The Accountant – Is Good Governance on our Agenda?  –  Summer 2020 (MIA Publication)

In this issue, the MIA asked two Maltese Members of the European Parliament for their perspectives on Good Governance and whether this is on their agenda.

Good Governance Towards Stability in Business and a Better Quality of Life - Miriam Dalli, Member of the European Parliament

For all members of the European Union to harness a stable business environment and to safeguard European citizens’ quality of life, good governance is essential. Ensuring accountability and transparency are key, together with providing citizens with an effective, efficient and inclusive system.
Good governance is a matter of both internal and external relations. EU support for governance reforms has gained ground in the EU’s external relations, particularly in the EU’s development policy. This is not to say that it has not met its challenges – on the contrary, it has come under considerable pressure to ensure that measures implemented, and funds allocated, actually reach the ultimate target of improving the well-being of citizens.

The same goes for the EU’s own Member States. Good governance is a matter of improving democracy and ensuring that the expectations of citizens are met. It is a cross-sector approach that has to apply to all – from the judicial, to the financial, to the environmental and social aspects.

By way of example, recommendations for member states were adjusted to address new priorities that came to be with the advent of the Coronavirus pandemic. Country specific recommendations now focus on two aspects. First, the immediate fiscal, economic and social responses to the crisis, and second, the medium-term reform and investment priorities to put economies back on track. Such reforms have to be geared for sustainable and inclusive growth, while integrating the green transition and the digital transformation. Their implementation will be monitored to ensure that countries embrace good governance and transparency. Failure to do so will result in the Commission asking member states to improve their system.

Another example are the transparency rules that the financial industry must abide by. The S&D Group took the lead on this file and was successful on several key issues, including a more transparent approach on remuneration policies. Under the new rules, banks, insurance companies and pension funds will for the first time have to make visible how they include environmental, social and governance risks in their decision-making process.

Good governance is an evolving process that helps a democracy develop. As we look at different countries, we see that there is no fool proof system. Over the past seven years, the Maltese government embarked on reforms designed to address transparency and accountability, such as the removal of prescription on acts of political corruption and the press law revamp that abolished criminal libel, among others. The government is currently working on proposals that conform with the 2018 Opinion of the Venice Commission. The proposals focus on a system of transparency and intend to eliminate political influence of politicians from the appointment of judges. Furthermore, the role of the Judicial Appointments Committee in the appointment of judges should be supreme. Another reform is related to the appointment of the Police Commissioner, where the candidate should be selected following a public call, in line with the recommendation of the Venice Commission.

I support the initiative to regulate lobbying in Malta, that is currently being spearheaded by the Commissioner for Standards in Public Life. The introduction of a legal framework to regulate lobbying is of extreme importance since lobbying forms part of the decision-making process and, as such, transparency needs to be ensured. A Register of Lobbyists and a Transparency Register would allow the Commissioner for Standards in Public Life to appropriately monitor and regulate lobbying.

Another initiative I would like to see introduced relates to measures that can actually address the revolving door practices. Politicians should not serve companies they have dealt with closely while in office. The most infamous example is that of the former European Commission President Jose Manuel Barroso who, less than two years after stepping down, was appointed as chairman of investment bank Goldman Sachs.

Further reforms are to be carried out and it is positive to note that the Maltese government has shown determination to implement them, including reforms that are being led by the President of Malta related to the Constitutional Convention. More needs to be done at all levels, particularly since governance, transparency, and accountability are spread across various levels, starting from the European Union level, moving on to individual member states, and descending to regions and local councils.

We have recently seen the publication of the Venice Commission’s proposal on reforms being proposed and implemented by the government. Action is the way forward and I look forward to more initiatives across all levels, with the ultimate goal of enabling citizens being governed by robust systems in place.

Miriam Dalli, member of the European Parliament

Good Governance for Better Efficiency – David Casa, Member of the European Parliament

Between 2014 and 2020, the EU will have invested €325 billion in projects across Member States. On the ground, infrastructure projects that benefitted have signs affixed with the ubiquitous European flag. Each of these projects are bound by rules to ensure standards, avoid corruption and abide by timeframes for efficient use of the European taxpayers’ coffers.

The EU’s broader concern with that efficiency is shining a new light on good governance as a requisite for democracy. In its seventh report on Europe’s cohesion policy, the Commission has noted that government effectiveness is broadly showing a downward trend across the EU.

The attention that has been afforded to governance by the EU stems from the Commission’s periodic diagnosis of bloc. Poor government is considered the root of sluggish development, innovation and entrepreneurship, and jams spokes in the wheels of healthy democracy by discouraging public participation and weakening inclusiveness.

Good governance in Malta
Malta is an interesting case study compared to our European counterparts. The Maltese people have had quite a high degree of trust in its institutions, which is generally a good sign. In 2015, Maltese trust in government effectiveness was on par with the UK and Ireland, stopping short of governance superstar Finland and overtaking Germany.

Trust in the institutions afford a happier mandate and enable more effective government – on paper. Curiously, when it came to evaluating Malta’s competitiveness and actual government efficiency, Malta was more closely comparable to Poland and Slovakia. A takeaway from these data seems to be that Malta has been more comfortable with its level of governance than we should have been.

Transparency is certainly an essential pillar of proper government. However, as the Maltese expression goes, fuq tlieta toqgħod il-borma: accountability and the rule of law are absolutely vital to ensuring good governance. Bolstering our financial watchdogs and white-collar crime units is an essential step to increasing all three pillars. These calls aren’t just being made from the political arena, but private industry has constantly been requesting these.

The challenges ahead
Experts and professionals who have spoken out have been let down by the lacklustre implementation of good governance, as well as a culture that still seems to be rooted in electoral patronage. The Commission’s reports are unequivocal on the point that this does nothing to help attract investment in the private sector.

Since 2015, an elevated awareness of corruption and rule of law issues, culminating in the 2019 political crisis, has altered things considerably. Increased scrutiny by international organisations, namely the Venice Commission, GRECO, and Moneyval, all bodies of the Council of Europe, have highlighted flaws in the Malta’s sphere of governance. As the old mantra goes, recognising the existence of a problem is the first step toward tackling it.

Domestically, Robert Abela’s administration is ostensibly taking steps to remedy the governance deficit that has imperilled vital sectors of the economy. The new portfolio for governance attached to the Justice Ministry aims to do that. But the role has been criticised as insufficient. Notably, it has been argued that many of the same officials remain in office to ensure good governance, when they operated happily under the inadequate protocols of the previous regime.

Studies cited by the Commission show that Malta will enjoy the most relative gain if the public sector becomes more meritocratic, when jobs and promotions are awarded on merit, not connections. Unfortunately, the civil service is still treated as a political toy. The press has all but given up reporting on the countless promotions given without a call of applications, jobs being created with specific individuals in mind, and vindictive transfers to workers of another political colour. None of this bodes well for good governance in the public sector and Malta has a long way to go before the public sector can lead in good governance.

The EU’s relationship with its Member States is not very simple, and public opinion is rife with misconceptions on what the EU can and can’t do. In the past few years, there have been increased calls for the EU to intervene in cases of maladministration and corruption. There is only so much the EU can do, and it certainly cannot take over what remains the responsibility, moral and legal, of its constituent nations.

David Casa, member of the European Parliament