Smaller government must allow business to take central role

Opposition leader Simon Busuttil called on his audience at the EY Malta Attractiveness Survey conference not to ignore warning lights on Malta’s economic development, citing over 50% of foreign direct investors in Malta who claim they “did not know” whether Malta would be attractive for investment in three years’ time.

“Policymaking decisions should not be centered around the short term benefits at a cost of jeopardising the long-term sustainability objective,” Busuttil said.

Busuttil said the positive outcome of EY’s attractiveness survey – where 79% of current foreign investors in Malta find the country attractive for FDI purposes; and 56% intend expanding their operations in the next 12 months – encourage the Maltese in formulating an economic strategy out of an effective, clear and sharp economic vision.

He gave credit to the government for its strategy to increase female participation rate, but said it had to ensure that economic growth is sustainable and not artifically created by increasing public sector presence in the economy to make up for existing gaps in the market.

“In this day and age there is no justification for a mentality that government should be a big brother to cater for everyone’s needs, at a cost of creating new dependencies on the state and further posing a threat to financial stability. Even more importantly, not to end up in a situation where the private sector will be challenged by a direct and unfair competition of a growing public sector itself, where the country’s limited resources could have easily been invested more efficiently elsewhere,” Busuttil said.

The PN leader said the political class had to remain vigilant and receptive to persistent cautionary soundness indicators.

“Case in point, the case of an economy driven mainly by domestic demand and reporting below potential performance in export levels;  an economy where government seems to be opting for public sector employment as a short-term remedial measure; an economy reporting persistent drop in industrial production coupled with a sluggish performance in the manufacturing sector. The business sector – and civil society – want the peace of mind that the government, as a policy-maker has the vision to fill in the potential vacuum created by possibly re-scaled industries.”

Busuttil also remarked that government in Malta was still too big and too powerful, and called for a redimensioning that gives it a directional role for business, and that makes business less dependent on government-induced demand and protection.

He cited five important lessons learnt from previous PN administrations, namely giving the private sector a more central role in the economy; getting all economic players to excel in competition; encourage creativity and innovation; a modern education system; and giving government a less dominant, but supervisory role.

“Such key factors and a ‘can do mentality’ need to be employed to a number of sectoral pillars which will shape Malta’s economy in the next 10 to 20 years,” Busuttil said.

“The foresight of our predecessors in their open-minded approach towards market forces and internationalisation remain today strong and relevant.”