Labour going into government conscious of big problems – Muscat

Speaking during the conclusion of a dialogue on the economy held as part of the Labour consultative congress, Joseph Muscat said that Labour's guidelines on the economy would be two-pronged: 'care with your money, and 'economic growth that benefits all'.

Both guidelines were approved at the end of the dialogue.

In his concluding address, Muscat said that Labour was well aware of the financial problems plaguing government, and went as far as to say "There might be more than we know."

"A Labour Government's first order of business will not be to whine," Muscat however affirmed in a bid to dispel fears that Labour will abandon its positive and hopeful tune once firmly in Castille. "It is going into government conscious that it will find big problems. The road map that we are adopting takes these problems into account."

Muscat said that due to this 'awareness' Labour will not be presenting "a manifesto that makes a series of pledged that will be abandoned once problems rear their head," and insisted that Labour's proposals "will be credible."

Discussing the guidelines adopted by the party, Muscat emphasised that government's finances belong to the Maltese and Gozitan population. Muscat said that these funding required careful management and not needless mismanagement and squandering.

He said that this represented a difference in governmental attitude, as well as approach. "The government is not the be all and end all in the economy, but simply a regulator," Muscat insisted.

He reiterated that the private sector is crucial to national economic growth, and insisted that Labour's roadmap for economic growth takes this into account. He said that a Labour government will be creating opportunities for the private sector to invest in the economy.

Muscat once again assured the private sector that a Labour government "will leave the private sector free to work," and also reiterated statements that the financial sector would not be interfered with. He also dismissed the notion of nationalization, branding this "a thing of the past."

"This word is not in the Labour party's dictionary," Muscat said, adding that such a move would throw the country into economic turmoil and uncertainty due to loss of investor faith. He also expressed faith in the management capabilities of Maltese and Gozitan individuals, and, in a jab at the now-notorious statements by Finance Minister Tonio Fenech, affirmed that Labour would not hold back from appointing "Maltese fools" (cwiec Maltin).

Muscat also pointed out how leading foreign investors had recently cited the local service charge, needless bureaucracy, and exorbitant utility prices as factors that greatly discourage them, and other foreign investors, from investing further in Malta.

Muscat said that Labour's pledge to reduce the tariffs would not mean "hidden taxes" elsewhere. "That is GonziPN style, and we are not GonziPN." He added that this reduction will be realistic and credible and will stem from saving methods that is sustainable in itself.

Muscat said that a vote for a new Labour government will not mean a vote for a government that represents a "box of chaos that would burst open after the election" but a vote for "five years of tranquility, of a government focused on work, employment, the economy, and not for a government weighed down by itself."

Also speaking during the dialogue, Economist Alfred Mifsud expressed concern at the tendency that a party in Opposition paints the situation in a negative light, in such and such a way that raises the question "how will you solve these problems?"

He said that "while governments change, problems do not go away" and are inherited by successive governments. He said that the local economy is divided into two segments. He said that that part of the economy that is related to government's performance is "grey bordering on black."

In this, he referred not only to the national debt, but also to that debt which does not show up on government's books, such as Enemalta's books. "The reality is there are certain financing troubles, and that the government is bending the figures to meet certain targets," Mifsud said, such as the 3% deficit threshold being imposed by Brussels.

"It is unlikely that in the last five months of the year there will be such a positive swing that takes the deficit back in line with what was forecasted last year," Mifsud said.

Nevertheless, he insisted that this should not mean that anyone should lose faith in the economy, insisting that it could yet be turned around. He said that the difference between Malta and other financially troubled countries like Spain is because these have "a governmental problem, but a national one."

He said that Malta as a country remains strong. "We have a government that is somewhat naughty while the people behave. The former is made up for by the latter," and despite how the government mismanaged funds, it was never forced to borrow funds from foreign banks, but found the support of the local public to borrow what it needed.

He said that countries like Spain instead suffer from "a naughty population while a well-behaved government tried to make up for its mistakes." He insisted that Malta's self-dependence is a point of pride for its people, and not for its present government, adding that "debt and deficit figures are as bad as Spain."

Mifsud also dismissed to newly-announced PN candidate Simon Busuttil's statement that under a Labour government, Malta would be requesting a bailout, chalking them up to political inexperience.

He insisted that Malta needed no foreign support, and will not need it in future, and expressed hopes that the country does not become witness to "politics of obstructionism" that will hinder the government's borrowing options from local lenders.

Amanda Mifsud said that Malta is not taking enough advantage of its geographical position such as oil exploration. She said that local energy costs and excessive bureaucracy are also driving away investment, and asked the Labour Party what it proposed to do to address these factors.

Keith Caruana said that as a developed economy, Malta needs to plan ahead to it remains one step ahead of its competitors in the event that they 'catch up'. He also called for more innovation in the creative industries, such as IT and other sectors which are not present or developed in Malta.

He also called for a 'safety net' and 'angel investor' schemes that protects and assists entrepreneurs and enables them to take risks to develop new businesses or expand existing industries. Caruana also called for the establishment of an 'institute for entrepreneurs' where business veterans can pass on their experience to budding entrepreneurs.

Trade Unionist Andrew Mizzi said that while investors need to be assisted, he warned that "the reigns should not be handed completely over to others to the detriment of others, such as the workers." He called on a Labour government to safeguard this balance carefully.

Private auditor Kevin Borg said that the financial services sector, despite having expanded in recent years, "is very vulnerable". He called for a "firm position" against a unified taxation system across the EU, warning that were this to become a reality, Malta would overnight "lose our value added within this sector which will lead to a huge loss of business."

He also warned that the development industry is experiencing difficult times, but are being supported by the banks, which "so far have been holding strong. What will happen if these fail?" he asked. He said that this is due to a liquidity problem among local businesses and operators, and called for this to become a priority.

UHM spokesperson Jesmond Bonello said that Malta should aspire to reach the same wage levels as those in the rest of the EU. He said that UHM's studies show that if Malta retains the current rate of progress, it would take 35 years for local wage levels to reach EU wage levels. "We want to see this timeframe shrink as much as possible."

He said the solution lay in investment in the Maltese workers' skillbase.  Bonello insisted that any government should invest in the local workforce, given how Malta's greatest resource is its human resource potential. He added that such investment would ultimately result in greater economic growth, a stronger economy, and an improved quality of life across the board.

Labour party member Nicky Briffa emphasised on the need for liquidity and the circulation of wealth for economic generation. He said that a Labour government should consider switching over the VAT system from an accrual basis to a cash basis. He also suggested that a part of, or the totality of, over-time be non-taxed.

Alessandra Pace said that despite she agreed with quotas "in principle" she called for more action to encourage women to reach top-tier decision making positions. She called attention to how female graduates from Malta's University outnumber male graduates. "Why are these women not fulfilling their ambitions and not reaching top positions?" she asked.

Pace called on Labour government to carry out a campaign in local schools to empower the ambition of women and improve their perception at the work place, as well as shift the notion that women belong exclusively in the home. She also augured that Malta sees a female Prime Minister in the near future.

Economist John Cassar White said that the tourism sector requires considerably investment and attention, given how Malta is an open economy and is competing alongside other countries for tourists. He said that this extends across the board and encompasses infrastructure, low prices, eliminating bureaucracy, limiting locally-induced costs, and especially training. He said that the country should not take tourism for granted, given its far-reaching multiplier effect within the Maltese economy.

Economist Mario Vella also insisted on the importance that the country exports more than it imports. He said that while it does not matter to a great degree what the country imports, be it a product or a service, what matters is that there is a market to export to.

Economist Joseph Vella Bonnici said that while other countries like the U.S. are seeking ways to generate jobs through manufacturing, he said that locally, whether manufacturing will stay in the island or not "is up in the air." He said that jobs generated by manufacturing dropped by a third in just a few years, and called on both the private and the public sector to fashion a joint plan that will invigorate the sector, as well as more convergence between industry and the educational sector.