Of consultations and pacts

Last week, the government commenced consultations with a wide range of stakeholders in preparation of the pre-budget document 2009. Through the experience acquired over the last four years, we have been able to produce better budgets that address the needs and expectations of the largest possible net of interested parties.

In this year's pre-budget, we will be looking at four themes that are critical in addressing the needs the country is facing. The three major pillars of this Administration - employment, education and environment - are horizontal issues that will play an important part in each of these themes.

Enterprise

A healthy enterprise is the key to a dynamic economy. Recent economic statistics continue to show we are doing well: sounder finances, lower debts, sustained economic growth and a low unemployment level. This success is being achieved despite the adverse events taking place on an international level, such as the credit crunch, the difficulties being witnessed by the US economy and the increase in the prices of oil and cereals. In order to compete we need to reach high levels of productivity and quality and stand out from the rest by 2015. In its vision, the government chose six sectors where we need to specialise and, through these consultations, we will be looking into those areas that need to be improved in order to meet these objectives.

Sustainable localities

Traffic and higher levels of pollution are unfortunately negative consequences of the commercial development that has taken place in a number of areas in Malta, such as Valletta and Sliema, and, to a lesser extent, in a few other towns, such as Birkirkara, Mosta and Ħamrun. What we have in mind here is a concept that has already been floated last year but about which no concrete action had been taken yet. The idea is to facilitate the attraction of potential businesses within non-traditional localities in order to provide employment closer to home and, therefore, ease these congestion problems. Such type of employment would also constitute an additional opportunity for women seeking a balance between their working and family lives.

Renewable energy

We have already invested substantially in the environment and, as a result, national awareness has reached unprecedented levels. Renewable energy is inevitable in order to achieve a number of goals, ranging from a cleaner environment to lessening the dependency on oil. Under this heading, we will also be discussing an issue that has made quite a few newspaper columns over the last few weeks: the Energy Efficient Appliances Rebate. This had been adopted, as a one-year measure, by the government, in the budget 2007 to instil a change in mentality and practice among consumers, importers and retailers in favour of products that are more environmentally friendly. By 2007, the government had already noticed an evident change in pattern towards environmentally-friendly purchasing trends. A new scheme targeting environmentally-friendly products will be introduced this year through EU co-financing.

Better regulation

The regulatory environment in which businesses operate influences their competitiveness and their ability to grow and create jobs. That is ultimately our final objective. By reducing red tape or, rather, providing a red carpet, the government believes that entrepreneurs can improve their competitiveness, although sustainable development must be kept in mind. We want to develop a better regulatory environment for businesses that is understandable, effective and enforceable.

Social dialogue

Achieving the challenges ahead requires the widest national consensus possible. However, in today's world and following the 2004 experience, consensus and decisions in the interest of the nation are not necessarily boxed in the form of a social pact, even though in notion this would always be desirable and the government is open to any discussions that can lead to a national consensus.

In 2004, the government had initiated discussions on the social pact, which went on for more than six months, based on a framework document proposing over 55 measures that sought to address economic and social challenges facing the country at the time. A meaningful compromise could not be reached. Four years later, it does not seem that certain discordant positions have changed too much. What we need is to look forward not backwards, to address new challenges not to re-open and discuss old discords.

While a general agreement on some issues may be desirable, what we really need on an economical level today is to address specific sectors. The challenges being faced by the manufacturing sector, the financial services sector, the ICT industry, tourism and others are more complex and diverse from each other. For example, while wage restraint would be desirable in manufacturing, the same attitude would lead to a brain drain in financial services or ICT.

The government has taken active steps to facilitate meaningful debates and consultation processes that assist in determining the right national policies or actions. The pre-budget process involves an extensive consultation process and is tangible proof of the government's commitment towards involving the widest possible range of stakeholders in the drafting of its policy and before taking its decisions.

Mr Fenech is Minister of Finance, the Economy and Investment