Capturing the mood

The news on last Wednesday's papers was that the government and the trade unions were moving close to an agreement on the issue of the water and electricity bills. This newspaper described the mood of Gejtu Vella, secretary general of the Union Ħaddiema Magħqudin, as "jubilant", as he spoke of this development at a Conference on climate change organised by the same union. What I understood between the lines was that Mr Vella was saying this issue is behind us and let us look forward to the future, which is full of challenges.

This may sound like a paid advert of Gejtu Vella; it is not, but if I understood Mr Vella well, I believe he captured the mood prevalent in the country.

It is only those living in cuckoo land who believe that the water and electricity rates had to stay as they were. Admittedly there were also those who believed that they should go down, but in general there was agreement that given the price of oil throughout this year, the water and electricity rates had to reflect today's realities.

Moreover, we had to make sure that the rates were a deterrent against waste and at a level where those that could afford the luxuries of life, had to pay more. The disagreement was more a question of timing, a question of by much the rates had to increase, and a question of whether or not one should have a stepped approach.

Once some form of agreement is being reached on these aspects, we need to look forward. Let us face it we have had a budget, the contents of which were overshadowed by the rates issue. And the economic challenges that we are expected to face as a country in the coming months are much bigger than the rates issue to the extent that the rates issue may seem like a distraction. This explains my statement about the mood prevalent in the country. We want to get our teeth into these challenges to make sure that employment levels remain high and the economy keeps on growing.

Successive Nationalist governments over the last 21 years (with a brief interlude of two years in 1996 to 998) have consistently managed to capture the economic mood of the country. Our economy was crying out loud for fresh air in the mid 1980s because it was being asphyxiated through state intervention. The government elected in 1987 carried out a policy of liberalisation in the country, which created jobs and wealth and generated well-being. Ten years later the economy cried out loud for a vision that created confidence, which the government encapsulated in EU membership and privatisation of certain state controlled assets. This not only generated confidence but it also gave our country its rightful place in the international economy.

Another 10-year jump, and the call was for a better stewardship of the economy. The government responded through a policy of fiscal prudence such that the deficit in the public finances was reined in to sustainable levels and by adopting the euro as our national currency. We could recognise the benefits of these policies in the last weeks and months as we moved from one crisis to another in the international economy.

We could withstand the onslaught of the price of oil in the first months of this year thanks to the policy of fiscal prudence. We could then withstand the onslaught of the crisis of the financial markets thanks to the euro (the Malta lira would never have made it).

The call for better stewardship is developing into something else. The challenges that we are facing are generating a call for a greater sense of security.

The policies that gave our economy the fresh air it needed are no longer relevant today. In any case we take them for granted as everyone believes that there is no turning back. It is the same case with the question of vision and stewardship.

People believe that EU membership, fiscal prudence and adoption of the euro are irreversible.

Thus the risks that people are sensing from an economic point of view are more of a micro nature than of a macro nature. They have to do with the possible loss of economic wellbeing, such as coping with inflation and rising prices, coping with a possible reduction in income, coping with a possible loss of employment, coping with a diminution of one's wealth.

People want to feel secure that everything possible is being done such that these things do not happen to them.

I believe that this is the mood in the economy today and people are supportive of a competent government which inspires confidence that it is indeed capable of facing today's and tomorrow's challenges.