Malta's budget for 2023 was announced in parliament on Monday evening, with Finance Minister Clyde Caruana confirming energy subsidies, announcing record cost-of-living increases and sticking to his promise of not introducing new taxes.
Almost 10 per cent of all government's recurrent revenue will be reserved for energy and cereal subsidies, the minister said, with that €600 million measure looming large over the rest of the budget speech.
The budget comes at a time of global uncertainty sparked by persistently high rates of inflation, war in Ukraine, energy prices at record levels and ongoing supply chain woes.
All that will hurt Malta's economic prospects, the minister acknowledged, with growth expected to slow down in 2023. But the economy will continue to grow and, importantly, the deficit is expected to be marginally trimmed.
Key Budget 2023 announcements
- COLA of €9.90 a week
- Public sector workers to get a raise
- Pensions to rise by €12.50 a week
- Working pensioners to get a tax break
- Children’s allowance to rise
- A Christmas bonus for low-income earners
- Students to get a stipends increase
- First-time buyers promise to come into effect
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Budget 2023 live blog
Live blog ends
11.15pm That’s all from us tonight – this live blog will end here.
Thank you for having joined us. You’ll find links to all our Budget 2023 coverage at the top of this article to find out more.
Abela: poverty 'can never be eradicated'
11.05pm Poverty can never be eradicated, Abela believes.
“No matter how hard we work, it can never be eradicated. We will not pretend poverty is a perception, like the Opposition did when it was in government.
“Giving aid to the poor is not an acknowledgement of failure, it’s a sign of a government that wants to help those who need it.”
Abela makes it clear that the government’s aim is to ensure national debt doesn’t veer too far off 60% of GDP. Or call it 60”ish” – there’s a bit of elbow room, the PM says.
Earlier, Caruana told parliament that he expects to end the year with debt at 57% of GDP, rising to 59% of GDP next year.
Abela on building aesthetics
11pm Abela acknowledged that the shift to EVs would do nothing to reduce the overall number of cars on local roads. That, he said, would be impacted by free bus services and measures like keeping key services off the roads at certain times.
The PM was also asked about plans to tighten controls on building aesthetics. The PA’s Planning Commission, he said, must place greater emphasis on aesthetic considerations when deciding on applications.
Abela: Malta-Gozo tunnel 'not a priority'
10.50pm Abela was asked about the metro and Malta-Gozo tunnel promises, which featured nowhere in the budget.
He said metro studies - feasibility, socio-economic, geological – are under way. As for the tunnel, he admitted that “it’s not a priority at this stage”.
Live stream restarts
10.35pm Having been suddenly cut, a MaltaGov stream restarts, allowing us to see what journalists are asking the prime minister, deputy prime minister and finance minister.
Watch it below.
MaltaGov cuts stream for journalists' questions
Correction October 25, 2022: The below post is incorrect. It was a stream by the Labour Party that ended as journalists started asking questions, not MaltaGov.
10.24pm Robert Abela had his say. Then Chris Fearne spoke for a good while. And finally Clyde Caruana got his five minutes.
And then, just as the focus shifted to journalists asking questions, the state-run, taxpayer-funded MaltaGov stream of the prime minister's press conference ended abruptly.
That means the citizens whose taxes paid for the press conference will only get to hear the scripted speeches, and not any of media's questions about the budget.
We'd say it's unbelievable, but sadly it's not.
More reactions to the Budget
10.20pm We listed a couple of initial reactions to the Budget in previous posts. More reactions have been flowing in – from the Malta Union of Teachers to the hotel lobby.
We’ve put together a selection of those reactions which you can read here.
Robert Abela: 'record capital spending'
9.57pm Prime Minister Robert Abela is delivering his budget reaction.
Watch it in the video below.
Employers largely satisfied
9.55pm The employers’ lobby is, by and large, satisfied.
The government did not have much leeway, it acknowledges, and keeping energy prices stable was fundamental.
It now needs to cut unnecessary expenditure, make the public sector leaner and adopt a clear long-term plan for developing skilled workers and maximising the country’s economic potential, the Malta Employers’ Association said.
Bernard Grech: 'A budget in the red'
9.52pm Grech dismissed the budget as a short-term, myopic one that did not elucidate a long-term vision. Voters would see what a real visionary budget looked like today week, he said. That’s presumably a reference to his budget response in parliament, to take place next Monday.
He noted that the government has been promising a new mental health hospital for years, but keeps doing nothing about it. Caruana made the promise again during this year’s budget speech.
The PN leader also said he was “pleased” to see the media highlighting typos and other such mistakes in the party’s pre-budget document.
“They found typos, but they found no problems with the policy,” he said.
Bernard Grech: 'Many nice words, but no solutions'
9.37pm PN leader Bernard Grech is delivering his first reaction to the budget speech.
"This budget continues a failed economic plan," he says. "It's a budget in the red."
Prime Minister, Opposition leader to speak
9.30pm As is custom, both Robert Abela and Bernard Grech will speak about the budget this evening.
Grech will go first - he's scheduled to hold a press conference any minute - with Abela expected to speak at 9.45pm.
Chamber of SMEs hoped for more
9.29pm The Malta Chamber of SMEs welcomed the safety net of protecting Malta from energy price hikes. But it's also disappointed. The budget fails to effectively tackle other major challenges choking businesses, like the "serious" employment crisis, suffocating bureaucracy and "impossible" traffic, it says.
Malta Chamber not quite satisfied
9.17pm Reactions to the budget have already started coming in.
The Malta Chamber says the bulk of proposals are directed at maintaining spending power rather than improving quality of life.
While subsidising energy and maintaining spending power is good for business, the country needs a longer-term strategy to be future-ready, it says.
Minister wraps things up
9.14pm That concludes the bones of the budget speech: Caruana is now delivering his concluding remarks.
Just like the introductory remarks, they are focused on playing to the gallery and taking a few digs at the Opposition.
Caruana's voice rises as the banging on the benches gets more incessant.
"This is a budget that will have a better future," he concludes.
Tax rebate to encourage extracurricular activities
9.12pm Having spent 20 minutes reminding people about projects that have already been announced, the finance minister ends with a genuinely changed measure.
Parents who send their children to sports, arts or cultural classes or activities will get a bigger tax rebate: €300 instead of the €100 it was previously.
Drive for Ħal Far racing track
9.10pm Caruana says the Ħal Far racing track is still happening, and it will be financed through the National Development and Social Fund. I.e. passport money.
There were unconfirmed rumours that the track would fall prey to budget cuts.
Community policing to go nationwide
9.06pm A push to introduce community policing now covers 76% of all towns and villages. It will be nationwide by the end of 2023, Caruana says.
Encouraging police and army officers to keep on working
9.05pm A new scheme will encourage members of disciplined corps to continue working past their 25-year retirement period. The scheme will allow them to improve their service pension by 23% if they work for an additional four years, Caruana says.
Malta’s police force has been struggling to attract recruits: this scheme may go some way towards improving that situation.
9.01pm Demand for water is rising as the country grows, and work is therefore under way to increase reverse osmosis water production by 20 per cent. That’s a €12 million project.
Works to build a network of underground tunnels to carry water across the country is around 25 per cent complete, Caruana says, and another tunnel will be built to move water from the RO facility in Cirkewwa to Ta’ Qala reservoirs.
8.58pm The first step of the Ecohive project in Magħtab will focus on a €50 million Organic Processing Plant. A skip management facility will also be developed in 2023, allowing around 47,000 tonnes of large waste to be removed from the Magħtab landfill, separated and processed.
Sending parking underground
8.55pm Studies are under way to identify public parking lots which can be turned into underground lots, allowing the surface area to be turned into publis spaces, the minister says.
Expect the first concessions to that effect to be out within the first three months of 2023, he says.
Parks and green lungs
8.52pm The government’s headline electoral pitch was a €700 million investment in green urban lungs.
Caruana says the first phase of that project will see preparatory work at sites in Cospicua, Birżebbuġa, Ħamrun, Marsa, Siġġiewi and San Ġwann.
Works will be coordinated by a new, yet-to-be-established state agency.
Work will also continue on the Ta’ Qali national park – the project will have soaked up €36.7 million in public funds by the end of this year, with an additional €13 million allocated to it for next year.
EV charging, solar panels
8.50pm Schemes to encourage the installation of solar panels, heat pump water heaters, solar water heaters and well restorations will continue, he says.
There are also plans to install 1,200 additional EV charging points across the country by 2024, he says. There are currently 340 overall.
Malta-Gozo ferry PSO talks under way
8.47pm The government is in talks with Brussels about introducing a new, two-year Public Service Obligation for Malta-Gozo ferry trips, the minister says.
There is “agreement” that prices for commuters will be immutable, he says.
The current PSO, which Gozo Channel benefits from, lapsed years ago.
Incentives for electric cars
8.45pm Incentives to buy an electric car are to increase to €11,000, rising to €12,000 if you also scrap your old car in the process.
Those who tapped an older, similar fund for plug-in hybrid cars but are still waiting for their vehicle to arrive in Malta will still get the €11,000 grant, Caruana says.
€20 million has been allocated to the schemes.
An inflation-mitigating budget for the underprivileged?
8.42pm Robert Attard, a partner with consultancy firm EY, has been analysing the budget for us.
“Budget Speech 2023 is primarily directed, in line with more recent budgets but more so in an inflationary period, at alleviating financial hardship of the underprivileged - targeting pensioners, social cases and citizens needing special attention.”
He says the budget confirms the government is continuing with its inflation-mitigating measures.
Earlier we heard Clyde Caruana say that the cost-of-living adjustment would have been €25 had the government not intervened and inflation would have hit 12.8% rather than 5.7%
“In absolute terms, government estimates such inflation-mitigating measures (energy; cereals) to cost the country around €600m next year, that is, €70,000 per hour and around 10% of government's total annual recurring expenditure.”
Attard, a tax expert, points out that there are no major changes to the tax system.
8.41pm The government’s latest plan at reducing rush hour traffic is to try and prevent key services from operating before 9am.
Talks are underway with stakeholders to see if that is possible.
Caruana doesn’t say what ‘services’ he is referring to, though waste collection is the first to come to mind.
8.40pm Land reclamation remains on the cards, it seems. Caruana says the government has met with experts to “explore a number of projects”. Now work will begin on feasibility studies and environmental impact assessments.
8.38pm Caruana is now speaking about infrastructural projects, but there’s nothing that hasn’t been announced previously.
Work on the Msida Creek project announced last week will be “pushed forward” he says, as will dredging works in the Grand Harbour to improve Malta’s capacity to attract dry docking works.
There are also plans to introduce a shore-to-ship power project to the Freeport, much like the ongoing one that will allow ships docked at the Grand Harbour to switch off their engines while docked.
Reminder of previous property incentives
8.35pm Caruana is reminding people about previously-announced property incentives that will continue to apply in the coming year (and 2024).
Among them: tax benefits for those buying properties in UCA or that were vacant for several years, and a scheme allowing people restoring old homes to claim back up to €54,000 in VAT.
Schemes slashing stamp duty for first- and second-time buyers and people buying properties in Gozo will also be extended.
The health sector
8.29pm Caruana is now presenting various initiatives linked to the health sector: from free HPV vaccines for boys born from 2000 onwards to chemotherapy pumps that cancer patients can use at home.
ART clinic services are to be extended to allow parents to access them when trying for a second baby.
Bringing the courts into the digital age
8.25pm The government will be investing millions to further digitise some state functions: €10 million will go to digitising the court system and €6 million to digitising the maritime registry.
There will also be projects to digitise the pathology department, he says.
8.22pm Speaking of flying, there's a problem titled 'Air Malta'.
Doing nothing would have led to the airline eventually folding overnight, he says. It was just losing too much money.
Now the government is in talks with the EU Commission to secure state aid for it.
But, the minister says, "there are no sacred cows" for the EU Commision.
"We will not be getting any form of special treatment, when countries and airlines far larger than ours did not”.
The EU Commission is “evaluating its options” at the moment, he says, reassuring parliament that irrespective of what it decides, Malta will continue to have a national airline.
8.20pm More airlines are on the cusp of shifting their registration to Malta, Caruana says, and there will be more announcements to that effect in the coming days.
The government will be developing a masterplan for civil aviation and the area around the airport, to focus on developing economic niches like leasing and cargo, drones and electric vertical take-off and landing (eVTOL) aircraft.
What's in a name?
8.19pm The Foundation for the Development of Tourism Zones is to be rebranded to…. the Agency for the Regeneration of Tourism Zone Development.
Residency schemes for foreign investors
8.17pm “The time has come for various residency schemes to be revised,” Caruana says. The Global Residence Programme and Malta Residence Programme have been around for several years, he says, so now is the time to evaluate them and see if they need to be updated.
“We want to ensure that Malta remains attractive in this regard, while ensuring these programmes continue, given international pressures,” he says.
8.14pm There’s a vaguely-worded promise to help companies meet ESG (Environmental, Social, Governance) criteria, and then a bit more flesh: a rent subsidy offered to local businesses will double to €50,000 for the first three years. And the scheme will also be extended to apply to six years overall.
A more concrete measures
8.11pm Local businesses that invest in digital projects will get up to 50% of their investment back, up to a maximum of €100,000.
Gozo-based businesses will also get an additional 10% as a tax credit, which can rise to 20% if the investment reduces their carbon footprint.
Digitisation of businesses
8.09pm A scheme titled ‘Business Enhance’ will offer €40 million worth of cash grants to SMEs. And there will also be the EU-funded Digital Innovation Hub project, Caruana says, which will help SMEs and start-ups introduce things like cloud computing and AI into their work.
Again, not too much detail. Caruana is flying through all these.
A start-up initiative
8.07pm Our push to attract start-ups to Malta will see the country set up a one-stop shop named, somewhat creatively, Start Up Malta.
It will help budding investors/companies establish themselves and tap funding schemes.
Research & Development
8.06pm There will be a €5 million investment in a ‘Technology Extension Support’ scheme that will rope in private investors. Malta also intends to “broaden” its involvement in the Horizon Europe scheme – the EU’s key R&D programme – and “strengthen” the National STEM Community Fund.
But that’s all about that. There were no details or concrete pledges.
New laptops for year 7 students
8.03pm Students in year 7 are to be given a new laptop each, starting from the next scholastic year. That’s an extension of the government’s one-tablet-per-child policy.
The government will also be restarting a programme of distributing fresh fruit and vegetables to primary school children and “starting talks” to extend that to secondary schools.
Tax benefits for writers
8.01pm Authors already enjoy a reduced tax rate of 15% on their book royalties. That will now be halved to 7.5%, Caruana says.
Will that matter? The local publishing sector says it's pretty much on its last legs already.
Working pensioners and taxes
8.01pm Caruana listed some tax-related pensions benefits earlier. Here’s more: 40% of pensioners’ working income will be ignored by the taxman, up from 20% this year.
The measure is obviously intended to encourage people to keep working past their pensionable age.
It will cost €27 million, Caruana says.
Tax refund cheques are back
8pm Tax refund cheques will return this year, and they will range from €60 and €140.
That’s €26 million spent right there.
Focus on local workers
7.59pm As Jobsplus CEO, Caruana piloted an employment policy that looked to import tens of thousands of foreign workers.
As finance minister, he’s in charge of implementing a new employment policy that focuses more on upskilling domestic workers.
He reiterates that here: the “main principle” behind government measures will be to “improve the local (employment) market before looking to third countries,” he says.
7.56pm Caruana spends some time explaining some basic numeracy here, most likely to parry criticism from the Opposition about ballooning national debt: the absolute increase in national debt is irrelevant if the economy is growing at a faster pace, he says. It is the percentage of debt, as a share of national wealth, that matters.
Why no tax cuts?
7.53pm Caruana sheds some light on the government’s thinking. Tax cuts would have saved families with two working adults €510 a year, he says, while subsidizing energy costs will save them €1,300 in electricity costs and €700 in car fuel.
“The European Central Bank is veering towards a tighter monetary policy, to rein in inflation,” he says. “Reducing income tax at this stage would not be aligned with this policy and could send conflicting messages to the economy.”
It would be interesting to be a fly on the wall during a conversation between Caruana and Kwasi Kwarteng.
Dropping the deficit
7.48pm Back to public finances.
The deficit will drop slightly, Caruana says, despite that promise to spend €600 million to insulate energy and cereal prices. He says that’s in large part thanks to the Inland Revenue Department collecting an additional €120 million in owed taxes this year.
Debt will rise slightly, with Caruana saying the government's plan is to keep it within or around the 60% of GDP mark.
"Projections show that from 2024 onwards debt will start declining," he says.
You can read more about the government's finance projections - and its previous expectations - here.
Looking to buy your first home?
7.46pm You may want to read more about those first-time buyer incentives here.
A slowing economy
7.44pm Tourism did better than expected this year, Caruana says, with gaming, manufacturing and some other sectors also doing well.
But international pressures will weigh down the local economy, he adds.
The economy will grow by around 3.5% in real terms next year, with private consumption rising about around 4%. Government expects investment to increase by 5.9%.
The unemployment rate will most likely hover at around 3.1 %, the minister says, with inflation moderating to 3.7%.
7.40pm Caruana is now onto the next chapter of this year’s budget speech, which focuses on government finances.
He will now discuss GDP growth rates (and targets), the national deficit and debt, among other things.
Stipends to increase
7.37pm Here's one we missed earlier: student stipends are to rise by €50 a year, the minister says. The increase follows a larger boost of 10% introduced last year.
The increase is in line with the Labour Party’s electoral manifesto, which promised students a 15% increase over the course of this legislature.
7.35pm A PL electoral promise to give first-time buyers a €10,000 grant will kick in this year, Caruana says. The measure will apply to all first-time buyers, provided their property costs under €500,000 and will be back-dated to January 1 of this year.
A scheme intended to help buyers pay for their mortgage deposit is to be broadened to properties valued up to €225,000, up from €175,000.
Caruana acknowledges this is a fairer reflection of market prices.
7.28pm We’re onto a section in which Caruana is presenting a series of benefits focused on those with a disability.
There are too many different ones – and he is reading too fast -for us to list them all here - but they range from tax credits for therapy sessions, to a €4.2m programme to introduce personal assistants for people with a disability, to subsidies to buy cars equipped for wheelchair users.
Carers will also get social security payment credits and the law will be changed to make it easier for cohabiting couples in which one person has a disability to have the other registered as a carer.
Carers’ grant increases
7.27pm There’s a massive increase in grants for parents who quit work to look after their disabled children.
Rather than the €500 yearly grant they received this year, they will now receive €4,500 a year, divided into four payments.
The PL has promised to increase the grant to half the minimum wage, Caruana notes.
Difficulty allowances for schools
7.25pm Last year, Caruana announced plans to give school principals €10,000 a year to allocate to children from financially challenged families. The grant came into effect some months ago.
Now he says that the grant will be modified: schools in larger catchment areas, or in lower-income areas, will receive more.
Allowances for fostering and coeliac patients
7.24pm Allowances for fostering will from now on be tapered to end gradually, rather than abruptly the moment the fostering takes place.
And there will also be a benefit for coeliac patients, equivalent to €20.
Children's allowance up by €90
7.23pm Children’s allowance is to rise by €90 per child. The Labour Party had made such increases part of its electoral manifesto.
Caruana says this year’s increase will cost taxpayers €5.6 million and impact 41,000 families.
Those million-euro injustices
7.22pm The government continues its age-old tradition of allocating millions to fix ‘injustices’ workers in state entities suffered in the past.
This time round, it’s allocating €10 million in total to that end.
Caruana boasts that the government will have forked out €83.5 million for such purposes between 2017 and 2023.
More about 'COLA plus'
7.21pm We've got the 'COLA plus' covered in greater detail here.
Boosts to non-contributory pensions
7.20pm Retirees who do not qualify for a contributory pension are to receive an additional €50 a year.
Those with fewer than five years’ worth of contributions will receive €450 a year.
Those with between five and 10 years’ worth of contributions will get €550.
Social security payments for mental health issues
7.19pm Anyone aged 18-30 who misses up to two years of work due to a mental-health-related issue is to get those social security payments covered by the state.
Applicants will need to prove that they received psychiatric care during that time.
More on pensions
7.17pm The non-taxable ceiling on pensions is to rise to reflect the increase in pensions, Carauana said. It will now stand at €14,968.
And 56,000 additional pensioners are to receive cost of living bonuses that reach up to €1.50 a week this year. This is a continuation of a measure announced last year.
Service pensions are to get €200 added to their social security exemption capping. It will now stand at €3,266 a year.
Pensions for widows and widowers will continue to creep upwards to match that of their deceased spouse. Increases will reach up to €3.54 a week.
'COLA plus' before Christmas
7.13pm A new mechanism intended to help low-income people cope with the rising cost of living will, Caruana says, see 80,000 such people receive a cheque at home.
The average grant will be of €300, he says, and grants will be means-based.
Caruana said eligible people will receive a cheque in the post “before this Christmas”.
This measure will cost around €10 million.
Caruana had first announced this mechanism well over a year ago, and there was some expectation that it would be announced during last year’s budget. Negotiations with social partners pushed that forward, though, to this year’s event.
Pensions to rise by €12.50 a week
7.12pm Pensioners are to get a €12.50-a-week increase, equivalent to €650 a year. It’s the eighth year in a row that pensions have increased, Caruana tells MPs.
That’s a huge weekly increase, but remember that it includes the record COLA increase triggered by record levels of inflation.
The increase will cost around €65 million to finance, given that there are around 100,000 eligible pensioners.
COLA of €9.90 a week
7.10pm As Times of Malta had exclusively revealed back in August, this year’s Cost-of-Living-Adjustment will be of €9.90.
The COLA, which is paid to all workers, is automatically calculated based on inflation and cost of living indicators.
Caruana said it would be a massive €25 a week if subsidies were not in place.
It appears the government has disregarded employers’ calls to set minimum and maximum COLA rates, as well the business lobby’s push for some workers to be excluded from the increase.
That €600m figure confirmed
7.02pm Caruana confirms that subsidising energy and cereals will cost around €600 million next year. That's €70,000 an hour and around 10% of all government's recurrent expenditure, the minister says.
Keep in mind, however, that the €600 million figure is just an estimate. It might end up costing more if energy prices rise further, or less if they drop to more moderate levels.
More about those subsidies
6.52pm Caruana is still speaking about the thinking behind the government's push to cushion energy prices.
Had energy prices not been subsidised, Caruana tells MPs, bills would have shot up by 130%.
“For every €100 owed, people would have had to pay around €230,” he says.
Setting the scene
6.43pm As is tradition, the first part of the speech sets the scene. Caruana speaks about the global challenges the country faces, the war in Ukraine and rising prices.
“The last time energy prices were raised in this country, the economy collapsed,” he says.
The minister recalls how Enemalta had, at the time, raised an additional €100 million by raising tariffs.
"Today, we are absorbing a hit six times bigger, and we're not asking people for a single euro," he says.
The minister has effectively confirmed that subsidising energy prices will suck around €600m out of government coffers next year.
Finance Minister presents motion
6.34pm The Finance Minister has handed the president’s message to Speaker Anglu Farrugia, who now reads it out. It marks the start of today’s budget event.
Caruana then presents the budget 2023 motion, which is seconded by Byron Camilleri.
And now the finance minister can begin his speech.
About that red briefcase
6.15pm The finance minister unveiled a new budget briefcase today, breaking from the traditional black one used in previous years.
Here's more about this flashy new addition to the annual budget speech - it looks like Caruana may have spent a pretty penny on it.
6.10pm Good evening and welcome to this year’s budget blog. We’ll be takin g you through the Budget 2023 speech – and its key measures, of course – as Finance Minister Clyde Caruana unveils them.
Caruana, shiny new red briefcase in hand, visited President George Vella earlier today to present the budget document to him, before proceeding to parliament in Valletta.
He's now inside the parliament building.
We expect him to start the budget speech at around 6.30pm.