When the modern economic history of the country is written, historians will have to describe some of the failures in the management of public projects that have cost Maltese taxpayers dearly. These failures are all attributable to massive governance shortcomings caused by different shades of incompetence, business naivety and abuse of political power.
One of the first failures was the failed turnaround of the shipyards. After decades of unsustainable dependence on state aid, when the Mintoff administration promoted self-management in the shipyards, former prime minister Alfred Sant declared war on the waste of public funds in the moribund shipyards. This was the first acknowledgement that the Labour Party no longer considered militant trade union support a strategic political strength.
The PN’s determination to accelerate the process of joining the EU in the late 1990s meant that the shipyard workers, led by their militant leaders, had to face the prospect of operating without state aid to achieve commercial viability. This reality never sank into the mindset of workers and their leaders. Attempts to improve working practices were largely unsuccessful. The PN administration of 2008 rightly decided to close the yards, saving Maltese taxpayers vast amounts of money.
Air Malta, another parastatal organisation, suffered from political interference and patronage since its inception. When air travel was liberalised in the 1990s, it could no longer rely on monopolistic protection. Its management at the time believed that when Malta joined the EU, the national airline would benefit by branching out into mainland Europe.
Azzurra Air was the result, set up in Italy. Unsuitable aircraft were bought to operate scheduled flights from a foreign base. The failure of this Air Malta subsidiary would have brought down the national carrier were it not for the continuous pumping of taxpayers’ money into the airline to keep it flying. The chickens are now coming home to roost.
At the turn of the century, Middlesea Insurance, which, through the Bank of Valletta’s involvement as a substantial shareholder, was never free of government influence, set up Progress Insurance in Italy. Once again, the management engaged in hubris, believing that the imminent entry of Malta into the EU would bring enormous business benefits, despite an evident lack of management experience and competence to steer a business successfully in a more complex European scenario. Middlesea was sued in the Italian courts and had to settle at a high cost to bury this massive corporate failure.
The latest corporate debacle was that of BOV, which had branched out to provide high-risk services in Europe when Malta joined the EU. Unsurprisingly, the Italian market proved too complex for the local bank to understand the risks it involved. Taxpayers now have to deal with propping up this bank, which is arguably too crucial for the Maltese economy to fail.
The abuse of public funds in public projects are no less notorious. The privatisation of three public hospitals, the building of a new power station, the procurement of gas from Azerbaijan and the refurbishment of St Vincent de Paule Residence are just examples of how corrupt practices hurt taxpayers.
In the last three decades, the failures of public governance were also aided by weak institutions and regulators that turned blind eyes to clear evidence of mismanagement, incompetence and abuse of power by politicians and inept public officials.
The people deserve much better than this.