Opinion: The fake surplus and our blinding deficit

“This government has eliminated its debt,” ONE news claimed in January 2017,  weeks before Joseph Muscat frantically called an early election.

“In reality”, disgraced former prime minister Muscat had declared, “we’re experiencing an economic miracle.  The deficit wasn’t just reduced; it’s been transformed into a surplus”.

“All the debt of Gonzi PN has been eliminated,” ONE News announced. “This is the result of Labour’s politics of responsibility and prudence,” Finance Minister Edward Scicluna added.

Scicluna accused the PN that its “proposals are not costed or sustainable and would take Malta back into excessive deficit procedures”.

Fast-forward a few years to 19 June 2024’s headline: “The Commission is opening deficit-based excessive deficit procedures against Malta”. Labour amassed a staggering €909 million deficit in 2023.

That’s four times higher than GonziPn’s €250 million in 2012. Labour has increased the country’s total debt to an eye-watering €9.7 billion. And those two men who duped the nation with their fake surplus and economic miracles, Muscat and Scicluna, now stand in the dock facing the most serious criminal charges.

Labour hoodwinked the country.  It presented itself as fiscally responsible and reliable. Muscat was portrayed as the financial guru conjuring economic miracles.  Labour relentlessly hounded ‘GonziPN’ for running a €250 million deficit, blaming him for Malta’s excessive deficit procedures.

Gonzi’s €250 million deficit sounds like spare change compared to Labour’s. The illusion that Labour eliminated all GonziPN’s debt is shattered.  The European Commission has rudely brought the country down to the shocking reality that Labour ran up an unbelievable €10 billion bill.

In October 2016, at Labour’s Vittoriosa club, Joseph Muscat accused the Nationalist Party of “exploding the deficit”.  He derided Gonzi for amassing “debt higher than European regulations allowed”.  Now, Malta faces excessive deficit procedures.

Labour’s deficit in 2023 reached 4.9% of GDP, well above the 3% European regulations allow. Muscat now understands what “exploding the deficit” really means.

And the situation will only worsen.  The Commission estimates that Malta’s debt-to-GDP ratio will increase from 50.4% to 52% by the end of the year and to 52.6% by next year.

Gone is the so-called surplus. Gone is Muscat’s economic miracle. Labour has been in power for over a decade.  They have only themselves to blame for Malta’s excessive deficit procedures.

Franco Mercieca, the shortest-lived parliamentary secretary, announced in May 2017 that “this (Labour) government is so responsible that it created a surplus while strengthening public services, particularly in the health sector”.

In fact, Labour was busy wrecking the health service. Its top officials were colluding with Vitals and Steward Health Care in a fraudulent scheme estimated by the NAO to cost the nation €4 billion.

Millions of our money were being siphoned to purchase private companies in secretive jurisdictions to pay shady characters like Shaukat Ali and his family and to his dodgy companies that paid tens of thousands of euro into Joseph Muscat’s BOV bank account.

Millions more went into luxury vehicles, lavish flats, travel expenses, private health insurance, and Ram Tumuluri’s personal legal costs.

Armin Ernst, who kept shifting positions between Vitals and Steward, was paid €700,000 annually out of our taxes to help Joseph Muscat, Konrad Mizzi, and Keith Schembri achieve their objectives.

“This surplus is due to a more realistic economic strategy,” Edward Scicluna told the nation in 2019.  That strategy involved selling passports, importing cheap labour in the tens of thousands and slashing capital expenditure while siphoning millions of taxpayers’ euros into the pockets of close collaborators of Labour’s leadership.

It included millions of euro of suspicious direct orders and hundreds, if not thousands, of phoney jobs like those given to Melvin Theuma, Rosianne Cutajar and Karl Stagno Navarra.

The Commission’s brutal assessment of Malta’s dismal performance and its decision to “open an excessive deficit procedure” is a vindication of Simon Busuttil’s prescient warnings. Labour mocked him.

Now even Labour’s staunchest supporters must see with their own eyes where Labour’s got us – a deficit multiple times greater than GonziPn’s, a €10 billion debt burden, massive overpopulation with frequent power cuts, drainage overflowing into our bays, grid-locked roads, towering over-development, rampant corruption, a dilapidated St Luke’s hospital and a former prime minister, deputy prime minister, finance minister, tourism minister and Muscat’s chief of staff facing criminal charges over the biggest fraud in the nation’s history.

The European Commission noted that although the Council “recommended that Malta ensure a prudent fiscal policy by limiting… primary expenditure,” Malta was “not in line with what was recommended”. “Consequently, there are no related savings to be used to reduce the government deficit as recommended by the Council”. There goes Labour’s fiscal competence and prudence.

Even more humiliating were the Commission’s comments about Malta’s educational standards.  “The latest results from the OECD programme for International Student Assessment (PISA) show that Malta has one of the highest shares of low achievement in the EU, posing a challenge for later skills development”.

Labour promised we’d be the best in Europe.  We’re near the worst.

“Almost one in three 15-year-old students in Malta underperforms in mathematics, reading and science,” the Commission’s report noted. “Teacher shortages have been addressed partly by substitute teachers with a level of qualification different or lower than required”.

“Early school leaving remains above EU average,” the report adds.

The Commission highlighted the “low educational outcomes” and the “severe shortage and mismatch of skills”. It pointed out Malta’s “sizable offshore solar and wind energy potential” and how “this potential remains unused”.

It was critical of “traffic congestion as well as high emissions from road transport” and its impact on competitiveness. It urged the government to improve the “quality and efficiency of public transport”.

It insisted on improving teacher professional development and student basic skills. It demanded that the government reduce its deficit.

“We took from nobody and gave to everybody,” Joseph Muscat said in October 2016. Today’s depressing reality is a stark reminder of the lasting harm the man wrought on our country.