Rebuilding our economic mindset won’t be easy


It was very refreshing to hear a senior government minister acknowledge over the weekend that the country’s economic strategy needs to be rethought, moving away from its reliance on construction. For too long, people have been promised the same economic direction, the short-term gains of which have cost the community dearly.

For decades, successive administrations have relied on the real estate development sector to revive the economy in times of recession or to stimulate growth even when the economy is doing well. Many – including politicians and political parties – have undoubtedly prospered from this approach. But our flexible town planning rules, too often bent at the discretion of developers, have led to an intolerable encroachment on our precious environment and the unacceptable degradation of priceless urban landscapes.

Meanwhile, residents have faced increasing inconvenience as the two islands become a permanent construction site. At the same time, inflation in house prices, based on the belief that stone is a sure-fire get-rich-quick investment, is making the country uncompetitive.

“We have to change the way we think; we need to change the way our economy works, ”Finance Minister Clyde Caruana said last Friday in a speech that was a breath of fresh air. “If we repeat the same things, we will get the same results. This is indeed a commendable change in political mentality.

The lobby of real estate developers does not seem happy to be pushed out of its comfort zone. One developer even argued that Malta needs 100 more years of real estate development. Fortunately, Caruana has better ideas. He observed that “people are getting tired of cranes and concrete.” He pledged that the government would also put more emphasis on education, adding that “if we improve education, our economic activities will change.” Indeed, investing in an education system that achieves desired results is the holy grail of good economic planning.

In its defensive reaction to the minister’s strategic statement, the Malta Developers Association argued that the solution should not be to “make an enemy” of the construction industry but to strengthen policies and laws to protect them. urban and rural environments.

The association seems to underestimate the irreversible damage already caused by overdevelopment. The building frenzy has caused enormous damage to our ecology, our heritage, the quality of life of our community and even our tourism industry.

In the years to come, the construction industry may be very busy restoring or modernizing some of the older and older buildings that are no longer suitable for their purpose. Many ugly and dysfunctional residential and commercial properties will need to be renovated or demolished to make way for properties that adhere to stricter standards of quality of life, safety and sustainability.

If Caruana’s statement marks the beginning of a real shift from the more or less identical commitment to unsustainable economic strategies, it is welcome. It is hoped that the Nationalist Party will also commit to relying less on real estate development for economic growth.

Despite the happy discussions leading up to an election, Malta faces formidable socio-economic challenges that need to be addressed urgently. There are significant sustainability risks not only in its reliance on real estate development, but also in its reliance on the sale of passports, its mass tourism model which offers low financial returns to a high socio-economic cost and foreign investment fueled by low taxation and low-cost imported labor.

Whether all of this change can be achieved without introducing new taxes, as promised by Caruana, is debatable. But putting education, the environment and people’s quality of life first is the right thing to do.

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