Monday 23 May 2022

Political parties which cannot live within their means

This column first appeared in Malta Today

An article I read on an online news portal called The National, gave a simple explanation of how to budget one’s income on the 50-30-20 principle, starting with what it describes as ‘must-haves’. “Must-have costs include housing, utilities, food, transportation, insurance, minimum debt payments and child care that allows you to work. Using the 50/30/20 budget, these costs ideally would consume no more than 50 per cent of your income. That leaves 30 per cent for wants (entertainment, clothes, vacations, eating out and so on) and 20 per cent for savings and extra debt payments.”

While it was referring to households, it was interesting to read this in the same week that we heard how both the Labour Party and the Nationalist Party are up to their eyeballs in debt, especially when it comes to their media outlets.

ONE Productions owes €1.25 million for utilities while MediaLink has debts of up to €3.5 million. Between them they owe around €20 million in unpaid VAT, tax and social security contributions. PN Leader Bernard Grech recently admitted that the party’s total debt run to €32 million while Labour is said to owe €10 million.
Now that your eyes have stopped bulging at these figures, let me ask you some obvious questions to which there are some very equally obvious answers.

What would happen if you did not pay your ARMs bill? (Your water & electricity would be cut off).
What would happen if you did not pay your VAT? (You could face jail as has happened to ordinary people in previous years).
How about if you did not pay your tax? (You would incur a hefty penalty, be charged interest and they will keep hounding you until you pay up).
And if you fail to pay your employees’ social security contributions? (You can face judicial action as well as hefty penalties)

Of course, all of the above do not seem to apply if you are a powerful construction magnate (who can sail through life without abiding to any rules or regulations since he has the right connections) or, as in this case, a political party.
Both the PL and the PN have clearly demonstrated that they are unable to manage their finances because they have not budgeted for their ‘must-haves’. This financial mismanagement, coming from a party in Government and a party which is supposedly a Government-in-waiting, does not exactly inspire any confidence in the ordinary taxpayer. Most of you reading this are probably wondering why your hard-earned income is guzzled up so quickly by taxes, N.I., VAT and those pesky ARMS bills, while the ‘untouchables’ keep getting away with not paying for years. I mean, can you imagine how much more disposable income we would all have if we simply acted as cool and casual as Labour and the PN about paying our ‘must haves’, and just decided to squander it on our ‘wants’ instead?
But very few of us have that luxury. Leaving aside those who have turned tax evasion into a fine art form (paradoxically, they always tend to be the most wealthy), the average person in this country coughs up the money right on cue when the bills, income tax and VAT returns arrive. They do this by slogging away at their jobs and in many cases relying on a two income household not through choice, but through economic necessity. They juggle to pay for their must-haves and their wants and perhaps, just maybe, they put a bit of money aside in their savings, although the latter is becoming less of a possibility these days. They struggle to pay off their credit card debts and bank loans, but pay them off they must, because no benevolent fairy godmother is going to wave her magic wand and make them disappear.
And yet, here are Malta’s two major political parties, the heavyweights, the recipients of so many back door donations by those who wield the real money and the real power in the country – and both of them are on the verge of bankruptcy. Where did all the money go? More pertinently, when it comes specifically to their media houses, one must ask, what other business could survive like this for years without folding?
Although they may seem like essential tools for propaganda purposes, in the larger scheme of things, the politically-owned media houses would fall under the umbrella of ‘wants’. It’s like wanting to buy a BMW when all you can afford is a Toyota Vitz. Although the PN is in more dire straits, both parties have to bite the bullet on this one. After all, pre-One and Net TV, they still managed to get their respective message across via their radio stations. Hiving off their respective TV stations, which are more expensive to run, would go a long way towards stemming the flow of cash which is being haemorrhaged.
It’s not just the political parties which are in the red. While the debts keep piling up, the Labour Government in particular behaves in a way which epitomises the phrase made famous by the Nationalist Prime Minister Eddie Fenech Adami…’money, no problem’. It is an interesting twist, loaded with irony, that it was Labour which used to regularly accuse Nationalist Governments of squandering all the money in the state coffers. These days, the big spenders are those who once claimed to be socialists (a trend which one can clearly see being mimicked by much of the general population).
But, ultimately, like any household that has been living beyond its means, and which has been spending money it does not actually have, there comes a point where something’s got to give.
After an election campaign which stopped short of promising to pay us to stay home and watch Netflix, Finance Minister Clyde Caruana has given the first indications that he is going to slam on the spending brakes. Eurostat figures published recently show that Malta’s deficit stood at 8% last year, the highest in the EU. In response to this the Minister announced that, “I have started an exercise by which I am looking more deeply into government expenditure to see where we can be more judicious so that unnecessary expenses are cut.”
He pointed out that, apart from cutting down the deficit, this was also essential in order to absorb any increase in fuel prices, which he is determined will not be passed on to the consumer. This is a commendable decision, especially when places such as the UK have seen shocking increases, sometimes even three times as much, forcing people to choose between heating and buying food.
There are plenty of areas where the Government could curb its spending: from the number of expensive consultants on its payroll to the lavish, completely unnecessary opening ceremonies every time a project is completed (although ever since the PR-obsessed Ian Borg was kicked upstairs to the Foreign Affairs Ministry perhaps we will be spared more televised ribbon cutting). And let’s not forget all the people who have been handed jobs with the public sector over the last few years, bloating the civil service so much they are probably all bumping into each other in the corridors. Meanwhile, the private sector keeps searching frantically for Maltese-speaking job seekers, but it is all in vain, and they are nowhere to be found, because they are all working with some government department or entity now.
Minister Caruana strikes me as a sensible man so it should not be too hard for him to find the areas where he needs to trim the fat. It won’t go down well because no one enjoys hearing that the party is over, but it is clear Malta can no longer keep spending on frivolous things like there’s no tomorrow, because tomorrow will eventually come. In fact, it’s probably here.

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