Reading through the Country Report Malta 2016 issued by the European Commission, the verdict reads stark clear: the economy is booming.
Economic performance is robust and exhibiting substantial resilience to challenges on a macroeconomic scale.
GDP in 2015 exceeded the pre-2009 crisis peak. The new power station project coupled to the finalisation of EU-funded projects have boosted investment leading up to 2015, the economy has expanded and basing on figures of the Winter European Economic Forecast a 5.4 per cent growth in the final quarter of 2015 should level to 3.9 per cent in 2016 followed by a projected 3.4 per cent in 2017.
In terms of new jobs, Malta fared better in the post-crisis period than during the boom until 2008. Government has catalysed this through policies that enabled more women to join the workforce, notwithstanding the fact that this still remains relatively untapped potential in the labour market.
Comprehensive childcare policies have certainly played a crucial role but, unless more flexible working regimes are developed – albeit at a cost – women participation in the world of work shall remain hindered.
Malta has experienced strong revenue growth that has served to lower government deficit. Expenditure, on the other hand, which is mostly healthcare- and pensions-related remains an obvious challenge together with inefficiency issues with the public administration and the research and development sector judiciously described as ‘nascent’.
The modern era requires its own economic model upon which to operate
The Commission says education and training outcomes remain below targets and this affects the quality of the general workforce. Subsequent governments have invested thoroughly in education and this is often exemplified by the building of schools and the provision of IT equipment and, very unwisely so, the framing – perhaps perceived – of laptop computers and interactive whiteboards as the be-all and end-all to an effective education.
What really matters in class is the quality interaction between teachers and the younger generations, the nurturing of an attitude of respect and, on the educators’ side, the ability to retain the highest standards of communication with their students irrespective of artificial electronic media.
Poverty, or the risk of it, has increased between 2008 and 2013 especially among children and those with low skills.
The commission seems satisfied that such matters are being addressed. From an ideological stance this raises a fundamental issue: about the redistribution of wealth.
Economic growth is the obvious priority for all governments irrespective of political creed. The sustainability of social welfare systems is already a challenge let alone underweak or negative economic growth scenarios that would exacerbate poverty.
However, what distinguishes a truly successful government is its ability to implement policies that truly ensure the equitable redistribution of wealth across all segments of society. Economic growth alone is never the guarantee of success; in its worst forms, economic growth can be the enriching of the rich and for the poor to get poorer.
It is certainly not the case with Maltese society nowadays.
This legislature shall be remembered for the one-time initiative by government to revamp and modernise the energy sector. The last time this has happened was in 1987 with the onset of the Nationalist administration. As of then, with Labour’s ascension to power in March 2013 the energy sector was, and still is, a priority.
It is far more complex now when apart from the compound issue of energy infrastructure there is the need to ensure a diversification of the national energy mix.
Controversy or not, gas-firing deadline or not, Malta is in the right direction.
Government has wasted no time to engage with the European Commission to assess the feasibility of connecting Malta to a natural gas pipeline that should, eventually, result in the next transformative project upon which future economic growth shall be sustained.
The transport sector remains a tough nut to crack. The commission words its opinion carefully on the lines of the ‘high economic costs caused by significant road traffic congestion’. We all know what it means.
None or very few of us have the luxury to wake up late in the reassurance that we shall be at work on time. Parents know the stress they endure with their children having to wake up very early to prepare for school. What we seem to forget is that all this carries an economic cost in the same way that there is a huge price tag – that translates into health costs – related to the huge volumes of car exhaust emissions released to the air from urban traffic. There seems to be no immediate solution.
As political parties move closer to the centre ditching the traditional ideological conceptions of ‘left’ and ‘right’, it appears that we grow ever-more convinced about the hidden hand of the market and the wonders it supposedly can do.
Trickle-down economics is the order of the day and the very notion that government should intervene in any way sounds anathema to some, mediocre to others. Clause IV – the common ownership of the means of production, distribution and exchange – is a relic from the past. It has been forgotten, unthinkable, if not a metaphorical mortal sin to consider nationalisation of almost anything these days.
As if the State has to stay away from everything under the sun and leave everyone exclusively to his or her own devices, at the mercy of the ‘hidden hand’ on the assumption that markets can ever be perfectly ‘free’ and operate equitably to the benefit of one and all.
The global recession has shown that not only distortions can happen but they can be great, affecting the lives of millions. As with the missing price tags of environmental goods and services.
The modern era requires its own economic model upon which to operate. It does not mean the State should be laid back and abdicate from its moral obligation to intervene and correct, when necessary, a misbehaving ‘hidden hand’.
Quality education from primary to tertiary, the national health service, and adequate pensions, all of which are not ‘free’ but sustained through proper taxation regimes, are all essential ingredients of reverberating democracies.
Alan Pulis specialises in environmental management.