The budget does a fine job in tackling the cost of living challenge but fails to outline a much-needed long-term plan for an economic transformation, according to economists and stakeholders.

Malta Chamber president, Marisa Xuereb and Malta Employers’ Association director-general, Joe Farrugia commended the government’s measures to heavily subsidise energy and help the most vulnerable people.

However, they are concerned because they feel the economy will clearly remain heavily dependent on construction and high levels of consumption, both of which must be urgently reined in.

Justifiably, the finance minister is seeking to mitigate the immediate effects of the staggering worldwide crises, they argued, but this will only mean that so much more space will have to be sacrificed for buildings and cars before the country sets out to change its economic course.

“Why do we keep subsidising fuel for boat owners? And why do we subsidise energy consumption that is beyond the amount a family needs to live comfortably,” Xuereb asked, adding that the budget does a very good job in keeping everything as it is but that means it will also retain the high levels of consumption that people are accustomed to.

“The budget does not incentivise people to reduce wasteful consumption,” she noted.

“Rather, it cushions the impacts to a degree that might encourage it. Subsidies that are handed out across the board might be excessive and do not send out the message of how valuable energy actually is.”

Traffic congestion

In its pre-budget proposals issued last August, the Malta Chamber suggested that car users start paying for parking in densely populated areas, with funds accrued through such a measure going into a pot dedicated to sustaining e-mobility measures.

The proposal was not taken up but Xuereb said she still believes that it could have been a beneficial measure to mitigate the issue with traffic congestion.

Farrugia noted the government’s decision to boost the economy now is crucial.

“This is not to say that short-term measures constitute a bad budget,” he said. “However, there was no serious talk about the need to transform the economy.

“The same goes for capital expenditure. Save for the projects that will be carried out with EU funds, there was very little about capital investments or the creation of new economic sectors.”

Foreign workers

Mario Thomas Vassallo, the head of the public policy department at the University of Malta, did not expect the budget to set a long-term economic vision, arguing that, by its very nature, the budget is a financial plan covering just one year.

“Finance ministers deliver budget speeches to lay out their financial plans for the next year. It’s not a long-term economic plan. There are other avenues for that,” he said.

He did point out, however, that the budget speech lacked details about how the country will tackle the influx of foreign workers.

Xuereb insisted that the country could reach massive sustainability goals by just having the entire population change its lifestyle marginally.

“We would still be living comfortably, mind you, but figures show that, just by slightly lowering our consumption levels, we could reach environmental and sustainability goals way earlier than we are projecting,” she said.

“We also need to bump up our efforts in training highly skilled workers and exporting more of our services and manufactured products. That is how we can grow the economy without eating away more precious land and without having to ruin our national heritage.”

Vassallo also noted that the budget speech was unnecessarily heavily partisan, especially in its opening remarks.

He said an event such as the budget is no place for such discourse.