Ensuring a guaranteed basic income

The need for a decent basic income is an all-time issue among those who have a social conscience. However, it assumes more importance in times like these, when prices of essential goods are spiralling upwards, almost out of control.

The perennial question is whether the income received by each person through employment (or a pension) should be sufficient or else whether such income derived from employment or a pension should be supplemented through a social wage, when, on its own, it is insufficient for ensuring a decent living.

Various jurisdictions are experimenting with this idea through pilot projects. As a result, they are seeking to reinforce a social net, protecting the vulnerable through ensuring that each is guaranteed a basic income irrespective of his or her circumstances in life. Each person has the right to have the basic means to ensure a decent life.

The basic facts should, by now, be clear to all.

The three Caritas studies published to date have revealed a widening gap between the official minimum wage and three different categories of vulnerable households.

In the case of a household consisting of 2 adults and 2 children this gap is approximately 40 per cent, at 2020 prices. In fairness it has to be clarified that this gap does not include the receipt of social solidarity income, amongst which children allowances and the various forms of supplementary social income which may be applicable to specific circumstances. When this is taken into account, I believe that in most cases the gap is substantially reduced.

The current price rise of essential goods, average close to a 25 per cent rise in a number of cases, (although a number of items have had much steeper price increases) brings to the fore another worry. Cost of living adjustments to wages and pensions are effective at the beginning of the year, and reflect the cost of living of the previous twelve months.

The last statutory cost of living increase has been of €1.75 per week, less than the cost of a cappuccino. During the past years such increases have varied from a €5.82 per week increase in 2010 to a €0.58 per week increase in 2015.

At times this increase is deemed to be too low as was the 2015 COLA adjustment.

It is essential that the basket of goods and services utilised to measure the actual cost of living is updated on a regular basis in order to ensure that the results obtained are realistic and reflect actual needs.

Finance Minister Clyde Caruana has over the past weeks emphasised that he is considering proposals to introduce a new form of COLA for low-income people. So far, however, nothing has materialised. The Minister has hinted that he is discussing various proposals behind closed doors. Would it not be a much better idea if the discussion is externalised? Everyone of us is interested in the proposals being drafted and discussed.

One possibility which should be considered is not to keep accumulating the cost-of-living dues and carry out adjustments to the minimum wage (and pensions) on the following January. It should be possible to carry out cost of living adjustments to the minimum wage as well as to pensions twice a year, towards the end of June and towards the end of December.  In times of steep price increases, as the present, such an initiative could make a substantial difference to the vulnerable and those on low income.

Ensuring that each has a basic decent income is a basic requirement in the development of the welfare state.

published Malta Independent on Sunday : 30 January 2022

Climate change requires behavioural change

Climate change is nature’s reaction to the cumulative impacts it has sustained as a result of human  behaviourover the years. Long periods of drought or intensive rainfall leading to flooding, longer periods of sunshine, extremes of temperature are all too familiar nowadays.

It has been emphasised time and again that we need to achieve carbon neutrality at the earliest. This signifies that the amount of carbon emissions resulting from our activities must be less than the carbon being stored in the various carbon sinks.

We must address each and every one of our activities as the carbon emissions from all of them, added up, will bring us closer to or further away from our targets.

Addressing climate change is a political issue. It involves policy decisions. If we intend to address climate change these political decisions should be complimentary and contribute to achieving the goal of mitigating climate change as well as addressing its causes.

The decision to substitute the Delimara power station running on heavy fuel oil with one using natural gas has contributed substantially to reducing Malta’s carbon emissions.

On the other hand, the current policy of encouraging the use of fuel guzzling cars and yachts pulls in the opposite direction. Increasing the capacity of our roads and planning new yacht marinas is not a positive contribution to addressing climate change. Yet it goes on, one decision after the other.

The decision to start the long road towards electrification of our roads was not linked with a decision to have a moratorium on new fuel stations. Why does current policy encourage new fuel stations when their operational days are clearly numbered?

It would be pertinent to point once more to the Transport Master Plan which emphasises that around 50 per cent of trips made with private cars in Malta are for short distances, taking up less than 15 minutes. Yet local and regional sustainable mobility is not encouraged. A behavioural change in our mobility patterns at a local and regional level could remove a substantial number of cars from our roads. Why is this not actively encouraged?

Transport policy is unfortunately not climate friendly. This needs to change the soonest if we are to make any headway in addressing climate change.

The carbon neutrality of our buildings is also of crucial importance in our climate change strategy. I have repeatedly emphasised the need of entrenching solar rights thereby ensuring that solar energy can be generated in more buildings. In addition, planning policy should establish that individual carbon neutral buildings have all the energy required for the use of the particular buildings generated on site. This would of necessity limit buildings to dimensions whose energy needs can be catered for through solar energy generated on site. This would limit building heights and substantially reduce the construction of penthouses.  Land use planning can contribute substantially to climate change mitigation!

The basic problem with climate change issues is that the link between our behaviour and the carbon cycle is not obvious or visible to the untrained eye. This makes it easier for those who seek to avoid or reduce the uptake of actions mitigating climate change.

We owe it to future generations to do all we can to address the accumulated impacts on the climate. Taming the present can ensure that there is a future.

published in The Malta Independent on Sunday : 23 January 2022

The resignation of David Thake

The resignation of David Thake is a positive step.  It takes courage to admit to having acted incorrectly and shoulder the political responsibility for your actions. There are others who should follow in his footsteps. Parliament, as a result would be a much better place.

The fact that the tax misdemeanours of the companies owned by David Thake were revealed through media leaks does not make the case any less serious. It however adds another worrying dimension to the saga: institutional breach of ethics, this time by the tax authorities. The Minister for Finance Clyde Caruana is politically responsible for this. He has to act fast to address the matter.

Registered editors already have a right to request income tax returns of sitting MPs. This right should be extended to VAT returns, not only those submitted personally by sitting MPs but also by companies in which they have a controlling interest. This would do away with selective leaking of damaging tax information which generally targets those who those close to government seek to damage or destroy!

It has been established that the two companies owned by David Thake, namely Vanilla Telecoms Limited and Maltashopper Limited have collected Value Added Tax due on their services and retained the tax collected for a long period of time. His companies, stated David Thake, had a problem with their cash flow and thus they were not in a position to pay up the taxes they had collected.

Vanilla Telecoms Limited owes the exchequer €270,000 while Maltashopper Limited owes another €550,000. This is a substantial sum which has been collected from taxpayers through VAT and includes fines and interest due for non-payment.

There are serious doubts as to whether Thake’s claim that he was simply applying the Covid-19 tax deferral scheme is correct.

Given that most of the pending VAT dues of Thake’s companies date back to substantially before the outbreak of Covid-19 Thake has yet to explain as to why it took him so much time to address the cash flow problems of his companies. He has shed too many crocodile tears in emphasising that faced with cash flow problems he opted to pay his employees rather than the VAT office. His delay in acting to address his cash flow problems has the specific consequence of endangering the livelihood of the very employees, which he is so keen to protect!

It is not correct to describe David Thake as a tax evader. It is unfair to compare him to Bernard Grech, his party leader, who was investigated for tax evasion over the years and opted to pay up on the eve of the PN leadership contest.

In view of the fact that Thake’s companies have yet to submit their accounts it is not yet clear as to the actual cause of his cashflow problems.

The point at issue is whether it is right for David Thake to bankroll his companies through the taxes they have collected as economic operators. The fact that there are others who do likewise, and maybe worse, is no consolation!  He was a member of parliament elected on a good governance platform. The mismatch between his behaviour and his stated beliefs cannot be clearer than this.  This is no minor administrative omission as David Thake emphasised when he announced his resignation.

Its fine to preach good governance. Putting this into practice is a completely different matter. Thake’s resignation, even though he took some time to decide that he should resign, puts some sense back into local politics. Thake’s resignation is a positive contribution to improve standards. Ian Castaldi Paris and Rosianne Cutajar should be next.

published in The Malta Independent on Sunday: 16 January 2022

The golden handshakes must be transparent

It has been reported, in various sections of the press, that Justyne Caruana, former Minister of Education, has received, or will be shortly receiving payment in the region of €30,000 as a result of her ceasing to hold political office. This has occurred after she was forced to resign subsequent to the publication of a damning report from the Commissioner for Standards in Public Life which report concluded that the Ministry of Education, under her political direction, had screwed the exchequer to benefit her “close friend”.

Since 2008 holders of political office who cease to occupy such office have received golden handshakes, substantial sums which some describe as severance pay. The sums disbursed to date are substantial and, over the years, are said to be close to a total of €1,500,000. Holders of political office in receipt of such payments are not just members of Cabinet, as payments have also been made to former Leaders of the Opposition throughout these years.

The applicable criteria are largely unknown. There is no transparency whatsoever in the process.

There is a serious issue of governance.  The Executive is bound to be accountable through ensuring that both the criteria applied as well as the monies disbursed are well known. It is an expenditure from the public purse, so there should be no secrets about it. It is in the public interest to know how the public purse is being managed at all times.

First: the objectives of the payments should be crystal clear. When holders of political office take up their post, generally, they take leave from their current employment or close their private offices if they are professionals. Their job prior to assuming political office may be lost by the time they relinquish office. On the other hand, losing contact with their professional environment will generally place them in a difficult position to reintegrate when their term of political responsibilities draws to an end. 

Hence the objective of these so-called golden handshakes is to compensate for the fact that the holder of political office cannot go back to his/her former job or professional environment. He or she will generally have to start from scratch or almost. Not all cases are identical and hence the criteria drawn up should allow for some leeway. Do they? We do not know as to date these criteria are considered as some state secret!

The objective of the payments made is to ease the transition of the holder of political office back to a normal life.

The second point is to establish who should apply these criteria. From what is known through reports in the media the matter is regulated by the Office of the Prime Minister (OPM), either directly or through the Cabinet office. This is not on.

Ideally the criteria should be applied by an authoritative person or body separate and distinct from the OPM. The OPM has a finger in the pie, generally, in all the circumstances leading to the appointment to political office or to the dismissal therefrom. It should therefore not be in a position of sugaring resignations with promises of generous hand-outs.

The third point is then to establish the quantum payable.

From what is known, locally, this is established at a month’s salary for every year’s service, subject to a minimum payment of a six-month salary. It is not known whether eligibility is pegged to a minimum period in office.  These payment rates are substantial when compared to those in other jurisdictions. In addition to having smaller payments other jurisdictions subject such benefits to a minimum period in office, generally of not less than one year.

There are also a number of other serious considerations which need to be made. Should loss of political office as a result of an unfavourable election result have the same impact as being dismissed from office or being forced to resign as a result of unethical or unacceptable behaviour?

Specifically, should ending your political appointment in disgrace be rewarded? It should definitely not be so.

These are some of the issues which transparency brings to the fore. We need to discuss them seriously and only then can they be applied ethically and fairly.

It is for these reasons that earlier this week I have requested the Auditor General to investigate the golden handshakes being paid out by the Office of the Prime Minister to former members of the Cabinet. The payments made and the criteria applied should be examined meticulously.

Good governance should be our basic guide.

published in The Malta Independent on Sunday: 9 January 2022

Ħlasijiet kbar: trasparenza xejn

Għadni kif ktibt lill-Awditur Ġenerali fejn talbtu jinvestiga x’inhu jiġri dwar il-ħlasijiet enormi li qed isiru lill-Ministri u Segretarji parlamentari li jispiċċaw mill-ħatra.

Il-kriterji li qed ikunu applikati m’humiex magħrufa. Ma hemm l-ebda trasparenza dwar x’inhu jiġri.

It-talba li bagħatt hi s-segwenti:

“Nikteb biex nitolbok tinvestiga l-ħlas ta’ “golden handshakes” lill-membri tal-Kabinett li jispiċċaw mill-ħatra. Presentment fl-aħbarijiet hemm il-każ ta’ Justyne Caruana imma għad kif kellna ukoll il-ħlasijiet li saru lil Rosianne Cutajar.

Ma hemm l-ebda trasparenza dwar il-ħlasijiet li saru u li qed isiru lill-Ministri u Segretarji Parlamentari, uħud minnhom għal darba tnejn.

Nitolbok għaldaqstant tinvestiga xi kriterji qed ikunu użati biex isiru dawn il-ħlasijiet kif ukoll li teżamina l-ħtieġa li jkunu introdotti mekkaniżmi effettivi ta’ kontroll u verifika dwar dan il-proċess kollu.”

Charity: supplementing the welfare state

We are long past the day when charity was the only help available for those in need and the vulnerable! Over the past days I have come across a number of comments on the social media pointing out that if we pay taxes there is no room for charity. These comments emphasise that our taxes, funding the welfare state, should be enough to assist those in need and the vulnerable. Unfortunately, reality is quite a different matter, as we can see day in day out.

The welfare state may be just enough for the average person. But it is not sufficient, as no one fits the average person!  The welfare state, as most other state initiatives, is generally a one size fits all exercise, supplemented in specific circumstances.

Individual and institutional charitable acts and initiatives supplement and buttress the welfare state. This has been going on for years. In fact, charity and charitable institutions preceded the advent of social services by many years.  Unfortunately, it has been identified, over the years, that a number of people slip through the protective net of the welfare state. In such instances charity and the initiatives of charitable institutions are indispensable.

Christmas time, the solidarity season, is when all this comes to the fore. L-Istrina on Boxing Day, the Franciscan soup kitchen initiative in Valletta, the Siġġiewi Dar tal-Providenza, Hospice Malta and Puttinu Cares are some of the very worthy charitable initiatives which over the years have bridged the gap and reached many of the neglected corners of social needs in Malta.

It is right to supplement the welfare state in the short term. However, in the longer term, the welfare state should be tweaked in order that its reach is extended to the neglected corners which are identified from time to time.

One can say that, in a sense, charity and charitable institutions are the red light which indicate areas where the welfare state has so far failed to make a difference.

Personalisation of welfare, when this is possible, generally makes the difference on the effectiveness of welfare.

Consider, for example, the Franciscan soup kitchen initiative which has been launched in the past months in Valletta.  It started off as a soup kitchen providing a hot meal to those who need it: some 90 persons every day. The availability of facilities for taking a shower as well as the services of a psychologist are being added, as a result addressing this basic neglect of human dignity which our effluent society has developed. In the process it may be possible to identify, and in some cases address the root cause as a result of which, some of us are not being protected by the welfare net.

L-Istrina on Boxing Day funds the Community Chest Fund, now incorporated as a foundation. The Community Chest Fund, under the direction of the Presidency of the Republic, throughout the year supplements the gaps of the health authorities, primarily through funding expensive medication and supplementing the assistance received from the state by those seeking medical treatment abroad.

Apparently, I am informed, the Community Chest Fund is no longer distributing white goods nor is it offering scholarships. Fortunately, the Presidency has the capability of learning through the mistakes of its past occupants.

On the other hand, the health authorities should pull their socks and start shouldering the expense due for these expensive medicines. Is not this why taxes are paid? Should the health service be reliant on charitable donations in the long run?

This leads to one crucial issue: taxation.  Parliamentary political parties have for some years been competing in dishing out promises of tax reductions. It has to be underlined that without adequate funding the welfare state cannot keep up with the needs of the vulnerable and the neglected amongst us.

Taxes have to be reasonable but they have to be collected.  Addressing adequately tax evasion, including that encouraged by the state, would go a long way in funding the welfare state gaps.

This would not eliminate the need for charity and charitable institutions. They are here to stay, being an integral part of our society. Rather, they will have more time and resources to identify and address other areas which the welfare state, inadvertently, ignores or neglects.

published in The Malta Independent on Sunday: 2 January 2022