Fighting a cancer with an aspirin

The ghost of Valletta past
The ghost of Valletta past

I could be cruel and suggest that some people in government right now are way out of their depth.

Yet it seems I do not need to be so brutal, because most people are coming down to their own conclusions.

This is not a time for egos and explanation of ideological or academic standpoints. This is a war, and in war you do not cut corners.

Let us start off with our minister of finance. Edward Scicluna is a good man, but he had less to do with the economic miracle we experienced which was pioneered by Joseph Muscat and the entrepreneurship of the Maltese businessman who takes risk, reinvests profits and employs people. Scicluna may be too much out of touch with this business reality: he is an academic, a good person to serve as a representative for Malta in some Ecofin meeting in dreaded Brussels, but not to take us into the storm.

On Thursday, Scicluna looked us in the face as he announced a €1.8 billion package, but this is a grossly misleading figure. It is only a €210 million injection with a ridiculous contribution.

Scicluna was also dishonest. He said the government had contributed €700 million to the package, equivalent to the deferred VAT, national insurance and tax from businesses. In reality these figures are illusory because the government would never collect these figures, considering the abysmal state of trading we are in today.

It was just like listening to an uninspiring lecture at University. The rest of the press conference was focused on reminding us what a damn good run we had in the last six years and encouraged us to be grateful for the fact that we had no debt.

What the hell! This in a scenario where the service industry is dead, our tourism sector is at a standstill and all our other lifelines in the economy have been switched off.

It was very clear to all those who know the way politics works that the package was concocted by civil servants or people who have never run a business. Giving €147 a month to every employee was more of an insult than an aid package.

And it was a glaring let-down, especially when compared to what Europe was offering. I am not talking of the European Union or Commission whose endorsement of national spending is simply business-as-usual; in the UK, employees were awarded 80% of their wage capped at £2,500.

All countries took their own initiatives, unwilling to wait for Europe. The EU has turned out to be an appalling monument of lack of solidarity in this time of need, all its soft power wiped out by a virus. It is a time we turn our backs on the Eurogroup and its political overtures to spending limits and deficit reduction.

Prime Minister Robert Abela has to come to terms with this crisis. The salvage package he presented to business last Thursday is not only inadequate; it falls short of addressing the central issue. It is flawed. It encourages employers to kick out employees and invite them to take a €800 contribution a month as unemployed people.

It was like someone throwing in an aspirin to treat an acute cancer.

Abela has been led to believe that businesses are in a position to take the brunt, dig into their pockets and save the day. They are being portrayed as fat cats. It is an old fallacy from Mintoffian politics that has no place in the Malta of today. The truth is that most companies will suffocate from cash flow restriction, take out loans that will take them into the next three months and then suddenly dry up, being left with just a new mountain of debt and nothing to show for it.

And then what? They will return when this crisis is over, to a start-up situation which will take the economy to ground zero.

The role of the government is to keep businesses afloat so that when the sun starts to shine again they can bounce back up to take up the challenge.

In most of Europe, the packages are generous and encourage employers to hang on to their workers. In Malta we have yet to understand that businesses, small businesses especially, are the spine of our economy. If they go, the economy goes.

There are also blunders and prejudices in the centre of government towards private business, whether it is an independent school and their teachers, private service providers, small businesses, media organisations and big business.

We in business are expected to wave a wand and turn hot air into euros, but the same is not expected of government employees, employees of government-funded agencies who are now closed and not functioning, or better still, of entities such as Air Malta which have been losing millions, rumoured to be over €90 million in the red now, who will still see the wages of pilots, cabin crew, engineers and others dished out… lest we forget by taxpayers.

This is a sore point, and I am not suggesting we should not pay them. But why should employees in a private company take a pay-cut and suffer the brunt, but those at Air Malta continue as if nothing happened.

Are they going to take a 50% cut like British Airway pilots?

As Matthew Vella’s editorial rightly emphasises today, Malta needs its own Marshall Plan, we need a government that intervenes, that uses its financial clout to combat this tsunami.

Without businesses ready to return to the fore months after this crisis, there will be no economy to talk about. And Abela should know that with no money in their pockets, the first to be blamed will not be the employers, but the government.

Robert Abela has to act. He needs to surround himself with experienced advisers grounded in business, people who can take him through a survival package for businesses that can revive themselves once this nightmare is over.

It is a long road, one that will take us into the end of the year. This silly survival package must be replaced with something concrete.

More in Blogs