A better quality of life

"Biex int tghix ahjar" bellowed the billboards relating to the road building programme in the Zebbug area. I believe that many Maltese understand that if we are to have decent roads it is inevitable that we endure some inconveniences. However, as the scorching sun characteristic of our summers crept in, it melted away any sense of citizen care and traffic flow that existed.

Now the slogan has re-surfaced as the title of a pre-budget document covering 2006-2010. It is meant to "...develop a measure of national consensus with regards to the challenges we face and the way we address them". Very promising, especially for someone like myself who is a firm believer in strategic planning. The free market does not do away with the need to plan; the EU itself puts a lot of emphasis on national development plans, business plans, impact assessments and logical frameworks.

The government over these last two decades has been highly suspicious of planning and its track record in this area has inevitably been miserable. Suffice to mention the White Paper entitled Prosperity in Change - Challenges and Opportunities for Industry, and the National Development Plan for Economic and Social Cohesiveness (2003-2006), both of which do not even get a mention in this last effort.

I must admit that from the outset I was a little disturbed by the choice of title for this document. Maybe I was still conditioned by the needless detours and hazards I had to endure in going home. Also, these days I am highly suspicious of anyone telling me anything about my future well-being. Was this some ultimate altruistic gesture by the powers that be? Or was it merely a Freudian slip on the part of who is living comfortably, and felt it time to give some thought to "us" citizens? Who is defining what "ahjar" (better) entails? And to think that we are meant to be one community- all together, for better and for worse.

What prompted the government to prepare such a document? Was it the work of Brussels, especially following the poor rating we got on the Lisbon Agenda? Or was it the fact that recently the Labour Party had come out with its own plan for the regeneration of the economy? Or perhaps the government just wanted to broaden the discussion beyond the MCESD, in the hope that it will avoid a repeat of last year's failure with the social pact.

The document is essentially a padded version of the annual economic survey. It contains a few good points such as the importance of placing the annual budget within the context of a longer term programme; that it is only through economic growth that our country can guarantee "the existing high levels of our social network over the years to come" and that it is about time that the government manages properly its most valuable asset, land.

There are also some gross inconsistencies, such as that relating to the role of government in the economy; and some glaring omissions, such as that about the future of agriculture in our country. The document states that "the building of a body of skills in new areas spans a generation". Why this thrust on "new areas"? Why not seek the gradual enhancement of the existing technological and skill base? Why do we need to start afresh every time?

The document contains little analysis and is, at best, a generic statement of intent. "We must not satisfy ourselves by aiming towards the fifty on hundred target, many times falling short of it, and being satisfied with both scores". Judged by its own measure the document is not good enough. It says little about what is to be done, why, by whom and by when.

Be that as it may, the basic message coming through is loud and clear: the government is now seriously worried about the state of the economy and the consequent decline in our standard of living. Unless urgent action is taken, "...an increasingly mammoth question mark will be placed against our ability to maintain our current standards of living, let alone to sustain gradual improvement". And to think that these same people, the same billboards, up to a few months ago, were boasting about the soundness of the financial position of our country.

Despite all the fluff of the document, it is evident that the government is impotent in dealing with the present situation. Our country's commitment to ERM2 implies that we have ceded the possibility of using monetary policy as a tool to regenerate the economy. In any case, we already have zero, if not negative, real interest rates on savings. (That is, the rate of inflation is equal to, if not higher, than the interest rates given by the banks).

Also, there are severe limitations as to what can be done with fiscal policy. The capacity to tax is at the limit and the best that the government can promise is that there will not be any more new taxes. A task force will look at the existing tax structures and suggest improvements.

The government's main hope is that the economy starts to grow again. This would facilitate its endeavours to reduce its budgetary deficit which has become, together with the control of inflation, a top priority policy objective. Unfortunately, the already anaemic momentum of local economic growth is bound to be adversely affected by the spectre of higher oil prices. This will have an impact on all of us, consumers as well as producers.

Oil Price Rise Sparks New Jitters was the title of a recent (August 8) editorial of The Times which concluded that this oil price increase has come at the worst possible moment for the Maltese economy. Higher oil prices will not only hit us in our pockets. It will push inflation further up, eat into our foreign reserves and is likely to have a negative impact upon our competitiveness.

As we say in Maltese, "il-hmar il-maghkus idur ghalih id-dubbien".

fms18@maltanet.net