It’s all about spending sprees so far

From additional maternity and paternity leave paid by the government, to the construction of two new hospitals and extensions to Mater Dei and the Paola Hub; from an interest-free loan up to 25% of the property value provided by the government to free cancer medicine for all, the proposals put forward thus far by the two major political parties are all about more and more government spending. 

Let us be clear, some of the proposals boost wellbeing and indirectly can contribute to higher economic productivity by ensuring workers remain in employment, while raising young children. Other proposals are targeting deficiencies in the health system that were made worse over the past decade as a result of the misguided emphasis on the Vitals/Steward project that drowned in corruption and failed to deliver. 

But what is missing in this conversation is how these pledges will be financed. Nothing is free. The benefits, the initiatives, the capital expenditure comes out from the taxes collected from each and every one of us—at least from those who do pay taxes. We have never had an election campaign where pledges to increase spending were balanced out with counter-measures that would raise certain taxes or propose cuts in other areas of government expenditure. Unfortunately, it has always been a one-way street—more spending, increased benefits, newer benefits, grander capital projects. Until the election is over. 

We realise that any such conversation is difficult to have. Who wants to hear that income tax, VAT or national insurance will increase? Who wants to hear that importation duties and excise taxes will increase? Who wants to hear that certain benefits will be means-tested or that certain incentives will only apply to those who truly cannot afford or require assistance? 

The truth is that no one wants to hear such a conversation being played out and politicians shy away from it. The reply politicians give to how this largesse with public funds will be sustained is scripted: ‘Economic growth will ensure enough taxes are collected to satisfy all demands.’ 

The formula has worked for the past 13 years. The economy has ballooned and government revenue has increased without the need for new taxes. Malta’s headline figures are among the best in the EU and although debt has increased astronomically, its burden is more than bearable given the sustained economic growth. 

But this formula has its limitations. Unbridled economic growth has created a vicious circle that requires even more workers to continue growing. With the pool of Maltese workers practically exhausted, the gaps have had to be filled in by foreign workers. As a result, the islands’ population increased rapidly and exponentially, bringing with it social consequences. The property rental market exploded; property prices have shot up; the pressure on public infrastructure like roads, sewage, electricity distribution network, schools and healthcare services, has increased. Hospital waiting times for operations, appointments and emergency services continue to blight the system. Traffic has become a nightmare. Public transport cannot cope with demand. 

But we also know that despite the unfettered promises made at election time, a different reality starts to bite when the election is over. 

The big urban greening projects announced with fanfare in the 2022 election campaign by the Labour Party never materialised. The Magħtab incinerator, once billed as crucial for Malta’s waste management plan, remains but a hole in the ground. The new hospital in Gozo and a regional health centre in the north of Malta are nowhere to be seen. The basic refurbishment works on the theatre at the Malta Visual and Performing Arts School started just before the 2022 election, stopped dead just after the result was out. The glitzy metro plans of 2021 remained just that with a new re-dimensioned transport plan only announced now and which will require a further three years of studies, investigations and planning procedures. 

What this means is that voters were given the impression these projects will happen but when push came to shove, they were forgotten, relegated to the bottom of the pile, abandoned or mired in tender issues that have caused interminable delays. 

One may argue that abandoning certain projects because they are not financially feasible, especially in a scenario where fuel and energy subsidies were introduced to ensure price stability, is judicious. Not really. It is judicious if accompanied with honesty and frankness about the over-promising or the changed priorities because of international turmoil. 

The prime minister recently boasted about the more than 140 collective agreements signed over the past four years involving public sector workers and which cost more than €1 billion in wage increases. It is good that public sector workers are paid decent wages. But somehow, we never have the conversation as to how many people are engaged with government entities as a political favour and not because they are really needed. 

So, when politicians from either side start promising everything, we know they will not deliver everything. We know that the growth formula being promised is likely going to create more social pressure. We know that once the Naxxar counting hall computers finish their work on 31 May, some of the proposals would have already been deprioritised because even this magic growth formula has its limitations.