The government's preoccupation with the outlook of our economy, especially the likely negative impact from ever-higher oil prices, comes across very clearly in the recent published pre-budget document meant to cover 2006-2010.

In the circumstances referred to in the first part of this article (August 23), the only options available to the government are to seek to increase its revenue by speeding up the privatisation process and to cut its expenditure. Both of these measures are double-edged.

There is little doubt that privatisation, while providing important financial resources for the government to control its fiscal deficit, is also obliterating our country's asset base.

The document rightly points out that foreign direct investment by itself will not propel Malta to a higher level of economic activity. So what will?

The document once again fails to indicate the way forward. To my mind we should be following Singapore's example. This country, rating among the most competitive in the world, has been economically successful by spurring its public corporations, such as the Port of Singapore Authority and Singapore Airlines, to become world class players. We keep selling everything Maltese by the pound.

Also, privatisation should not be the means through which we buy our way into the euro. Sooner or later reality will catch up with us. This is what the Italians did and they now have to pay the price.

Similarly, cutting government spending will further dampen local economic growth. Over the years we built an economy which is too dependent on such expenditure. In particular, a significant amount of public spending goes, directly or indirectly, for the remuneration of public employees. Any cuts in this respect will inevitably affect the purchasing power of about one third of local households.

The government now says it is committed to "... reposition the capital and human resources of the public sector". The document claims there is need to render public administration more productive and cost effective. "Much has been attained. Yet much needs to be done." Such an important statement is left hanging in mid-air. Where have we been really successful? Where have we failed why? What should we now be doing differently? Why are we having to restructure key public institutions that were restructured only a few years back? Where has accountability gone?

For sure, enhancing national productivity inevitably entails improving the productivity of the public sector. The idea is not new. In the 1990s, we had the Management Systems Unit. Now we have the Management Efficiency Unit. The basic issue, of course, remains how to push public employees into the private sector. Recent events at Sea Malta show that even here the government has now had a change of mind.

Gone are the promises that public sector employees are guaranteed a job for life. How the government can justify to treat employees differently from those, among others, at Malta Development Corporation, PBS Ltd, the freeport and the shipyards I do not know. Over these last few years, employees in these entities were all offered alternative jobs within the public sector or attractive termination packages. Surely, our decision-makers realised that their policy was not sustainable. Who has been talking about transparency?

The document's declared mission is outlined as being " ...to ensure that each and everyone, whatever the talent, can contribute to economic growth". Fine words indeed.

And yet, almost 18 months after losing their job, a number of public sector employees are still getting paid for staying at home.

Cutting expenditure could also end up starving key institutions such as Malta Enterprise and the Malta Tourism Authority; institutions from important financial resources that could paralyse their operations. This is acknowledged by the document itself, when it speaks of a " ...balancing act between introducing policy objectives directed towards stimulating economic activity and enhancing productivity while reducing the fiscal deficit".

The document also points out that if the government wants to cut its expenditure it will have to act fast on such issues as stipends, free medicine and children's allowances.

The document adds that " ...the old formulae for economic development in Malta... are losing their relevance today and will be completely obsolete tomorrow". Unfortunately, the document does not offer any concrete new formula. It does not indicate what we have to change, to unlearn. It fails to project a clear understanding of the new dynamics of economic development and competitiveness.

There is talk about the search for excellence. "Excellence must permeate the essence of what to do across every sector of our life". This is in itself recommendable but seems to be out of sync with the realities of an economy that is struggling just to remain competitive.

The idea of clusters too finds its way into the document. For some reason these are kept separate from the key target industrial sectors. Mention is made of the role of research and development and innovation in fostering economic development. However, this seems to be just cut and paste from some EU document rather than the logical conclusion of an in-depth study of the needs of our enterprises.

A venture capital fund is to be relaunched. Yet no mention is made of what has happened to the Lm1 million that were allocated to set up such a fund some three budgets ago. And in what way will this fund be different from all the previous failed attempts. Similarly, the document projects the introduction of a national vocational qualification framework. As far as I know, work in this area had been going on for years. What has been the outcome? Why was this work stopped?

Regretfully, gauging from what is happening around us, this document promises much more than it can ever deliver over the indicated timeframe. It is more concerned with form than substance. Just like the billboard campaigns.

The road to economic regeneration and increased prosperity for all our society is full of potholes and demands a better effort. Maybe, as with the roads, the EU or some foreign government will give us a helping hand.

fms18@maltanet.net