The cost of not choosing

Tomorrow, the finance minister will present another budget, with the familiar anticipation of new measures, allowances and promises of relief. The conversation will quickly turn to who gained what and whether government has been sufficiently generous. 

Yet the more consequential question may concern what will not be announced. Which existing commitments have been reconsidered? Which programmes have outlived their purpose? Which difficult choices have released resources for Malta’s emerging needs? A budget is not simply a statement of how much a country intends to spend. It reveals what a country prioritises, and what it is willing to stop prioritising. 

There is an important distinction between affordability and choice. Growth can make an expanding public sector appear affordable, particularly when tax revenues rise alongside employment and consumption. Malta benefited from precisely this dynamic in 2025. The general government deficit narrowed to around 2.1% of GDP, as revenue outpaced expenditure.

But improved fiscal balances do not necessarily mean that public resources are being used more effectively. They can mean the economy is generating sufficient revenue to accommodate an expanding collection of commitments. The test comes when revenue growth slows, new pressures emerge, and government must decide what deserves priority. 

The latest figures make this test more demanding. During the first six months of 2026, government expenditure increased by 15.2% compared with the same period a year earlier, while revenue increased by 6.7%. The deficit widened from approximately €313 million to €698 million. Employee compensation increased by 10.2%, intermediate consumption by 22.1%, and gross capital formation by 23.4%.

Half-year figures reflect payment schedules and cannot forecast the entire year. These increases do not in themselves establish waste, but they raise an important question about whether the state can address new priorities without adding another layer of spending. 

Much of a budget is determined before the finance minister enters parliament. Public servants must be paid, pensions honoured, healthcare delivered, contractual obligations fulfilled and debt serviced. Many reflect essential responsibilities and legitimate social commitments. The difficulty arises because new measures are generally easier to introduce than old measures are to redesign.

A grant creates beneficiaries, a subsidy creates expectations, and programmes become embedded in institutions. The budget risks becoming an accumulation of past decisions rather than an expression of present needs. Some obligations are legally binding, others politically entrenched, and still others survive because nobody is tasked with questioning them. Treating all three as equally untouchable obscures where meaningful choices remain. 

Inertia 

This is the political economy of inertia. The benefits of existing measures are concentrated among people who know what they stand to lose. The costs are dispersed among taxpayers, future generations and competing priorities. Removing or reforming a programme therefore generates visible resistance, while maintaining it rarely generates comparable scrutiny. Governments of every political persuasion face this asymmetry.

It helps explain why budgets tend to be additive—a new incentive here, an additional allowance there, another scheme to address a problem that an earlier intervention failed to solve. Each expense may be defensible yet collectively inconsistent with changing needs. A policy introduced as temporary relief can quietly become a permanent entitlement. The fact that it once addressed a genuine problem does not establish that it remains the best instrument for addressing it today. 

Consider the choices facing Malta. The country needs better transport connectivity, more reliable infrastructure, stronger educational outcomes, an effective response to population ageing and a credible transition towards greater energy resilience. These priorities will shape opportunity, quality of life and public services for decades. Yet each competes for resources with established commitments.

Maintaining broad energy support, for example, has protected households and businesses against international shocks. That protection has value. But without a strategy to reduce energy dependence, public money repeatedly cushions a vulnerability rather than removes it. The choice concerns how best to deliver compassion and fiscal responsibility together. 

The same reasoning applies to infrastructure. Announcing projects is attractive, but their merit depends on solving problems at reasonable whole-life cost. A road intervention temporarily relieving congestion may offer less value than reliable public transport, school mobility, maritime connections or better-coordinated working hours. Conversely, rejecting capital investment simply to improve short-term fiscal figures can be equally misguided. What matters is whether spending produces measurable benefits, not its accounting label. Teachers’ salaries, preventive healthcare and effective maintenance can build long-term value; an impressive building with little practical utility may not. 

Spending and results 

Education provides an especially uncomfortable illustration of the gap between spending and results. Malta has invested in facilities, programmes and reforms, yet weaknesses in foundational learning remain a serious concern. The response cannot be another initiative added to next year’s allocation. It must examine what programmes achieve, why students fall behind, and which interventions improve learning. The same applies to healthcare, social policy and business support.

How many programmes are evaluated after implementation? How frequently are unsuccessful approaches discontinued? And how often does evidence lead to resources being transferred from familiar initiatives towards more effective alternatives? 

This requires a different understanding of fiscal discipline. The conventional debate focuses on the deficit, public debt and whether government expenditure is rising too quickly. These indicators matter, particularly as ageing, healthcare demand and interest costs increase pressure on public finances.

But compliance with European fiscal rules is a constraint, not a strategy. A country can meet deficit targets while preserving ineffective programmes and neglecting essential investment. Equally, a well-designed investment can strengthen long-term fiscal sustainability even if it increases expenditure today. The objective should be public value within a credible medium-term fiscal framework. 

Spending reviews 

There are practical ways to begin. Government could publish a clearer account of the multi-year costs of existing policies before adding new measures. Major schemes, subsidies and tax incentives should face regular spending reviews, with their objectives, beneficiaries and outcomes made public. New discretionary programmes could carry review dates and, where appropriate, sunset clauses requiring a decision to renew them. Tax exemptions and preferential treatment should also count in this exercise.

They may not appear as ordinary spending, but they carry opportunity costs just as surely as a cheque written by government. Procurement and contracted services deserve particular scrutiny, not because outsourcing is inherently inefficient, but because rapid spending growth requires evidence of value. Parliament and independent fiscal institutions should scrutinise outcomes, not just arithmetic. 

Not every programme can be judged by financial return. A pension protects dignity, disability support advances inclusion, and public healthcare delivers benefits that cannot be reduced to euros saved.

Evaluation is not about making government a profit-maximising company. Its purpose is to distinguish clearly between the social outcomes society wishes to protect and the particular instruments chosen to deliver them. A commitment to the former should not automatically become permanent loyalty to the latter. Policy instruments must be allowed to evolve as evidence, technology and circumstances change. 

Ultimately, the obstacle is as much political as technical. Meaningful reallocation creates winners and losers, while the benefits of better choices may emerge only after several years. Malta needs greater maturity in discussing public finances, with parties, employers and unions acknowledging trade-offs rather than promising everything without sacrifice.

Vision 2050 and other long-term strategies will mean little if the annual Budget remains disconnected from the decisions required to deliver them. Strategic ambition is measured not by the number of priorities a government announces, but by its willingness to rank them. 

The untouched 

Tomorrow’s budget will contain measures that are necessary, welcome and politically popular. They deserve to be assessed fairly. But the most revealing part of the exercise may be what remains untouched. Economic leadership is not only the capacity to finance new promises. It is the willingness to question inherited commitments, confront competing demands and redirect scarce resources when the national interest requires it. 

In economics, choosing not to choose is itself a choice. As Malta’s needs and fiscal obligations grow, the cost of that choice will become harder to ignore.