Staying the course in Vision 2015

By Ivan Debono

In September 2010, in a much-publicised event, a working group under the aegis of MZPN (Team 2015) presented a report to the prime minister on the Vision 2015 programme. The event and the report made that evening’s headlines, and both were promptly forgotten.

The report opened with a quote by David Galula on the difficulty of changing established ways of thinking. Indeed, the objectives of Vision 2015 are as much about changing Maltese mindsets as they are about Maltese economic development. The report had the undoubted virtue of stating that things must change.

It also urged our political leaders to think in strategic terms. And strategic planning starts with a good look at the map.

Malta’s circumstances create particular challenges. Our microstate covers a mere 300 square kilometres, with the sixth highest population density in the world. We chose the path of independence in 1964. It was never going to be easy for a tiny island isolated at the extreme southern edge of Europe to function as an independent state. Our economy, our energy supply, our links with the rest of the world, and the wellbeing of our people were now entirely up to us.

One might argue that in these fifty years we have managed to do quite well. By the standards of an ex-colony (for want of a better term), we certainly have. But EU membership in 2004 brought additional responsibilities. There are now new standards which we rightfully aspire to as a European nation, and the basic necessities – housing, healthcare, food supply and security within our borders – are no longer sufficient.

Today’s citizens expect much more. They want quality. Not just the basic goods, but consumer choice and luxury products; not just jobs, but quality careers; not just a roof over their heads, but proper urban planning and environmental benchmarks.

There is a growing realisation that the quality of life is as important as GDP in measuring national wellbeing. It has given rise to a new paradigm in economic metrics: Happiness Economics.

Alongside the quality of life, the aim of the Vision 2015 is to increase Malta’s GDP per capita to 95% of the EU average by 2020. Missing this target would be a real danger, since Malta would risk falling to pre-1987 levels of prosperity and quality of life.

The government must therefore prepare the road ahead for the achievement of this goal. This must be done in a spirit of calm conviction and determination. How can we reach our objectives and put Malta among the winners?

The first condition for victory is for politicians to speak truthfully.

We are living on the cusp of history. Tomorrow’s world will be radically different from today’s.

The new global situation casts doubt upon the European model, which combines economic development with quality of life and social justice. Faced with the changes brought about by globalisation, the financial markets’ growing strength and new technologies, we have often made up for our decrease in competitiveness by an increase in public expenditure. The Maltese may have had the impression that this was free money. On the contrary, it was financed by public debt. The current economic crisis has implacably revealed one fact: to save the European model, things must change.

We need a credible roadmap which is clear and ambitious enough to achieve this change. This is the second condition for success. The government’s strategy must be built around three keywords.

The first is courage – the courage to reform. We must finance our economic model by the wealth which we create, not by the debt which we incur. Europe has no raw materials, and neither does Malta. Its only wealth is its human capital: the intelligence and enterprising spirit of its people.

We must therefore work more, not by increasing working hours, but by working more efficiently. It is vital to move beyond the idea of a job for life. We must accept that today’s worker will have to retrain, change jobs, and possibly change job sector several times. But to do so, work must be made more attractive. Above all, we must change our relationship with work in order to re-inject motivation, innovation and personal responsibility on the workplace.

The goals set by Vision 2015 require a radical shake-up of our job market. We must move away from low-skilled, low-paid labour. This is no easy task, and it raises the question of whether our education system is equipped to train tomorrow’s workforce. On the other hand, it is not enough to aim to for a post-secondary enrolment rate of 98% if we cannot guarantee that the same percentage of jobs will require a post-secondary diploma.

Malta’s demography poses its own challenges. If the status quo is maintained, the gap between social security expenditure and contributions will increase to unsustainable levels. It has been suggested in some reports that the way forward is Dynamic Social Security. Whatever the name, it is clear is that social security must be targeted more efficiently. Its burden must be shared more fairly and more effectively.

Courage is also required if public expenditure is to be lowered – the government’s, for a start, but also that of other administrative structures. We must aim for a cost-effective education and health system. We are still far from the “tightening of belts” of the 1970s and early 80s, but the changes which must be made require an effort throughout all levels of society.

Unity of action is the second keyword. We must change from a country of vested interests and petty divisions to a united and confident society.

When we applied to join the EU, we set high standards for our country. To our credit, we managed to achieve them. But EU membership was not the end of the road. It was the start of a new one, with more challenges and higher rewards. Now is not the time to lose focus. Whatever our national political issues, they must not distract us from far more important strategic choices.

The third essential keyword is global awareness. Our political institutions are being asphyxiated by debates centred around and limited to Maltese or local issues, where our only reference is this tiny archipelago. We should be looking closely at the wider world. Someone, somewhere, has faced the problems we are facing today, and it is in our interest to learn from other countries, especially fellow EU members.

We run the danger of seeing Europe relegated to the back benches of a globalised world, with Malta out of the game altogether, and our destiny determined by a US-Chinese G2. If we are to steer our own course, we must establish a common policy with other EU members. This is the only way for Malta to have any influence in world affairs.

We should bring a message of clarity to European economic policy. How can we compete with Chinese firms when their production cost is twenty or thirty times smaller, when they do not have to contend with trade unions, health and safety or environmental rules? We have to state clearly that protectionism is not a dirty word. Europe’s founding fathers had a protectionist vision which has been eroded by a combination of impotent submission to globalisation and a naïve belief that economic development would lift the Third World out of poverty.

Malta cannot count on its own internal market to power its economy. Without aiming to emulate the economic giants, we must aim at innovation and exportation, without which we will be unable to profit from globalisation and the common European market.

The third condition for victory is to govern in a way which allows the successful undertaking of the necessary reforms, notwithstanding the obvious obstacles and the accompanying mistrust. In this respect, the opposition has not been very helpful. But the government is not free from blame.

It is always the gulf between political discourse and reality which creates disillusionment. If the Maltese are to be convinced of the need for reform, it is not enough for the our political leaders to publish reports and roadmaps. They must set the example.

Vision 2015 requires a collective effort. Everyone must be associated in this strategy: the government, MPs, political parties, clubs, movements and think-tanks. The government should not fear public debate. On the contrary, it should welcome it. Governments with a stable majority are often rendered immobile by a lack of audacity.

In 1964, Malta chose the path of independence. Forty years later it joined the EU. Achieving that coveted status was hard. But this is one medal that is harder to keep than it was to get.

This article was published in The Malta Independent on Sunday on 29 April, 2012