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With little or no hints from the Prime Minister on whether the coming year will see a general election, 2007 is still inevitably bound to see an electoral campaign in full swing with the shadow of an election looming around the corner.
Implicit in the prime minister’s reticence, the party machinery can be heard in full gear ahead of an election. In March, the Nationalist party will stand an important electoral test in some of its local strongholds, with the most contentious council election to be held in Mosta, where a repeat of this year’s show in Rabat is very likely. A shift to a Labour majority would spell a massive defeat for the PN following a long negative campaign from the Opposition about the incomplete Mosta Square project and with the attacks on Edwin Vassallo promising a more or less similar fate to that suffered by Rabat’s Tony Abela.
In Gzira, Labour may also have a try at securing a new majority, adding to its steady conversions at Pietà, Msida and San Gwann secured just this year, while H’Attard and Swieqi should theoretically be Alternattiva Demokratika’s popularity testing grounds.
Whatever the outcome, perhaps the most important indicator in the coming round of local elections will be the actual voter turnout – the fewer the voters, the worse for the PN.
Possibly, the PN will downplay the local elections and let Labour take over as it did over the last two years, but that would leave Gonzi with not one single electoral victory since he took over as prime minister, leaving him to face a general election with only a record of failures.
The prime minister has much more serious stuff to think about. While he is expected to sprinkle some of the feel good factor on his birthday on 1 July – the date he set for himself to open the Mater Dei Hospital, which he had cheekily called “a gift to the Maltese people” – the same day will be indicative of Malta’s progress on the Euro front.
If everything goes well – that is if inflation is lowered, the deficit kept on its downward trend and the national debt kept under control – Malta should on 1 July adopt the dual pricing mechanism. But that would only be possible if the European Commission and the European Central Bank give Gonzi the pass mark to enter the Euro zone in June.
The changeover to the Euro will hardly be an electoral winner for Gonzi, and Sant has already turned it into a non-issue by making his key declaration last October that a Labour government would keep the country on the track to the Euro. Still, Gonzi might be tempted to call an early election soon afterwards to minimise the potential negative effects linked to the changeover.
While lowering inflation may win him some votes if the macroeconomic effects somehow trickle down to the citizens in the street, the grim prospect of price increases in a country that fears any kind of change makes the whole shift to the new currency a very risky venture.
The worst fears linked to the Euro changeover are however related to property prices. One of the most important decisions yet to be taken by the Gonzi administration is whether or not to give an amnesty for those holding undeclared cash, with an estimated Lm200 million in black money believed to be hidden away from the watchful eyes of the country’s fiscal watchdogs.
Finance junior minister Tonio Fenech has already said a decision will be taken only after the EU confirms Malta can join the Euro zone. Yet property sales figures already indicate that black money is being somehow channelled into the construction market: The number of housing units constructed increased by 35% in 2005, from 6,700 to 9,000, and despite the increase, prices skyrocketed by 40% since 2003 for apartments, and by 35% for two-bedroom maisonettes.
As Economist Edward Scicluna put it, one might disagree with what actually started this massive property inflation, but it will only persist if it is generously fuelled through excess Maltese currency in circulation seeking back-door conversion into Euro. The closer the date for the euro changeover, the more the people will channel their undeclared monies into property. And that might well be the biggest problem ever created by Gonzi’s government in the wake of the infamous extension of development zones.
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