The recent fall in the price of crude oil and other commodities augurs well for families who in recent months have had to face ever-increasing costs to buy staple goods needed for day-to-day living. The spending power of Maltese families, like that of other Europeans, is falling steadily and there is a limit as to how much, and for how long, such families can cope before they throw in the towel.

Despite significant economic growth registered in the first half of this year, the economy is facing some structural weaknesses that need to be addressed. We are still too dependent on public and private consumption when we all know that our long-term prospects depend on export led growth.

Now that it has been revealed that government finances are again beginning to spin out of control, it is likely that we will experience further pubic expenditure cuts, which will continue to dampen the growth prospects of our economy. At the same time our competitiveness is constantly under threat, not so much because our workers are overpaid, but because productive investment that can improve productivity is becoming increasingly conspicuous by its absence.

At the same time, it is obvious that the regulatory function of the government on price inflation is not giving the desired results. Our inflation continues to be stubbornly higher than that in most of the other countries in the euro zone. As I have remarked publicly a number of times, the international cost spiral of oil and other commodities in itself does not explain why prices in Malta are accelerating at a higher rate than elsewhere in the EU.

Our families need some effective social shock absorbers to enable them to cope with the ever-increasing cost of living. I agree that at this stage it would be dangerous to indulge in industrial confrontation to raise workers’ wages, however justified such a measure would be from a purely social perspective. A further substantial increase in wages at this stage would make our manufacturing and services industries less competitive and this could inevitably lead to job losses.

Following the spending spree of the Gonzi administration to better its electoral prospects earlier this year, the government is left with no real option to reduce taxes. We are at a stage in the electoral cycle where the government thinks that it can afford being unpopular by letting Maltese families weather the economic storms on their own. Unfortunately, this is one of the consequences of the political developments that followed this year’s general election.

But the Labour Party will continue to remind the government of its political and moral obligations to the hard-working families. The Gonzi administration needs to ensure that proper explanations are given as to why we are facing inflationary pressures that are more severe than is the case in the rest of the euro zone. There may be structural flaws in our competition regime that still permit profiteering by economic operators who are in a dominant position.

We need to look in particular at the supply side of medicine, food, and other basic products, which are the core of our families’ day-to-day living requirements. While no one is proposing price freezes, we are certainly keen to see abuse in over pricing eradicated. Telling families to shop around is hardly a solution when the products they need are in any case overpriced in every sales outlet. What is needed is proper enforcement of measures to challenge abuse in pricing, especially by those who enjoy some dominant market position.

When things hopefully start to improve, the government must deliver on its promise to cut taxes. But even before this happens, we will insist that those families who are most at risk of sinking into poverty because they cannot absorb price increases for basic needs will be provided with social shock absorbers to help them cope.

The Labour Party will insist on this agenda on every appropriate occasion because this is our political and moral obligation as a progressive social democratic party that has always believed in social values.

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