Bringing checks and balances back inside the House

Malta’s commissioner for public standards is cautiously optimistic that his hard-hitting report on government jobs for MPs can bring about important changes.

“I sense a growing awareness on both sides of Parliament that things should not go on as they are and as a result I see good prospects for meaningful reform,” George Hyzler, a former junior minister in the Eddie Fenech Adami cabinet of the 1990s, says.

His report on plum jobs for MPs, placed in well-paid positions with the State or on lucrative legal consultancies with ministers, is a veritable indictment on a system through which various prime ministers have attempted to placate backbench MPs.

Before Joseph Muscat, Lawrence Gonzi created a system of parliamentary assistants to have MPs shadow ministers and earn a higher honorarium; controversially he gave ministers their parliamentary honorarium, a ‘double salary’ that gave Muscat a successful crusade.

Then Muscat postponed any meaningful reform on parliamentary and ministerial salaries, but gave his MPs jobs with the State – chairmanships, positions of trust, and well-paid directorships.

“The principle of separation of powers is fundamental in our democratic system… we should be looking towards introducing more checks and strengthening existing ones rather than diluting them,” said Hyzler, who dubbed this practice as being “fundamentally wrong”.

“An MP whose standard of living becomes dependent on such appointments may find it harder to [take a critical stand]… An MP who publicly goes against his or her government can expect a backlash. This does not only happen in Malta, but in all democratic systems contested by political parties that in turn rely on their members’ loyalty. But ask yourself the question, is an MP who for reasons of conscience would wish to criticise his own government more likely to do so if, apart from the political backlash, he would also face the prospect of losing his job? I think not.”

It comes as no surprise that the placement of these MPs in sensitive positions of leadership bolsters a system of political patronage and clientelism.

“These authorities should be run efficiently and should not, for example, act as a screen for the engagement of unnecessary staff. Unfortunately, politicians need to contest elections and solicit votes. It is a known fact that employment with Government, directly or indirectly draws votes. MPs entrusted with running these agencies are placed in a position where they can yield to constituents’ demands,” Hyzler says.

Originally, the Gonzi administration in 2004 allowed MPs who were employed with the public service – teachers, or nurses for example – to retain their employment salaries to bolster their MP’s honorarium, which remains a ‘part-time’ job for most. Yet, by granting ministers their previously forgone MPs’ honorarium without any public notice, Gonzi – as well as Muscat’s own campaign – conditioned any debate on raising both ministerial salaries and MPs’ honoraria.

“The reasoning of the 2004 amendments… was that lower grade public servants should not be debarred from serving as MPs since such jobs would not normally be politically sensitive… In reality the honoraria issue that created the backlash concerned increases to ministers not to backbenchers. Nevertheless, the major parties still appear wary of bringing up the issue again.

“However, this issue needs to be addressed with urgency. We need to attract good people to represent us and it is unfair to expect the professionalism, dedication and commitment required if we do not pay them well. I also said that it is wrong for government to address the issue of low salaries by appointing backbenchers to these positions in a way that Parliament’s integrity is undermined,” Hyzler says.
“In any case conflict has to be avoided.”

Hyzler’s proposal is offering MPs the option of serving as full-timers, choosing whether to be debarred from other work and therefore be paid accordingly. But why offer them the option?

“Because individuals considered as high earners would be unwilling to forego their private work in order to become full-time MPs, even if the salary for full-time MPs is increased,” Hyzler says, mindful of those MPs in successful legal and medical practices, as well as businesses, earning net revenues well above €100,000.

“Such people should not be lost to Parliament. Whatever the system and the mechanism adopted, all MPs, part-time or full-time, should be debarred from holding appointments or consultancies with the government or the wider public sector.”

But then that means that ‘part-time’ MPs with their own lucrative businesses and practices and private consultancies can be freely wedded to big business and private interests, something that would run counter to the “fundamentally wrong” practice of having MPs employed with the State (often on salaries far less than that offered by the private sector). Aren’t these ‘part-time’ MPs’ loyalties also compromised, politically?

“The issue is that the Constitution prohibits MPs from being a party to contracts of works with government, and consultants are usually engaged by contracts for service. The legal interpretation that I reluctantly accepted for the purposes of the report is that contracts for works that are prohibited by the Constitution do not include contracts for service,” Hyzler says of MPs offering their legal services to State entities.

He then says MPs placed in positions of trust with ministries are not being recruited in accordance with the provisions of the Constitution and therefore their appointment raises serious constitutional issues.

When he turns to MPs with private practices, Hyzler does concede that there are grounds for concern about “the influence of developers in politics, but I think this has more to do with the financing of political parties than with individual MPs.

“Where individual MPs are concerned, a relationship with a private business more commonly can give rise to a conflict of interest if, say, Parliament is discussing a bill or motion that affects the business in question. But Parliament has rules whereby an MP who has such a conflict must declare it and refrain from voting on the bill or motion in question. Provided that MPs follow these rules, they cannot be regarded as compromised.”

Backbench bonanza

In Malta, MPs are required to be in the House of Representatives every Monday, Tuesday and Wednesday to qualify for the basic honorarium of some €22,752 (50% of Scale 1 government salaries).

The salary gets better if you are a chairman of a parliamentary committee (75% of Scale 1), but if you are a minister on some €54,000-odd a year, you cannot attend to your private profession, except for raking passive earnings from your firm’s profits.

The ‘part-time’ allure of Malta’s House of Representatives indeed serves as extra pocket money for some MPs. Yet if you are in a successful law practice, medical profession, or have a small business empire, the political class can offer you an ‘easy’ €22,000 annual income for your three-day sojourn in the House of Representatives. Whether or not your political duty will come before your business interests, or vice-versa, will be something that voters will have to watch out for.

The Maltese parliament also provides transitional allowances for former ministers after the lapse of 12 months from the termination of their executive position, and after deducting any income from their jobs. But Malta has no fixed ‘revolving doors’ policies to limit the cases where lawmakers switch jobs and join the private sector, armed with the influence they gained as Cabinet members.

The incomes listed here (only non-ministerial MPs are listed) include all the net incomes declared in their 2018 tax returns as presented to MaltaToday by the House of Representatives under the Tax Management Act. Incomes would be for the year 2017.

Not all MPs in the House today were present in 2017; not all tax returns for all MPs have been submitted to us from the office of the Speaker; incomes are listed in no particular order except for how they were presented in their tax return (they include professional and private income, MPs’ honararium, other incomes, rents and interest).

Net incomes implies that the original tax return reveals an MPs’ gross income and the deducted expenses, especially for those who run businesses or professional practices. The spousal income is listed ‘as is’ in tax returns (note: MPs Kristy Debono and Jean Pierre Debono declare each other’s net income in their spouses’ declaration).