Issue link: https://maltatoday.uberflip.com/i/1508764
maltatoday | SUNDAY • 1 OCTOBER 2023 8 INTERVIEW Raphael Vassallo rvassallo@mediatoday.com.mt Desperately seeking an economic The annual Budget is always a highly anticipated event; but this year, expectations seem to be greater than usual. Budget 2024 unfolds against the back- drop of spiralling inflation, and a general feeling of unease concerning Malta's entire eco- nomic model. Do you share the view, then, that this an 'ex- traordinary' Budget, by usual standards? Let me put it this way: every budget has its own story. And for politicians – especially, finance ministers – it's always a 'special' budget, for some reason or oth- er. Back in 2008, it was because there was an international crisis going on. And we've been hearing the same sort of thing ever since, basically... But is there anything really 'spe- cial', about this budget? I think that what is being done, at the moment, is more of an account- ing exercise, than anything else. That is to say: government has to seek ways to control its expend- iture; and it has to ensure that it gets its dues, in the form of tax collection. And on that level, I think the government is doing a good job, overall. However, the question we are all asking is: will this budget pro- vide an economic vision? Because that's what the country desper- ately needs, right now. As things stands today, we are relying too much on quantity: whether in the tourism sector, or in various other sectors – except maybe ag- riculture - but the point is: this strategy is simply not working. In fact, it is only overheating the economy. Go to Mater Dei Hos- pital, on any day of the week, and you'll get a glimpse of what I'm referring to. Even in the emer- gency department, you'll find that – out of, let's say, 70 people – maybe around 10 will be locals. Now: to avoid any misunder- standings, I'm not saying the problem is that 'they are foreign- ers', and 'we are Maltese'. It is simply that Mater Dei was not actually designed to cater for the size of the population, that we have today. It's a bit like having a car, which can carry a maximum of, let's say, five passengers. You might be able to squeeze in a sixth one, right? But there's no way you're going to manage in squeeze in 10.... because something will hap- pen, sooner or later. The braking system will fail. The axle will give in. You know what I mean... I think I do, yes. And so does Clyde Caruana himself, it seems. For the past two years, he has been suggesting that 'Malta economic model needs to change'. But isn't this also one of those problems that is very easy to 'diagnose'... but not to 'cure'? What is your own proposal, on how to actually change Malta's economic mod- el? We cannot provide alternative models, until we start answering some very basic questions. Such as: what capacity do we need for this country? What is the max- imum capacity this country can even hold? And what sort of the infrastructure do we have, at present? Can it cater for 1 million people? 2 million people? Because don't forget: when we talk about Malta's population hovering somewhere between 600,000 and 700,000 residents: we don't include all the tourists who come here annually. So at any one time, there might be well over a million people on the is- land, at once. Take, for example, what hap- pened during the heatwave last July. What we saw two months ago, was a literal 'overheating' of the system. Now: let's not go into all the explanations we were giv- en – it was because of the heat, the sun, the temperature, and all that – because... I mean, come on! Even if the temperature was 50 degrees: it's still not going to melt two inches of copper piping, two metres underground. Forget it. Nonetheless, there was 'over- heating' of another kind: coming from the increased demand for electricity, as a result of the pop- ulation growth. The DEMAND, please note; because there is no problem with the 'supply' side. But the distribution network cannot handle such a high de- mand, because it was never planned to cater for such a large population... I see your point, but that doesn't bring us any closer to a solution. Let's face it: this 'pop- ulation growth' is not happen- ing because of any increase to Malta's birth-rate (quite the other way round, in fact). So basically, we are talking about immigration... I don't call it 'immigration', my- self. I call it 'importation'... Well, that word doesn't seem entirely appropriate, to be used for people. But let's go along with it for now... [Shrugs] Appropriate or other- wise: that is what we are doing, in practice. We import workers from third countries, on the ba- sis that: compared to what they would earn in their own country, our 'minimum wage' is enough to make them rich. A person in Pa- kistan can expect to earn some- where around about $2 a day. In Malta, they get E4.50 an hour... No doubt. What I was coming to, however, is that: people don't import things, for no particular reason. Those im- ported workers (most of them, anyway) would have respond- ed to vacancies in the local job-market. And many of them are employed in jobs that Mal- tese workers don't even want to do, anyway. Doesn't that also mean that Malta depends on the 'importation' of foreign labour, up to a certain extent? Let's start with the question of 'jobs Maltese workers don't want to do'. I think that the Maltese people would be more than will- ing to go for those jobs... as long as they are given good conditions, and good pay. For example: as a student, I used to work in catering... and back then, the standard pay was 'zewg liri Maltin [Lm2] fis-siegha'. How does that work out in euros, at the current exchange rate? 'E4.66 an hour'. How much are today's ca- tering employees getting paid, on average? 'E4.66 an hour'... [Pause] Do you mean to tell me, then, that – after 30 or 40 years – the rate-per-hour, in catering, UHM chief executive officer JOSEF VELLA argues that Malta is facing a 'crisis situation;' and as such, we can no longer afford political bickering over the country's economic direction