In today’s economic climate, discussion inevitably revolves around what concrete measures are being taken by world governments as also by our own to prop up the economy. In essence, the question being pondered is whether government should carry on pumping money into the economy and if so under what conditions and with what consequences.
Our government has rightly decided to place the perseverance of jobs as a top priority by assisting companies who are prepared to reinvest into the economy. This is a wise decision with far reaching economic and social consequences. Economic in so far as it will lead to an increased deficit, which will have to be paid back through increased taxation over the years; and social because it will help keep our social fabric in place.
Economics must be looked at as a science and not as a religion. Accordingly, all persons giving priority to control the deficit may not be fully aware of the social consequences if the unemployment rate is increased without any attempt on government’s part to curtail the spectre of increasing the persons on the dole.
While however accepting that foreign companies committed to investing in the manufacturing sector should rightly be helped, we would like to see a helping hand also in the tourism industry whereby persons committed to reinvesting are also helped out beyond the assistance so far given in the form of moratorium on bank repayment of loans. Hoteliers too are big employers and fall in employment in this sector and will also face dire consequences on standards and future prospects of the industry. We would encourage government to lend a helping hand in the long-term interests of the industry.
Government should also look into the pricing mechanism of Air Malta which while offering reduced prices in the winter months, shies away from offering sufficient competitive prices in the close to summer months. Accessibility to Malta has increased but even more seats are required to drive higher numbers and spenders to our country. The experience of low cost airlines has succeeded in drawing people to Malta who would never have come had they not taken advantage of the pricing of low cost which leads to bigger spending money at the destination end.
The economic situation must make government more cautious in the targets it is setting which are being refuted by world institutions. It is elementary that with lower growth, if any to be registered this year, there will be a fall in revenues of government both in the collection of income tax and VAT. This will have far reaching consequences on state finances - a lot of which are fixed in the form of wages and pensions. Buoyant talk such as the recession will only hit us slightly. It is true that the media has fanned far too much gloom and that we risked talking ourselves into a recession but the hard economic facts cannot be denied, our tourism and manufacturing orders are down. This is inevitable granted the fall in growth and declining economies worldwide.
Our top priority must be to keep high export levels as a result of the competitivity of our manufacturing base and maintain tourism earnings since these have an immediate multiplier effect. The way forward is to further control government costs by prioritising expenditure in favour of investment costs rather than spending of amounts with little return. Stipends are an investment if they encourage more students to further their education, but there is much waste of financial resources in government spending and far too many people not being employed productively.
The productivity levels in government service have long been a bone of contention in the country as this discriminates against the private sector where job security is less guaranteed. In today’s climate it seems absurd that public sector employees carry on benefiting from index link rises while their counterparts in the private sector show restraint in the name of keeping their jobs while also being prepared to work a lower day week to preserve their jobs.
Government should also look critically at certain electoral promises made which unnecessarily have increased the strain on government finances. One such promise is the capricious granting of children’s allowance to all children irrespective of the financial state of the family. Government needs to look critically at all its expenditure, spend on things that give added value and avoid all waste.