Recovery plan

blending public and private investment to develop internal capacity for epidemic control supplies. This should include supporting investments in the healthcare digitisation sector and also the investment promotion and incentivisation of the manufacturing industry to attract production lines related to healthcare equipment and materials.

Taking this a step further to realise an even wider goal, we need to also use this window of opportunity to put in place the right frameworks for the long overdue rise of the social enterprise in this country. This will enable the provision of an adequate legal basis for the evolution of healthcare businesses with a social purpose.

Government should take the lead in strongly promoting the funding of this pillar due to its manifold socioeconomic benefits and the material public interest it will result in. Specifically, this stream could be initially funded by the financing instrument established by the European Stability Mechanism specifically devised to support ESM members to address healthcare needs, namely the Pandemic Crisis Support which can be equivalent to up to 2% of the 2019 GDP, equating to c. €264m. This start-up funding will establish a unique platform for further leverage and growth in the sector, which can transform this vision into reality.

It goes without saying that as a starting point, the efforts in this direction would be futile if they are not preceded by a clear collective and national resolve leading to the closure of the long-drawn issue regarding the three main hospitals (GGH, KGRH and SLH) currently operated by Steward Health Care, with the facilities being returned to the State and integrated back into the national health services portfolio.

Policy Pillar 7: Innovative and comprehensive investment aid programmes: Investment aid should not be

an automatic concession but built on the wider basis of the strategic priorities being put forward in the economic recovery programme. The core notion of investment aid should be to support responsible enterprises that are willing to invest their effort and risk their capital in the transformation of their business as an integral part of the economic regeneration we are seeking to reconstruct.

Clearly distinct from the targeted relief support, the purpose of the investment aid should be focused on a set of priorities which will enable the economic transformation the country is after, seeking to map out a medium-term landscape which will empower businesses to grow responsibly and with adequate levels of funding. Priority should be allocated to the shaping of new business models, attraction of talent, targeted reskilling programmes, energy efficiency and de-carbonisation projects, support in capital programmes aimed at digitisation and business optimisation, innovation and a strong entrenchment of applied R&D.

The instruments made available for supporting enterprises should go beyond the classical methods and start venturing in more targeted support through various innovative routes. These should include sector-specific investments (for example, digital, aviation, and logistics), formation of dedicated funds for recovery acceleration and the consideration of deeper participation in initiatives which can contribute to a more robust economic regeneration through high value-added activities. The Malta Development Bank and potential new investment funds spearheaded by government should support innovation-driven start-ups which might normally be sidelined by the commercial banks due to higher risk profiles characterising such enterprises and projects.

This degree of support needs to be extended while closely guarding the stability of our financial system and never placing in jeopardy the liquidity and solvency of our banks that have systemically served as catalysts for responsible economic transformation.

Policy Pillar 8: Spearheading local ecosystems: the peak of this crisis has exposed the fragility of isolated systems and industries. We should learn the lesson and spearhead the formation, nurturing and growth of sustainable local ecosystems across multiple industries. This needs to be defined by a strong accent on the promotion on the circular economy, a structural collaboration within and across industries, the consolidation of industries to avoid inefficiencies and duplication, a converged effort to internationalise. An essential primer that can contribute towards success is the application of targeted government sourcing to serve as a jumpstart for the functioning of the ecosystems in a post-COVID scenario.

Apart from channeling local procurement opportunities, government plays a key role in the nurturing of these local ecosystems mainly through their promotion and by striving to remove structural inefficiencies at source (for example, supply chain costs). From a regulatory standpoint it also needs to ensure the right levels of fair competition are in place and barriers to entry are not allowed to emerge.

The notion of economic clusters needs to be expanded and seen as a specific policy goal. Such clusters allow and facilitate the transfer of knowledge, ideas and the creation of economic activity in emerging sectors. The nexus between research and commercialization needs to be strengthened further within these clusters with the Malta Development Bank playing a key role in supporting the investment in the start-up and evolution of such clusters.

Policy Pillar 9: Prioritising public spending: more than ever our country cannot afford to utilise public funds to pay for avoidable discretionary expenditure on items which are not considered to be a critical priority. This has been resulting in short-changing taxpayers and is a stark result of partisan appeasement. Public-spending plays a crucial role in the recovery and revival of our economy and it should therefore be applied judiciously in a manner that will deliver a long-term return to the state, once enterprises and employees will restart generating income, realising profits and paying fiscal dues to government.

In this regard, we need to have the courage to commit to a bipartisan resolution to redirect this avoidable expenditure towards strengthening industry and create more employment opportunities through economic stimulus measures. This should be an integral part of the new Social Pact outlined in Policy Pillar 5, hence securing long-term meaningful change by all parties concerned.

Central to government should allocate spending priority to further investment in infrastructure, across all networks but with priority being given to the acceleration of works on the road network improvements, the application of technology in mobility and the strengthening of the robustness and security of the digital infrastructure of the country. All those involved have a duty to ensure that we emerge out of this crisis as a country which is not a perpetual building site, while retaining the benefits of digital engagement as part of the natural mode of operation for the local economy.

Policy Pillar 10: Position EU funding as a primary financing vehicle for transformation: without portraying this

as the silver bullet or as a substitute to the local commitment and fiscal discipline necessary for addressing the cost of this recovery programme, EU funding will play a crucial role in making this recovery happen, particularly in the initial stages of the effort. The relevance of the EU has never been so material: clearly this is a crisis that all our fellow member states are in and solidarity will be a crucial element in handling this crisis and those emerging from future pandemics, when (not if) they occur.

The EU is currently in the process of shaping its multi-annual financial framework (MFF) for the period 2021-27, which will be largely influenced by the economic aftermath of the COVID-19 crisis on a European level. This is expected to be complemented by an economic recovery and transformation fund earmarked to be in the region of €2trn, with strategic priorities closely aligned to those being advocated for the economic transformation referred to in Policy Pillar 4, most notably the Green Deal, the digital agenda and the health programme.

As a larger component of the respective project financing by the private sector will be what is known as direct funding, government needs to also proactively support businesses in their funding applications and assist them in securing foreign partners to aggregate the upfront financing required, linking economic clusters to the large-scale funds being set in motion by the European

Union institutions.

The Recovery Plan and the MFF will be complementary vehicles which have the potential of bridging the gap between our local resources and the aspirations being set out in our recovery programme, hence serving as the enabling vehicle for the execution of the measures we shall shape in due course. This will be a complex process which will bring into play also other sensitive subjects which could have a fiscal and strategic impact on Malta’s economic future and hence will require a concerted effort to achieve the best outcome possible for the 2021-27 period.

SPECIFIC MEASURES

These 10 Policy Pillars mark the boundaries of our policy agenda to be adopted in our political engagement towards the COVID-19 recovery programme. At this juncture it is felt that as an Opposition we should clearly set out these Pillars as the first step of our participation in the consultation process and explain them to all involved, in an open and transparent manner to clearly set out what we stand for in terms of our values and strategic priorities.

Subsequently, pursuant to the shaping of the internal Policy Clusters, each cluster should put forward a series of specific measures which are intended to realise the outcome of these horizontal Policy Pillars. A list of specific measures has already been devised and mature enough for discussion.

However, in the light of our commit

ment to the success of the consultation process with government and the other stakeholders, these will be discussed in the designated structures for

the execution of the consultation process, prior to being announced publicly. This will allow the latitude for in camera discussion and the avoidance of unnecessary political posturing which is not conducive to the objective of convergence on these crucial matters.

In terms of the specific measures to be advocated, it has to be underlined that the economic impact on Gozo has been nothing short of disastrous, with a recent survey carried out by the Gozo Tourism Association clearly showing that the main economic sector of the Gozitan economy is at a complete halt, currently being sustained only by the wage supplement and with owners mulling over large-scale redundancies. All the 10

Policy Pillars apply for Gozo but each one needs to be adapted and carved out for a better application and it is therefore essential that this exercise is done in a horizontal fashion. Gozo

cannot be considered to be an appendix to the recovery programme but we need to build a programme which is dedicated for Gozo in its own right.

This Briefing Note is to be considered a canvas that will serve for the shaping of the best economic recovery plan possible for our country. Each one of you has the ability and the duty to leave his/her mark on this canvas by contributing to the measures that will be shaped in the coming weeks.

In conclusion, if there is one message I feel that we should be transmitting to the people out there is that in these challenging times our country needs first and foremost hope for a better tomorrow and a clear leadership, vision, direction and undivided commitment that we can transform that hope into a reality through the reshaping of an economy for the people.