Much is said about the state of our economy, the competitiveness of firms operating in Malta, the performance of key economic sectors such as manufacturing and tourism, the fiscal deficit, employment and unemployment levels, the regulatory framework within which firms have to operate, public sector induced costs, privatisation of state-controlled entities, monopoly service providers, and a host of other economic issues.
Different points of view are often expressed as to the extent to which these issues are within our control to manage.
The two opposing views are, on the one hand, that we can do little to manage these situations because the level openness of the Maltese economy is such that it leaves us very vulnerable to international developments, and on the other hand, that government can do a great deal to influence each of these issues.
A third possible view that is often unexpressed is whether the private sector in Malta can influence any of these issues. The reality must be somewhere incorporating a mixture of the three views, namely that government can adopt policies that stimulate economic growth, the private sector has to play its part by seeking to exploit the opportunities offered to it and not wait for the manna from heaven, and we need to accept that certain matters are outside our control.
The fact that certain matters are outside our control should not make us despondent, but should spur us to work harder, while being realistic in our expectations as to what can be achieved. Yet it needs to be recognised that the openness of our economy has created an element of uncertainty, that we may not as yet have learnt how to manage.
A typical example is the tourism industry. There is no doubt that the number of tourists coming to Malta depends on our ability to market Malta effectively and to upgrade the product that Malta represents. However, there is also no doubt that the number of tourist arrivals depends on the extent of competition that there is from other tourist destinations, and this has created in itself a great deal of uncertainty. Then, there is also the role that the private sector plays in bringing over tourists to Malta. Listening to the debate on the performance of the tourism sector, one notes the interlocutors seeking to shift blame on each other, until they all point to government as being the only cause as to why tourism numbers have not been as good as we expected them to be.
One half expects someone to come up with the idea that all we need is for government to go to a number of countries, stay in one of the main squares in these countries, and take down the names of people who want to visit Malta, while everyone else sits pretty until these tourists come to visit us.
Admittedly there is a great deal of uncertainty (not just in the tourism industry) and the question that needs to be asked is how it can be managed with the objective of minimising it. This is what individual businesses do all the time, and we need to adopt this model for the management of our economy. Managing this economic uncertainty requires three key elements (and the list may not be exhaustive). The first is the ability to take the difficult decisions that need to be taken to bring the fiscal deficit to sustainable proportions, to continue reducing the role of the state in the operation of the economy and to remove rigidities in the economy. I believe that in this regard, the decisions are being taken, even if at times they are unpopular and bite hard into everyone's pockets.
The government, over the last number of years, has not shirked from its responsibilities to take such decisions for the good of the economy - starting with the introduction of VAT, continuing with the liberalisation of the economy and the privatisation of state-controlled entities, and ending with a very vigorous effort to balance the budget within a reasonable time span as well as addressing the pensions issue. We may not have liked such decisions, but they were needed.
The second element is to have the appropriate policies, strategies and initiatives to address each of the economic issues. It is on this issue that we start to fail. The government has spelt out its policies, strategies and initiatives on a number of areas. There are, however, some areas that still need to be tackled. Moreover, in a democratic society such as ours, it is not enough for government to spell out its policies. The concept of having social partners requires, in effect, that all social partners spell out their policies.
And policies, strategies and initiatives are not wish lists, but concrete measures that can be realistically implemented. The right to participate in decision-making brings with it the responsibility to participate in a positive manner.
Voters must have appropriate alternatives in terms of policies. It is not enough to show what is wrong with a policy, or a strategy or an initiative. It is critical that alternatives are presented. In the absence of adequate alternatives we will remain stuck in the quagmire of uncertainty.
The third element that is required to manage the uncertainty is targets and the appropriate plans linked to those targets. It is probably here where we fail most. We do have some targets for the gross domestic product and the level of the fiscal deficit. But this is not enough. We need to have some targets specifying the type of structure of the economy that we want to have five, ten years from now. Admittedly setting such targets is not easy and may always one day boomerang back into one's face. But targets provide direction and this in turn helps to manage uncertainty.
I have in the past likened the current situation to the one faced by Malta in 1964 when it achieved its independence. Somehow, at that time, we managed the uncertainty and minimised it drastically. Within five years we were going through an economic boom and the key pillars of the economy were performing very well. We need to re-acquire that same sense of urgency to get things done, that had characterised those years.
Maybe we need to bring in more youth into our economic decision-making processes. Youth manages uncertainty better - but that is another issue.