With the general election just a week away, it is very logical that the discussion on the economy and its future prospects centres on the "would be", "should be" and "might be", depending on which political party wins this election.
That this election is too close to call is known to everyone. That this election shall determine the future of the economy for generations to come is equally known to everyone. This election shall determine whether Malta joins the European Union at the next enlargement on May 1, 2004, or whether it stays out in the cold. It is an election that has to lead to stability.
The options that have been placed in front of the electorate predict both benefits and costs. The pro-EU camp (of which, I am happy to say, I am a member) sees net benefits for the economy if Malta were to join the EU; and costs if Malta were not to join the EU.
Equally, those against membership, although not knowing at all, in concrete terms what is the alternative, foresee benefits if Malta were to stay out of the EU and costs if Malta were to join the EU. For this reason, it is important to appreciate that one is not speaking of short-term but of long-term issues, hence the need to go for stability.
The core issue is whether the long-term prospects for the Maltese economy are better if Malta were to join the EU or if Malta were to stay out. The fundamental factors to this issue are whether we would have more economic stability with Malta being a member of the EU or not, whether there would be more economic certainty; whether the legislative process would be more transparent; whether there would be more social and political stability that would in turn support economic stability; whether there would be more business and consumer confidence; whether business would be allowed to prosper irrespective of which political party is in power.
The answer is a definite yes; the long- term prospects for the Maltese economy are better if Malta were to become a member of the EU.
On the other hand, staying out of the EU would mean less economic stability, more uncertainty, a less transparent legislative process, less social and political stability, less business and consumer confidence, less opportunities for the business sector to prosper and generate wealth and employment and a greater dependence on the government of the day.
The option of staying out of the EU, irrespective of how it is called, is fraught with short-termism, which brings about instability and uncertainty. This is because it cannot be given any concrete parameters. This is why its proponents talk of flexibility.
In essence, flexibility is something positive to overcome short-term difficulties, but it spells disaster when it comes to long-term objectives. Flexibility is a quality one needs to steer away from certain adverse events, while remaining on course to meet the long-term objective. However, the option of staying out of the EU is placing flexibility as the long-term objective.
So here is the paradox of this general election. We are aware that we have to take a decision that has long-term implications for our economy and yet one of the options we are provided with (the non-membership option) is very short term in its approach. We know what it does not offer (non-membership of the EU), but we do not know what it really offers in concrete terms. We know it would mean throwing away Lm81 million that are expected to be received from the EU during the first three years of membership, but we do not know what will replace them.
Even the electoral promises that are coming with this option are very short-term. The epitome of this short-termism is the two months tax rebate that is being offered. It is so short term that it was not even mentioned in the electoral manifesto of the Malta Labour Party.
And what happens after these two months? Does anyone really believe that such a tax rebate would produce some medium-term (forget the long-term) economic boom?
It would actually weaken the economy because the government would have to make up for the shortfall in revenue through some other means (presumably future taxation), while if there is an increase in consumption, this is likely to lead to an increase in imports thereby worsening our balance of payments.
We have a one-time opportunity to do away with proposals that might bring some short term gains that would have to be paid for at a later stage. We have already been through enough of these proposals, like wholesale employment within the public sector and putting barriers to international trade, as had happened in the 1970s and 1980s. They are at the basis of the economic problems that our country is facing today.
We should opt for stability and that option is only possible with a government that will lead the country into the EU next year.