PL strategy: Mintoffian economics

The public has been clamouring for the Labour Party, and its key economic spokespersons, to go beyond criticising every single economic achievement made by our country and actually come up with some proposals, or a vision. We have so far been promised a safe Labour, but have been given no hints on the direction it intends to take.

It is becoming safer every day to say that Labour won’t work- Tonio Fenech

Finally, prospective Labour Economy Minister Edward Scicluna has spelled out his and Labour’s views on how our economics should be modelled. In an aptly titled article written in The Times (August 25) Scicluna suggests in no hidden terms that we should “recall Mintoffianeconomics”.

If this is a hint of how Labour sees economic growth and financial sustainability, things do not augur well. Mintoff’s key economic principles revolved around second-hand infrastructure to reduce costs, maintaining competitiveness not through increas­ed productivity but through frozen wages, controlling inflation through price controls, bulk buying and import substitution. Very few remember the days of computers being illegal “as they would take workers’ jobs” and going to buy chocolate and toothpaste from Sicily.

Infrastructural investment: There has not been one significant investment, made by this government in its recent history that has not been condemned by Labour. Whether it’s the new Delimara power station, which will provide a secure, steady supply of energy; whether it is about a new hospital, which offers a top class health service; whether it’s investment in our history and future, in terms of the developments in Valletta. Were it for Labour, these should have never taken place.

So what was Mintoffian economics? It was, to name a few, about a second-hand power station that burnt coal, a water production facility that failed to guarantee potable water on a daily basis to our families, a second-hand telephone system that anticipated social networking in putting a number of people on the same line.

Economic strategy: Labour has never acknowledged Malta’s success in transforming itself over the past 25 years in an innovative, forward-looking economy which has excelled in the fields of financial services, online gaming, the pharmaceutical industry, digital gaming and the rest. Labour either speaks about economic digression or else tries to lead one to believe that while the economy seemed to be growing, profit was being taken out of these shores, ignoring the significant Maltese participation in such business.

So what is Scicluna’s alternative? Mintoffianeconomics that sought to artificially and unsustainably create employment through the various ‘korpi dixxiplinati’ (thus negating workers even their basic right to strike), frozen wages and stuffing the unemployed within an immense public sector, at taxpayers’ expense; we are still bearing some of these costs today.

Economic freedom: Here again, every single economic liberalisation or privatisation process was met with strong objection by Labour. If we look at the growth of sectors such as telephony and communications, banking and other financial services, these are the results of precisely such processes. Mintoffian economics is about state control, where business is not given freedom to thrive and grow.

Fair competition: The inflation rate is the result of local and international market forces. Internationally, everyone, except the opposition, knows what is happening to energy prices, commodity prices and food prices. The latter are at a record high because of the shortages in the supply of grains.The government is not in the business of controlling prices but in ensuring fair competition.

However, the opposition is still fixated with controlling prices. Maybe they are hankering back to their time of price controls and the bulk buying system. Their arguments point towards that direction. In particular, at a specific conference, the concept of the government importing certain products was brought forward by none other than Joseph Muscat.

Scicluna concludes his admiration of Mintoff’s economic legacy by claiming that this strategy resulted in financial health. His conclusion is therefore that reducing investment is the way forward to further improving the sustainability of our financial resources.

Mintoffian economics meant not only a lack of infrastructural investment but no investment in key services, such as education and health.

A nation develops only as fast as the investment it is willing to undertake. We do not have one of the lowest unemployment rates in Europe by coincidence. This was possible because over the past years we have invested substantially in energy provision; in new roads; in upgraded industrial parks, in university and schools; in hospitals and health centres.

Surely, the thousands of jobs being created in ICT, financial services, gaming and ancillary sectors would have been impossible without the investment in education and training and in our nation’s communications system and worldwide connectivity.

This remains the way forward. We cannot expect the growing economic sectors to continue growing without further investment. This is the reasoning behind the Bio Malta Campus and the Aviation Park. These are attracting new foreign direct investment and new jobs.

We have experienced Mintoffian economics long enough to be able to understand its key objectives, but also its key results. If Muscat is admitting that this will be his guiding light, than truly, it is becoming safer every day to say that Labour won’t work.

Tonio Fenech is Minister of Finance and the Economy.