Opinion: Securing The Best Future For Us And Future Generations

Recent years have seen Malta’s economy become a trailblazer. We introduced benefits that in other countries remain stuck in policy documents or at most tested as pilot projects. From free childcare, to free public transport, to the tapering of benefits, to the lack of taxation on pensions, to free gyms for young people.

We have taken our economy from the one with the second lowest capacity in Europe to create jobs to being the second best.

Our economy has grown by a third since the pandemic, when experts had predicted that we would remain stagnant like the rest of the euro area. Our GDP per capita now exceeds that of Finland and France, and is soon going to equal Germany’s.

Does that mean that we can rest on our laurels and hit the pause button? Certainly not.

Today’s dynamic economic climate is not one that allows anyone to do that. We have seen how powerhouses such as France have tumbled by remaining stuck in their ways. Or how countries that went down the tempting road of populism, like the UK, have ended up with rising unemployment and falling living standards.

We are also at a very important crossroads. One road leads to the rapid progress promised by the adoption of AI and advanced robotics. The other road leads to social disruption and alienation, also caused by the same technologies.

This is therefore not a time for ill-thought experiments but rather the time to consolidate all that we have achieved over recent years and get prepared for our next leap forward.

This is the underlying philosophy underpinning Malta’s Budget 2026 – a Budget that aims to continue spreading the benefits of rapid economic growth to those who do not benefit directly from it. It is a Budget that aims to strengthen further the purchasing power of parents so that they can continue to invest in the education of their children, our future workforce. A Budget that devotes considerable additional support to our firms so that they can prepare for the digital and green transformations. A Budget that while continuing to invest in traditional infrastructure starts a pivot towards new technology.

Accompanying these four aims are four figures. A social package of €120 million, a tax cut for parents of €160 million, business incentives for innovation and wage progression of €40 million and a commitment for AI investment of €100 million.

Why am I singling out these €420 million? Not because the rest of the Budget allocation is irrelevant. It most definitely is not, and is crucial for the success of our society. However, the €420 million represents that part of our Budget that most clearly constitutes a direct investment in the success of our Malta Vision 2050.

Over recent months we have undertaken the largest consultation process ever undertaken in our country. Together with foreign and national experts, an in depth exercise with 400 stakeholders and a large survey among the population, we drafted a consolidated strategy encompassing all areas of government. More than 2,000 persons or organisations took the time to send us detailed feedback which we are integrating within our strategy before we launch it early next year.

Malta Vision 2050 sets out the path we believe our nation should undertake in order to remain one of the most successful societies in Europe.

Now that our GDP per capita is among the top ten in Europe, we need higher ambitions. That is why from next year instead of just looking at inflation, unemployment, deficit, GDP growth and poverty rates, we will start to measure ourselves against three additional targets.

Firstly our position on the UN’s human development index, an index that combines economic achievement with that in education and in health. Secondly, by how much the disposable income of our families exceeds the EU average. Thirdly, by how much we deem our life to bring us satisfaction.

Does that mean that GDP and the rest of our past guides have become irrelevant? Absolutely not. Rather, now we have to achieve those, and on top do better in the three broader indicators above. For example we still need rapid GDP growth, but now it has to also directly lead to better human development, higher household income and better life satisfaction. If it does not, we will fine-tune the economic machine to lead to this.

Doesn’t sound that easy? Well, when ten years ago we were saying that we would have the highest employment rate in Europe, many instead said that “Labour won’t work”.  Over the course of these ten years we have shown how good progressive policies can achieve pretty much anything you aim for. And if ten years ago, we had just started down this lane, now we are ten years wiser and way better at policy formulation and implementation than we were then.

Take taxation. Back in 2013 we started by removing income tax from those on the minimum wage. Then in 2017 we removed income tax from pension income. Last year we gave the most comprehensive tax cut ever granted, which benefited all and not just some. This year we are starting the process of removing income tax on parents earning up to the average wage.

Back in 2012 a parent started paying tax on incomes above €750 a month. In three years time those with one child will start paying tax only on incomes above €1,500 a month, while those with two children or more will be free of tax on incomes below €2,500 a month.

What about the environment? Before 2013, successive Nationalist governments had extended the development zone by an area equivalent to that Siggiewi in addition to earmarking Manoel Island and White Rocks for high-end property speculation. We will be returning these areas and Fort Campbell to the people in the form of parks.

What about housing? We are continuing our policies to lower property taxation on first time buyers, giving grants to support loan repayments and the purchase of vacant or UCA properties while strengthening the equity sharing and the 10% deposit schemes. We are also starting our affordable housing programme which will see hundreds of properties being sold at a 30% discount from market rates.

And a final word to those who may be reflecting on the different measures announced. When your employer next grants you a raise, a substantial part of that increase is supported through a government subsidy, even more so for those working in Gozo.

Next year’s Budget is not just about financial figures, it is about strengthening the backbone of our workforce and supporting families.

A €9.3 billion investment is not a promise; it is a shield, ensuring stability and opportunity for every citizen in Malta and Gozo.

Robert Abela is the Prime Minister of Malta