Social benefits fail to guarantee ‘dignified standard of living’, NAO says

The National Audit Office has flagged a “dignity gap” among people relying solely on social benefits, saying that they cannot afford a basic, dignified standard of living.

In its report, published Wednesday, the office pointed out a family of four relying on non-contributory social benefits receives only €14,717, which is €4,600 less than the minimum essential budget estimated for 2025 at €19,355.

The report said that while benefits increased by 18% since 2023, the cost of living rose by 27% during the same period. Consequently, the financial deficit for these families has nearly doubled since 2020, when the shortfall was €2,707.

The NAO previously recommended tightening eligibility thresholds to ensure that people with significant assets cannot access benefits intended for the financially vulnerable. Instead of tightening criteria, the Budget 2025 increased thresholds, raising the savings limit for single individuals from €14,000 to €16,000 and for couples from €23,300 to €26,00.

It also flagged that the Benefits Compliance Directorate continues to exclude certain assets from means-testing, such as summer residences and high-end vehicles, without these exclusions having any formal legal backing.

The report also identified severe limitations in how the government monitors and enforces benefit compliance. It found that the BCD failed to implement physical inspections for new applicants or those seeking reinstatement after previous fraud. Currently, only desk-based checks are performed for previously defaulting applications.

However, the inspectorate is critically understaffed. There are only three inspectors working at the BCD, and the inspectorate itself acknowledges that it needs at least six to be effective.

The NAO said genuinely proactive, random inspections accounted for only 1.22% of all inspections carried out in 2024. Furthermore, inspections are strictly confined to standard office hours, making it impossible to detect irregular employment that occurs during evenings or weekends.

Despite the lack of progress on 13 key recommendations, the BCD is exploring Artificial Intelligence (AI) and machine learning to detect fraud. A proof-of-concept has been developed with a one-year action plan to transition toward an operational AI-driven detection solution.

Limited progress on university capital projects

The NAO also scrutinised the University of Malta for limited progress on recommendations regarding its multi-million euro capital projects.

The Sustainable Living Complex (SLC), originally slated for completion in 2018, is now not expected to be fully operational until June 2026.

The audit also flagged issues with the Campus Hub project, noting that unutilised space in Block A remains empty. The NAO warned that this represents lost potential revenue for the university and could lead to higher costs for the government if it decides to lease the space at future market rates.

Transport: More inspectors, but consistency lacked

Progress at Transport Malta was described as mixed. While the Public Transport Unit (PTU) successfully doubled its inspectorate staff to seven and moved to a 24-hour shift pattern, the quality of inspections remains inconsistent.

"Mystery shopping" exercises conducted by the audit team revealed that inspectors were far less rigorous when not being openly shadowed. Mandatory safety checks, such as the functionality of wheelchair ramps, were notably missed during these unannounced visits. However, the NAO pointed out that TM has re-classified several health and safety breaches as “non-rectifiable,” allowing for immediate penalties upon detection.

Planning Authority a success story

Meanwhile, the Planning Authority (PA) successfully implemented nearly all of the NAO’s recommendations. The authority has introduced a formal ICT strategy, established a robust policy for major investments, and improved its disaster recovery planning. The NAO “positively acknowledges the significant effort” made by the PA to strengthen its internal corporate governance.

Auditor General Charles Deguara noted that while some entities are making efforts, the lack of progress in sensitive areas like social benefits and infrastructure is concerning. The NAO intends to revisit several of these audits within the next two years to ensure that public funds are managed with greater accountability and transparency.