In 2013, ‘Labour Won’t Work’ was the buzz slogan used by the then Nationalist Party in government during the general election campaign to try to instigate an element of fear among those people opting for a change in government.
Apart from the fact that the slogan was a copy-and-paste exercise from Margaret Thatcher’s 1979 campaign, the PN showed that it lacked a basic understanding of what a party in government should do to ensure steady economic growth that benefits everyone, not just those at the top.
Fast forward to 2018, and the economic situation in Malta is starkly different from the one that we were handed in 2013. The government has managed to drive down debt to GDP to record lows, and focused primarily on utilising the surplus in the budget, which has been also registered in the current account over the past four years, to tackle social and other challenges that were emerging as a result of this buoyant economic growth.
Additionally, addressing both budgetary deficits and overall government debt when the sun is shining shows the government’s commitment and drive towards achieving a resilient and sustainable economy.
One can also add that poverty has been on the decrease and is declining at a fast rate in comparison to the EU average and the employment rate is at unprecedented levels. Productive capacity and residential spaces are also being created at a strong pace in order to make sure that we meet future demands. These issues are all the result of healthy habits, which we must keep up if we want to keep on growing and exceeding expectations.
However, in writing this article, it is not my intention to paint a pretty picture of our daily endeavours. Rather, I believe that we should focus on the sustainability of our economic model in order to make sure that we cater for the challenges that we will surely face in the future.
Our increased activity is also dependent on labour mobility, and thus the management of economic and social consequences is another key challenge
Our strong economic growth is a key factor that is currently underpinning the fiscal surplus. A fiscal balance across an economic downturn will be a key test for our future sustainability. Meanwhile, we also face challenges when it comes to dependency on vulnerable services and exports, and as a result, we will likely face a future challenge when it comes to transforming temporary support mechanisms into permanent competitiveness advantages.
Activity has increased to meet the current surge in demand and ensure ongoing activity from the created capacity will be the main challenge.
Increased activity has resulted in the increase in house prices at a faster pace than the EU average over the past three years, and per capita waste generation continues to increase.
Our increased activity is also dependent on labour mobility, and thus the management of economic and social consequences is another key challenge.
On another note, discrepancies in productivity between sectors are also a risk, as a two-speed economy creates isolation risks between workers and businesses, denting economic and social development.
Sufficient negatively correlated sectors is key to overcoming smallness and building distinctiveness-based competitiveness with sufficient diversification. Developing input-output and multiplier relationships between businesses is key, and the sustainability of business investment in respect of environmental, human and other key resources must be ensured.
We must also make the best possible use of Malta’s distinctive assets.
Overall, we must ensure that our economy is investing to enhance productivity, income and the quality of life of our citizens. This has been this government’s challenge from day one, and I believe that as things stand we are achieving our goal.
Success however, is not something you achieve once. Success must be continuous, and this is why we are resolute in addressing the challenges that we will surely face in the coming years.
Aaron Farrugia is Parliamentary Secretary for EU Funds and Social Dialogue.