A PM addicted to economic growth? - Tony Zammit Cutajar

While there is little doubt that economic growth is desirable and often commendable, it seems that our Prime Minister is slowly but surely becoming addicted to economic growth. It is now abundantly clear that according to him, increasing our gross domestic product (GDP) should be Malta’s prime strategic objective, notwithstanding the side effects this same growth might have on our present and future quality of life.

Politicians, normally not of socialist leaning, tell us that GDP must grow and must grow at all costs. This is because we are told that GDP growth is equivalent to human progress. It is not.

GDP measures all money-based activity but doesn’t distinguish if the activity is useful or destructive. Let me quote a simple hypothetical example. If you clean your own house and take care of your ageing parents, GDP is not affected. If, however, you hire a cleaner or send your parents to a nursing home, then you contribute to GDP. Any activity that contributes to an increase in GDP is therefore very warmly welcomed by our government.

The government covers many of its failures by hiding behind economic growth. No mention is made of the cost of this growth, nor is this cost analysed or properly debated. Our economic growth has enticed more than 50,000 foreigners to live and work on our tiny island. These people are undoubtedly contributing to our economy, but they have obviously put more strain on our general infrastructure and caused a disproportionate increase in the residential rents, which in many cases are no longer affordable by many Maltese.

I would think that many of these settlers also make use of a car to get around, and this too must help to exacerbate our very serious traffic problem.

We are propping up our economy by selling our soul (citizenship) to the world’s super-rich. Each passport sold nets the country more than €500,000, but are we taking account of the damage being done to our national reputation?

The National Statistics Office recently showed that the cash-for-passports programme was the single biggest contributor to Malta’s budget surplus last year. The €164 million raked in from the scheme turned what would have been a slight deficit into a €112 million surplus.

The few foreigners with whom I make contact all question the long-term wisdom of this initiative.

The government covers many of its failures by hiding behind economic growth. No mention is made of the cost of this growth

It is true that reputation is an intangible, but it does have a very significant value. Let us not forget the oft-quoted saying that it takes years to build a reputation but minutes to lose one.

Muscat calls on us to defend a tax regime that taxes us, Maltese citizens, at rates of up to 35 per cent of our (world) income, while the same regime provides the opportunity to overseas super-rich persons and companies to transfer their profits to Malta and pay tax at five per cent.

This activity is commonly referred to as our financial services sector. The practice is admittingly practised by a few other EU countries, but it is coming under increasing pressure in the European Parliament.

The jury is still out on whether Malta is a tax haven or not.

I would think that the single biggest contributor to our economic growth during the past few years has been the frenzy in the construction industry caused mainly by the government’s decision to allow high-rise buildings and other large developments. We seem to be building like there is no tomorrow.

Are we however taking account of the pollution and inconvenience being caused during the construction stage of these projects, the tremendous pressure on our existing infrastructure, the negative effect on traffic flows and the irreversible damage to our environment?

The government’s reply to all this can be summed up by the phrase coined during Bill Clinton’s electoral campaign: “It’s the economy, stupid.” This phrase emphasised the importance of the economy growing all the time.

This is what brings in the votes and it was proven at the last general election.

I believe we need the economy to grow, but this growth should be planned and sustainable, with due importance given to our country’s long-term interests rather than short-term gains.

Tony Zammit Cutajar is a retired businessman.

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