Government is failing to attract new local and foreign direct investment because it is not creating the right environment for business. Taxes are too high. Government-induced costs continue to rise. The skills base of our workforce is inadequate. The administration, and the prevailing social and political culture are still not geared to help this country compete successfully in the 21st century.
Nothing serious is being done to regain Malta and Gozo's competitive advantage in tourism, manufacturing and services. Our islands can only start to recover if we keep public spending down, by cutting waste and corruption, making taxes affordable, and maintaining a good standard of government to deliver good quality public services.
Investors move across the globe and base their operations wherever it makes good business sense for them. They fragment their companies by locating different parts of their operations in separate countries to gain a competitive edge.
They move the different functions of their companies according to the comparative advantages of the different countries where they decide to operate: depending on the availability of talent, capital, competitive costs and proximity to their most important customers.
We can only succeed if we manage to win the skills race. We must educate and train our people in a way that makes sense in the 21st century. In an increasingly borderless world where capital, goods, services and people move more freely than ever before, the right education strategies, combined with a good work ethic, a top quality infrastructure, good governance and competitive operating costs, can make all the difference.
The worst disservice done to Malta and the European Union by those campaigning for membership was to project membership as a free and permanent banquet with hundreds of millions of liri raining down on us from the blue starry skies of Brussels, with an eternal new spring.
More people are waking up to the reality that EU membership is not the soft option, all gain and no pain, it was presented to be. EU membership has not delivered us from ourselves. The way a country is run depends on the quality of local political governance.
Incompetent and corrupt politicians do not transfigure themselves once their country joins the EU. Things get (or do not get) done well (or badly) by national governments. Ultimately it is up to national governments to deliver on the ground: both in areas where it is exclusively within their own national competence to operate and other areas, which they run together with EU institutions.
This is why some countries have prospered since joining the EU while others have lagged behind. The difference lies in the ability of local politicians to get their act together and lead and manage their countries successfully and effectively mobilise the widest and best social and economic forces to move the country ahead.
Government's lack of drive
In 2003 the Economist Intelligence Unit published a report 'Europe Enlarged: Understanding the impact', stating: "Success is not guaranteed, joining is no guarantee of catch-up growth." The report warns that EU membership does not suspend the ordinary laws of economics.
"Poorer countries that keep public spending down and taxes affordable, while maintaining a good standard of government, will grow faster than countries that let their public sectors bloat and their tax burdens rise."
No one harbours any more the dangerous illusion trafficked like an attractive drug during the EU membership campaign that, once Malta joined the EU, everything would fall into place, foreign direct investment would flood in, and the vast EU market would be automatically guaranteed.
We must create the right business environment to attract new local and foreign investment. During the last few years while the PN government concentrated all its energies on securing EU membership, one European diplomat after another based in Malta was expressing disappointment at the government's lack of drive to attract foreign investors. We are now paying the price.
In its recommendations for the national budget of 2006, the Malta Federation of Industry quotes the 'World Investment Report' showing that "Malta's percentage share of total world foreign direct investment (FDI) inflows has deteriorated by 22.5 per cent between 2000 and 2003. Contrary to Malta's case, all the other countries have in fact registered a positive percentage change in their share of total world FDI inflows. The opportunities to attract new FDI to Malta are there but the country is facing harsh competition from other countries and it is losing out fast."
We must work hard to develop our bilateral ties with countries in the EU and beyond, striking out to our neighbours in the Mediterranean, China, the United States, Russia, Australia, India, Japan and Canada.
The Malta Labour Party believes that the country urgently needs a comprehensive plan to get it moving again, to have a viable economy and a cohesive society in the years ahead. Life for a microstate in the 21st century is never going to be easy.
Today's fiercely competitive world will inevitably disturb the comfort zones we have grown used to over the years. But learning to live outside these comfort zones must not mean a cruel assault on the most vulnerable sectors of our society, who are always at risk of falling behind.
We need a successful economy to create jobs and wealth to solve the structural deficit and public debt problems, and to sustain and improve the quality of life of our families and pensioners, to sustain good public services in education, health and welfare, and to protect the environment.