Dealing with low public morale

Times of Malta

Editorial

http://www.timesofmalta.com/articles/view/20091217/opinion/editorial

It seems that it never rains but it pours for the many Maltese families who currently have to cope with various attacks on their standard of living. Why are so many of us feeling so grumpy about our current financial wellbeing?
Inflation rates that are substantially higher than those in the eurozone, rising unemployment, worsening job prospects especially for young people, limited opportunities for extra income through part-time work or overtime, and now substantial increases in the cost of water and electricity have taken their toll on the public's morale. This is evidenced in the results of a recent Eurobarometer survey.
This survey not only demonstrates the bad mood that is affecting the Maltese but also indicates that the situation is deteriorating rapidly. Despite being spared the worst effects of the global recession, we are finding it difficult to reconcile our long-held conviction that the future will always be better than the past, with the cruel reality that in the current global environment we have to work even harder to earn every euro that goes in our pockets.
As we are slowly but surely being weaned off the economic shock absorbers of state subsidies, rising fiscal deficits and escalating borrowing to support our welfare state, we feel the bitter pain brought about by the threat of falling living standards and the insecurity that this brings with it. In this sense, we are not faring much differently from the Irish and the Greeks who are facing similar threats to their quality of life.
The new tariffs for water and electricity may have just coincidentally been announced with the survey findings. But they will certainly not help to lift the spirits of consumers. The controversy surrounding the massive increases in the cost of energy services in late 2008 is still fresh in many people's minds. It is important that the reinstatement of these higher rates for 2010 do not destroy the chances of new investment that ultimately can help us overcome the current slump.
The greatest risk that we take when these morale sapping developments occur is that the agenda for structural reforms is put on the back burner until the public mood improves again. This is a luxury we cannot afford. There are many analysts who argue that health, pensions and social benefits reforms should have been accelerated in the past when the economic situation was rosier so that we could face recessions, like the current one, with more optimism.
Membership of the eurozone club has helped us to instil discipline in the management of our public finances, although it is understandable that some see this development as an obstacle to, rather than an enabler of, prosperity. Politicians should be brave enough to tell the people in detail how they plan to reinvigorate the economy. The emphasis should be on straight talk, devoid of political rhetoric, that is clear enough to avoid misinterpretations.
Telling people to cut 15 per cent of their current electricity consumption to neutralise the effect of the increases in rates is probably insensitive and could well raise the anger against the government. Many are already cutting corners to make both ends meet.
The government needs to deal with the public's low morale through credible reassurances that our taxes are used effectively by cutting on mismanagement in public entities and unaffordable public expenditure. We also need more determined action against corruption, and a fairer tax burden sharing by those capable of contributing to the upkeep of the state.