Monday is Budget Day in Malta. It is the day when the government, and more specifically the finance minister, presents the estimates for public income and expenditure for 2025.
When discussing budget setting within the context of a privately owned business, I make the claim that, although the chief financial officer presents the budget to the board of directors, all the finance people do is collate the figures and present them. This obviously draws protests from finance people and snide remarks from those working in other departments within the company.
I continue by saying that an estimate of income and expenditure without a description of both the macro and the micro scenario, a list of assumptions on which the numbers are based, the stated objectives of the company and an action plan detailing how the income will be earned and on what the money will be spent, is not really a budget. It is a set of numbers which is disconnected from reality.
I believe that this applies also to the budget presented in parliament. It cannot be just a set of targets without a thorough explanation of what each ministry would want to achieve thanks to the resources being placed at their disposal.
I have written in a recent contribution that governments need to achieve a balance among three factors – social cohesion, economic growth and reducing income inequality. This should probably be an overarching principle in a democratic society such as ours.
Beyond this, and to achieve this balance, what should be the objective of each ministry and how will these objectives be achieved through the various initiatives? Unfortunately, we are often told what the government would have achieved in the past but little commitment is made about the future. However a budget, by definition, is future-oriented.
When analysing the budget, we need to go beyond the numbers and evaluate the outcomes expected
Another consideration to make is the distinction between inputs, outputs and outcomes. Governments should focus on outcomes. However, these are very often ignored. For example, we are told about how much money is being spent at Mater Dei Hospital or in primary care services. However these are inputs and mean nothing. We are also told about the number of patients that have received care at Mater Dei Hospital. These are outputs, which also mean nothing much.
What counts in a health budget is neither the money we spend on our hospital, nor the number of surgical procedures held there. What really counts is whether the Maltese are becoming healthier or not. If the number of surgical procedures at hospital double, but we have more Maltese suffering from respiratory diseases, as a result of pollution caused by the construction sector and traffic, then we are not really meeting our objectives, because the outcome of any health ministry is a healthier population. The same applies to all other ministries.
When analysing the budget, we need to go beyond the numbers and evaluate the outcomes expected from having placed so many billions of euros of our money at the disposal of the public sector for it to function effectively.
As such, come Monday, I would be less interested in what cash handouts are given, or how tax rates have been revised, but would be more interested in what sectors are being targeted to achieve economic growth, what measures are being taken for the Maltese to have a healthier lifestyle, what will be done to ensure that our young people are equipped with the appropriate skills to become responsible citizens, what opportunities are being given to the Maltese to enjoy their leisure time and how we will make our environment more sustainable.