Cabinet Papers | Cutting the apron strings

Nowhere are the challenges facing the young nation as eloquently presented as in a frank memo presented by George Borg Olivier to his Cabinet five months after a second consecutive electoral victory in March 1966. Borg Olivier plainly admits the inevitability of a British pull out from Malta while expressing concern about the rampant land speculation, which risked making the Maltese strangers in their own country.

Don't take us for granted

In August 1966, the newly elected Prime Minister made it clear to his Cabinet that he intended to change the country's foreign policy. His starting point was the party's traditional policy based on "our affinities with the West and with NATO" and "particularly our special relation with the United Kingdom" which was embodied in the defense agreement signed after independence. But such a policy was in need of review. Borg Olivier proposed the setting up of a ministerial committee to be entrusted with this task and chaired by himself. In outlining his vision, Borg Olivier betrays a certain frustration with the way western powers had taken Malta for granted.

"We should make a greater effort to cultivate relations with friendly nations and we must not allow the West to take us for granted."

But despite his frustration, Borg Olivier did not look south towards Arab countries or to the Eastern block. Instead he recommended greater contacts with countries such as France and West Germany in Europe and Japan and Taiwan in the East.

Significantly, he called on his Cabinet to become accustomed to "the idea of Britain pulling out of Malta" which meant the loss of Malta's major employer.

In a typically anti-colonialist tone, he spelt out his vision of a future, which ironically only became a reality in a different way under his successor Mintoff.

"We need vision in contemplating our future in the world and we must cut the apron strings of our colonial past."

On bended knees... for investment

In his 1966 memo, Borg Olivier also admits that his government had "gone on bended knees to attract foreign capital", giving incentives which "we have often denied our people".

According to Borg Olivier the only gain made from such a policy was job creation. "Most of these industries have been given free lands, free services (sometimes at an enormous cost as is the case of Comino) and practically all are owned by foreigners to whom government has given tax holidays, generous grants, generous loans and permission to spend their earnings abroad."

Borg Olivier insisted that the wages offered by these industries to Maltese workers had to be adequate and given central importance in any negotiations. More concretely, he proposed that any contract for any undertaking must first be sent to the Minister of Labour.

Borg Olivier also referred to the fact that a large amount of Maltese capital was abroad and spoke of the need to entice it back by offering those repatriating the funds income tax abatement and tax holidays.

The perils of speculation

In contrast to his own government's policies, which actively promoted property development, Borg Olivier became increasingly aware of the perils of an economic model based on land speculation.

"One cannot close one's eyes to the speculation, now rife, in connection with the purchase of land," the Prime Minister wrote. He warns that unless action was taken immediately "Maltese citizens may soon find it difficult to purchase land to build their own home."

He rebuts the argument that speculation is giving more value to land sold at a low cost, warning that speculation goes further than that because "land is sold and sold again, mostly to foreigners, at ever increasing prices." He warns that if this phenomenon is allowed to go on unchecked, "foreigners will continue to earn on our land increasing sums of money, out of which the only benefit that Malta can get is from stamp duties on contracts signed".

Among the measures contemplated by Borg Olivier in his memo is the introduction of a land transfer tax "which would increase with successive transfers" and which could be discriminatorily in favour of Maltese citizens and the "compulsory shareholding by Maltese in property ownership."

An expat's paradise

Ironically, three years earlier in January 1963 the Cabinet was presented with a memorandum, which proposed a residency scheme aimed at attracting expats by promising them tax exemption on income earned abroad. The idea was presented as a way "to give a new lease of life to the property market." The memo referred to the need to fill the void created by the departure of families working with the British military.

This exodus resulted in "serious hardships" for importers, shop owners and the government itself due to a loss in customs revenue. The idea was to fill the void by attracting people of independent means from the UK or elsewhere "who are finding it difficult to live in their own countries because of the inroads which tax on income makes on their earnings and pensions."

According to the report, these people would only take residence in Malta if their income was exempted from tax. The memo projected that these "visitor residents" would take up, on lease, more than 4,000 furnished or unfurnished properties. It was expected that expats would also find Malta attractive due to its climate, low cost of living and the fact that it was part of the Sterling area in a way that transfer of funds from the UK were not subject to any controls or restrictions.

Apart from expats from the UK, the government also wanted to attract expatriates from ex cololnies in Africa who are "loathe to face the rigours of British climate after years living in tropical and sub-tropical conditions." Projections shows that each of these 4,000 families would spend on average £1,000 every year, leaving an annual £12 million in the economy. In this case, residency was clearly defined as meaning that one actually lived in Malta for not less than nine months in any calendar year. The expats were not allowed to earn any income from any employment in Malta unless any payment made here was due from a source abroad. But writers and painters were exempted from these restrictions.

Monies for hoteliers

A memo issued in July 1969 reveals the extent to which government was assisting hoteliers. The government was faced with a request for a £400,000 grant for the development of a 690-room hotel in Zebbug, Gozo. The request was made by the Pisani brothers, who promised to spend £1.4 million on the new hotel, which would have created 400 new jobs. But the memo points out that the Pisanis had already been granted £173,333 for the development of the 320-bed Corinthia Palace in Attard.

They were also granted income tax relief for ten years and exemption from customs duty on construction material used in building the hotel. The Malta Development Corporation had instructed the government that no additional financial assistance could be given to any applicant who had already received assistance, unless Cabinet approved this. In this way the picturesque Xwieni bay was spared from hotel development.

Secondary schools for all

Providing access to secondary education for all was seen as a vital step to ensure that the country finds the manpower needed by its new economy. Education Minister Paolo Borg Olivier insisted that this was a vital step to be taken at the beginning of Malta's new five-year development plan. But apart from its utilitarian function, the education reform proposed in a memo issued in April 1969 also had a humanistic element: that of alleviating exam pressures on students.

The minister proposed a revision of the method of selecting students for admission in secondary schools. Instead of an exam, "cumulative record cards and new attainment and intelligence tests" should supplement and eventually replace the admission exam. This change in assessing children from one exam to assessment covering the whole time spent in primary education, coupled with the fact that secondary education was to become available for all, was seen as a way of transforming primary education.

"No longer will the children and their parents be burdened with fear of an arbitrary exam... No longer will teachers feel duty bound to cram their children for this examination, no longer there will be an unnatural concentration on the two examinable subjects (English and Maths) at the exclusion of other valuable subjects like Nature Study, Arts and Crafts and Physical Education... no longer there will be dreary repetition which children undergo in order to sit the same exam again and again."

The reform foresaw aspects of both the botched set-up of comprehensives for mixed ability classes in the 1970s and the setting up of educational colleges in the past decade, which saw the abolition of the dreaded 11-plus exam.

The humanistic aspirations of the reform were spelt out clearly in the memorandum which proclaimed that "once the awful bogey of fierce competitive selection for entry to secondary schools is banished, our primary schools will become much happier and much more spontaneous and efficient places."

Still, the reform was still a far cry from comprehensive in the rest of continental Europe where students of all abilities went to the same schools. In fact the reform envisioned three types of secondary schools; Grammar schools, technical schools and new "secondary general" schools. These schools were collectively meant to provide the type of secondary school best suited to the "widely varying abilities and needs of children." The 3 types of secondary schools were meant to differ only in bias in the education offered and were not to be diametrically different from each other.

"Each will offer the same basic subjects and each will strive at achieving the same standards." Pupils were to be able to move from one kind of school to another according to the progress they made and the interests they developed.

The Minister also made it clear that the provision of secondary education for all was not to be provided at the expense of private secondary schools. On a practical level, the reform envisioned that the primary level would begin at age 5 and would last 6 years. The reform envisioned 12 new boy secondary schools and 14 new girls secondary schools.

Metering the boreholes

In February 1969 Guzi Spiteri, Minister for Trade, Industry and Agriculture, proposed the metering of all boreholes used by farmers, a step that has still to be fully implemented 40 years down the line. In fact the decision to meter boreholes was only taken in 2008 and the process has yet to be completed.

"It is essential to tackle the problem of measuring exactly the quantity of water extracted by farmers so as to provide a better picture of the situation", the Minister claimed. Ironically former Minister George Pullicino used the same expression 40 years later.

At that time, water extraction by farmers was estimated to be 30% of the island's total consumption but this estimate was out-dated.

Therefore the government's aim was to obtain "accurate figures on the amount of private extraction" and be in a position to protect the aquifers from "over pumping" and "prevent damage which could take generations to remedy." The Minister remarked that "water is a precious commodity" and "all efforts must be made to ensure the optimum utilization of natural underground resources."

In view of this, the minister endorsed a report prepared by the United Nations Development Programme proposing the metering of private water extraction. The expense of purchasing and installing the meters for 1100 private wells was estimated at £35,000. In the absence of regulation, the number of private wells swelled to 8000 in the subsequent years.

In the 1960s Malta was more dependent on ground water than it is today.

In September 1966 the same Minister warned that experts had come to the conclusion that Malta was not in a position to increase the extraction of ground water.

A cabinet memo reveals that due to the increase in demand for water due to the growth of tourism, the authorities had to "resort to over extraction of the aquifers to meet demand."

But the same Minister was aware that this could result in "the progressive salinification of water."

The only way out for the government was to commission a distillation plant to convert seawater in to fresh water. Distillation which involved boiling the water and then condensing its steam was superseded by the more efficient reverse osmosis technology in the 1980s on which Malta depends for more than half of its drinking water.

But back in 1966, 9 million gallons extracted from the aquifer and a further 1 million gallons stored in reservoirs provided for the peak summer demand of 10 million gallons.