The risks of playing catch up

The risks of playing catch up

When Malta joined the EU in 2004, many had the reasonable expectation that thanks to this political development, the country’s economy, physical infrastructure, the public health system, education standards and social care would improve to catch up with those of the wealthier Member States. As far as economic growth is concerned Malta’s per capita GDP is today almost at par with the EU average.

The same, however, cannot be said about development in other areas that are arguably just as important to people’s lives. Recently, business leaders, ecologists and economists have spelt out the likely effects of overdevelopment on the physical and social infrastructure of the country.

Yet, the government does not seem to consider the risks of this ‘catching-up’ mania as a priority that needs to be managed carefully. The Prime Minister keeps repeating the mantra that he wants Malta ‘to be the best in Europe’. We may be catching up economically with some of the more prosperous Member States, but the cost of doing so is often ignored.

The first risk that overdevelopment creates is an economic one. Malta’s economic growth in the last few years was mainly the result of massive direct foreign investment in e-gaming and financial services that keep growing mostly thanks to a generous tax regime, light-touch oversight of regulation, and an influx of foreign workers with specialised skills that are scarce among local graduates. Malta is also benefiting from a worldwide boom in tourism brought about by the growth of low-cost travel.

This is not organic economic growth but rather opportunistic exploitation of circumstances that favour specific economic activities which may not prove to be sustainable in the long term. The over 43,000 foreign workers that are supporting this growth are of course paying taxes, renting or buying property, and spending money on living expenses. The economic knock-on effect continues to stoke demand for more services while it fills the government’s coffers.

A second high cost that is not being discussed openly enough by the government is that of the physical infrastructure. The almost continuous construction boom is creating massive pressure on the services infrastructure. One shudders to think what is likely to happen to our drainage, water and electricity infrastructure in densely built-up areas like Buġibba, St Julian’s and Sliema as more tower blocks are allowed to be built by the Planning Authority.

We already have a massive construction waste disposal problem that the government is naively hoping to resolve by filling in old quarries. Where will the millions of cubic metres of stone and rock be dumped from all the major projects in the pipeline, to say nothing of the Gozo tunnel if it ever materialises?

A third cost that is being paid by the most vulnerable in our community is of a social nature. Many first-time buyers are finding it difficult to get on the first step of the property ladder as foreign buyers are crowding out locals even at the lower end of the property market. The situation is even worse for vulnerable families that can no longer afford to rent decent accommodation and cannot afford to wait for the social housing developments that the government is promising.

Another cost is in our health and education infrastructure. Our free health system is creaking under the pressure of an increase in population, an ageing profile of the local community, pressures from foreign works and irregular immigrants, and decades of under-investment in the sector. Demand for placements in private schools by foreign workers has in some cases left limited options for local parents who prefer a private education for their children.

Put simply, poorly planned economic growth is not sustainable and creates immense pressure on the physical and social infrastructure of the country. The first victim of the drive to catch up is likely to be the tourism industry. While overtourism is not a unique challenge to Malta, other countries seem to be tackling the issue more intelligently. For instance, the Greek island of Santorini now limits cruise ship visitors to 8,000 each day, down from 12,000 in previous years. Isn’t it time to restrict the number of tourists visiting some unique historical sites like Mdina?

The government should abandon its condescending attitude and listen to the advice of experts in economic, social, physical infrastructure and environmental fields. The Prime Minister also needs to look beyond his current term of office and commit his government to a visionary strategy for Maltese society.

As a society, we cannot afford to jettison our long-term prosperity for short-term economic gain.

This is a Times of Malta print editorial

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