PN doubles down on call to create new economic sectors in pre-Budget proposals

In its submissions to the pre-Budget consultation, the Nationalist Party has reiterated its main economic proposal for the general election earlier this year, stressing on the need for the creation of new economic sectors with a high value-added and high wages.

The Budget for 2023 is due to be presented by Minister for Finance Clyde Caruana in Parliament on Monday.

The PN said that its economic proposals “are still valid, and the Government should make good use of these proposals”.

It argued that both the country and the wider global economy is at a stage where the political class “must rise above party politics and solely do what is best for the country”.

The economic model it prepared, it said, aims to increase Government income by €42.6 billion through the creation of 32,500 new value-added jobs over a period of eight years, commanding an average salary of €43,000.

“This would not only increase the needed Government income, but it will also offer sound opportunities for our youths, the same youths that we must endeavour to do our very best to retain in Malta and Gozo,” it said, referring to a survey conducted earlier this year that found that around 70 per cent of all youths want to leave Malta.

The 32,500 new value-added jobs are split between the existing economic sectors (18,160 new jobs) and the new economic sectors (14,355 new jobs).

“From the seats of the Opposition, the Nationalist Party is ready to walk the talk and rise above partisan politics,” it said. “The PN will do this by sharing all its costings with Government and all stakeholders. What is pending is the Government’s willingness to seriously put aside partisan politics at a time when the country needs all available talent to drive it out of its current challenges.”

Improving Malta’s attractiveness

Party Leader Bernard Grech also suggested the creation of other diversified tax incentives to mitigate the threat of potential international tax reform, and stressed the importance of seriously considering how these can also be extended to local investors to maintain a fair playing field.

He also called for the “re-engineering and transformation” of Malta’s higher education model to make sure that it is industry-driven.

Additionally, the PN said that a “re-invention” of the country’s economic model is needed, with a shift to a low-volume high-margin model.

“In other words, stop growing the size of the workforce but increase the value-added output,” it said. “We must focus on re-inventing our current successful industry verticals such as iGaming, maritime, financial services, and others. We now know how important these are for our continued economic stability and growth.”

Opposition Spokesperson for Finance Jerome Caruana Cilia acknowledged that Malta’s economy has grown in recent years, but pointed out that it has done so, at least in part, unsustainably: “The PN has for some years continued to recommend that the economic debate in Malta should focus on diversified economic models,” he said.

“With the appeals falling on deaf ears, the debate is now long overdue, and the cracks are beginning to show. Without further delay the Government must engage with all stakeholders, including the Opposition, and through a collaborative and cooperative approach address the elephant in the room and rectify the matter before it is too late.”

There are hints that the Government is taking steps to move away from the growth through high population growth and cheap labour model, with Minister Caruana saying last week that the time has come to pursue a new vision.

COLA

As regards the Cost of Living Adjustment (COLA), the PN said that the current system should not be abandoned, despite the high cost it might have on businesses. To lessen the burden, the Party suggested that the Government provides financial assistance where required to make sure that it does not result in a wage-price spiral.

However, it also called for “mature discussion” on eventual reform to the mechanism.

The full document can be found here.