EDITORIAL | Wednesday, 27 February 2008

A pragmatic manifesto

The Labour Party manifesto contains a number of business-friendly proposals worth analysis. They are not ideologically driven and show a far different mind set in the party’s approach to business than in years gone by.
Pragmatism seems to be the order of the day with the realisation that growth can only be achieved in a thriving business climate allowing business to get on with the job with the one stressed proviso that growth and social protection should go hand in hand.
Overriding consideration and importance is being given to the country remaining competitive and attracting more foreign investment. These are the pillars for growth to materialise and the party is envisaging growth to be between the four and six per cent mark.
Nonetheless it is doubtful whether these growth projections may materialise in view of the global economic climate. The European Commission last week lowered the growth forecast for Eurozone and the IMF has indicated that world economic growth is expected to slow in 2008.
With this in mind the MLP needs to understand the consequences of not reaching the growth figures it is projecting. Many of the fiscal expansionary proposals being made will not be affordable if growth does not take off. Government cannot be starved of funds through tax cuts or increased subsidies and at the same time keep financing public expenditure as it stands today.
The areas where the party is seeing possibilities of growth include manufacturing, IT, financial services, medical services, maritime services and tourism. Another prime mover for growth is the MLP’s suggestion to invest in the regeneration of the Grand Harbour area.
A major policy plank remains the control of the cost of living even though the possibilty of government intervention is very limited in an open market economy.
The market is what it is. Where controls can be exercised is in government-induced costs that contribute to jacking up the cost of living and in closed sectors of the economy where competition does not lead to lower prices.
Once again, like the PN, Labour is banking on growth being primarily pushed up through domestic consumption. By leaving more money in people’s pockets the wheel will continue to spin.
But it is worth pointing out that increased disposable income can aggravate the trade balance because consumption is bound to focus on imported goods.
The growth the country really needs for sustainability is that fuelled by foreign investment. Euro zone entry has given the country a stamp of credibility but it is clear that our country still has a long road to travel.
We are behind in respect of women’s participation in the labour market, illiteracy, research and development and education. In all these sectors our country needs an injection. Labour realises this and addresses these issues in its electoral programme.
Other proposals include help for companies wanting to set up shop in Malta and companies that encounter choppy waters. These proposals need to be beefed up to ensure that good money does not end up chasing lame ducks as was done in the past.
The manifesto includes an interesting proposal on the functioning of the MCESD allowing its chairman to attend cabinet meetings. This will elevate the status of the organisation and coordinate better the relationship between government and this organisation.
There is also a commitment to take better care of public finances by setting up a task force. This may be a welcome innovation but surely beefing up the Public Accounts Committee could be a surer way of making government accountable to parliament, which ultimately should be the custodian of the public purse.
The target being projected for tourist arrival figures, if achieved are a welcome boost to the economy but again economic realities especially the weakening of the Sterling may make this target difficult to achieve. Certainly however there is the commitment to place tourism on a stronger footing and hopefully in this sector also there will be the will to build on the good foundations already in place.
It is encouraging to note that many of the proposals in the Labour manifesto are in synch with the policies of the present administration leading to the belief that a change of government will ensure a sense of continuity in the economic field.
It is imperative however that certain amount of loose talk is controlled as it could do damage to our investment prospects. All talk of renegotiating the European package must be ended. Even if the discourse was originally intended as part of the MLP’s strategy to get Malta Shipyards out of trouble, the very word ‘re-negotiation’ is not correct.
If anything a Labour government can ‘discuss’ with the EU but ultimately it is a Community decision that will determine how, what and whether Malta Shipyards will continue to benefit from subsidies after 2008.
The mind set, which this newspaper favours, is a determination of either party which wins the next election to carry on strengthening business, investment and jobs in the country. All business proposals made with the intention of increasing a business-friendly environment are most welcome.