National discussion on how to upgrade Malta’s infrastructure an ‘important need’ – economist
An EY partner leading the economic advisory team, Chris Meilak, said that there is an important need for a national discussion on how to upgrade Malta’s infrastructure, both in terms of quantity and quality.
The Malta Independent on Sunday reached out to Meilak following the results of the 2023 Malta Attractiveness Survey run by EY Malta last month, which revealed that 86% of foreign direct investment companies find Malta’s planning and preparedness for population growth in terms of infrastructure as ‘inadequate’.
Meilak provided further insight on what has emerged in the 19th edition of the survey, which collects information on foreign direct investment in Malta, and listens to views, strengths and weaknesses in the country.
He was asked about Malta’s rapid economic growth in the last 10 years, which has been primarily based on increasing the population.
“One thing which is emerging is that there is an opportunity to look at a potential round of funding to upgrade Malta's infrastructure. In the study we went into different dimensions, from energy, to waste generation, water production, wastewater, public spaces, social infrastructure (nurses, teachers etc) as well as transport,” Meilak said.
He continued that if one had to look at the current behaviours, consumption trends and project future supply and demand, there is the need for a national discussion on how to upgrade Malta's infrastructure, both in terms quantity and quality.
Meilak said that there is the feeling that most economic agents – government and policymakers, companies, constituted bodies, individuals – are in agreement that this is very important, at this point in time.
He was asked why certain measures to address this increase in population, such as needing a skills card to work in tourism, or the regulations to be imposed on temping agencies, for example, have taken this long to implement, after the population has already increased.
Meilak said that Malta has always been a country which is too small to influence outside opportunities, describing the country as more of an "opportunity-taker".
He said that when there is a new opportunity, a new niche, or growing demand due to external factors, we tend to adapt accordingly.
"Ideally, if you are a large country, you have the luxury to plan ahead first, and then decide. In Malta, over the years, we have seen that we are often at the mercy of external factors," Meilak said, mentioning the pandemic, the current energy crisis, the financial crisis in 2008, as well as the political crisis in North Africa a few years back.
As a result, Meilak said that through the conference, EY said that Malta should now be more proactive and plan ahead, but there is also an element of "emergent strategies," where an opportunity is taken, and then adjusted afterwards.
Small size also means that the country is limited in its resources, Meilak said, adding that a small group of people is tasked with tackling a wide variety of issues, and while this is an advantage to address many dimensions, but at the same time, there would not be enough resources to plan ahead, and to implement these plans.
Meilak said that there is a national consensus that there needs to be investment in the country's infrastructure, noting as well that the current timing is "not right" in terms of funding, due to international high interest rates, as well as the country's financial recovery from the Covid-19 pandemic, and the high energy prices which, up to now, are being subsidised by the government.
"The opportunity lies in the excess liquidity held in our financial system.” Meilak further noted that Malta is a nation of 'savers', both at a corporate and individual level.
Meilak suggested a mechanism to channel this excess cash towards infrastructure and productive type of investments, believing that by taking bold decisions now - individuals, corporate and government alike - future generations will stand to benefit.
Finance Minister Clyde Caruana had said that Malta’s population will have to increase to 800,000 over the next 17 years to keep the economy growing at the current rate, if the economic model we have now is retained.
Asked how this can be sustainable, Meilak said that the EY study shows that the Maltese population is decreasing, considering the fact that Malta has an ageing population. The study also showed key reductions in the labour force, Meilak said, adding that the country has come to a stage where we do need foreign nationals to fill in these gaps.
"I think what is not sustainable is the current level of infrastructure," Meilak said, adding that it is difficult to quantify the country's carrying capacity and what it can sustain.
Meilak said that discussions should be about future jobs, infrastructure as well as the funding gap attributed to it to achieve an adequate level, and the third point being social integration.
"A greater effort is needed by all so that we can fast-forward to the level of social integration we see in other countries," Meilak said, noting that in the past, the Maltese have also emigrated to other countries for better job opportunities, and that now, it is our turn.
The current population size has now increased to more than half a million, not considering tourists who visit the island year-round. This means that in reality, there are many more people on the island at any given time, beyond the population size.
Mentioning the dimensions impacting Malta's infrastructure, Meilak said that congestion is also an increasingly visible problem. He said that we need more and better infrastructure, but the existing one needs to also be maintained.
On road infrastructure, Meilak said that we are avoiding the discussion that we need both "carrots and stick."
He said that this should not be just a political discussion, but rather an individual one. Meilak posed the question; "do I want my freedoms to be touched, or do I want others to be impacted, but to exclude myself?"
Beyond the political discussion, Meilak said that individually, "we are happy to complain, but we are not happy over actions that affect us individually."
He said that he sees many individuals taking measures such as riding public transport and car-pooling in attempts to reduce road congestion, but he also sees people who get discouraged after a while, asking themselves, "why am I the only one doing my part? Why aren't others doing the same thing?"
"You could argue that government is there to lead and take bold decisions, but if, individually, we are not ready for it, then there is no progress. We all have a role to play,” Meilak added.
He said that one could argue that things need to get worse, before they get better.
Opposition Leader Bernard Grech had recently said that the country is heading towards a time where there are more foreign workers than Maltese workers.
Asked about this, Meilak said that the discussion should not be about whether the country should accept foreign workers or not, but rather it should be on how to prepare the country for the next phase, given the ageing population.
Asked if there is a will for expanding and adopting a higher quality infrastructure, Meilak said that he believes so, looking at the ways political parties are responding on this point. He said that will is also shown through discussions with constituted bodies.
Meilak said that another area where the country is still avoiding discussion is on pensions – mainly because this will affect most at a later time of their life. Additionally, Meilak said that funds from pension funds could be re-invested towards infrastructure, which brings us back to the earlier points on the infrastructure funding gap.