On reading the Pre-Budget Document

The Pre-Budget Document for 2008 was unveiled last week with the slogan "Families growing stronger". The slogan itself gives a very clear message of the need to achieve cohesion in our country, where the social issues and the economic issues cannot be divorced from each other.

A strong economy that seeks to achieve sustainable economic growth is invariably buttressed by a strong element of social cohesion; and social cohesion can only be achieved if there is a strong economy to support it. The role of the family as a social unit in achieving economic growth and social cohesion is indispensable and hence the required emphasis.

There are two thoughts which came to mind when reading through the Pre-Budget Document. The first is about the European Union. The introduction to the document, signed by the Prime Minister does not make one single reference to the European Union or Malta's membership of the Union. This certainly does not mean that our country's membership of the EU has stopped being important for this government or for our economy. It means rather, that, to a great extent, our social and economic well-being from now on will depend on our policies.

The EU does not guarantee that we have the right economic and social policies. That depends on our government. EU membership provides a window of opportunities.

Those who work in the area of foreign direct investment confirm this. However, the EU does not guarantee that we exploit those opportunities fully. It is only competent governance that can guarantee that our country benefits from those opportunities. To use a fishing analogy, EU membership provides us with a sea with a lot of fish that we can capture; but it is up to our capabilities that we capture those fish. The Pre-Budget Document evidently takes account of this fact of life, and seeks to transmit it to the public.

The second thought that came to mind was that although we here have a government, which, give or take a period of 22 months, has been in power for over 20 years (albeit under two Prime Ministers, and with only two of the 1987 front benchers being present in today's front bench), it is still capable to be innovative and it is still eager to deliver as if it were in its first year in power. I do not doubt that there have been signs of tiredness in this administration when handling some of the day-to-day issues, with the result that it may not have handled them correctly.

This is evident from the element of disgruntlement that is reflected daily on the media. However, when it comes to vision, to policies and to new ideas, it is still capable of re-energising itself and is capable to look beyond next year (2008 is euro year and an election year). It has set its sights on 2015 and is starting to set the direction for the economy and the country for the coming eight years. The 2008 Budget is seen merely as a programme of action that will serve as a stepping stone in achieving long-term objectives.

The concluding chapter of the Pre-Budget Document for 2008 summarises what these long-term economic objectives are. It starts by stating that Malta is to become a regional centre for ICT, after having already managed to attract significant investment in this field and after it has been recognised internationally that Malta has made giant strides in a number of areas related to this field. The role of the financial services sector is earmarked for further development through capacity building and through further strengthening of the legal regime to enable the creation of more opportunities for new and updated business lines.

Tourism is expected to remain a pillar of the Maltese economy. The document speaks of the need to base the tourism sector on the principle of sustainability. This implies the management of Malta and its cultural heritage as a tourist destination and seeking to provide the highest quality service. One overriding principle in the development of this long-term strategy is that firms operating in Malta can only strengthen their competitive advantage if they move up the value chain. The issue of social cohesion is highlighted in this regard through a strong emphasis on the need to develop Malta as an international centre for education and on the need to develop an outward-looking competitive health service.

As with any policy document, there will always be areas that one would have wished they were included, but have been left out. One may also ask the pertinent question as to what happened to the good intentions listed in the previous pre-budget documents. These are without doubt two very fair points to make. On the other hand, being a policy document, I would like to judge it on the basis of whether it sets a clear direction for the economy. In this regard I feel the Pre-Budget Document scores very highly.