While annual government budgets are short-term business plans for the administration of the country, they are also a link in a strategic plan that should cater for the country’s long-term prosperity. The scenario behind this year’s Budget is one of good economic growth, low unemployment and encouraging economic activity in most sectors. This is the ideal time to tackle slow-burning issues that remain inadequately addressed at present.
It will be dangerous to assume that the present strong rate of growth is sustainable in the long term. The growth of certain economic activities like electronic gaming and financial services, as well as property development, may slow down in the medium term as a result of developments we may have little control over, like tax harmonisation in the EU and a natural slowdown in speculative property development. So a first priority for the Minister of Finance should be a diversification plan that will see the Maltese economy less dependent on a limited number of industries that are mainly attracted by our favourable tax incentives.
The inefficiency of the transport and logistics infrastructure is another priority identified in the EY attractiveness survey. The concerns about our chaotic traffic system is becoming a major concern that could affect not only local users of the system but also tourists. Speeding up the improvements to our transport system is crucially important to sustain new investment.
The EY attractiveness report also highlights the importance of more effective investment in education to attract new investment. We need to move on from photo opportunities where ministers distribute tablet computers to pupils to a soul-searching exercise which will help us develop a plan that will see more students studying sciences, engaging in R&D and choosing the tough courses that lead to qualifications that the country needs to move up the productivity ladder.
The financial crisis of 2008 has increased the disparity in earnings between those who have well-paid jobs and others who struggle to survive in low-paid employment. In the present climate of economic growth the government needs to take care of those who cannot take care of themselves because they come from a deprived background.
Those who are struggling to get on the property ladder also need a helping hand to provide the first home for their family. This is the first step to build the foundations of a fair society. The benefits of low oil prices should also translate into lower electricity and fuel tariffs for businesses as well as for individuals.
With an increasingly ageing population and a public health system that is underfunded, now is the time to create fiscal incentives for those who want to take up a health insurance cover for their families.
As the next general election approaches, it is important that the Budget exercise is not one that distributes goodies to entice the electorate to treat this administration kindly in the polls.
The country needs to know this administration’s plans for the future of our natural environment as the increasing urbanisation of the island is perceived by many as a threat to their quality of life as well as to long-term sustainable economic prosperity.
Short-term speculative projects may create the illusion of prosperity, but they may also destroy the delicate and sustainable balance that a small over-populated island needs to remain attractive both for the locals who live here and those who pay to spend their holidays in Malta.