A nation that excels

I could not agree more with the sentiments expressed by the Prime Minister in the foreword to the pre-budget document A Better Quality Of Life when he says that we "must seek to be the best in what we do and take pride in doing so". The last sentence of this document reads "excellence will make life better for us and our children". How very true.

But as the Italian adage goes, tra il dire e il fare c'e di mezzo il mare, which loosely translated means there is an ocean between saying and doing. Society at large needs to feel confident that the measures being proposed are not pie in the sky but that they can be implemented.

The report is well presented and congratulations are due to all those who participated in its compilation. Tonio Fenech makes a call for the public to express their views on whether the priorities identified are the right ones or whether there are other more important issues that have been omitted.

I would first like to make a few comments on the economic data presented. Rising oil prices are understandably adversely affecting Malta's economic growth.

The report estimates that the oil price hike, on which our energy requirements depend, has depressed our gross domestic product by just under two per cent in real terms in the first quarter of 2005. Having said that, there is no doubt that Malta's economy, as judged by the gross domestic product, has not grown over the past five years! In the year 2000 our GDP was Lm1.66 billion and it remained unchanged in 2004. This is very worrying.

The structural deficit that we hear so much about seems to be finally heading in the right direction. From a high of Lm105 million in 2003 it has been reduced to a provisional figure of Lm94 million in 2004. Provided this has not been achieved by creative accounting, this is no mean achievement.

In 2004, total government expenditure is quoted at Lm892 million, of which Lm254 million, or 28 cents of every lira, was spent on social security benefits. This figure equates to a sum of Lm635 for every man, woman and child in Malta or an average of nearly Lm2,000 for every Maltese household! I do not know how this figure compares with other countries but I am quite sure that it is on the high side.

I am not in anyway advocating the reduction of benefits to all those who need them but it would seem that the system is being abused. Perhaps, besides a tax compliance unit (TCU), we also urgently need a benefits compliance unit (BCU) to curb abuse. If all benefits paid were to be recorded in a national database according to the recipient's ID number, it would not be very long before serial abusers were identified.

The registered unemployed at the end of June 2005 stood at 6,218 as against a figure of 8,061 in January 2004 and is the lowest in four years. Assuming the method of computation has not been changed, this is undoubtedly a positive indicator.

There are obviously problems in our tourism industry. The average length of stay per tourist was 9.7 days in 2004, a drop of nearly five per cent on the previous year.

The number of hotel nights is decreasing, while the bed nights in other accommodation is on the increase. This is surely a sign of "lower spending" tourists that many hotel operators rightly complain about. Much has been said about attracting "higher spending" tourists but obviously not enough has been done in this regard. The proof of the pudding is in the eating.

Do we stand a good chance of success in the tourist sector? The report talks about a perception of Malta having five-star facilities but a two-star environment. This is no perception. It is a fact and the quicker we accept it the better.

If we ever hope to attract a better quality tourist, we cannot continue on this road to nowhere. Like all consumers, tourists make a conscious decision of where to spend their money. We are being beaten hands down by all of our Mediterranean competitors.

If we all agree that tourism should be the main or one of the main drivers of our economy, we must draft an investment plan to cover the upgrading and embellishment of the whole island. The exercise might entail the expenditure of hundreds of millions of liri over a period of years but once all the calculations are made, the investment might be economically viable. It is no use complaining of low-spending tourists if our country remains in its present state. To quote a recently used phrase "with peanuts you catch monkeys". If we want the big spenders, we too must spend big.

Why is it that the government's recurrent expenditure continues to escalate year on year? In 2004 it amounted to Lm733 million, an increase of Lm55 million, or 8.2 per cent, on the previous year. I have commented previously on the largesse in certain sectors and I renew my call for increased efforts to control and where possible eliminate excesses.

This objective should be put at the top of government's priority list. Recent statements seem to indicate that the government does not intend to increase taxes. Revenue growth must therefore either come from increased economic activity or reduced expenditure. While the former would be preferable, the latter is more easily achievable.

It is also good to note that a task force is being set up to review the current tax structure. It might do well to stimulate economic activity by recommending lower income tax rates. It has been shown that many times a reduction in tax rates, besides inducing more economic activity, also encourages more compliance, with the net result being an increase in total tax revenue.

The document also makes reference to protecting the consumer against market failure. This is also most welcome and has prompted Edwin Vassallo to quote beach kiosks as an example of market distortions.

How about other sectors such as taxis, to quote but one example? When are we going to get taxis to use their meters? It is unacceptable that in the year 2005 these operators, who have a monopoly, continue to flout the law with impunity.

The government is acknowledging that the Malta Environment and Planning Authority is a target for criticism. Nobody will argue with the need to manage development but are we sure that this is being done in a pragmatic and logical manner? People involved in the construction business tell me some horrific stories. Any measure to reduce red tape and unnecessary bureaucracy will be welcomed by all concerned.

Being aware that Malta's minuscule size makes it very difficult to compete due to the lack of economies of scale, I am encouraged by the idea of support for clusters.

One of the proposals made for Gozo is the addition of a yacht marina as well as the inclusion of Gozo in the cruise liner itinerary. In nearby Taormina, cruise liners drop anchor regularly a few hundred metres offshore and passengers are ferried by the liners' own boats to Naxos for onward transportation by coaches to Taormina.

If it can happen there, why not in Gozo? While on the subject of cruise liners, let us not scar the majestic Valletta bastions by installing a cable car to transport tourists from the cruise liner terminal to Valletta. Surely an efficient shuttle bus service or a monorail can do this job.

One area that the report fails to mention is what I consider to be a time-bomb slowly but surely ticking away - traffic congestion. Basically we have too many cars on our roads and other than restricting ownership we shall, at some time in the future, have to consider restricting their use. To do this, we must provide an efficient, modern and comfortable public transport system and once this in place we can oblige the public to use it rather than their own private vehicles. While this measure might sound draconian, I think it is only a matter of time before our roads are totally choked.

If I had to make one overall criticism about this document, it would probably be that it aims too high and sometimes verges on wishful thinking. Others might justifiably argue that it is somewhat indicative of our nation's presumptuous approach but then, as the Chinese proverb says, "a journey of one thousand miles starts with a single step".

The Prime Minister has bravely declared that he is determined to deliver. I hope he is successful.