Joseph Muscat's 10 commandments

At the very least, Labour leader Joseph Muscat’s 10-point programme does identify the right priorities: social mobility and female participation, the two prerequisites for making Malta a modern country.

This is my verdict on Muscat’s 10 proposals:

1. A PL government would build upon the past successes of all former administrations and the good they achieved in their own ways, “even that of the current administration.”

Verdict – Why does he even have to say this? Still it is a welcome departure from the tribalism of the past.

2. A PL administration would retain everything that had worked in the country’s best interest in the past.

Verdict: Same as 1, was Muscat so keen on having 10 instead of 9 commandments?

3. Government should be honest with the electorate (with direct reference to Gonzi’s pledge to cut highest income tax rate from 35% to 25%).

Verdict: Everyone says that in opposition. Realistically nobody can foresee the future. Governments last five years and Gonzi may well honour the income tax promise in his last two budgets before the next election – as he did last time round. By making Gonzi’s promise to slash the highest rate of income tax his own, Muscat might find himself disarmed on the eve of the election.

4. A radically different approach to economic growth. “Gonzi believes that to bring in more money, one should tax more,” Muscat said, stressing that he would reduce the tax burden to bring in more revenue.

Verdict: A bit too simplistic. At best more revenue from VAT as a result of an increase in consumption will merely offset the cuts in income tax. In the absence of solid revenues the first blow from the world economy would make public services even more vulnerable than they are now.

5. PL administration would be “clear and focused on how to reduce expenditure through realistic targets which would be adhered to with vigilance and not revised from one year to the next.”

Verdict: Where exactly will he cut? There is lard and it needs to be cut. But the bulk of expenditure is related to social services, pensions and rising health costs. Promoting social mobility is the only long-term way to combat costly welfare dependency. But in itself at least in the short and medium term investing in social mobility costs even more money. That could also mean focusing resources where they are most needed and asking uncomfortable questions like; should rich students receive a stipend while most working class children do not make it past fifth form? In the same vein, should the state subsidise parents who send children to independent schools? Surely no painful cuts are mentioned except generic ministerial cuts.

6. The sixth point, Muscat said, would be to reduce taxation as much as possible, while at the same time ensuring that what tax is collected is used properly.

Verdict: Guess what moderate Tony Blair did after being elected? A windfall tax on the fat cats which was channelled in to expenditure on social mobility. Muscat should speak of fiscal fairness, rather than vague references to tax reductions. Taxes on speculation and big profits by private monopolies should be increased not reduced. Tax reduction should focus on middle-income earners.

7. A “generational change in how tax is collected and applied” in a way that government should shift the tax burden from those who produce to those who pollute.

Verdict: Definitely a forward-looking proposal in synch with modern progressive politics. But there is a problem in arguing for a shift in taxation from income to environmental taxes. Environmental taxes are meant to act as fiscal incentives to change behaviour from polluting and resource-hungry actions to sustainable ways, rather than generating a revenue for government. As such if used in this way environmental taxes are to a large extent revenue-neutral.

Another problem is that such taxes can be regressive if the less well-off do not have access to an alternative option. Obviously some rich people will still keep collecting property and big cars and this could rake more money for government. And how does the idea of a green shift with Muscat’s populism on subsidies to MEPA and water and electricity bills? Does Labour accept the fact that water can no longer be treated as a dirt cheap resource? And where does land, the scarcest resource in Malta feature in this plot?

8. Malta needs to stand up and be counted at a European level, to ensure that “Malta gets what it was promised and what it deserves.”

Verdict: Some rhetorical patriotism to appease latent eurosceptics in the party. Muscat’s call for less stringent conditions on deficits makes sense to avoid a double-dip recession, but could well be interpreted as a return to the Fenech Adami era where money was no problem. Probably it is thanks to the EU that our deficit has not spiralled out of control.

9. A PL government would remove Malta from its position as the country with the lowest female employment participation in the EU.

Verdict: Most progressive element in Muscat’s policy. The entry of women in the labour market would be the greatest injection in working-class incomes and a step towards a more middle class society. But extending maternity leave is only a part of the equation. Childcare vouchers for working and middle class mothers could have a more direct impact on female participation.

But why should the maternity leave extension come at the cost of the City Gate project which after all restores a bit of dignity to the entrance of the capital city? Why not finance both (and perhaps put a roof on that theatre) through fiscal redistribution? And why use this as an example when this will probably be the government’s pre-electoral showcase?

10. Muscat affirmed how, in order to build a new middle class, a choice must be made between “a economy or low wages, or of high skills.”

Verdict: Muscat is showing vision by putting social mobility at the top of his priorities. But his living wage idea seems like another attempt to say something leftwing without rocking the capitalist boat. Anyway this long-term goal does not do away with the need of establishing a decent hourly minimum wage rate. This would help in encouraging women to enter the formal economy and give dignity to part time work, which could be a pillar of an inclusive economy.

General verdict: The opposition should not expected to give a detailed blueprint. It does not have the full picture and all the books in its hands. So a degree of vagueness can be forgiven. Vagueness in opposition can also give that kind of flexibility which enabled Clegg and Cameron in the UK to govern together in a reform coalition which defied conservative orthodoxy by increasing capital gains tax, and liberal orthodoxy by raising tuition fees.

But that’s no excuse for not making hard choices even in opposition. Muscat’s speech is strong in long-term vision but weak in an inability to confront any sector of Maltese society. This raises the prospect of Muscat finding himself rocking the boat after being elected to secure revenue for his ambitious tasks without having any mandate. Or he might well have to abandon lofty ideals to govern ‘business as usual’.