For all the brave talk about “passing the examination” set by Brussels, and the Prime Minister anticipating bright opportunities ahead, the Maltese economy continues to languish under the weight of taxation and loss of competitivity in the world’s markets.

As long ago as the year 2000, the Central Bank registered its concerns regarding the possible trend of decline in arrivals from Malta’s traditional tourist sources due to increased competition. Time has proved that this was no “temporary blip on the nation’s economic radar screen” to borrow an apt observation by the Governor of the Central Bank at that time.

Past policies

Malta difficulties stem from past policies that had to be corrected at Europe’s bidding as soon as we joined the European Union For very many years, Malta lived beyond its means giving rise to a structural deficit and mountainous debt.

The damage had to be made good by way of an austerity programme, enforced in the interest of “convergence”.

The government could have reduced its expenditure by controlling the cost of government. Instead, it resorted to a stiff and unforgiving tax regime. In so doing, it choked Malta’s economic lifeline.

Malta’s immediate challenge is to make for economic growth that is export-led and quality-oriented. This, and this alone, will create more jobs, step up productivity and output, and create the right environment for investment.

There will always be some voices from green quarters who will complain that economic growth could wreck the stability of communities and play havoc with the balance of nature.

Growth is an imperative

But no growth at all is much more dangerous. It thwarts aspirations for progress. It pins down the working population to low living standards at worst and suppresses their upward mobility at best.

Growth may not necessarily guarantee improvement for all the poor, but it is much more likely to open up possibilities for improvement than stagnation.

Malta needs economic development – sustainable development – and that has to come from new productive investment, for which many others are competing.

Malta is not likely to attract foreign investment in sufficient quantities unless its market is responsive to the demands of the global market.

An overweight government leads to an under-performing economy. It is a deadweight chocking Malta’s economy in the eyes of political and other vested interests.

Dead weight

The political class knows that, for the past several years, the cost of government escalated beyond the island’s means,

The true facts were withheld from the electorate while matters were fast deteriorating and, when the truth came to light, it was hotly contested.

Anyone passingly familiar with the classics of Greek tragedy knows that the gods in the heavens were assembling and polishing their thunderbolts all the while the Nationalist administration under Dr Fenech Adami was insisting that the hofra was a hrafa, and even before that.

Instead of relieving the economy of government extravagance, Gonzi choked the economy with more and more taxation, which amounted to a massive surcharge on the entire business sector, and on the whole body of consumers.

Two centuries ago, Oliver Goldsmith wrote that “ill fares the land... where wealth accumulates and men decay”.

Malta’s priority target is to marshal its resources in such a way as to maximise its ability to compete on the world’s markets and survive.

This can best be done if the government were to exercise frugality and limit its tax requirements, thereby relieving the economy of its burdens and giving it a sporting chance to survive in a world of unyielding competition,

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