This week, parliament has reconvened after the summer recess. Parliament is back in business for the new season and we have a tight agenda. There is a lot of work ahead of us. We are committed to our electorate and to the Maltese people to the electoral promises that we aim to deliver over the five years of this term. The government’s will to deliver is consistent and ever present. However, as a responsible government, we also need to take into consideration the reality around us.

At the moment, the world is not going through a rosy phase. Financial systems around the world are bleeding, and bleeding heavily at that. Huge amounts of money are being forked out by various governments, either to bail out banks in trouble or to maintain liquidity in the markets and the banking system. The world economy is coming to a halt, and everyone is wondering what’s next. The US government is putting $700 billion as a bailout for the banking system, and for the US government to take over all the shaky assets of the investment banks.

US voters are very angry, and rightly so. They are threatening their respective representatives in the Congress against voting in favour of this bill. On Monday it was voted down, while the US Senate revived it on Wednesday. The Congress representatives are torn between their moral duty to pass this law and their angry voters. The bailout will take its toll on the deficit in the long-term, but in the short-term will try to smooth and oil the banking system. The voters (collectively called Main Street) are angry at the fat cats (Wall Street and the bankers) who have partied, benefited from the boom and have received more money on their exit. It’s a Hobson’s choice for these parliaments – a Main Street rescue plan is a Wall Street bailout at the same time. In order to save the commercial banking industry and help the market to remain liquid so that banks keep on giving loans and overdrafts to small business, the greedy people at the huge investment banks will exit the scene free, without any sort of punishment.

Which brings me to the next question: Is capitalism dead? In the US and Europe, politicians from the extreme left are rejoicing at the current global crisis, and are bashing capitalism, and are trying to promote extreme socialism as the solution. The problem is not capitalism, or free trade and competitiveness, but greed and lack of regulation. The US, in the last years, have removed a lot of regulation which was introduced in the 1930s after the Great Depression, thinking that markets will regulate themselves.

In fact they didn’t. Free markets, free enterprise will still create wealth, but the state should be the regulator. The state should not be a regulator and a player in the market, but only a regulator. As a regulator the government needs to be constantly on alert to make sure that the regulations are constantly up to date and in tune with the evolution of the market. This is one of the main reasons the Maltese government wants to privatise the shipyards. The government has no business to be a key player competing in the market with free enterprise.

What is amazing is the way the economic situation has evolved or rather collapsed around the world. Starting from a homebuyer in any remote town in the US, we are now facing a global crisis of unprecedented proportions. In the 1990s new laws in the US allowed banks to give loans and mortgages to lenders with bad credit in order for the latter to give the possibility to poor people to own houses.

The loan rates were higher than normal rates, and hence were quite lucrative to the banks. The underwriters (such as Fannie Mae), for both political and business, allowed this to happen and the sub prime market expanded tremendously during the last six years.

The problem is that the risk was not restricted to the US lenders and the underwriters. These assets (sub prime loans) were repackaged into marketable securities, as a means to divert and spread the risk. These securities were taken over and bought by banks and other financial institutions all over the world. Most of these securities had good credit ratings. Everything was smooth as long as the real estate market in the US was booming. But then when the housing bubble burst, the whole chain started to collapse. The final blow was the bankruptcy of the investment banks, which were considered as institutions in the finance world.

Back to Malta. We are not immune to the turbulences of the economies around us. This is a very sensitive period and it is wise to be cautious. The government is committed to its promises, but the global crisis calls for some prudence. Leadership and responsibility calls for restraint and caution. We really do not know what’s going to happen next. Whether we like it or not, even the results of the US elections might have an impact on us. This is not the right time for risky decisions and challenging goals. Global parameters are constantly changing.

Irrespective of the financial situation, the government will not slow down on other reforms. Rent reform is still on the agenda. The local council reform will be discussed as well. A lot of work was done on these reforms. We also face the national reform in front of us, which needs to be submitted to the EU. While the government should exercise caution in financial matters and decisions, government is willing to be assertive and proactive when it comes to other reforms.

Let us all work together for the good of our country. I wish that Joseph Muscat’s swearing in as Opposition Leader, together with the experience and fortitude of Prime Minister Lawrence Gonzi, will continue to bring about change in the way we do politics. We can argue and fight out our ideas but then once a decision is taken we should all endeavor to make it a positive experience for one and all in the interest of our nation.

David Agius is the government whip