Debunking the myth of the government’s fiscal competence

It is easy to argue that the Maltese economy has never done better when looking at the country’s GDP growth in isolation.

It is far more difficult to reconcile that eye-watering GDP figure of roughly €24 billion and the relentless pace at which Malta’s economy continues to expand with what that actually looks like in the real, physical world around us.

More importantly, it is especially difficult to keep track of how mismanagement of the public purse makes it so much harder to service both €11 billion in debt and a widening deficit that’s set to tip over the €1 billion mark by the end of this year.

The European Commission issued clear warning signs about government spending – any more reckless spending spells inevitable trouble, despite the government’s line that the sheer amount of debt is backed by the country’s economic growth. 

Besides lining the pockets of powerful individuals with direct access to power, is there any point at all in building an economy that grows so quickly if all it does is saddle future generations with debt while the majority of those in the present struggle to keep up?

The best example of this fallacy is the way taxpayer money is spent via public procurement.

Just last month, The Shift published several stories about Enemalta’s failure to account for €60 million in a carbon credit transaction gone awry, the ongoing €44 million social housing debacle at the beleaguered Malita Investments, and KM Malta Airlines’ delayed filing of its annual accounts.

Besides the disastrous management of the state’s energy company, Malita’s finances, and Air Malta’s fledgling successor, the Public Contracts Review Board (PCRB) and the courts are clogged with litigation over major tenders, with the most recent example being Wasteserv’s €600 million waste-to-energy project being delayed yet again after the winning consortium abruptly pulled out at the last minute.

Though these examples of financial mismanagement are already more than enough to make any decent accountant sweat profusely, a closer look at how the government spends its money on personnel makes for harrowing reading.

Yet again, even a month’s worth of headlines contains a staggering amount of examples of overspending, from putting the Labour Party band’s coordinator on a total of €3,500 a month’s worth of consultancy fees, an €8 million splurge on direct orders to set up a pavilion at the Osaka Expo, or the Gozo minister’s €100,000 SiGMA bash, among others. 

And, last but not least, it is impossible to analyse the government’s spending without referring to the €900 million Steward-Healthcare-shaped hole in the country’s finances, or the fact that to this day, the three public hospitals that were supposed to receive a €400 million facelift were left to flatline and rot. And all we have to show for it is an €11 million bill for the government’s legal defence.

The fact is that the speed of the country’s economic growth hardly matters if the fundamental basics of keeping a society alive and well are compromised in the process, and no amount of feel-good budget incentives can make up for widespread corruption.