Privatisation is the name of the game

The privatisation of the management of the Gozo Hospital and other facilities of the Health Department is raising many an eyebrow – not least because it is a Labour government that has decided to opt for this course of action.

I have no doubt that the Gozo hospital is overmanned and wastage is uncontrolled and it is costing the exchequer much more than it should to run it. Obviously, the government’s aim is to continue giving Gozitans the free service of a fully fledged hospital while controlling the costs through a private management company that would also be able to use the hospital for private paying patients.

The idea is good in principle. I have always maintained that in health the government – of whatever political hue – has an open ended financial commitment that cannot be considered healthy from a fiscal point of view and reining in the costs in this way makes sense. 

As I understand it, this private company will not really be the ‘new owner’ of the hospital, as Minister Konrad Mizzi was quoted as saying; but it will be given a contract to manage the hospital for a number of years with the government ending up spending less than it does for the same service it is giving currently. As usual the terms of this contract have not been published and one cannot really assess whether the contract is a fair one to both the government and the chosen contractor.

One cannot expect that the chosen private firm is doing this for charity, so the attraction of profit must be somewhere in its sights. Again, whether the concession allows for a fair profit or for much more, is plain conjecture so long as the government insists – wrongly in my opinion – to refuse to subject such contracts to public scrutiny or at least to the scurtiny of a Parliamentary Committee in which the Opposition is represented.

By refusing to involve the scrutiny of the Opposition, the government puts itself in an awkward position. The Opposition, clearly free of the shackles that confidential information would impose on it, is free to let its dogs out and attack the contract. The most popular – and vicious – attack is the scare that Gozitans will end up with a lowering of service in the hospital with discrimination between patients paid for by the state and private patients who fork out their money for the service. The contract should have ensured the minimum level of service to be paid for by the state for its patients. But then again, who knows?

The Opposition is riding on the frustration of Gozitan hospital employees who have been having a beano – a ‘xalata’ – ever since they were employed by the government. Yet the Opposition, that is now depicting itself as the paradigm of the purest virginity imaginable, can hardly oppose any steps that curb the abuse that was going on in the Gozo hospital even when it was in government. This abuse might have been petty by the standards of the oil purchasing scandal but the petty abuse of a lot of people can add up to quite a hefty amount of public money going down the drain, i.e. in the bank accounts of private individuals.

Something similar is happening with the proposed partial privatisation of Air Malta. One of the unions representing Air Malta employees recently publicly argued that since Air Malta was on the way to financial recovery, its partial privatisation was no longer necessary. Cosy jobs are quite popular in this fair land, and losing them or seeing them metamorphose into real jobs is quite a horrible experience for many – an experience to be avoided at all costs.

Will the PN now take up the shackles of these employees who are afraid that they will be asked to give an honest working day to their employers and will lose the benefit of political interference, stopping all attempts at real reform?

The funniest thing in all this is that the supposedly leftist Labour Party is pushing for privatisation while the supposedly centre right Partit Nazzjonalista is rallying against it. This has already happened in the partial privatisation of Enemalta – whether it was the sale of a minority shareholding to the Chinese or the agreement with a private consortium to build a gas fired electricity plant in Delimara.

In short, the ideological stance of both parties is completely topsy-turvy.

Flashback to the Thatcher years

A flashback to the early eighties recalls interesting developments. Margaret Thatcher in the UK had raised privatisation to the ‘hallowed’ status of a political ideology. She went ahead and privatised all she could, even the rivers and lakes that provided the water of UK citizens.

In Malta, the Mintoff regime in power continuously used its propaganda machinery to attack the PN in opposition by any means possible, including scaring every Tom, Dick and Harry that once in government the PN would emulate Thatcher and sell everything Mintoff had created... with all those Labour voters enjoying the luxury of a state job finding themselves employed with the greedy private owners who would have bought the family jewels. 

While never accepting privatisation as an ideology, the PN would reply that it has a pragmatic approach – there are areas where the government should never have owned enterprises in competition with the private sector (such as banks, hotels, building contracting firms and factories) while there were sectors in which government ownership made sense.

In government after 1987, the PN had a guarded approach to all this. Most of Mintoff’s creations – over 100 state-owned commercial companies – were bust anyway and nobody wanted to buy them. Many were wound up and some salvagable ones were sold.

The PN embarked on the partial privatisation of Bank of Valletta and Mid-Med Bank (the precursor of HSBC) with the government keeping the majority shareholding.

It was the 1996-98 Alfred Sant adminsitration that killed the privatisation duck once and for all when it converted Telemalta Corporation into a limited liability company (Maltacom) and started selling its shares while keeping the majority shareholding. 

In that way, Labour signalled that it had changed its ideological stance against privatisation. No fanfare about this U-turn, of course, but there it was.

There are many ways how the country can benefit from privatisation. Entrusting the mangement of hospitals to the private sector is one of them.