WATCH | Clyde Caruana: ‘Families raising children have more expenses and challenges than others’

Finance Minister Clyde Caruana says Budget 2026 rewards families raising children with major tax cuts but insists that improving quality of life will also require longer parental leave, greater productivity, and a renewed focus on education.

Families with children were the prime target in Budget 2026, being rewarded in the form of widened tax bands that will leave more money in their pockets. 

Taxpayers who do not have children may have found this unfair but when I raise this concern with Clyde Caruana, he insists this targeted support is important to make sure that families feel empowered to have more children. 

“Families raising children have more expenses and challenges than other families. By lowering tax so significantly, couples having children or about to have children will be left with enough money to pay off a large part of their home loan, if not all of it,” he says. 

Caruana acknowledges that this measure, albeit massive, is not enough to offer a better quality of life to families. He says the next step should be to increase and strengthen leave offered to new parents, but not without first bringing social partners around the discussion table. 

“It’s clear what our thoughts are. Now we must sit at the table to see how this will happen. But it needs to happen. I’m all for it,” he says. 

Caruana says Budget 2026 is part of a broader strategy to enhance productivity and economic resilience, shifting from a growth model focused on expanding the workforce to one that prioritises capital investment and skills development. 

“We are changing the economic recipe of growth. Instead of adding more workers, we are encouraging companies to invest in capital so that existing workers can be more productive, while also creating wealth for the country,” he adds. 

This approach, he explains, is why the government has opted against broad corporate tax cuts, favouring policies that retain skilled workers and incentivise innovation. Caruana linked this strategy to higher wages and greater efficiency within Maltese companies, arguing that a more productive workforce benefits the economy as a whole. 

He says that only once Malta becomes more productive can the government start to consider matters like a four-day work week.  

“We haven’t matured enough as an economy to start promising things like a four-day work week. Countries like the Netherlands can offer shorter hours and higher wages because their workers spend more time in education and develop higher skills,” Caruana says. 
The finance minister notes that over 40% of students currently do not achieve six O levels, a sign that families need to give more value to education, and the state must ensure that the workforce is prepared for a rapidly changing global economy. 

The following is an excerpt of the interview.   

The budget slogan suggests that it’s only through economic growth that we can guarantee a future for our children. Is this growth sustainable in the long term? 

Yes. The incentives we announced in the budget are tied to capital investment. I used to say that we need to change the economic recipe of the way we grow, and slowly, that change is happening. It’s happening because we’re encouraging companies to invest in their capital instead of adding more workers, so that with the same increase in capital, the existing workers can be more productive so that we no longer need to bring foreign workers to create wealth. Those workers will also benefit from higher wages.  

Population growth has been a key concern. How does the budget address this concern? 

Malta’s economy grew in a very short amount of time, and that brings its own challenges. How are we addressing the issue? First, we acknowledged the problem. Then, we published our labour migration policy so that the population can continue to grow, but at a decreased rate.  

We’re not giving the industry any money to employ more workers, but rather to keep workers for longer and to invest more in research, innovation and AI.  

The direction is clear now. We have enough workers, so let’s now look at the way we produce. Production in the economy happens through land, labour and capital. Land is what it is. We already have a lot of labour. So the third way to grow is capital.  

You had poured cold water over proposals for a mass transit system. How else can the traffic issue be addressed? 

This is a big problem. It’s especially big from a financial aspect. I don’t have anything against it, but I want to be convinced that the numbers make sense and that everyone understands the change of attitude that needs to take place. It’s not just about project costs but also operative expenses. How will all this be financed? And revenue; how much will people pay? Will there be enough demand? Will people stop using their car or get rid of it entirely? Will they do it on their own volition or only through measures like paid parking, or limited parking, or increasing licence expenses? I’m not saying I agree with these measures, but these are things that need to be considered for a project like this to make sense. Are people ready to move around more? Neither a tram or metro will stop in front of your doorstep. I want to be convinced that people have considered all these things. 

You’re often in disagreement with the prime minister. What’s your relationship with him like? 

I have no problem with the prime minister. I worked well with him throughout the pandemic, and I work well with him as finance minister within Cabinet. He knows what type of person I am. I’m the type that says what I feel and think. I’ve been in the Labour Party for over 25 years and I consider myself a child of the party. I’ve dedicated a lot of my time to the party. I do what I do and say what I say because I believe in the party and I want to make sure the government has the best policies to bring to its people. I understand that I get quoted for days whenever I speak, the little I speak, but I do this to sensibilise public opinion. 

In your budget speech, you said the government will start discussing with social partners so that maternity and paternity leave can be increased. Do you think you will find agreement with employers? 

We need to get there. A commitment to improve the quality of life of families merits this discussion. When I announced the tax cuts, I said that several measures need to be taken to improve family life, and this is the biggest measure but only one of many that need to be taken. It’s big, but it’s not enough on its own. There needs to be more. This is one of these measures that needs to come into force. 

What if employers don’t agree with this? 

You can’t discuss forever, but you can’t not discuss either, since these things have their impact. We’re showing what our intention is. It’s clear. Now we need to sit at the table to see how to make it happen, but it needs to happen. I’m all for it.