The worst economic and financial crisis since the Great Depression. Hundreds of multi-nationals going bust and thousands of jobs lost. Unemployment in Europe surpassing the 20 per cent mark and deficit spiralling beyond control.
This is the scenario that characterised 2009. These are the challenges the government had to face throughout the second year of this legislature. There is no denying that these challenges created hindrances for our economy and conundrums for the decision makers whether in the public or in the private sector. Denying this will not do anything to help the situation. It will only make matters worse.
These were obstacles nobody wanted and few expected to be facing. But they were challenges that we had to face, and we had to work hard in order to turn them into opportunities. Most importantly they were challenges that we managed to come through thanks to Government’s bold decisions.
Governments in Europe adopted different strategies to combat the crisis. Some raised income tax while others increased VAT or property tax. Some governments froze wages and others still increased the pensionable age. The worst case scenario is of course Greece and a look at the austerity measures taken there is enough to make one understand what we could have gone through had Government not taken the decisions that eventually helped us get through the crisis.
The sound economic basis built by Government enabled us to tackle the problems in a different manner. Government not only opted to incentivise investment and the creation of jobs but also made training and obtaining the concept of job flexibility a priority. This was only possible thanks to past decisions which are allowing investors to find a trained workforce ready to take up different challenges.
Throughout 2009 ETC was instrumental in job related solutions. 4,027 persons found a job through the corporation and the total of persons who entered the workforce for the first time in 2009 surpassed the 18,000 mark. This was of course facilitated by Government’s commitment to spend e80 million under different investment schemes that in turn benefitted over 2,000 companies, factories and individuals. The government also intervened to save 2,500 jobs that were in danger due to a decrease in exportation.
Tourism is a very important pillar in our economy. Like other sectors it was negatively affected by the economic crisis that afflicted our main tourism markets. We reacted to these problems by being proactive and creative.
Air Malta increased its routes while the government managed to attract more low cost airlines that are now flying to and from Malta. The government also launched a number of schemes to incentivise the tourism sector. The public sector is benefitting from a scheme to bring international conferences to Malta and sports associations are being helped to organise international tournaments and training camps. This niche generated a total of over 22,000 bed-nights and these results confirm the importance of diversification in our incoming tourism markets.
Other aids included a €10 million scheme to induce investment in the private sector and another to encourage local councils to organise cultural activities which are also serving as tourist attractions.
These were not the only measures taken by the government in 2009. Self-employed and SMEs are the backbone of Malta’s economy and Government launched schemes that allowed these businesses to invest more, employ more and pay less taxes.
Apart from this, mothers who returned to the work force after five years became entitled to a year’s tax break for every child under 16 years of age. Tax incentives were also aimed at parents whose children attend child care centres and at families who host foreign English language students.
This contrasts with other European countries who tried to counter the recession by imposing more taxes. We not only refrained from reverting to such measures, but, also in contrast with other European countries, ensured that food and medicines remain VAT-free.
We have been criticised for embarking on capital projects against a backdrop of recession. Investing in projects was described as money down the drain. But how can anyone possibly describe as a waste of money the building of new schools, arterial roads and infrastructural projects that will stimulate jobs and strengthen our economy?
The number of reforms undertaken by Government during the past year confirms the determination to move forward. It shows the resolve to change what needs to be changed. This restructuring substantiates Government’s intention to reach the goals set for Vision 2015. The rent law, local councils and the local enforcement system, MEPA, primary health care and other sectors have either undergone reform or are being tackled.
2010 will see a consolidation of what we have achieved during the last two years. This will only be possible thanks to the decisions we had taken and the sound basis we managed to build despite the economically hostile environment.
The government is not doing this alone. Through real consultation we managed to build a consensus with investors, employers, unions, civil society and all those who understood that the first step in winning a challenge is facing it. This is not the time to sit on the fence. It is time for proactivity.
Chris Said is parliamentary secretary in the Office of the Prime Minister