Reining in Clayton’s overspending

It seems that for some ministries and particular entities, the budget is a superfluous exercise. The way that last year’s budget was completely disregarded by the Malta Tourism Authority (MTA) and the Film Commission makes the responsible minister, Clayton Bartolo, the head of a financially irresponsible ministry where budgets approved by parliament are disregarded as if they were just unimportant details.

MTA has long been accused of financial mismanagement, having overspent its budget by almost €20 million in 2021 and finding itself singled out in a review of government expenditure during that year. The Film Commission, also under the aegis of Bartolo, overspent its budget by some €10 million for the current year. They seem to be Clayton’s terrible twins!

In the budget for next year, MTA has had its wings clipped for the first time in a decade, with the government cutting its allocation for 2024 by €9.5 million after it was one of the biggest winners throughout most of the budgets held over the past decade. Its allocation rose from just €28.5 million in 2014 to €119.5 million in 2023, a staggering 320% increase. In spite of these increases, MTA kept spending more than was allocated to it in the budget.

The increases were never enough for Clayton’s boys! They wanted more concerts and more handouts. And Bartolo let them have what they wanted even though this meant ignoring the fact that MTA was on an overspending spree galore. The minister simply waived off these concerns, calling the overspending ‘an investment’.

MTA, for example, subsidises a number of live concerts every year. Details of how many of these concerts are subsidised by the MTA and how much is the subsidy for every event organised in Malta are scarce. Most of these details are not in the public domain. So how this public money is actually being spent and how much it adds up to annually seems to be a state secret. Since the money spent is public money, it is absolutely wrong to keep these details under wraps.

Moreover, this uncontrolled extravaganza has made the MTA budget a practically useless exercise. Finance is concerned with the art and science of managing money and financial discipline is paramount in running any organisation. Good financial management practice expects the authority to handle its finances in a way that allows it to be successful and compliant with regulations. In the case of MTA and the Film Commission, it does not seem to exist.

At its core, financial management is the practice of making a business plan and then ensuring all departments stay on track. Solid financial management would enable whoever is responsible for finance in the MTA and the Film Commission to provide data that supports creation of a long-term vision, and take informed decisions on where to invest. One must also identify what needs to happen financially for both entities to achieve their short - and long - term goals.

MTA ignores these principles and plods on with disregard to budgets and financial management.

Both MTA and the Film Commission continually fail to ensure that they have enough money allocated to them to meet their obligations - they just rely on the Finance Ministry being always ready to foot the bill, whatever its amount and irrespective of what has been budgeted.

More practically, I wonder whether MTA and the Film Commission have a serious financial manager responsible for activities and how these figure in planning, forecasting and controlling expenditures. Lack of financial discipline should not be the normal way of doing things, as seems to have been happening in these two bodies.

The Ministry of Finance should have more clout to restrain this expenditure.

Moreover, it should be obvious that the MTA or the Film Commission themselves should not judge whether their over expenditure was necessary and justified. ‘Nemo in propria causa judex’ - no one should be a judge in his own cause.

Early retirement

Last Tuesday Times of Malta reported that one of the budget measures indicated that the Air Malta early retirement scheme is to cost some €92 million in 2024. This expenditure is the main reason for a €97 million increase in the budget allocated to the Prime Minister’s Office.

It also reported that a state-owned entity - RSSL Ltd. - has been tasked with the implementation of Air Malta schemes. And RSSL Ltd falls under the aegis of the Office of the Prime Minister - rather than under the ministry responsible for Air Malta, which incidentally is actually the Ministry of Finance! One wonders why this change was necessary.

Incidentally, RSSL stands for Resource Support and Services Limited, a company that was set up in 2003 by the Gonzi administration with the responsibility of labour recruitment and provision of personnel - whatever that means. I suppose it really refers to the job of government seeing what to do with the employees when a state-owned entity is closed.

Air Malta will be shut next March and a new airline launched to replace it - in spite of all the beautiful promises about its bright future made by Konrad Mizzi when he was the minister responsible for the airline.

Instead, over the last two years Air Malta was slimmed down with employees who voluntarily resigned from their job being offered generous golden handshakes or being ‘transferred’ to the public service with the same pay.

In the past, there were cases of people being re-employed by Air Malta after they were given a golden handshake to leave voluntarily! This should not be allowed to happen again and former Air Malta employees who are going to be re-employed by the new Air Malta should not be given any compensation for early retirement.

It could well be that the ‘new’ job with the ‘new’ Air Malta will have less generous perks and/or a decrease in basic pay. In this case, the amount of the ‘golden handshake’ should be worked out in the light of reduced salaries and lost perks rather than on the basis of a job loss.

Will the government do this? Or will existing Air Malta employees be allowed to have the cake and eat it when they are re-employed by the ‘new’ Air Malta?