At the Times of Malta Business Breakfast on Budget 2025 last Thursday, seasoned Finance Minister Clyde Caruana was in good spirits as he navigated questions by the equally savvy Herman Grech.

The minister was au courant with relevant statistics, ranging from Air Malta’s performance to the price of a carton of milk. He answered questions from the floor on rising homelessness, hospital woes, lack of financial literacy, vanity projects in the creative economy, subsidies for private schools, the cost of living, energy subsidies, fiscal discipline and more.

His main message was that, overall, and relative to other countries, we are doing well. I wrote this article towards the end of the session, mainly to reiterate the three points I made at question time. Yes, these are the same points I make annually. But they remain pertinent – and I remain hopeful.

Caruana stated that “wealth is made up from streams of revenue”. Of course, he did not need reminding that wealth is more than that. Monetary wealth is a rather narrow definition of what wealth is, yet, one which we still choose to focus on in our annual budgeting exercise in Malta. Wealth is also health, open space, time and other aspects that enrich human life.

These other aspects are measurable (as is well-being itself) but have not yet made their way into the budgeting process here in Malta. I suggested to the minister that Malta adopts modern tools in the budgeting process. Tools that are being deployed in other countries (the UK, Iceland, Australia, others) to assess the impacts of the budget on well-being and not just the impact on income.

Marie Briguglio at the Times of Malta event. Photo: Matthew Mirabelli

The minister also reminded us about “the law of diminishing returns”. For the unfamiliar, this law states that the satisfaction or return we get from anything increases marginally the more of it one has but ever more slowly. The more you have of the same thing, the less satisfaction you get from having more of that thing.

This law operates for anything from eating biscuits to investing in property. The first (biscuit or property) gives you far more satisfaction than the 10th. I argued that we need to consider this when, budget after budget, year after year, legislature after legislature, we continue to place our economic focus on disposable income.

Our GDP growth is already well above the EU’s average. Is it not yet time to focus on life beyond our pocket? Is it not time to give people in Malta a better environment, enhanced social facilities, better health facilities (including mental health), a better infrastructure and more leisure time, besides money?

My main and concrete suggestion would be that we subject the budget to an assessment of its impacts on societal well-being- Marie Briguglio

The focus on disposable income of the poor is another matter. That remains a priority. A buck (or a €100 cheque) gives a lot more “bang” to someone living hand-to-mouth than to someone who manages to save money every month.

This year, once again, the minister informed us that “there will be tax cuts”. Year after year, we are told that it is good news that no new taxes will be introduced. I argued that, for policymakers and stakeholders interested in change, relinquishing the power of taxes is rather unwelcome news. Taxes (otherwise known as fees, contributions, price etc.) offer a powerful tool by which to change problematic behaviours and practices.

Think of anything that we want to achieve in Malta, from reducing congestion on the roads, to tackling obesity, to creating a shift in the tourism offer. Well-designed disincentives can work in tandem with subsidies to achieve the change. The minister argued against increasing revenues from taxes for fear that these would be misspent by the public sector (a statement which was met with some murmurs from the floor considering the growing list of needs).

Be that as it may, my argument was not about using taxes to raise revenues but, rather, using them to create the necessary brakes in certain aspects of the economy.

The minister concluded that there is always more than we can do. On this point, I fully agree. My main and concrete suggestion would be that we subject the budget to an assessment of its impacts on societal well-being.

We have the tools to do so. 

Marie Briguglio, an economist, is the Principal Investigator of the Wellbeing INDEX project, a joint project of the Malta Foundation for the Well-being of Society and the University of Malta.