Improving the economic well being of the middle class is perhaps the biggest challenge facing every country in the European Union. Last week I described the situation of a particular Maltese employee who had effectively lost about one month of his net annual earnings due to the measures introduced in the budget and throughout the year. The most noteworthy of these were the possible loss of four days’ leave, the price hikes in electricity, kerosene and diesel, the increase in fares of public transport and the air travel levy. I expressed the feeling that the economic visions of both the PN and the MLP provided little respite to a middle class that was caught up in a rat-race that required them to work longer and harder while experiencing a steady drop in disposable income. The purpose of this article is to convey some elements of the Green Party’s economic vision – a vision that will allow Martin a way out and/or up from his current economic status. Three elements of our economic vision can be explained thus:

Education Reform – “Work smarter not harder”

The reality of many at the lower end of the middle class is that they get stuck in a vicious circle of debt, overtime and/or second jobs. In order to finance their homes, educate their children and meet other living expenses that are continually spiralling upwards, too many people are resorting to a working week of 60-70 hours. The not-too-different economic visions of the PN government and MLP opposition promise to offer the middle class more-and-more work for what effectively is less-and-less pay, due to the progressive nature of taxes. A career of overtime is the bonanza that many have won from successive Nationalist governments. The crude reality is that the fixed salary pays the bills, while overtime/second job affords the luxuries, and in some cases (as was Martin’s) pays the house loan.

Apart from winning lotteries or inheriting a substantial amount of money, The Green Party believes that the only way in which the middle class can improve its economic situation is by improving the product they place on the market i.e. their skills and knowledge. If Martin is not given the opportunity to improve his skill base, then the only improvement in earning potential he is guaranteed is the pathetic cost-of-living-based-on-minimum-wage increment government doles out so-ceremoniously once every November.

While I can highly commend successive Nationalist governments for significantly improving post-secondary and tertiary education, we still need a quantum leap in the continuing vocational education sector. Martin needs to have the training opportunities and time availability to upgrade or diversify his skills. If education and training can improve his productivity (and consequently his remuneration) by a mere eight per cent then he has won back his “lost” month – otherwise he will just have to work eight per cent longer – more time taken out of the very little free time he has left at present. The Greens do not want Martin to have to work longer – we would like him to work smarter!

Property Reform – “A truly level playing field”

The exorbitant increase in the price of land (note that the real cost of construction has not changed much in the last decade) is an economic burden that has far-reaching effects on the economy. Everyone in the country is aware of the ridiculous sums of money being asked for residential property. Property is simply becoming unaffordable, unless the next generation is content with the typical 50-60 square metre dwellings many continental middle class Europeans inhabit. The price of land has more dire consequences on the cost of our local products and the country’s competitiveness. For example, the six figure sum paid by an entrepreneur to acquire a tiny retail outlet or a tinier catering outlet in a main street, feeds into the price of Martin’s clothes, his shoes, his meals, and consequently his spending power. On a national level, for example, it ends up in the price of the plate of pasta we sell to our tourists. Few realise this, but the biggest drain on our competitiveness is the unaffordable cost of the first factor of production – land. When Minister Galea correctly states that the ill use of resources is the chief cause of Malta’s drop in competitiveness, he needs to be reminded that part of the solution lies in the approximately one-and-a-half-billion-liri (yes, nine zeros) worth of vacant property capriciously left out of Malta’s economic equation.

The Green Party’s economic vision includes the creation of a truly liberalised market in property by ensuring that all existing properties can be placed on the market, either for sale or for rent. This year the Greens will be working to have an abrogative referendum on this country’s rent laws, a number of which were enacted before the Second World War! When this referendum is through, and hopefully the Maltese vote to remove this mega-absurdity, landlords will have no fears about placing their properties on the market. After 60-odd years, demand for property in this country will finally be able to meet the real supply. Real estate can then assume its true value. Taking some air out of the bubble now is wiser then letting it explode then!

Fiscal Reform – “Social Justice and Smart re-Distribution”

Martin’s economic situation cannot be improved if he continues living in a country in which little pockets of society are afforded privileges not available to the many hard-working people in the middle class. Blatant tax evasion in this country remains rampant, so much so that people like Martin end up paying more taxes than those who earn multiples of his fixed salary. Furthermore, the injustice is such that Martin also pays taxes to finance benefits that end up in the hands of people who either do not work their full eight hours a day, or those who work more than eight hours but mainly in the black economy. The tax system in this country was designed to be progressive and fair. However, the abuses on the ground from people who either just don’t pay taxes or claim benefits they are not entitled to, renders our taxation system socially unjust and economically discriminate.

Both the PN and the MLP choose not to be too draconian about clamping down on rampant tax evaders and benefits abusers, because they both fear losing their so-narrow majority. In the meantime Martin is expected to vote for one of them and lump it! The Greens believe that fiscal morality, a term conveniently forgotten by the PN, should work top-down. The government should weed out abuse, trim its overheads and then work to ensure that every taxpayer carries his/her share of the burden. I believe that if everyone pays his fair share it will be possible to lower taxes and distribute benefits more widely and fairly. This will be a win-win situation for many. The winners will be those who pay lower taxes than what they are currently paying, as well as those who are in need of social benefits. The losers are the very privileged few who live off the system… like I care!

Can you share our vision? I know Martin does…

Edward Fenech

Spokesman for Finance, Economic Affairs and Tourism ofAlternattiva Demokratika – The Green Party