As we see light at the end of the coronavirus tunnel, thanks to the vaccine, this country needs to start planning for the future. We need to work harder to ensure we do not get further spikes in the number of cases in the future. We also need to take steps to provide businesses and families with the support they need today and in the immediate future.
However, we also need to think of what happens afterwards. This explains the title of this week’s contribution. We know that the world will not be the same again once the coronavirus is brought under control and so there is no benefit to be gained by hankering about the past.
To the coronavirus, we also need to add the impact of Brexit. This is still an unknown quantity as businesses and persons living in the UK are starting to find out. The proverbial dust will need a couple of years to settle on Brexit, with all the risks that it entails. We also need to add a new administration in the US, which will probably take a different view from the previous one, on how it wants to conduct its economic relations with other countries.
Therefore, as a country, we will be facing a totally different scenario, which will pose challenges to our economy and which we need to be prepared for. I believe we will need to think of starting afresh. This is not a situation that should scare us as we have been in this position before, where we have had to start afresh.
Certain fundamentals in our economy remain fairly constant. Our economic growth will always be highly dependent on foreign markets and foreign investment. In this regard, the key activities of our economy will remain an export-based manufacturing sector, tourism, and financial and other services. Demand for other activities is derived from these key activities.
We can no longer have a country that is willing to subject itself to the diktats of the profit motive of the few
The government has in the last years been operating at a surplus. As such, it should not hold back from supporting fully businesses and families to recover from the negative economic impact of the coronavirus. We need to keep in mind that a significant part of the business sector has increased its indebtedness during 2020 as a result of the coronavirus, which means that government support is even more essential. The budget deficit should not be seen as a limiting factor as the primary aim should be to set the economy once more on a growth path.
We should not be aiming at growth rates at around six per cent as experience has shown that this is not a sustainable growth rate. Moreover, growth should not be tied to increasing employment but by moving the economy up the value-added chain.
Although the pandemic is the number one issue in people’s minds, they haven’t forgotten about the need for a sustainable economic model for our country. A model that does not continue to harm the environment; a model that does nor fuel speculation; a model that does not benefit only the few but the whole of the population; a model that places the human person at the centre of the economy.
In order to start afresh, there will need to be a reassessment where the competitive advantage of businesses operating in Malta lies. Up to a certain extent, the tax regime has always represented an essential aspect of that competitive advantage.
It will need to remain so, while fully respecting rules of corporate governance and anti-money laundering. In addition to a favourable tax regime, we need to understand what elements in our economy adds value to the business sector, especially since we have no natural resources and the size of the market is miniscule.
Our future economy policy will need to be supported by two developments. The first is the change in the Constitution. The independence of the judiciary and the regulatory authorities need to be strengthened, while there needs to be a clear separation between the legislative arm and the executive arm of government.
The second element is the need to have an economy that places the human person at the focal point. The business sector is to contribute to the common good and good governance. We can no longer have a country that is willing to subject itself to the diktats of the profit motive of the few. To do this, we need to develop a new social partnership with the effective participation of civil society; and this is everyone’s job, not just the government’s
The new global scenario is requiring us to start afresh.