Liberalising the economy

The news that the draft National Programme for the Adoption of the Acquis has been approved by the Cabinet is to be welcomed. This document has long been awaited as it was meant to have been approved some time ago, but better late than never, as the saying goes. The Prime Minister has said that this plan was the result of proposals and suggestions, submitted by ministers, on the best way to adopt the European Union's acquis communautaire to Maltese legislation. One also hopes that the plan was drawn up after proposals and suggestions from the constituted bodies were submitted, otherwise the government's claim to be discussing Malta's EU bid with all sectors of Maltese society will not be taken seriously.

However, the Prime Minister has made it clear that the final version of the national programme will only be completed after a further series of consultations. Dr Fenech Adami said that the draft plan takes into consideration the current situation in the country, identifies the areas where changes are needed and proposes time-frames for the changes to be implemented. One hopes that this is the case and that wherever necessary the government did propose a suitable timeframe even if this means extending timeframes to after Malta's accession date.

It is important that the National Plan for the Adoption of the Acquis is a thorough exercise in the restructuring of the Maltese economy. Of course, wherever derogations are required these should be asked for. The same applies for transition periods, if these are in Malta's interest. However, on certain basic issues of liberalisation, the government should made it clear that it intends to liberalise soon. For example, the situation at the ports has long been criticised by the private sector. The monopolistic and antiquated restrictive work practices have resulted in huge transport costs for Maltese importers and exporters, and make Maltese businesses far less competitive than their counterparts in Europe. There is no competition at all and this is surely not permissible in the EU so the quicker liberalisation comes about, the better.

There are many other areas which should be covered by the adoption plan. The government has already made it clear that it intends to liberalise the telecoms sector by 2003. However, a carefully planned out strategy is needed here as there are many jobs at risk. Furthermore, the office of the telecommunications regulator needs to be greatly strengthened. The government has not made its position clear how it intends to liberalise this sector and we are at present in the absurd situation where the regulator (who is nor really a regulator but a civil servant) is not able to approve a request by Vodafone to cut its rates by 25 per cent? Is this not ridiculous? The government needs to come out with a clear strategy over how it intends to liberalise this key area and it is hoped that this is covered in the acquis adoption plan. There should also be a heavy emphasis made on re-training as over the years the telecoms sector, particularly government owned Maltacom, has absorbed far too many employees for its needs.

The government should also be thinking of introducing market forces to many of the government owned companies that operate in a monopoly situation. Monopolies are not healthy for the economy and the consumer almost always gets a bad deal. While being a member of the European Union does not mean that privatisation has to come about, it does mean that a certain amount of regulation should be introduced. Hence companies such as Enemalta or the Water Services Corporation should either be made to answer to a regulator or be made to face market pressures.

Another area that should be dealt with in the acquis adoption plan is the question of price control. This has no place in a liberalised economy, unless of course there are health considerations, such as the price of alcohol or medicines. Otherwise price control should be abolished. The best way to clamp down on price abuses is through the Office of Fair Competition. If the Fair Trading Act has not been particularly successful then this law should be strengthened to the advantage of the consumer.

Another area which should be liberalised, although in a gradual manner, is housing. Can anyone really imagine Malta's outdated and unfair rent laws, dating back to the pre-war period, to continue to exist once we join the European Union? Certainly not, as these are both unfair and a slap in the face to a truly liberal economy. The rent laws must be gradually liberalised, always taking the social aspect into consideration.

The government has a tremendous challenge ahead of it. It must plan to adopt the acquis in a way that is best suited for Malta's needs and it must convince the electorate that this is the right way forward. Let us hope that it has done its homework well.