Nothing seems to have been learned from the 2007 SmartCity project that promised to create thousands of high-quality IT jobs but which turned out, in reality, to be a massive property development project.
The same can be said for the American University of Malta project that, under former prime minister Joseph Muscat, was sold as a vision for making Malta a centre of international educational excellence but turned out to be just a public land-grabbing exercise.
These are two examples of the way political administrations often undertake marketing exercises which have a shaky basis in reality. They often do so in their annual budgets to curry favour with the electorate.
Annual budgets should be about short-term plans to manage public finances in the context of broader economic strategies which, in turn, define the long-term direction of the country towards growth and prosperity. The government and the opposition both risk suffering from marketing myopia when, instead, they adopt a short-sighted approach to economic planning by ignoring the gap between colourful economic visions and hard-nosed realities.
The 2023 Budget has shown how important it is for both the Labour and Nationalist parties to move from fanciful visions to grounded reality. Admittedly, both political parties finally admit that the present economic model needs to be re-engineered as its sustainability has long shown structural weaknesses.
The PN’s pre-budget document argues that the government should “re-invent and transform the existing principal sectors to drive out more value-added benefits and, at the same time, create new economic sectors”. There is no shortage of what higher added value activities the PN has in mind. It even attempts to give credibility to its vision by pinning figures on how it would create real jobs and enhanced salaries.
The PN document states: “The proposed economic model aims to increase government income by €42.6 billion, through the creation of 32,500 new valued added jobs over a period of eight years commanding an average salary of €43,000.” It is hard to detect any rigorous economic modelling that lies behind these optimistic projections.
Robert Abela was no more convincing in how he would re-engineer the economic model. In his speech in parliament, he argued: “It is true that the economy now needs to be changed to be more focused and targeted, mostly because of a shortage of labour and poaching of workers.”
He attacked the credibility of opposition leader Bernard Grech, saying: “The pre-budget document even said the PN government would increase tax revenue by (as opposed to) €22.6 billion. This is eight times the current revenue. Bernard Grech had said he would present a vision for the future and then did not present a single proposal.”
Yet, neither of the parties has given any meaningful explanation of how they will change the economic model to make it sustainable. Perhaps even more worryingly, they failed to acknowledge the structural weaknesses that need to be addressed and how this can be done.
The present economic realities are characterised by the mass importation of labour, an endemic low educational achievement, a dominant construction industry that has spoiled the urban and rural environment and sluggish productivity growth. P
olicymakers of both political parties must come up with a solid new path to the future by proposing radical reforms to address these structural weaknesses.
Rather than selling dreams and delivering mediocrity, our political leaders need to analyse what needs to be changed to guarantee sustainable economic growth and real prosperity for all.