This column first appeared in Malta Today

This week, Finance Minister Clyde Caruana went on record as saying he does not want to be the person who “kills this country’s economy” and that is why energy subsidies will not be removed under his watch. Fair enough –  I don’t think any rational person wishes Malta to collapse either because we will all suffer as a result.

However, his attempt at painting a doomsday scenario is not in keeping with the responsibility he carries towards the public in his position. Instead of telling us that 3000 jobs would be lost and that a catastrophe would ensue, Caruana should be putting pressure on the PM to change course and gradually adjust the subsidies because the economic reckoning will have to come sooner rather than later.  A Finance Minister should be steering the ship into calmer waters not indirectly encouraging the government to head right into the eye of the storm by keeping us on the same path.

There are also times when, yes, those in charge need to bear the brunt of negative public reaction, unpalatable as it may seem, by advising a wiser course of action. As an example, those who follow what’s happening in the UK will know that the new PM Andy Burnham came in for quite a bit of flak this week.

He announced plans to adjust the existing triple lock arrangement for the state pension in order to help fund a new plan for social care. The triple lock currently guarantees that the state pension goes up each year in line with either inflation, wage increases or 2.5% – whichever is the highest. His plan is for pensions to increase by 2.5% or inflation, whichever is higher. 

The initial reaction by pensioners was understandably negative with people phoning in to talk shows to complain bitterly about being penalised after working hard all their lives.  Why should the money needed for social care come out of their pensions, was their very valid argument.  With millions of pensioners already reported to be living in poverty, this is being described by Burnham’s critics as yet another blow to their quality of life.  On the other hand, it has been pointed out that the National Care Service Burnham is proposing will provide free personal care at home for older people, based on need rather than ability to pay.  

So while at face value it sounded like a very unpopular decision, in reality it could well turn out to be an intelligent, socially just, move which actually benefits those who need it the most. Of course, the crunch is that the Labour Prime Minister needs to make it to 2030 (which is the target date for the changes to come into effect), seeing that the country has had 7 different Prime Ministers in the last decade.  

Meanwhile, the brutal reality facing the UK and other countries right now is how to cope with a fuel crisis which is crippling most European economies.  In contrast, so far, in Malta we have been cocooned to believe we have a bottomless pit of funds to distribute all the freebies which were promised while continuing to dole out subsidies at every turn.  

By cushioning the people from realistic prices, this administration has simply encouraged waste. Do you think there would be queues of cars with just the driver if the price of fuel reflected what is happening throughout Europe? As for our nonchalant use of electricity, where are the educational campaigns for domestic use, private enterprise and government departments to be less wasteful?  They are nowhere to be found because our bills are still manageable – unlike other countries we are not having to decide between cooling/heating our homes, buying petrol to go to work or paying for groceries. It’s time to drag Malta into the real world because in order to continue with these subsidies as fuel prices hit a record high, we already know that the money  (a projected €392 million for this year alone) will have to come from somewhere else, although Minister Caruana fell short of explaining where the cuts will be coming from.   

One possible cut I could suggest is that of public expenditure; there are many areas which could do with a trimming of the fat, starting with the numerous consultants who are paid eye-watering amounts, sometimes after they have had to resign in disgrace from their previous roles. There are also people who are milking the public coffers with not one but two high-paying positions.  Their salaries might be a drop in the ocean in the light of the government’s €12 billion debt, but getting rid of all these unnecessary salaries would be a start.  Even as I write this, I am fully aware that the likelihood of that happening is next to nil. 

The only thing we have been told is that the much-vaunted €1000 bonus for every worker promised in the election campaign is not going to happen yet (or ever). If there are those who are surprised by this they must be very gullible. Politicians will promise anything to get elected, including the bizarre idea of giving you cash just because you show up for work.  Of course, inevitably, you have those justifying the backtracking: “every administration has 5 years to implement its electoral promises”. Well the way things are looking on the economic front, barely anything which has been promised will actually come to fruition because it was all unfeasible in the first place. 

Even if we look at all the services which are free at the moment, it is difficult to understand how they will continue to be sustainable. But now that the public has been lulled into a false sense of security that these freebies will remain forever, trying to reverse this trend would be like snatching a favourite toy from a child’s hands.  There will be tantrums and meltdowns and the good feel factor on which the Labour Party has been riding on for so long will dissipate in an instant.  But we can only live under the illusion that all is hunky dory for so long. 

The first signs that all is not as rosy as it seems came during a meeting with the social partners a few weeks ago. “The minister told us in no uncertain words that we, the social partners, ‘do not know’ what is happening around us and that we have our ‘head in the clouds’,” a person present for the meeting said.  Caruana reportedly told MCESD members not to go to him with wish lists because he had “nothing to disburse”. 

It is this which prompted the Chamber of Commerce to state that the Minister speaks one way in private and another way in public.  It is clear that there was so much emphasis in the last few elections on keeping everyone happy by throwing money at every sector that there was not even a minimal attempt at reining in the largesse. 

There didn’t need to be any shock waves either. As the Malta Chamber’s vice president Silvan Mifsud pointed out, a 10c increase in fuel prices in 2022 would have saved the government €100 million across four years. With that €100 million saved, he pointed out, the government could have tripled its allocation towards solar energy systems, including solar panels and batteries.  

Other entities, like the Central Bank, have been warning us since last year that Malta needs an exit strategy from the subsidies.  Instead what we have had is a summer of unbridled waste of a precious resource because as long as prices are kept low, there is no reason for the public to be more prudent.

The real test will come with what is announced in the Budget: will Clyde Caruana finally bring our feet back on the ground with realistic measures or will we just keep hearing how Malta is magically safe from everything happening around us?