GUEST POST: Labour’s last card

Published: April 27, 2017 at 4:53am

The crooks in government are spreading rumours that even if all that is being said about them is true, the country cannot afford a change in government at this time because the economy will crumble and everyone will suffer. This is Labour’s last card.

The last time I heard something similar was when the leader of the Opposition said, before the last election, that should Labour be elected to government, Malta will have to be bailed out. It seems that the Opposition leader is being proved right in what he said.

The success of any country depends on investment, and the number-one attributes that attract investment are stability and credibility. Without these two factors, any economy will fail. Labour has managed to cause both instability and loss of reputation, and this happened not in four years but in the first few weeks since they were elected to government in 2013.

It is a known fact that both major political parties always had an agreement that when it comes to financial services, they would work hand in hand so as to send out the message to investors that no matter who is in government, the country has the credibility and stability necessary to attract legitimate and long-term investment.

Labour always kept its part of the deal when in Opposition and naturally expected the Nationalists to do the same if in Opposition, too. But this is what the Labour government has exploited to the advantage of the few. They thought that no matter what they do they will never be exposed, because in order for the Nationalist Party to attack them they will have to break that agreement and end up damaging the financial sector.

So, the first thing they did when elected to government was set up offshore companies for themselves personally. No doubt the idea came from Keith Schembri, who already used offshore companies to hive off profits from his businesses and evade tax. The facilitator was Brian Tonna – the obvious choice – who was Schembri’s accountant and auditor for many years and the person who advised Schembri on such matters.

The next step was to drag in Konrad Mizzi – something they couldn’t avoid since he was the front man in both the energy and health sector. From there on, we all know what has happened – the Panama Papers. Many say they were unlucky that the leaks involved the financial advisors who they relied on – Mossack Fonseca.

However, they were ‘smarter’ than that: knowing that the EU and OECD were stepping up the fight against tax evasion and money-laundering, and that exchange of information was being enhanced, what do they do? They bring the cow safely home under their control to avoid cross-border risks. That is the reason they had Pilatus Bank set up and licensed in Malta.

By doing that, everything was under their control, eliminating risks of exchange of information. But they were too ‘naïve’ to understand that such risks had in fact increased, because once all documents and transactions were based in Malta, these were more accessible.

They never thought that anyone would go after them, because they believed that no one would dare tarnish Malta’s reputation as an attractive financial jurisdiction by rooting out Maltese PEPs who are up to no good on their own home turf.

This is why they failed badly: they are not just crooks, but amateur crooks. They probably realised that by doing what they did and getting caught, Malta’s reputation would be ruined, but they will have relied on the gentlemen’s agreement between the two political parties.

Now back to the word being spread that even if all this is true, the country cannot afford a change in government at this point in time because the economy will crumble and everyone will suffer. But if the economy is as strong as Labour boasts it is, why would it crumble if there is a change in government?

The reverse is true – the economy will crumble if Labour is elected to another term in office. This is inevitable, given the mess they have brought us to, and also because the economy is not really strong at all.

The current situation is the result of short-termism. No capital investments have been made, debt is rising, property prices are ridiculously inflated, and the wealth gap is widening at a fast rate.

People fail to understand – and it is imperative that this be explained – that the economic situation cannot be judged during the current period. Think of a farmer who buys a parcel of land, nurtures it and after a number of years obtains the yield of his long years of hard work. He sells the land to another farmer who immediately reaps the fruit of his predecessor’s toil.

The natural conclusion by those with a closed mind is that the second farmer is the better farmer because he managed to produce all that fruit immediately, in just one season. But the reality is that all the preparation and hard work was carried out with patience and passion by the first farmer, who sold it to him.

The Gonzi government was, in my opinion, the ideal manager during its time. Populism was not on Gonzi’s table; his intention was simply to manage the country in an era of financial crisis. He succeeded big-time, so much so that when the international situation changed, Malta was ready to reap the fruits of five years of hard work and honesty – just like the farmer who took care of the land but did not retain it long enough to see the fruits.

The Labour government was handed a country ready to flourish, and all they had to do was to ensure that the fruit of those long years of hard work was managed wisely. This is where it failed colossally. Labour was hijacked by the big-business operators who only had one intention – to make as much profit as possible to the detriment of everyone else.

The property industry played a big role in this, as is evidenced by the budget measures introduced by the government over the last four years, all such measures dictated by the Malta Developers Association with one intention, i.e. to increase demand artificially in the short term resulting in inflated property prices.

If Labour wins another term, the economy is destined to fail solely because Labour has no idea how to manage a country. The farmer who took over simply overworked the land and used artificial fertilisers to reap as much fruit as possible in the short term, depleting the soil so much that it could no longer produce any fruit.

Even if the government was not run by crooks and no Panama Papers had happened, the country was destined to fail due to bad management. The fact that those in power wanted a piece of the artificial cake naturally destroyed the very strong foundation much needed for success: stability and credibility.

The people now have a decision to make: either sell the land back to the honest farmer, or leave it in the hands of his inept and crooked successor. If the economy is destined to fail, it will fail because of lack of stability and credibility brought about by this government.

And if it is destined to fail it will fail irrespective of who wins the next election – so the crucial question we should be asking ourselves now is which political party can best be trusted to cope when the Maltese economy fails, as it inevitably will, given what has been happening and the choices that have been made.

Can the Labour Party manage a failed economy when it was not even capable of managing a good economy with strong foundations? The answer is clear: definitely not. They are the ones who have brought about this disaster in the first place.

Labour will do anything to stay in power. No doubt they will announce and promise a lot of goodies, like tax cuts, which will continue to ruin the country. But this is the only thing they have left: damaging promises which cannot see the light of day, and spreading the rumour that without them, the economy will fail. On the contrary, the economy will fail because of what they have done.