Joe Sammut

He is not afraid to incur the wrath of the Nationalists when he puts pen to paper on his pet subject, the state of the country’s finances. But unusually for an accountant and Labour activist, Joe Sammut, has also got a sense of humour, RAY ABDILLA discovers

Labour party activist Joe Sammut is not afraid of change, and believes that the political party he is so proud to be a member of recognised the need to undergo a metamorphosis and has now come out the other side.

He cites the example of what the British Labour party has done to make his point.

"The party made a clean break with the past and from being firmly stuck in the political wilderness, is now being accused of being an elective dictatorship. The MLP needed to do the same thing," he says.

But he stresses that the fundamental beliefs of the MLP are unchanged.

"We remain the party of the working class and of the disadvantaged sections of Maltese society," he says. "But the growing strength of the Labour Party can be attributed to the realities being faced by the Maltese working class."

But he is quick to add that there are some things that should not change.

"I am talking of our social beliefs, which are the foundation of our society," he explains. "For example, those who argue that Malta can no longer sustain the lower class should seriously think about what they are proposing. Such a statement goes against the grain of our beliefs. How could Malta afford to sustain the lower class in the past when it was a poorer society and now not afford to do this when our financial resources are by far larger?"

He believes that the lack of a social security system destroys the fabric of society because it creates a pool of desperate people.

"This leads to crime and social instability and both of these undermine prosperity," he says. "So we should stop thinking of social security as an unnecessary expense. What is needed is a reform which enables the country to finance this expenditure in a more efficient and targeted manner."

We move into further detail about his specialised subject – the state of the country’s finances. Mr Sammut has very strong views on the issues related to this subject and a vision about the direction in which he thinks Malta should head.

"There are no reasons why we cannot emulate the successes that many other small countries had in this field," he says. "We have all the right conditions to succeed."

He supports the MLP’s view that the fixation of government to force march our nation into the EU is leading to resources being misused.

"At a time when our civil servants should be coming up with solutions to dilemmas like the lack of success in the financial sector, we are forcing them to concentrate all their resources on writing an endless stream of reports and tinkering with our legislation to suit the bureaucrats in Brussels," he says. "During this year alone, we will have spent Lm13 million on this useless process. Imagine if some of these funds had gone towards boosting the limited promotional budget of our financial centre."

So what does Mr Sammut believe to be the main reasons for the mammoth size of the island’s deficit?

"The problem underlying the structural deficit is two-fold," he replies. "On the one hand, the government is unable to collect revenue from a considerable section of the population, who continue to evade taxes.

"When revenue increases it is because the government taxes existing tax-payers more. This creates a disincentive to work and diminishes economic growth, and in turn reduces tax revenue."

He adds that on the expenditure side, he believes the problem is that the Nationalists operate with a ‘money no problem’ attitude.

"They are not clearly planning the financial needs of each project, especially if the programme is required to align the country with the acquis," he says. "It is a question of good leadership and setting out the right incentives and structures. But unfortunately, financial management and planning are rare in Malta."

In fact, he says, the fixation with Europe has now reached astounding levels. "Before 1996 the Nationalists had not been so single-minded, so whilst the pre-1996 Nationalists can boast of a couple of successes, the post-1998 Nationalists can only boast of reports and useless foreign visits."
As far as kick-starting the economy is concerned, Mr Sammut believes that raising taxes is no longer an option.

"It would disintegrate the private sector, at least that part which does not operate underground," he argues. "The introduction of new taxes has hit those who were already paying their due share. It is clear to everyone that spending is the area which must be tackled. This is why the nation needs a good team leading it."

Mr Sammut admits that cutting expenditure is a delicate process.

"Only an administration with its ears to the ground can do it properly," he warns. "But the Nationalists are too fixated with the acquis to undertake this process. This year alone they increased spending by Lm13 million for this purpose. In 1998 they rushed to sign a collective agreement and then in 2001 they started to grumble that it was costing them too much. Now they are proposing a wage freeze. This is a prime example of the financial management skills of the present administration."

Mr Sammut may be accusing the government of being obsessed with EU membership, but what are his own views on it, I wonder.

"Everyone agrees that the EU was a very positive development. However those who argue that we should join as quickly as possible have not yet grasped how a country develops," he answers. "Most Maltese do not care about the EU. And this statement should not astound anybody. Most EU citizens do not care about the EU either. Many do not even know what it exactly is.

"At present most Maltese are worried about the economy, on whether they will retain their job or whether their pay cheque will sustain their standard of living at a time when inflation has surged. Concentrating all our resources on joining the EU at present flies in the face of logic."

He is also very sceptical about selling off Malta’s assets, especially existing businesses, giving the sale of Mid-Med Bank as an example.

"This was not just a question of whether the selling price was right, although that was very important too," he says. "The questions that many posed were on the way the bank was sold. Should the state have sold it completely to foreigners? Should the selection process have been more transparent? Should the staff and management of this bank have been more involved?

"I do not agree that we should sell existing businesses to foreigners. If we need foreign expertise, it’s better to bring in foreign consultants. When you sell an existing business you end up with nothing as a nation, except the one-off privatisation receipts. Then you permanently lose a chunk of profits which every year are transferred abroad. The Mid-Med saga will remain a scar in our political and financial history. Let us hope that in due time someone will reveal what really happened in that case."

Once we are on the subject of thorny issues, I am interested to know whether Mr Sammut is ever apprehensive about writing in the press, after all, he tackles some controversial topics. But he stands by his principles.

"Those who accuse me of being irresponsible in most cases are only angry that their plans or actions have been uncovered," he says. "I usually have three to four stories in my hands every week. Not all make it to the papers. You can be sure that I check my stories well.

"Regarding the VAT report, I can tell you that the government has already made a study of the impact of the introduction of VAT on essential items. The information I was given and the documents I saw showed that this measure would have been introduced in the 2002 Budget. If this does not happen, I will be the first to rejoice that I have not been proven right. Introducing such a weighty tax on such essential items is immoral. I am content to have played a minor part in stopping such a measure."

Turning to the next election, Mr Sammut pledges that he will certainly be contesting and voices his hope that he will be involved in the next Labour government, since he believes it will change Malta radically for the better.

But can a Labour administration really turn things around, if that’s what’s needed?

"It would not be the first time that the Labour party would be called to govern the country when the nation is on its knees," he answers. "One only has to remember what the Labour party achieved after the Second World War and after the sixties."

He also stresses that in those days, the Labour party succeeded in building up Malta’s welfare system.

"Those who accuse us of being misers could do well by looking at how Labour’s welfare system eradicated absolute poverty and created the middle class in our country," he says.

With age on his side and a renowned sense of humour, I wonder whether Mr Sammut, has ambitions to climb up the MLP’s ladder.

He laughs at this question.

"I do not understand why the fact that I have a good sense of humour should drive me to run for a top post in the Labour party," he tells me. "Your comment on me being ‘young’ shows that you too have a good sense of humour.

"Maybe you should run for a top post in your newspaper," he finishes, showing me just how much he enjoys a joke.