Alex Borg wants his cake and to eat it (The truth about construction and property in Malta, 6 January 2025). His and his party’s (and also the government’s) attitude towards the property and construction sector is symptomatic of the state of politics in this country. Some sacred cows are untouchable. Alex Borg is determined not to rock the boat. Worse still his underlying argument is, without having to read much between the lines, ‘handle with care, because the sector increases the GDP and provides jobs’. Forget any meaningful efforts to reform. Despite his criticism of Finance Minister Clyde Caruana, the truth is that the PN and the PL in this are in coalition: a coalition of complacency. Borg shamefully defends business as usual. He wants more and more construction and the continued subsidising of speculators.
Alex Borg criticises Caruana’s claim “that we don’t need to sustain the current rate of construction to prosper”. Now, it’s not as if the Labour government of which Caruana forms a principal part has done anything meaningful to cut the construction/speculation/tourism throuple down to size. Alex Borg too dismisses any serious attempts for a so called ‘new economic model’ despite his party’s rhetoric.
There is no magic wand, no once and for all measures or reforms in this, or in any other sector for that matter. Changes in the economy involves changes in taxation structures, and which sectors are incentivised and which are not. No serious politician or party should avoid discussing taxation. Instead we have a Labour Party in government, and the parliamentary opposition party which repeatedly go down the damaging, populist and sheer irresponsible route of solemnly declaring that the tax structure will ‘never’ be touched.
As the KPMG report quoted by Borg, and indeed various Central Bank of Malta reports, points out, rents and house prices has leapt forward, massively outpacing rise in incomes. That is why we need real reform, meaning changes in planning, or more precisely actual urban planning rather than simply a ‘permitting authority’. Urban planning means ensuring the availability of the right types of properties to ensure that everyone who wants a home can afford one. It means restricting the waste of the precious resource of land by refusing permits for what are clearly properties for speculative activities. Reform involves reversing the 2006 ‘rationalisation’ scheme. Labour voted against expanding the development zone back then, but reversed their opposition once in government.
Reform also involves a change in mindset, seeing housing as a social and community issue rather than vehicles for speculation. Family homes are homes, anything more should be treated as any other asset, and taxed as all other income from employment and self-employment. It is simply not true that, for example, reduced taxes on property lead to cheaper rents or reasonably priced houses. Government financial incentives end up in the pockets of speculators, since the value of the incentive is simply added to the price of the property. How about flooding the market with affordable housing, or taxing the hoarding of property? What’s happening at the Foundation for Affordable Housing? A good idea which probably lacks resources to be effective. How about effective disincentives for short lets, and incentives for long lets, the longer the period the greater the incentives? Another policy measure can be the incentivising of the setup of housing cooperatives. This should help the availability of more affordable housing, and strengthen communities.
Successive governments’ policies allowing the conversion of hotels into speculative luxury developments and schemes incentivising the sale of property to foreign investors and multimillionaire Maltese passport purchasers have exacerbated the situation. It is simply corporate welfare for speculators at the expense of all of us. In the meantime the needs of the vast majority of people living and working in Malta are largely ignored. Indeed some time ago Alex Borg himself, shamefully, lamented regulations imposing limits on multiple occupancy in rental properties. Regulations should go further, place further limits on occupancy and classifying what are clearly dormitories as hostels, with strict regulations on hygiene and proper facilities.
No single housing policy can succeed in isolation. What is needed is an integrated strategy aimed at reorienting the housing system away from the pursuit of profits above all and towards actually meeting the social need for housing. On a wider level economic incentives should be re-directed to sectors which invest in the training of their workers, in technologies which increase energy efficiency and efficient use of resources, and which are investing in the circular economy and providing socially useful products and services. The hoarding of ‘value’ in dormant assets should be actively discouraged, disincentivised and taxed. The income from these taxes can be re-directed towards socially and ecologically useful investments.
The problem is that even supposedly ‘new’ and ‘fresh’ politicians engage in the usual transactional, centrist neither-here-nor-there politics. They refuse to propose, refuse to make policy choices. They refuse to discuss in depth and in detail the much needed reforms lest they step on toes. It’s only all about image, coffee mornings and Tik-Tok.
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Dr Ralph Cassar is the Greens’ secretary general and a local councillor
The version published in Times of Malta: https://timesofmalta.com/article/the-toxic-throuple.1103535
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