The message of sustainability

Developments beyond our shores continue to send warning signals regarding the need for sustainability in our decision-making processes. Government, as is well-known, has made it very clear that the principle of sustainability will need to be at the very foundation of its decisions. However, there are still those who seem not to want to hear or understand this message, because one does recognise that sustainability requires an ability to make hard choices and decisiveness.

Choice, in turn, is at the basis of economic theory - as any student of economics would tell you - for two main reasons: First because resources in an economy are always scarce, and second because in an economy we always have to think about tomorrow.

The discussion on sustainability in our country did start a number of years ago when government had posed the question of the sustainability of the welfare system. Could we continue to afford to have the welfare system as it is structured today or does it need to be changed?

There were those who thought government was seeking to divert the public's attention by resorting to the proverbial red herring. There were those who could not be bothered about the welfare system because they felt that this was a problem of the future (thankfully these persons have not been entrusted with the governance of the country). Thus the discussion on this matter proceeded in fits and starts.

Now we are speaking of the need for sustainability across a whole spectrum of decisions. Moreover, the issue is no longer about the need for economic sustainability on its own, but on the need to balance economic sustainability with social sustainability and environmental sustainability.

Therefore we need to accept that the trade-offs that such a balance will require, will be more numerous and will involve more serious issues. This would require more sobriety when indulging in an economic debate.

The warning signals that I referred to in the first sentence of this contribution are coming from all sectors. We have had the statement by the British government about the good times being over.

We all read about the credit crunch in the UK, our major tourism source market, which will certainly force persons to cut back on their consumption. The increase in the price of oil is no longer a surprise; the only uncertainty is not whether it will go down or not, but at which point it will stop rising.

The upheaval in the currency market with the fall over a number of months in the value of the dollar and the sterling together with the fall in the value of equities has created a negative wealth effect. The increase in the price of cereals and foodstuffs in general is making people wonder whether they will be able to maintain their current standard of living. The thirst of China and India for foreign investment seems to be unabated, making people wonder in the Western Europe whether there will be any economic activity left in this part of the world.

The story goes on and on, but the message remains the same. In this scenario, can we expect to have sustainable growth rates in our economy in the future, similar to what we have experienced in the last years?

Thankfully, or thanks to government's correct policies, we have an economy that has proved to be resilient and that has performed well in the last years. We are, therefore, not at crisis point, like other countries are. We do not have current problem on our hands that requires immediate attention. On the other, had I believe that we have a potential problem that is we are facing a situation that is not, in essence, a problem, but could become one, if we do nothing about it.

When faced with a potential problem, the attitude of crossing the bridge when we come to it, is not appropriate. We need to adopt the approach of prevention is better than cure. This is where hard choices and decisiveness become critical. Recently the Governor of the Central Bank of Malta highlighted the fact that some five years ago our cost of labour increased without a corresponding increase in productivity; hence causing a loss in competitiveness for firms operating here. We seem to have weathered the adverse effects of this over the years, but the question that we need to ask is whether we continue to weather it in future, given the international economic scenario.

It simply does not make sense that organisations that represent the various economic, social and environmental interests in this country start bickering as to who paid for most of the burden in the past. Here we are talking about our future and the message that needs to be understood by all is that our task is to make our future sustainable and not our past.