Editorial | Wednesday, 14 May 2008

Cutting the fat

Minister Tonio Fenech’s remark that all electoral tax cut promises must be revisited in view of oil prices warrants comment. His statement helps uncover the superficial and capricious way electoral promises are made.
There can be little doubt that in the present global climate, it was sheer madness for government to talk of introducing tax cuts in the first place. To the few savvy analysts this always smacked of blatant electioneering, more so when the talk went so far as projecting budget surpluses by 2010.
Well now that minister has to pick up the
can and wisely hold back from announcing tax cuts months before the next budget while the electorate got carried away in taking the cuts for granted and prepare the family budget accordingly.
The fact that there will be no tax cuts, or certainly not of the magnitude being promised, gives rise to discussion on issues of disposable income and revenues of the state.
Throughout the electoral campaign, the government always insisted that cutting taxes would lead to increase in revenues, as happened in the time of reforming ministers George Bonello Du Puis and John Dalli.
So why the change of heart when the breaks were all linked to revenue increases and the price of oil was totally extraneous to the argument? The truth, although government will find it hard to admit, is that all talk of tax cuts was just blatant electioneering which served its purpose as government won the day albeit with the slimmest of majorities.
The name of the game now that tax cuts are being excluded is the trimming of government expenditure. Growth will not come about unless the country is competitive. We are already beginning to feel the effect of the decline in the value of the dollar, which is leading to tremors as ST electronics demands a helping hand from tax payers’ money. Not to be discounted is the equally perturbing effect of the decline in sterling, as it is likely impact tourism from the UK.
For both these threats to be overcome, we will have to produce more and offer better value for money. Competitivity should be our central focus. Simultaneously government has to seriously think in terms of cutting expenditure and trimming it to reasonable amounts, so as to help public finances.
Any talk of cutting government expenditure is met with a quick reply that 80 per cent of costs go towards salaries and social benefits, all of which cannot be tampered with or in any way reduced. We are certain that there is a lot that may be cut off the balance, with better enforcement of fixed costs, especially where abuses are taking place.
Government needs to produce a blueprint on cost-cutting, bringing waste and irresponsible government expenditure into proper perspective. Case in point is the indulgence in consultancies commissioned with little transparency or even knowledge from the public that such reports would have been commissioned. Government may want to consider publicising in the government gazette the reports it commissions, along with names of companies or individuals given the job. It should also provide timely information on what action is taken after reports are issued. Further controls can take place on the cost overruns of government projects. To the credit of the new minister responsible for roads, one can sense political will in controlling expenditure, ensure that the value for money concept is respected and that European standards are achieved. Accountability in the spending of public moneys can no longer be just a pious hope or a verbal commitment. It must be the guiding trust behind the implementation of government projects. This cautious approach should not just apply to the central government but equally in its implementation by the local council, which have taken over many a project previously undertaken by the central government.
Further ways of trimming expenditure include the setting back of the frontiers of the state by carrying on the privatisation project and also by setting up more private–public partnerships to include the management of public beaches. This would allow more people presently employed in the public sector to get a taste of working under the conditions applicable to the private sector.
Government should also address its attention to management of government buildings and seriously consider expediting the process of selling off properties which government has no knowledge of managing or resources to keep in good shape. The selling off of publicly owned buildings allowing the private sector to develop subject to stringent conditions would also relieve government from expenses incurred required to keep them in shape. There are a colossal amount of idle properties deteriorating and falling into a state of dilapidation. The case of Casino Notabile in Rabat is just one of many dilapidated sites opened just once yearly, with enormous potential if opened up for tender, allowing the private sector to restore and develop to high European standards. Government needs to rethink its whole policy on estate management and think smartly on just how property can render more into public coffers - to the benefit of not only the entrepreneur but also to society.