Towards a sustainable economy - Martin Cauchi Inglott
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Towards a sustainable economy - Martin Cauchi Inglott

We have become victims of our own success. Malta feels as if it is bursting at its seams. Our obsession with growth at all costs has become a cancer that is consuming all aspects of our lives, our heritage and our environment, while offering only vague notions of benefit in return.

We may have managed record GDP growth but is this wealth really being enjoyed by the whole population? Most growth has been captured by increased profits, not salaries. The share of income paid to workers has decreased from 51.1 per cent in 2012 to 46.3 per cent in 2017.

Clearly, for many people, the current economic model simply means more traffic, higher rents, smaller residences, more construction and less countryside.

But back to the big picture. The government has managed record levels of economic growth. Between 2013 and 2017, GDP has grown by 35 per cent, topping the charts in the EU with the exception of Ireland. Record tourism numbers and growth in the iGaming and financial services sectors spearheaded the growth.

But growth in these sectors has induced a greater demand for housing and office space, and Malta has experienced a construction boom. Ironically, growth in the construction sector has been fuelled by immigration which in itself has reinforced the need for yet more housing space – putting further strain on Malta’s ill-equipped infrastructure.

The National Statistics Office estimates that from 2013 to 2017, our population increased by about 50,000, roughly 30,000 of them not of Maltese citizenry. Hence our growth needs also to be spread across significantly more persons.

On top of this, much of the profit generated by iGaming and financial services passes oversees and only the portion left in Malta creates benefit to us. The same goes for other foreign-owned firms such as Vitals, Crane Currency and our power generation companies.

Our government’s solution to the pressures on our infrastructure is more building to increase capacity. Victims of our own success, we are now facing a dire need to embark on the massive expansion and modernisation of every aspect of our infrastructure, from roads and housing to waste management and water production. Funding these initiatives entails that, rather than replenishing our coffers, we will instead maintain or increase our debt levels – saddling our economy with yet more pressure to grow further still.

It is as if economic growth has become the raison d’etre for our entire society – a self-induced cancer that consumes our lives, our society, our cultural heritage and our environment. Is this quest for the never-ending expansion worth it? As a society, are we really benefitting more than we are sacrificing? If so, are the spoils being shared equitably?

It is as if economic growth has become the raison d’être for our entire society

Partit Demokratiku (PD) contends that it is the workers who most suffer the costs of our current resource-intensive economic model. They are the ones suffering the smog and construction dust, the crowded beaches and lack of parks and countryside, the hospital waiting lists, ever-growing traffic congestion and sky-high rents. The oligarchs, enjoying excessive returns on their wealth, are escaping the ill-effects through their luxury yachts, skiing trips and private healthcare.

Much in contrast to uncontrolled growth, PD believes that in a small and dense country, economic growth should focus on productivity gains. This entails focusing on our comparative advantages – such as our natural, cultural and historic heritage, our geographic location, our linguistic heritage, and most importantly our able and skilled workforce.

If we protect and embellish our environment and focus on making Malta a great place to live and work, we will not only benefit citizens but also make it easier to attract and maintain international specialist talent in key sectors. This is vital for us to compete as a regional centre of excellence in various sectors of the creative and knowledge economy.

In our vision, Malta can become a Mediterranean hub for digital entrepreneurs and researchers who choose the island because it is a great place to live, not just for tax reasons. We believe that Malta’s future in a globalised knowledge-based world is brighter than ever. Indeed in today’s economy, Malta is no longer hamstrung by our lack of natural resources and small size and there is absolutely no reason why the next Skype should not come out of Malta!

With the right investments in education, environment, beautification, culture and infrastructure, ample avenues for enhanced economic activity can be sustained and the future of our tourism industry would be sustained, enabling it to shift to higher spending tourists.

PD rejects the idea that chasing GDP growth should be the government’s top priority. Instead, it views the economy as a means to provide citizens with a prosperous and tranquil life. We advocate moving towards an economy based on leveraging and enhancing the things that we all love about Malta – our quality of life, cultural and historic assets, geographic location, and our hard-working and skilled workforce. 

There are ample avenues for sustainable high value-added business in Malta. In a globalised knowledge-based economy fuelled by creativity and innovation, not material resources, we are no longer hamstrung by our lack of natural resources and small size.

For us at PD, a sustainable economy is based on values not volumes, and economic growth means doing more with less, not just doing more.

Martin Cauchi Inglott is general secretary of the Democratic Party.

This is a Times of Malta print opinion piece

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