government started saying that the present health system is no longer sustainable. Pensions have to be reviewed. The stipend system for students has to be revised. Government is considering doing away with the June and December bonus. It is also considering raising the national insurance contribution once again.

So what went wrong since the referendum and the general election less than two years ago? The answer is simple. The Nationalist government is unable to grapple with the country's problems it created in the first place. The Nationalist government policies are not sustainable anymore. Since 1987 the PN in government followed only one policy: "Spend money on what you think will buy you a vote".

The truth deficit

To carry out this reckless policy the Nationalist government has created the worst structural deficit and public debt in our history. For many years it has deceived the public by its 'Money no problem' mindset of throwing money around. In the summer of 1996 the Nationalist Party opted for an early election not to let the truth about the public deficit come out into the open.

When the new Labour government started explaining the terrible situation public finances were in, the PN promptly dismissed the claims and said that the MLP was lying. In a few months' time the PN started blaming Labour for the deficit.

Then for another six years, between 1998 and 2004, they hid the deficit problem. A few days before the April 2003 general election, Dr Eddie Fenech Adami was boasting that "In the 1999 budget a plan of action was launched to reduce the deficit to 3% of GDP. This plan is being implemented and the targets are being met earlier than predicted."

A year later the deficit had shot to over 9% of GDP. The cynical politicians of the Nationalist Party knew that they were nowhere near solving the deficit problem and they were ready to deceive the electorate. They have also brought about a serious moral deficit in our politics, resulting in a widespread mood of crisis and a loss of faith not only in politicians, but in key institutions, from parliament and the electoral system to the courts and public administration.

During the months of the referendum and general election campaigns in 2003 the Nationalist government did not publish any statistics about the state of public finances as it wanted to conceal that they were growing.

Meanwhile it mounted huge billboards saying that public finances were on a sound footing and its leaders claimed in their speeches that the deficit was being contained and reduced when the opposite was happening.

On June 12, 2004, in the election for our European Parliamentary representatives the majority of voters taught the Nationalist Party a lesson about its politics of deception by staying away from the polls or switching their votes to the MLP and Alternattiva Demokratika.

The country needs a change. The Nationalist government has landed us in the mess we are in now and cannot take us out of it. The country needs to be delivered from the Nationalist government before it can create economic growth again.

evaristbartolo@hotmail.com