Issue link: https://maltatoday.uberflip.com/i/1527863
6 maltatoday | SUNDAY • 27 MARCH 2022 OPINION 2 maltatoday EXECUTIVE EDITOR KURT SANSONE ksansone@mediatoday.com.mt Letters to the Editor, MaltaToday, Vjal ir-Rihan, San Gwann SGN 9016 E-mail: dailynews@mediatoday.com.mt Letters must be concise, no pen names accepted, include full name and address maltatoday | SUNDAY • 13 OCTOBER 2024 Recalibrating the economic model Editorial THE latest MaltaToday survey has exposed a growing discontent with Malta's economic model - a model heavily reliant on construc- tion and a rapidly expanding foreign labour force. Although traditional concerns like jobs and inflation have taken a backseat, new anxieties are emerging. Chief among them is the rise in foreign workers, traffic congestion, excessive construction, and overpopulation. Together, these worries reflect deeper unease about the country's economic direction and its impact on daily life. The current model, focused on high growth rates, has allowed the government to finance generous energy subsidies and social pro- grammes, cushioning much of the population from economic shocks. However, with public frustrations mounting, the government fac- es a dilemma: Can it continue to sustain this growth while also addressing the growing so- cial and environmental discontent? Labour has already pledged tax cuts amount- ing to €100 million, aimed primarily at the mid- dle and lower-middle classes. Simultaneously, the administration has committed to curbing the influx of foreign workers. Yet, this promise comes with risks. Malta's record growth over the past decade has been fueled by foreign la- bour; cutting this inflow could destabilise the very economic engine that sustains the state's welfare model and upcoming tax reductions. The risk is clear: the country might struggle to maintain its social spending without triggering higher taxes elsewhere. What the survey makes clear is that concerns about foreign workers are not merely about job displacement or competition for resourc- es. They are symptomatic of broader issues linked to rapid, unchecked growth - issues that are eroding the quality of life for many resi- dents. The focus on symbolic measures, such as reducing the number of food couriers or re- stricting the issuance of certain licences, will not address the root cause. Moreover, target- ing smaller groups, like failed asylum seekers some of which have lived here for more than a decade, smacks more of political placation than meaningful reform. To address these concerns effectively, Labour will need to do more than just take symbolic action. A more fundamental recalibration of the economic model is required. This includes a serious commitment to enforcing regula- tions, tackling the shadow economy, and en- suring that all contributors to the economy are paying their fair share. The government's in- tensified focus on curbing tax evasion is a step in the right direction. Measures to prevent sal- aries from being paid in cash, as recently pro- posed, could further stem abuses - even if the impacts of such a measure on different stake- holders should be carefully considered. If such a measure is imposed on employers, this would raise questions on whether professionals like doctors and lawyers should be allowed to ac- cept cash payments considering that these are not even required to present a fiscal receipt. The question, however, is whether the gov- ernment has the political will to sustain these efforts. The need for continued economic growth to finance tax cuts and infrastructure projects could ultimately undermine these initiatives. Without a broader overhaul, any short-term gains from curbing tax evasion or symbolic tweaks to the labour market will only offer temporary relief. Moreover, addressing growing concerns on traffic and the environment also requires pub- lic investment which would require greater spending. In short, the opportunity cost must also be considered when the government em- barks on a major tax cut. With traffic emerging as the second most pressing concern, the government is now du- ty bound to present a concrete plan of action, backed by budgetary allocations. It must get serious about considering a long-term pro- gramme to invest in a metro. Malta is at a crossroads. Labour's ability to balance economic growth, public spending, and public sentiment will determine wheth- er it can shift from an economy that merely grows to one that truly benefits its citizens. As UĦM CEO Josef Vella says in his inter- view with MaltaToday, the country needs a long-term economic plan with a clear direc- tion. It is such a plan that will outline what policy measures are required in various fields and how these can be implemented. Just as the Active Labour Market Policy of 2012 identified several measures that encour- aged more people to go out and work – from people on benefits who were encouraged to find employment to more women being en- ticed to seek productive jobs and the intro- duction of in-work benefits to boost incomes for low earners – thus ensuring the economic engine had all its pistons firing, the country needs a new strategy to address today's prob- lems linked to quality of life. Anything less, and these latest survey results may just be the beginning of a deeper crisis in public trust. Quote of the Week "In this life, everything has a beginning and an end. And I think it's the appropriate time to put an end to a career that has been long and much more successful than I could have ever imagined." Spaniard Rafael Nadal, 38, announcing his retirement from professional tennis. In his career, he won 22 Grand Slam titles, including 14 at the French Open. He was Wimbledon champion in 2008 and 2010. MaltaToday 10 years ago 12 October 2014 Labour will miss March 2015 deadline - minister A delay in the construction of the new power plant – originally scheduled for March 2015 – is due to the reopening of negotiations be- tween power plant suppliers Electrogas, and new Enemalta shareholders Shanghai Electric Power (SEP). Insiders have told MaltaToday that the agreement with the Electrogas consortium had to be revised when SEP acquired a 33% stake in Enemalta plc in March 2014, and became the owners of the Delimara power station extension. Yesterday, energy minister Konrad Mizzi also confirmed with this newspaper that the construction of the new gas-fired power sta- tion in Delimara would not be completed by March 2015. But he said that the energy tariff reduc- tions for businesses would come into force as pledged. News of the delay is set to turn into a new headache for Prime Minister Joseph Mus- cat, who had publicly claimed he would re- sign if his government does not deliver the power station within the timeframes it had set for itself. On 11 April, 2013, Enemalta issued an Ex- pression of Interest and Capability (EoIC) for a power purchase and gas supply agree- ment, binding candidates to build and op- erate a new LNG plant by 31 March, 2015. Shortly after Electrogas was chosen to build the new plant, Chinese company Shanghai Electric Power purchased the 'BWSC plant' for €300 million.