Behind the blinking glimmer of free money, subsidies, and electoral pledges, the Labour Party continues to build a social contract where society’s wealth is increasingly being directed to the banking system and the construction industry. The latest proposals announced by the Prime Minister on interest-free loans may sound attractive to those who are struggling to buy property, but the reality is that these taxes will be directly subsidising banks’ profits, along with subsidising the income of building developers and property speculators.
In fact, the proposal is very similar to those consistently presented by the Malta Developers Association.
Effectively, the government is refusing to fund structural and long-lasting solutions to the housing crisis and instead is opting to directly pay banks to slightly ease the housing crisis, but not solve it altogether. The economic reality of Labour’s fiscal policy is that society is increasingly subsidising the waste and surplus of banks and large entities, as sunk cost capital grows and the country keeps running out of money to implement capital projects.
From an economist’s point of view, Labour’s fiscal policy is a fast track to financial ruin, and we are already experiencing this reality. The government has admitted that it cannot afford a metro, so instead we have to contend with Third World solutions. This is not hyperbole, but actual and material reality.
If 10,000 home buyers take up the government’s scheme next year, the Maltese public will be subsidising the banks’ profits, along with the income of contractors, to the tune of up to €650 million. This expenditure comes after subsidising fuel and electricity prices, adding even more to the government’s sunk cost capital.
There is no end in sight to this fiscal policy, and it is very dumb and reductive. The social contract is being decimated, and the economy is increasingly skewed in favour of those who run the property industry and the banks. Public taxes are going to subsidise the profits of Electrogas, and now banks and the construction industry. The fact that the Prime Minister does not want to propose any macroeconomic solutions is by design: the Prime Minister is intentionally building a society where the Maltese are increasingly paying banks, energy suppliers, and building contractors.
This can be measured in a very simple manner. For every €1,000 we earn, we are increasingly giving a share of this €1,000 to banks, Electrogas, and construction developers.
Website Editor
Historian and Publisher
Leave a Reply