Finance Minister Clyde Caruana’s statement regarding the need to move towards a new economic model last year, because the current model is unsustainable, made headlines

But the minister was an advocate for the current model years ago. Here is an excerpt from an interview with this newsroom which was published online on 27 March 2019:

During the interview, Caruana had mentioned a shortfall of 10,000 workers each year. He had been asked about the sustainability of needing an additional 10,000 workers each year.

“I’ve always been on record saying that if we want to sustain our economic growth rate we need to bring in these foreign workers otherwise the economy will come to a stand-still. At the same time i have always said that this will bring about a significant number of challenges. We are seeing this in education, through an increased demand for schooling; we are seeing this in the healthcare sector due to increased treatment demand; We are also seeing this in terms of traffic though the challenge here is more pronounced in the public transport sector as statistics show a third of foreigners use this service, while another third walk to work and the rest use private transport,” Caruana said.

“Perhaps the biggest challenge is housing. It takes around two years from when a planning application is accepted until a housing unit reaches the market. Nevertheless we need to get this economic growth as the benefits need to be reinvested in the economy to enlarge it and make it sustainable for an older population tomorrow.”

“Malta has among the lowest fertility rates in Europe and this will come with its price-tag. Our pension model is that today’s workers pay for today’s pensioners, and we have no such thing as saving for tomorrow’s pensioners. In order to make keep this model as sustainable as possible we must ensure that the number of people in employment continues to increase, otherwise someone needs to foot the bill for pensions. If not, Either tomorrow’s pensioners will need to accept a less generous pensions or tomorrow’s workforce would need to pay more in taxes to sustain those pensions, or the country would need to shoulder more debts,” he said.

As one can read above, Caruana had his reasons for advocating for the current model. But the problems with the current model are there for all to see. Too much garbage on the streets, traffic, constant road works to try and solve the ever increasing number of vehicles on the road, construction at every turn, the intensification of development.

While the reason behind the model to avoid pension issues could have been seen to be logical at the time, the issue is that the government was too focused on growing the population, but did not have equal focus on catering for that growth.

Perhaps the swift rate at which our population grew would have been fine had we better planned for it. For instance, would it not have made sense to plan the major road projects more in advance rather than creating chaos every year with some new project? Perhaps it would have made sense to have better planning laws to preserve the look of our localities through better design guidelines, and stronger protection for green areas – both ODZ and in the heart of localities, better planning of where apartments can and cannot be built. We definitely needed oversight on the construction industry over recent years. Perhaps a vast improvement of public transport could have been made with preparation. Better protection for third country nationals to ensure that they are never taken advantage of by those who do so. Overall, better planning ahead was needed to cater for the population increase. Let’s be clear, the problems the country is facing now are not because of the people who came to Malta to work. If there are jobs that need to be filled and there are no locals to fill them, then obviously foreign workers will be brought in. The problems were caused by a lack of planning to cater for the number of workers that were needed. Perhaps if the country was better prepared, the impact of the increase would not be so evident. The government must find better ways to tackle the transport, planning and other issues for the population size we have now.

The minister spoke about the need to change economic model. Realistically speaking, a change is needed. Caruana was reported as having said that Malta’s population will have to rise to 800,000 over the next 17 years if the country is to keep its economy growing at the current rate, unless a new economic model is devised.

With the traffic, construction issues, country’s size… it just isn’t sustainable. So the question now becomes, what’s the plan for the new model?