by Prof. Edward Scicluna, timesofmalta.com - Mon 1st June 2009
Prime Minister Lawrence Gonzi is in the unenviable situation where he has left himself no room for manoeuvre to cushion our economy against the ravages of the international situation and save jobs. Instead, he has to start the whole deficit cutting exercise all over again, this time under the direct orders of the European Union through its excessive deficit procedure.
In his recent outburst against opposition criticism and mine in particular, the Prime Minister lectured his audience on the euro peg but failed to mention that our economic history since World War II reports only two Maltese lira devaluations, one in 1967 and the other in 1992. Both were carried out under Nationalist administrations.
The Prime Minister referred to the interview I had on timesofmalta.com wherein I had stated that I considered that the present predicament of the economy and public finances were due to two major wrong economic decisions taken in the past. One was the refusal by the Gonzi government to utilise the +/- 15 per cent band around the then existent parity during the ERMII period. This had been suggested by the European Commission.
At that time, I considered this refusal as "the worst advice the Prime Minister was to be given for many years to come".
I had argued that the float within the band during the two years prior to euro adoption would have given the chance to our lira to find its real value against the euro. This would have allowed our monetary authorities to choose the most suitable permanent euro/lira peg, which would have helped Malta's export competitiveness and the creation of more jobs.
It was the Prime Minister's mistake at that time to ignore this advice and trivialise the issue with the infamous devaluation scare. Four years later, on the eve of the European Parliament elections, Dr Gonzi repeats this mantra to deviate attention from the required policy measures needed to take us out of the present economic quandary.
The second wrong decision was to concentrate solely on deficit cutting to the detriment of economic growth and to carry out this exercise solely by increasing taxation.
The way we should have reduced the deficit I had spelt out in a paper presented at a Chamber of Commerce conference in 2003 entitled Cutting The Deficit: We Can Do It. I had warned that previous attempts by other countries such as Ireland to cut the deficit by raising taxes would not succeed in achieving sustainable public finances. This was also ignored.
When the period of euro examination was nearing, as a euro expert appointed by the European Commission, I was given to understand that Malta was failing the stress tests carried out with regard to the debt/GDP ratio. I had reported this in various interviews.
I had advised that the debt ratio was to be brought down not by the one-off proceeds from privatisation but by more diligent control of public expenditure programmes through appropriate reforms. This would have succeeded in putting our public finances on a sustainable path.
The real cost of ignoring this economic advice showed itself in our very first year of euro membership. In one single year (2008) we managed to reverse a seven-year stint of sacrifices of deficit reduction through higher taxation. Our deficit shot up to 4.7 per cent, the inflation went up to over five per cent at a time when the whole world was facing deflation, and the debt accelerated its upward climb. This has brought the wrath of the European Union, which has initiated the excess deficit procedure against Malta. The Gonzi government cannot tell us it was not forewarned.
Finally, as an economist, I have consistently been in favour of euro membership once the much-awaited structural reforms would have been in place. It is sad to note that these much-awaited reforms, notably in health, education and pensions, have failed to materialise in the period prior to EU membership as well as in the period prior to Malta joining the euro. Today, the Prime Minister is still talking about these reforms.
It is up to the electorate to judge who has indeed weakened the economy and its public finances and put Maltese workers' jobs at risk.
Prof. Scicluna will be contesting the MEP elections on a Labour Party ticket.
1.6.09
Il-biza' ta' Lawrence Gonzi
it-Torca - Il-Hadd 31 ta' Mejju 2009
M’hijiex sewwa-sew htija tieghi li hemm min, fosthom il-karikaturisti, ipingini bhala biza ta' Dr Gonzi.
Jiena dejjem ippruvajt nghid il-verita’ fid-dawl ta' ricerka onesta li naghmel fil-qasam li nifhem fih, jigifieri l-ekonomija. Kif naraha jien, u ta' dan xbajt naghti provi, il-pajjiz ilu jehtieg qawmien ekonomiku kif jixraqlu.
Tistaghgeb li jekk Dr Gonzi ma jaghtix kas x'jghidulu l-esperti, l-esperti jkollhom iduru kontrih? lmma l-PN mhux din biss ma nizzilx dwari, imma li hrigt bhala kandidat ghall-elezzjoni Ewropea mal-Partit Laburista, il-partit li fdani, mhux biss bhala expert fl-ekonomija imma bhala briedem li jghid u jistqarr dak li tassew ihoss, bla habi u minghajr pregudizzju. Fuq kollox, il-Partit Laburista huwa mehtieg ghal Malta ghax minghajru u jekk ma jqumx wahda sew fuq riglejh, tbati s-sistema demokratika hawn Malta u mat-tigrif taghha jkollna herba ekonomika u socjali.
Wara t-telfa li garrab il-PL is-sena l-ohra, il-PN beda jahseb li jista' jaghmel li jrid fil-pajjiz. Huwa fatt sagrosant. Jafu kulhadd u ma jista' jichdu hadd. Jekk il-PL ma jsibx 1-ghajnuna tan-nies kollha ta' rieda tajba, pajjizna jitlaq b'girja wahda lejn id-dittatura. Jekk thares lejn l-imgieba ta' xi ministri tal-kabinett ta' Gonzi malajr tintebah x'qed nghid.
Insemmi ftit ezempji. F'Settembru li ghadda harget l-ahbar li 20,000 email passwords mis-server tal-gvern waqghu f'idejn nies li tqabbdu jisirquhom minn xi hadd li s'issa qed jahseb li mhux maghruf . Fost dawn kien hemm dawk tal-Pulizija, tal-Forzi Armata, tal-gudikatura u tal-parlamentari.
Il-Ministru responsabbli minn dal-qasam, l-Onorevoli Austin Gatt qara rapport fil-parlament li kkonferma li s-serqa sehhet b'success u damet ma nkixfet tliet xhur shah. X'sar minn dakinhar '1 hawn biex tissewwa dil-qaghda tal-biki? Ftit wara kellna incident iehor marbut ma' dit-teknologija. Is-segretarju generali tal-PN, Pawlu Borg Olivier baghat, bi zball, messagg elettroniku lis-segretarju tal-PL, li fih kien hemm xhieda cara u tonda ta' kif il-gvern ta' Gonzi jahdem b'mod mhux xieraq mal-PN bhala partit politiku. X'gara wara dan l-iskandlu? Ittiehed imqar l-icken pass biex tissewwa l-qaghda?
Li ghandna llum hija diskriminazzjoni sfaccata kontra nofs il-poplu, jigifieri dawk li ma vvutawx lil GonziPN u preferenzi daqstant iehor sfaccati favor dawk ta' gewwa nett. Saqsi lil min trid u tara jaqbilx mieghi. Din hija aghar mill-kazi l-ohrajn, ghax din m'hijiex kaz imma attitudni li tlewwen il-politika kollha u r-relazzjonijiet pubblici kollha tal-gvern. Aqra l-gurnali, ifli dak li jiktbu l-propagandisti ewlenin ta' GonziPN u tara b'liema mod degradanti jitkellmu dwar dawk li m'humiex maghrufin bhala segwaci ta' GonziPN. Kieku kienu qieghdin jiktbu dwar nies ta' razza differenti kienu jitqiesu bhala qieghdin jikkommettu reat razzist.
Il-htija ta’ din id-diskriminazzjoni klassista hija kollha tal-magna propagandista ta' GonziPN immexxija minn nies li lanqas biss kienu eletti mill-poplu u ghalhekk m'ghandhom l-ebda qima lejn is-sistema demokratika. lr-rwol tieghi fil-Partit Laburista hu li nghin biex din id-diskriminazzjoni tingheleb u pajjizna jerga' jibda jara d-demokrazija tahkem fl-oqsma kollha tal-hajja u tghin, kif taghmel dejjem fit-trawwim u t-tkabbir ekonomiku.
Jiena staghgibt kemm laqghuni l-laburisti, minn fuq s'isfel, malli saru jafu li jiena lqajt l-istedina li nohrog bhala kandidat ghall-elezzjoni Ewropea f'isem il-Partit Laburista.
Din il-laqgha sabiha li tawni jiena nfissirha bhala x-xewqa tal-laburisti li jharsu '1 quddiem b’tama li pajjizna ghadu ma tilifx kollox bhalma qieghdin ibassru xi osservaturi politici. B'rieda tajba nistghu nahdmu id f'id ghall-gid tal-pajjiz u tac-cittadini kollha bla distinzjoni u minghajr diskriminazzjoni.
Fl-istess hin, jekk il-laburisti ferhu bil-kandidatura tieghi, hekk ghamlu wkoll dawk kollha, mhux bilfors mill-kamp luburista, ghax jafuni bhala bniedem li jqieghed l-ewwel u qabel kollox il-moderazzjoni, il-komprensjoni, u l-gid tal-pajjiz kollu.
Ma nistaghgibx, izda l-ahhar fehma tinkwieta lill-propagandisti horox ta' GonziPN li mohhhom biss biex ipingu lill-Partit Laburista bhala wiehed maghmul minn qatta’ xjaten kif kien irnexxielhom ipinguh fl-imghoddi. Lil dawn ma nista' nghidilhom xejn ghajr li l-pajjiz mhux lilhom jehtieg imma lil min, b’serjeta’ u b’dedikazzjoni jahdem u jhabrek biex kemm jista' jkun malajr nohorgu mill-krizi ekonomika li ninsabu fiha. Bla dubju, mod kif ma nohorgux mill-krizi ekonomika jkun dak li noholqu aktar krizi socjali u politika biex innessuha u ma nhallux il-poplu jahseb fiha u jfittex lil min tabilhaqq jista’ jghinu jeghlibha.
www.edwardscicluna.com
M’hijiex sewwa-sew htija tieghi li hemm min, fosthom il-karikaturisti, ipingini bhala biza ta' Dr Gonzi.
Jiena dejjem ippruvajt nghid il-verita’ fid-dawl ta' ricerka onesta li naghmel fil-qasam li nifhem fih, jigifieri l-ekonomija. Kif naraha jien, u ta' dan xbajt naghti provi, il-pajjiz ilu jehtieg qawmien ekonomiku kif jixraqlu.
Tistaghgeb li jekk Dr Gonzi ma jaghtix kas x'jghidulu l-esperti, l-esperti jkollhom iduru kontrih? lmma l-PN mhux din biss ma nizzilx dwari, imma li hrigt bhala kandidat ghall-elezzjoni Ewropea mal-Partit Laburista, il-partit li fdani, mhux biss bhala expert fl-ekonomija imma bhala briedem li jghid u jistqarr dak li tassew ihoss, bla habi u minghajr pregudizzju. Fuq kollox, il-Partit Laburista huwa mehtieg ghal Malta ghax minghajru u jekk ma jqumx wahda sew fuq riglejh, tbati s-sistema demokratika hawn Malta u mat-tigrif taghha jkollna herba ekonomika u socjali.
Wara t-telfa li garrab il-PL is-sena l-ohra, il-PN beda jahseb li jista' jaghmel li jrid fil-pajjiz. Huwa fatt sagrosant. Jafu kulhadd u ma jista' jichdu hadd. Jekk il-PL ma jsibx 1-ghajnuna tan-nies kollha ta' rieda tajba, pajjizna jitlaq b'girja wahda lejn id-dittatura. Jekk thares lejn l-imgieba ta' xi ministri tal-kabinett ta' Gonzi malajr tintebah x'qed nghid.
Insemmi ftit ezempji. F'Settembru li ghadda harget l-ahbar li 20,000 email passwords mis-server tal-gvern waqghu f'idejn nies li tqabbdu jisirquhom minn xi hadd li s'issa qed jahseb li mhux maghruf . Fost dawn kien hemm dawk tal-Pulizija, tal-Forzi Armata, tal-gudikatura u tal-parlamentari.
Il-Ministru responsabbli minn dal-qasam, l-Onorevoli Austin Gatt qara rapport fil-parlament li kkonferma li s-serqa sehhet b'success u damet ma nkixfet tliet xhur shah. X'sar minn dakinhar '1 hawn biex tissewwa dil-qaghda tal-biki? Ftit wara kellna incident iehor marbut ma' dit-teknologija. Is-segretarju generali tal-PN, Pawlu Borg Olivier baghat, bi zball, messagg elettroniku lis-segretarju tal-PL, li fih kien hemm xhieda cara u tonda ta' kif il-gvern ta' Gonzi jahdem b'mod mhux xieraq mal-PN bhala partit politiku. X'gara wara dan l-iskandlu? Ittiehed imqar l-icken pass biex tissewwa l-qaghda?
Li ghandna llum hija diskriminazzjoni sfaccata kontra nofs il-poplu, jigifieri dawk li ma vvutawx lil GonziPN u preferenzi daqstant iehor sfaccati favor dawk ta' gewwa nett. Saqsi lil min trid u tara jaqbilx mieghi. Din hija aghar mill-kazi l-ohrajn, ghax din m'hijiex kaz imma attitudni li tlewwen il-politika kollha u r-relazzjonijiet pubblici kollha tal-gvern. Aqra l-gurnali, ifli dak li jiktbu l-propagandisti ewlenin ta' GonziPN u tara b'liema mod degradanti jitkellmu dwar dawk li m'humiex maghrufin bhala segwaci ta' GonziPN. Kieku kienu qieghdin jiktbu dwar nies ta' razza differenti kienu jitqiesu bhala qieghdin jikkommettu reat razzist.
Il-htija ta’ din id-diskriminazzjoni klassista hija kollha tal-magna propagandista ta' GonziPN immexxija minn nies li lanqas biss kienu eletti mill-poplu u ghalhekk m'ghandhom l-ebda qima lejn is-sistema demokratika. lr-rwol tieghi fil-Partit Laburista hu li nghin biex din id-diskriminazzjoni tingheleb u pajjizna jerga' jibda jara d-demokrazija tahkem fl-oqsma kollha tal-hajja u tghin, kif taghmel dejjem fit-trawwim u t-tkabbir ekonomiku.
Jiena staghgibt kemm laqghuni l-laburisti, minn fuq s'isfel, malli saru jafu li jiena lqajt l-istedina li nohrog bhala kandidat ghall-elezzjoni Ewropea f'isem il-Partit Laburista.
Din il-laqgha sabiha li tawni jiena nfissirha bhala x-xewqa tal-laburisti li jharsu '1 quddiem b’tama li pajjizna ghadu ma tilifx kollox bhalma qieghdin ibassru xi osservaturi politici. B'rieda tajba nistghu nahdmu id f'id ghall-gid tal-pajjiz u tac-cittadini kollha bla distinzjoni u minghajr diskriminazzjoni.
Fl-istess hin, jekk il-laburisti ferhu bil-kandidatura tieghi, hekk ghamlu wkoll dawk kollha, mhux bilfors mill-kamp luburista, ghax jafuni bhala bniedem li jqieghed l-ewwel u qabel kollox il-moderazzjoni, il-komprensjoni, u l-gid tal-pajjiz kollu.
Ma nistaghgibx, izda l-ahhar fehma tinkwieta lill-propagandisti horox ta' GonziPN li mohhhom biss biex ipingu lill-Partit Laburista bhala wiehed maghmul minn qatta’ xjaten kif kien irnexxielhom ipinguh fl-imghoddi. Lil dawn ma nista' nghidilhom xejn ghajr li l-pajjiz mhux lilhom jehtieg imma lil min, b’serjeta’ u b’dedikazzjoni jahdem u jhabrek biex kemm jista' jkun malajr nohorgu mill-krizi ekonomika li ninsabu fiha. Bla dubju, mod kif ma nohorgux mill-krizi ekonomika jkun dak li noholqu aktar krizi socjali u politika biex innessuha u ma nhallux il-poplu jahseb fiha u jfittex lil min tabilhaqq jista’ jghinu jeghlibha.
www.edwardscicluna.com
The moderate face of Labour
Malta Today on Sunday - Sun 24th May 2009
Economist, lecturer and widely respected independent pollster, EDWARD SCICLUNA surprised everyone by emerging as Labour’s frontrunner for the European elections. He talks about his reasons for entering politics, as well as Gonzi’s ‘disastrous’ handling of the economy.
For years, we have grown used to Professor Edward Scicluna making appearances on television to announce the general election result. Like the ‘Man from del Monte’, he would come on the screen with his clipboard and his deadpan voice, analysing the earliest samples and accurately predicting the election result.
"My predictions have clearly irked the Gonzi administration,” he tells me with a smile as he leafs through a small mountain of newspaper cuttings at his San Pawl Tat-Targa home. In one cartoon, the placid economics professor is even portrayed as Gonzi’s worst nightmare, pricking the Prime Minister’s conscience with reminders of a long overdue economic reform.
But while he has long been a keen critic of government economic policy, Prof. Scicluna only nailed his political colours to the mast after last year’s budget... when Finance Minister Tonio Fenech accused him of “leaning towards Labour”, for failing to share the government’s optimism for Malta’s economic future.
It was in a sense a self-fulfilling prophecy: but does he now regret his decision to contest the election? Hasn’t he just gone and thrown away a painstakingly constructed reputation for impartiality, which – let’s face it – he will probably never be able to reclaim?
“I would have preferred to remain independent, certainly,” he replies. “It’s more comfortable. I could have very easily carried on doing what I was doing before: conducting studies for the private sector, like the evaluation of EU funding I was commissioned to do by an auditing firm...”
So what made him go out for politics precisely now?
“After Labour’s third consecutive electoral defeat last March, I felt the democratic deficit was too significant to ignore,” he begins. “On the one hand you have the Nationalist party which is projecting the image of ‘party is king’. They act as though they own the country, and will be in government forever. On the other hand, there was an Opposition whose morale was rock-bottom, absolutely zilch...”
From this perspective, Scicluna argues that the difference between the two parties goes well beyond the demographic split that separated them in the last election.
“The 2,000 votes are immaterial really,” he says. “The truth is that one half of Malta’s political establishment had simply collapsed. This creates a dangerous imbalance, and you don’t have to look very far to see the consequences...”
To illustrate the gravity of the situation, Scicluna invites me to consider a global analogy. “When did the United States start behaving questionably and making mistakes... like, for example, the invasion of Iraq?” he asks. The answer, he claims, goes back to the collapse of the Soviet Union in 1989. “After one side collapsed, the other had free reign to do as it pleased...”
By inference, Scicluna suggests that after the collapse of the Labour Opposition in 2008, the Nationalist government no longer felt it was accountable to anyone, and started to behave in an almost dictatorial, uncompromising fashion that – according to Prof. Scicluna – is now becoming dangerous.
He lists out a number of recent “incidents” that helped consolidate his impression.
“The first was the gov.mt issue,” he begins: alluding to the revelation last September that 20,000 email passwords had been stolen from the government server, allowing the hackers access to highly sensitive email accounts throughout public administration, including the Malta Police Force, the Armed Forces, the judiciary and parliament.
IT minister Austin Gatt himself later read out a report in parliament which confirmed that the theft had been successful, and that the passwords had been accessed by unauthorised persons for as long as three whole months before the breach had been discovered.
“It’s astounding,” Scicluna continues. “We forget so easily... things which are fundamental to the basic running of the State. How can we ignore something so serious? How can we pretend that nothing happened? And yet, to this very day, nothing has been done about it...”
The second incident – revealed when PN general secretary Paul Borg Olivier accidentally sent his Labour Party counterpart a confidential email – involved the extent of the incestuous relationship that now clearly exists between the government and the Nationalist Party.
“What emerged from that email was that officials from OPM held a meeting with PN officials at the Stamperija in Pieta’,” he explains. “How can you have government officials dancing like that into the PN headquarters to pass on sensitive information about private citizens? It’s scandalous. But what happened as a result? Absolutely nothing...”
The third issue is not so much a single event, but rather an entire attitude that has been allowed to spiral out of control in recent years, to the extent that even committed Nationalist supporters are starting to worry about it. Prof. Edward Scicluna, like many others outside the PN’s inner sanctum, is increasingly appalled at the levels of blind prejudice currently being displayed towards non-Nationalist politicians and sympathisers.
“People who support Labour are talked about almost as though they are a separate species: sub-humans, second-class citizens, ‘hamalli’...” he comments with distaste. “The language currently being used to describe Laburisti is a disgrace. If it were directed at people because of their skin colour or religion, it would be considered illegal. How can an entire category of people be disparaged like that? This is half the country’s population we are talking about here...”
Prof. Scicluna explains that on his home visits, he meets Nationalist supporters who tell him they are ashamed of this sort of thing.
“I know it’s a hackneyed and overused word, but this is arrogance, plain and simple,” he continues. “Faced with all this, I felt I had to do something. I couldn’t simply stand by and watch the country degenerate like this...”
And yet, this represents a curious reversal of roles from the situation many of us remember in the 1970s and 1980s. Back then it was the Labour party that had been in power for what felt like forever... and it was the Nationalists who bore the full brunt of discrimination and prejudice.
I ask Edward Scicluna if he feels the Labour Party might be directly responsible for its current predicament. After all, isn’t it payback time for the Nationalists after the humiliations of yesteryear? And couldn’t it be argued that the Labour Party made itself unelectable, simply because of the memory of those years?
Edward Scicluna acknowledges the point, but counters that the PN propaganda machine has blown it out of proportion for its own advantage.
“Were it not for the PN, Labour would already have put all that behind,” he says, reminding me how Joseph Muscat has already made overtures to the victims of Labour violence in the 1980s. “But at the same time, the Labour Party grassroots are unwilling to let go of the image they have of their party back then. They still have their pride. They don’t want to throw out the baby with the bathwater... a lot of good was done in those years, and they are justifiably proud of that...”
Ironically, though, his own popularity within the party appears to also signify a change in Labour. I ask Prof. Scicluna if he was as surprised as I to discover that independent polls place him ahead of incumbent MEPs and other party stalwarts. After all, he is hardly a typical ‘Laburist’, at least in the way a typical Nationalist would reason...
“I believe my candidature appeals to a lot of ordinary people who want moderation in politics. I get that sort of feedback from Nationalists too.”
Scicluna also freely admits that the party had to change, not just for the sake of reassuring frightened Nationalist voters, but also for the good of the country’s political balance.
“If we are to have a two-party system, I would like to see two well-prepared parties: two parties that can assume power, without disruption or upheaval. Two parties that can be trusted to administer the country...”
Labour, no doubt, believes it is now ready to govern under Muscat. In order to do so, however, it will still have to reach out across the political divide and convince at least a small proportion of Nationalists that it can be trusted. But has it reached that stage yet? Has Muscat’s earthquake of change shaken the political establishment enough to make Labour electable?There is a tiny moment of silence. “More work needs to be done,” he admits at length. “But it has already started. This is what the think tanks were all about. You can argue that the change has not to date been far reaching enough – personally I suspect that the MEP election itself got in the way, and that we will see considerably more change after June 7 – but the Labour Party has undertaken to build a new platform on a wide variety of policy issues...”
Do you think your own candidature is part of a strategy to make the Labour Party ‘less scary’ to Nationalist voters?“Yes, definitely,” Scicluna replies without a second’s hesitation. “It is also partly why I contested in the first place. I want to change the way people look at the Labour Party. Look at how Britain’s Tony Blair managed to reinvent ‘New Labour’ in the 1990s. He turned it around from a militant, old-fashioned institution to a more business-friendly political party. There is a tendency to think that, being a workers’ party, Labour will always look negatively at business. But this is not true today... it is perfectly possible to champion worker’s rights, while also acknowledging that jobs are created by the private sector...”
But Edward Scicluna also argues that in today’s economy, Maltese businesses have a good deal more to worry about than the mere prospect of a Labour administration.
“We have never had the economy so badly mismanaged as the last 10 years,” he says, with a bluntness that takes me by surprise. “Prime Minister Lawrence Gonzi forgot the economy when he took over the finance minister’s portfolio in 2004. The EU told him to concentrate on deficit reduction, and that’s all he did. He forgot everything else. Words like ‘economic growth’ and ‘divergence’ were simply not in his vocabulary...”
Scicluna insists that from a restructuring perspective, deficit reduction is useless on its own. “Cutting the deficit? We can do it,” he says with a shrug. “It’s easy: the IMF provides a blueprint for it how can be done, by decreasing expenditure without raising taxation. But what was needed was the restructuring of our economy. That, by way of contrast, is not easy at all. It is hard and painful. But it can’t be avoided. The longer you postpone it, the more painful it will be.”
Scicluna shows me a series of graphs to illustrate what he refers to as the government’s “disastrous” handling of the economy. One of these graphs, representing the deficit curve over the past five years, resembles an almost perfect boomerang.“Here you can see the deficit as it stood in 2004, at 4.7%. Then it was reduced gradually over the next two years... only to grow again by the last quarter of 2008 to reach 4.7%.”
For Scicluna, this was the inevitable result of bad economic management, and points out a whole raft of questionable measures to account for it. “Instead of emulating other countries like Sweden, the USA, etc., government took the easy way out and increased VAT to 18%. It negotiated a five-year collective agreement with UHM, providing for an immediate (nominal) wage increase, and promising further wages increases over the next five years. This was just before 2008, when we joined the Eurozone...”
And then, the election came along. “In the 2008 budget, government voted enough expenditure to win the election. They covered their tracks by estimating revenue increases of almost €200 million. But even at the time, as an economist I asked: what if those increases do not materialise? And sure enough, they never did. We have now come full circle: the deficit is back to 2004 levels, the EU is now initiating infringement procedures against Malta. How can anyone call this good economic management?”
Still, while Scicluna is scathing about the Gonzi’s administration’s economic skills, it remains debatable whether a Labour government will heed his own advice, and embark on the necessary reforms: which include a revision of the university stipend system, and also control of expenditure on public health. What does Edward Scicluna recommend for a political hot potato like stipends?
“It would be very presumptuous of me to say that we should ‘do away’ with stipends,” he replies cautiously. “But even a recent European Commission document suggests that they are a burden on the system. But these are things the taxpayer has to decide. Does the taxpayer want to keep subsidising university students? If not, there are a number of ways the system can be revised. They could be converted to loans, or grants, or part-loans, part-grants... it’s not up to me to decide how to reform the system.”
However, Scicluna argues the biggest haemorrhage is not stipends but government wastage and inefficiency... referring to the recent scandal involving the issue of direct orders at Mater Dei hospital. “It gives a bad example throughout the economy,” he says. “These are basic issues of accountability and transparency. They affect the entire country.”
And yet, while Scicluna presents convincing economic arguments (to a layman’s ears, at any rate), the level of debate in the country appears to be more concerned with how Labour candidates voted in the last European election in 2004. Unprompted, he takes the opportunity to smash the PN’s current – albeit somewhat outdated – witch-hunt for closet Euro-sceptics within the Labour fold.
“I will not reveal how I voted in the 2004 referendum,” he asserts emphatically. “But only for one reason: to show how utterly irrelevant this argument has become. I have gone on record on countless occasions to say that EU membership would be beneficial to the economy. I was interviewed in November 1996 – two months after Labour won the election – and went on record saying that the Labour party would eventually come round to accepting EU membership... and I have been proved right on this, too. But why grace the question with an answer? It is an irrelevance, nothing more, nothing less.”
Prof. Scicluna will be contesting the European Parliament elections on behalf of the Labour Party.
www.edwardscicluna.com
Economist, lecturer and widely respected independent pollster, EDWARD SCICLUNA surprised everyone by emerging as Labour’s frontrunner for the European elections. He talks about his reasons for entering politics, as well as Gonzi’s ‘disastrous’ handling of the economy.
For years, we have grown used to Professor Edward Scicluna making appearances on television to announce the general election result. Like the ‘Man from del Monte’, he would come on the screen with his clipboard and his deadpan voice, analysing the earliest samples and accurately predicting the election result.
"My predictions have clearly irked the Gonzi administration,” he tells me with a smile as he leafs through a small mountain of newspaper cuttings at his San Pawl Tat-Targa home. In one cartoon, the placid economics professor is even portrayed as Gonzi’s worst nightmare, pricking the Prime Minister’s conscience with reminders of a long overdue economic reform.
But while he has long been a keen critic of government economic policy, Prof. Scicluna only nailed his political colours to the mast after last year’s budget... when Finance Minister Tonio Fenech accused him of “leaning towards Labour”, for failing to share the government’s optimism for Malta’s economic future.
It was in a sense a self-fulfilling prophecy: but does he now regret his decision to contest the election? Hasn’t he just gone and thrown away a painstakingly constructed reputation for impartiality, which – let’s face it – he will probably never be able to reclaim?
“I would have preferred to remain independent, certainly,” he replies. “It’s more comfortable. I could have very easily carried on doing what I was doing before: conducting studies for the private sector, like the evaluation of EU funding I was commissioned to do by an auditing firm...”
So what made him go out for politics precisely now?
“After Labour’s third consecutive electoral defeat last March, I felt the democratic deficit was too significant to ignore,” he begins. “On the one hand you have the Nationalist party which is projecting the image of ‘party is king’. They act as though they own the country, and will be in government forever. On the other hand, there was an Opposition whose morale was rock-bottom, absolutely zilch...”
From this perspective, Scicluna argues that the difference between the two parties goes well beyond the demographic split that separated them in the last election.
“The 2,000 votes are immaterial really,” he says. “The truth is that one half of Malta’s political establishment had simply collapsed. This creates a dangerous imbalance, and you don’t have to look very far to see the consequences...”
To illustrate the gravity of the situation, Scicluna invites me to consider a global analogy. “When did the United States start behaving questionably and making mistakes... like, for example, the invasion of Iraq?” he asks. The answer, he claims, goes back to the collapse of the Soviet Union in 1989. “After one side collapsed, the other had free reign to do as it pleased...”
By inference, Scicluna suggests that after the collapse of the Labour Opposition in 2008, the Nationalist government no longer felt it was accountable to anyone, and started to behave in an almost dictatorial, uncompromising fashion that – according to Prof. Scicluna – is now becoming dangerous.
He lists out a number of recent “incidents” that helped consolidate his impression.
“The first was the gov.mt issue,” he begins: alluding to the revelation last September that 20,000 email passwords had been stolen from the government server, allowing the hackers access to highly sensitive email accounts throughout public administration, including the Malta Police Force, the Armed Forces, the judiciary and parliament.
IT minister Austin Gatt himself later read out a report in parliament which confirmed that the theft had been successful, and that the passwords had been accessed by unauthorised persons for as long as three whole months before the breach had been discovered.
“It’s astounding,” Scicluna continues. “We forget so easily... things which are fundamental to the basic running of the State. How can we ignore something so serious? How can we pretend that nothing happened? And yet, to this very day, nothing has been done about it...”
The second incident – revealed when PN general secretary Paul Borg Olivier accidentally sent his Labour Party counterpart a confidential email – involved the extent of the incestuous relationship that now clearly exists between the government and the Nationalist Party.
“What emerged from that email was that officials from OPM held a meeting with PN officials at the Stamperija in Pieta’,” he explains. “How can you have government officials dancing like that into the PN headquarters to pass on sensitive information about private citizens? It’s scandalous. But what happened as a result? Absolutely nothing...”
The third issue is not so much a single event, but rather an entire attitude that has been allowed to spiral out of control in recent years, to the extent that even committed Nationalist supporters are starting to worry about it. Prof. Edward Scicluna, like many others outside the PN’s inner sanctum, is increasingly appalled at the levels of blind prejudice currently being displayed towards non-Nationalist politicians and sympathisers.
“People who support Labour are talked about almost as though they are a separate species: sub-humans, second-class citizens, ‘hamalli’...” he comments with distaste. “The language currently being used to describe Laburisti is a disgrace. If it were directed at people because of their skin colour or religion, it would be considered illegal. How can an entire category of people be disparaged like that? This is half the country’s population we are talking about here...”
Prof. Scicluna explains that on his home visits, he meets Nationalist supporters who tell him they are ashamed of this sort of thing.
“I know it’s a hackneyed and overused word, but this is arrogance, plain and simple,” he continues. “Faced with all this, I felt I had to do something. I couldn’t simply stand by and watch the country degenerate like this...”
And yet, this represents a curious reversal of roles from the situation many of us remember in the 1970s and 1980s. Back then it was the Labour party that had been in power for what felt like forever... and it was the Nationalists who bore the full brunt of discrimination and prejudice.
I ask Edward Scicluna if he feels the Labour Party might be directly responsible for its current predicament. After all, isn’t it payback time for the Nationalists after the humiliations of yesteryear? And couldn’t it be argued that the Labour Party made itself unelectable, simply because of the memory of those years?
Edward Scicluna acknowledges the point, but counters that the PN propaganda machine has blown it out of proportion for its own advantage.
“Were it not for the PN, Labour would already have put all that behind,” he says, reminding me how Joseph Muscat has already made overtures to the victims of Labour violence in the 1980s. “But at the same time, the Labour Party grassroots are unwilling to let go of the image they have of their party back then. They still have their pride. They don’t want to throw out the baby with the bathwater... a lot of good was done in those years, and they are justifiably proud of that...”
Ironically, though, his own popularity within the party appears to also signify a change in Labour. I ask Prof. Scicluna if he was as surprised as I to discover that independent polls place him ahead of incumbent MEPs and other party stalwarts. After all, he is hardly a typical ‘Laburist’, at least in the way a typical Nationalist would reason...
“I believe my candidature appeals to a lot of ordinary people who want moderation in politics. I get that sort of feedback from Nationalists too.”
Scicluna also freely admits that the party had to change, not just for the sake of reassuring frightened Nationalist voters, but also for the good of the country’s political balance.
“If we are to have a two-party system, I would like to see two well-prepared parties: two parties that can assume power, without disruption or upheaval. Two parties that can be trusted to administer the country...”
Labour, no doubt, believes it is now ready to govern under Muscat. In order to do so, however, it will still have to reach out across the political divide and convince at least a small proportion of Nationalists that it can be trusted. But has it reached that stage yet? Has Muscat’s earthquake of change shaken the political establishment enough to make Labour electable?There is a tiny moment of silence. “More work needs to be done,” he admits at length. “But it has already started. This is what the think tanks were all about. You can argue that the change has not to date been far reaching enough – personally I suspect that the MEP election itself got in the way, and that we will see considerably more change after June 7 – but the Labour Party has undertaken to build a new platform on a wide variety of policy issues...”
Do you think your own candidature is part of a strategy to make the Labour Party ‘less scary’ to Nationalist voters?“Yes, definitely,” Scicluna replies without a second’s hesitation. “It is also partly why I contested in the first place. I want to change the way people look at the Labour Party. Look at how Britain’s Tony Blair managed to reinvent ‘New Labour’ in the 1990s. He turned it around from a militant, old-fashioned institution to a more business-friendly political party. There is a tendency to think that, being a workers’ party, Labour will always look negatively at business. But this is not true today... it is perfectly possible to champion worker’s rights, while also acknowledging that jobs are created by the private sector...”
But Edward Scicluna also argues that in today’s economy, Maltese businesses have a good deal more to worry about than the mere prospect of a Labour administration.
“We have never had the economy so badly mismanaged as the last 10 years,” he says, with a bluntness that takes me by surprise. “Prime Minister Lawrence Gonzi forgot the economy when he took over the finance minister’s portfolio in 2004. The EU told him to concentrate on deficit reduction, and that’s all he did. He forgot everything else. Words like ‘economic growth’ and ‘divergence’ were simply not in his vocabulary...”
Scicluna insists that from a restructuring perspective, deficit reduction is useless on its own. “Cutting the deficit? We can do it,” he says with a shrug. “It’s easy: the IMF provides a blueprint for it how can be done, by decreasing expenditure without raising taxation. But what was needed was the restructuring of our economy. That, by way of contrast, is not easy at all. It is hard and painful. But it can’t be avoided. The longer you postpone it, the more painful it will be.”
Scicluna shows me a series of graphs to illustrate what he refers to as the government’s “disastrous” handling of the economy. One of these graphs, representing the deficit curve over the past five years, resembles an almost perfect boomerang.“Here you can see the deficit as it stood in 2004, at 4.7%. Then it was reduced gradually over the next two years... only to grow again by the last quarter of 2008 to reach 4.7%.”
For Scicluna, this was the inevitable result of bad economic management, and points out a whole raft of questionable measures to account for it. “Instead of emulating other countries like Sweden, the USA, etc., government took the easy way out and increased VAT to 18%. It negotiated a five-year collective agreement with UHM, providing for an immediate (nominal) wage increase, and promising further wages increases over the next five years. This was just before 2008, when we joined the Eurozone...”
And then, the election came along. “In the 2008 budget, government voted enough expenditure to win the election. They covered their tracks by estimating revenue increases of almost €200 million. But even at the time, as an economist I asked: what if those increases do not materialise? And sure enough, they never did. We have now come full circle: the deficit is back to 2004 levels, the EU is now initiating infringement procedures against Malta. How can anyone call this good economic management?”
Still, while Scicluna is scathing about the Gonzi’s administration’s economic skills, it remains debatable whether a Labour government will heed his own advice, and embark on the necessary reforms: which include a revision of the university stipend system, and also control of expenditure on public health. What does Edward Scicluna recommend for a political hot potato like stipends?
“It would be very presumptuous of me to say that we should ‘do away’ with stipends,” he replies cautiously. “But even a recent European Commission document suggests that they are a burden on the system. But these are things the taxpayer has to decide. Does the taxpayer want to keep subsidising university students? If not, there are a number of ways the system can be revised. They could be converted to loans, or grants, or part-loans, part-grants... it’s not up to me to decide how to reform the system.”
However, Scicluna argues the biggest haemorrhage is not stipends but government wastage and inefficiency... referring to the recent scandal involving the issue of direct orders at Mater Dei hospital. “It gives a bad example throughout the economy,” he says. “These are basic issues of accountability and transparency. They affect the entire country.”
And yet, while Scicluna presents convincing economic arguments (to a layman’s ears, at any rate), the level of debate in the country appears to be more concerned with how Labour candidates voted in the last European election in 2004. Unprompted, he takes the opportunity to smash the PN’s current – albeit somewhat outdated – witch-hunt for closet Euro-sceptics within the Labour fold.
“I will not reveal how I voted in the 2004 referendum,” he asserts emphatically. “But only for one reason: to show how utterly irrelevant this argument has become. I have gone on record on countless occasions to say that EU membership would be beneficial to the economy. I was interviewed in November 1996 – two months after Labour won the election – and went on record saying that the Labour party would eventually come round to accepting EU membership... and I have been proved right on this, too. But why grace the question with an answer? It is an irrelevance, nothing more, nothing less.”
Prof. Scicluna will be contesting the European Parliament elections on behalf of the Labour Party.
www.edwardscicluna.com
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