Malta’s snap election et al.
After barely 4 years in government, the Prime Minister called an early election – significantly during Malta’s presidency of the European Union. Why? Was it, as he says, because the Opposition’s criticisms of his governance were risking damaging the nation’s international reputation?
Or was it, to prevent any further evidence on the alleged corruption by the ‘Castille clique’ to emerge and cost more votes? To hopefully elect the Labour party once again, and even if the PM, or any of his close allies, is subsequently convicted, he would at worst have placed the Labour party once again in government and at best have created an overarching authority (nay, autocracy) to safeguard him or any of them against any criminal proceedings?
If anything is damaging Malta’s reputation, it is the heavy clouds of doubt and uncertainty surrounding Castille. It is the bad governance from within Castille which has became a metastasis across the institutions. Malta is a small rock – a jewel of a rock – but a rock. It has a micro economy and depends for its economic survival on FDI (foreign direct investment).
The Nationalist Party left a solid base of service industries: tourism, financial services, iGaming, etc. However, all of these are as vulnerable as they are valuable. They can relocate very rapidly. They are also currently benefitting from geopolitical problems elsewhere – which at some stage may come to an end.
The government claims it has brought about an ‘economic miracle’. Miracles are normally of divine domain but let’s examine the pretentious claim.
GDP growth during the present legislature was no more than a linear growth from the previous two PN administrations. Worth noting that the PN administration’s GDP growth of 2008-2012 was achieved through a global financial crisis – whereas the present government’s one came about during the subsequent global recovery and, as mentioned, benefitted from geopolitical problems elsewhere.
The previous PN administrations built the economic ground floor and stairs to the first floor. This is what government inherited. And on the way up, government sold most of the furniture. It sold buildings, land, passports, energy generation, and so on. What was sustainable growth became a project-based, and therefore unsustainable, economy.
What did government do with the newfound economic buoyancy? Did it invest in the infrastructure and/or reduce public debt? Neither. No new productive sector was introduced – notably in manufacturing.
Differently from the mentioned volatility of services, manufacturing is less likely to up and go because of the heavy investment in property, plant, and equipment. Yet, not a single manufacturing sector was introduced. The only sector that can be imagined as manufacturing was construction. We now know that a significant part of the Labour party’s donations came from the construction industry. And what followed was a spate of construction – especially in high-rise buildings – which flooded the market with the new, whilst little if anything was done with the old. Malta is cluttered with old buildings which if renewed could provide a healthy secondary (as opposed to primary) market of properties.
And what about public-debt reduction?
Government eulogises itself for having reduced the public-debt to GDP ratio. But this was due to GDP growth and not to a reduction of absolute debt - which in fact continued to grow.
So, to sum up the outgoing government: some achievements, no ‘making hay while the sun shines’, and very poor, if not outright-bad, governance. Malta’s unexpectedly swift election, intended for government and not for the country, has turned out to be a blessing in disguise for Malta. An election which is more about removing a government than installing a new one.
GDP growth during the present legislature was no more than a linear growth from the previous two PN administrations.