GUEST POST: Why Malta has slipped a full six places down the World Economic Forum Competitiveness Index since Labour came to power

This guest post was written by Matthew S.

A week ago it was reported that Malta has slid down another place in the World Economic Forum’s Competitiveness Index. That is a whopping total of six places since the Labour Party took over the government.

It makes Malta one of the worst placed European countries on that index, with only basket-case Greece and a few other outliers beneath it.

Amazingly, this has gone by with little to no comment from the Opposition and the media (though it was reported on this website), as if a loss in competitiveness happens in a vacuum. It doesn’t, and we need to analyse it.

First off, I want to get two of the identified problems out of the way: an ill-educated workforce and a terrible infrastructure. These are two very important issues, but they are such long-standing and deeply entrenched ones that they cannot be pinned down on any one particular administration – although Dom Mintoff’s deserves a lot of blame.

The truth is that, with infrastructure, there was never any forethought. People built how and wherever they pleased. City planning has always been nonexistent. Governments used land as a way to dish out favours and buy votes, a tradition vigorously re-taken up by this administration.

Car-parking has been little more than an afterthought and public transport was, until Austin Gatt decided to do something about it, been left for the powerful bus lobby to carve out as it pleases.

In short, Malta’s transport infrastructure is a total mess. It’s useless having discussions about traffic now. Short of pulling up (and down) three-quarters of the streets and buildings in Malta and starting all over again, I honestly don’t see a way out.

As for education, it’s never too late to start, but once you get past teachers who are a product of that bad education system, the teachers’ union, clueless parents and pupils who feel entitled to a good job regardless of their qualifications, you will have lost the will to live.

Good luck to any education minister who attempts that. Let’s just say that speakers who cannot speak and lawyer-politicians who think that their Form 2 results from three decades earlier are great achievements are not going away any time soon.

With those two out of the way, I would now like to deal with the other issues, which are directly traceable to terrible decisions made by this particular government.

First off, the cash-for-passports scheme. The government told us that the scheme is going to attract great talent to Malta (a Formula 1 driver, a pop singer and a Chinese businessman, remember?). The prime minister is always going off to some place or other to promote the scheme and coming back with boasts of how very many passports are being sold (so far, 73, but no talent to show for it).

Yet the World Economic Forum Competitiveness Index tells us that Malta is failing to free up, nurture, attract, leverage and support entrepreneurial talent. So the scheme is not really working out as planned, isn’t it?

Of course it isn’t, because such schemes never do – so much so that, last year, Canada cancelled its visa-for-investment programme after it found out that the people buying visas had inadequate language skills, paid less income tax than most workers and failed to generate much money.

Earlier this year, the Australian government also altered its visa programme after discovering that it doesn’t really work (please note that although many countries have visa schemes, only the truly banana republics are selling passports and outright citizenship).

When an investor really wants to invest in a country, he or she will do so regardless of a citizenship/visa scheme. Those who just want citizenship want it for easier travel, settling down somewhere nice (London or Paris, not Sliema or Buġibba) or as insurance against living in an unstable or authoritarian country.

Moreover, although the scheme might rake in large sums of money – as Joseph Muscat likes to boast – the money generated is ‘lazy money’. It is not productive. It doesn’t increase exports. It doesn’t increase consumption. It doesn’t generate new jobs and it sure as hell doesn’t encourage national-self-improvement.

It’s the selling of some paper – a bit like the American University of Baksheesh, really, which brings me to my second point: access to finance.

In a country where the biggest bank, which has state-shareholding, nonchalantly loans €51.5 million to a Chinese state-owned corporation (do we realise how absurd that sounds?), the government acts as guarantor on €360 million euros loaned to a private company, failed businessmen are bailed out by taxpayer money to the tune of millions, and sleazy Jordanian building contractors are given prime assets for free because they say they will build “a university”, one would think that acquiring finance in Malta is really easy. And that is precisely the problem.

When available funds and assets are wasted on government cronies, it means there is less finance to go around for everybody else, for the real businesses, for the good initiatives. Money is a finite resource. This policy of buttering up government cronies means that truly innovative and small companies find it harder to get a leg up, and thus competition is smothered.

I hear you ask why the government cannot use some of that passport money to increase available finance. But this government does not believe in competition and the free market. It wants to choose the market leaders. It wants to make money for itself, its ministers, its cronies and its hangers-on, not their competitors or The Enemy.

Lazy money is rarely spent wisely anyway. Oil-rich countries which end up blowing it all on corruption, opulent villas and white elephants which ħamalli would be proud of can attest to that.

Speaking of ħamalli, the top issue identified by the Global Competitiveness Index is inefficient government bureaucracy. This can be directly traced to #meritokrazija. We were told that what we know matters more than who we know (how are you doing, Ramona Frendo?). We were told that regardless of our political beliefs, we could still “work with Labour”. ‘Being in’ was so hip that even the braces-wearing Lou Bondi got in on the act and signed himself up for €54,000 a year.

The result is a public sector so bloated, with 44,059 people on the state payroll at the last count, that if the farcically named Commissioner for the Simplification and Reduction of Bureaucracy, Michael Falzon, were to spend the next 10 years vigorously cutting red tape, he would not have any time to enjoy his Bank of Valletta golden handshake and we would still have too much bureaucracy.

And the worst of it is that the bureau which makes for bureaucracy is now full of absolute incompetents: ironmonger-politicians, cheap-boutique owners, canvassers for Labour politicians, just-out-of-school teenagers, new graduates in their 20s put in charge of seasoned civil servants, convicted criminals, washed-up singers, people who enjoy being photographed naked with violins, Super One bimbos, individuals with five university degrees but who can neither write nor think still less communicate in either English or Maltese. All are being promoted way beyond their ability, all are too ignorant and uneducated to understand the depth of their ignorance and lack of fitness for purpose, and all are now floundering way out of their depth.

All the cronies are now on the Labour ship and all of them have boarded as ‘trusted persons’. If there isn’t a job for a crony, they will create one. Hell, they will also create yet another government board so that a particularly trusted person can also put his family, his friends, his grocer, hairdresser and his dog on the state payroll.

And here’s the rub: because these places were not filled competitively, because the best people have not been picked for the job, because most of them are know-nothings who think there is nothing to it (cue Phyllis Muscat, importer of face cream, heading the CHOGM Organisation Committee when she can’t even give an interview about the subject) who will inevitably create messes and red tape which will have to be cleaned up by someone more competent. It’s all in the name of #meritokrazija.

Seriously, is anyone surprised that Malta’s bureaucracy is what it is, and getting worse?

One of the most curious things in the Global Competitiveness Index is the description of low productivity as ‘the new norm’. The government has been boasting for months that employment is going up. How can productivity be low when employment is high?

Ah, the old Maltese tradition of being given a desk but no work to do (and in Mrs Konrad Mizzi’s case, they didn’t even bother with the desk). That’s the public sector. In private companies, productivity goes down because a lot of man hours are spent dealing with bureaucracy, bad infrastructure and an ill-educated workforce. Sometimes a business even has to employ two people to do a job which should be done by one were it not for the complications of bureaucracy.

You see, it’s a circle, a vicious one. All these issues affect one another. That’s why competition can fall so drastically in two and a half years. That’s why Malta has slipped six places down the Competitiveness Index.

Then there is Malta’s inability to innovate. I’ll come right out and say that expecting Malta (population 450,000) to be a leader in innovation would be expecting too much. The University of Malta receives little funding for research, with the money going on paying students to go to university instead. Creativity, the starting-point of all innovation, is not fostered in children either at home or at school, with the result that they grow up into hopelessly unimaginative and non-analytical adults.

That said, innovation can flourish in obscure places given the right atmosphere, education and resources. Skype came out of Estonia, Nokia out of Finland and Bla Bla Car from France, which although big and has some top universities, has too often been attached to socialist ideals which smother innovation and competition. And Iceland (population 350,000) is a hotbed of dynamic creativity.

But in Malta the state Council for Science and Technology is led (I use the verb carelessly) by an unstable and drunken dentist with a penchant for showing off, who goes to the office one morning a week and who has put his own girlfriend on the payroll there in a prominent position. And the state corporation for enterprise – Malta Enterprise – is led by a fossilised Marxist of pensionable age who got his education from the Stasi-controlled Communist university of East Berlin in the 1970s, at a time when even East German citizens who were considered not red enough were not allowed in.

Both Jeffrey Pullicino Orlando and Mario Vella were chosen personally by Joseph Muscat, not because they are the best person for the job, but because Muscat owes them personally. Pullicino Orlando colluded with Muscat to bring down the Gonzi government, and Vella mentored Muscat and helped him with his doctoral thesis.

You could not make it up. It makes you want to weep.

Do you want an innovation? How about adding an electric motor to Simon Busuttil’s bicycle to help him up the hill? If you haven’t yet, it’s time to get behind him, folks. Only he can save us from this mess. If Busuttil is not voted into power in 2018 – which is the flipside of voting Muscat out – Malta is fried.