For more than a decade, the Labour administration has taken pride in the belief that Malta was performing much better than most EU member states, as its economic growth is often more significant than that of larger countries. However, the government has persistently failed to acknowledge the cost of this growth on the long-term well-being of Maltese society.
The economic model adopted by former prime minister Joseph Muscat was based on the mass importation of high-skilled and low-skilled labour from third countries, promoting a low taxation regime to attract investment, selling European citizenship, a laissez-faire attitude to enforcement of civic and environmental regulations, and the bloating of the construction industry.
This has led to a race to the bottom where the country outperformed its competitors at the cost of inflicting severe pain on the community whose quality of life has nosedived in the last decade.
Despite repeated warnings on the unsustainability of this model, the government persists in refusing to reform the Muscat model. It fears that this may lead to painful adjustment to put the economy on a more sustainable foundation. The Chamber of Commerce again warned the government that the economy is nosediving as prosperity cannot be measured solely by GDP growth.
In a critical statement, the chamber expressed “serious concern” over the lack of foresight, poor planning, transparency, and weak enforcement. It said the country is in a “nosedive, and we persist in denial, failing to read the signs of the times”.
The threats to the sustainability of the current economic model are well documented and, in many cases, becoming more dangerous.
The collapse of the electricity supply infrastructure shows the lack of preparedness of policymakers to ensure that households and businesses have a reliable energy supply at all times. Investment to upgrade the electricity, water, and waste disposal infrastructure will cost several millions.
The continued importation of foreign (exploited) workers to support low-added value economic activities is today more than ever unsustainable.
The tourism industry, for instance, remains heavily dependent on them to serve the millions of low-spending visitors.
Taxpayers indirectly subsidise mass tourism through the government’s policy to keep energy prices at a level that does not reflect the actual market costs.
The happy talk of policymakers on promoting quality tourism sounds hollow. You simply cannot have five-star tourism in a one-star environment so let’s stop trying to fool ourselves.
The chamber correctly argues that basing economic growth on increased production rather than improved productivity is fallacious.
Still, the government gives the impression that it disagrees on what must be done to make the economy more sustainable.
It ignores the challenges posed by an ageing population, endemic underperformance in the education system, traffic gridlock, building sites mushrooming in every town and village, public services infrastructure that is creaking as a result of bad planning and maintenance, and a general atmosphere of shabbiness and lack of cleanliness in most places.
The government must heed the advice of the chamber and other non-political stakeholders clamouring for a change in direction.
The voice of ordinary people who feel that their quality of life is steadily deteriorating must be heard in a democracy that believes in fairness and the promotion of the common good.
Persisting in short-termism will be our downfall.