Issue link: https://maltatoday.uberflip.com/i/1547312
The following has been edited for brevity and clarity. The full interview can be found on maltatoday.com.mt as well as our Facebook and Spotify pages. PHOTOS: JAMES BIANCHI / MALTA TODAY 7 maltatoday | SUNDAY • 25 OCTOBER 2026 INTERVIEW What are the challenges and realities that Budget 2027 should address? Malta has been very successful in growing its economy. Going forward, however, the most important issue will not simply be growing the economy, but how we grow it. The way we have grown the economy so far has created what economists call externalities, which we feel every day in our lives. These affect infrastructure, healthcare services, energy distribution, water generation, sewage and traffic. The next step requires a long-term plan and a series of policy decisions that build on one another. We need to increase output, which is why productivity is so important. Each person in the economy needs to be able to produce more. What Budget measures could gov- ernment introduce to encourage this kind of investment and raise produc- tivity across the board? I like to describe the economy as a cake made up of different sectors. Some sectors already have relatively high productivity, such as information technology, communications and financial services. We need to keep expanding these sectors, and, if possible, help them grow even faster. The economy also includes sectors with lower output per person—what we call labour- intensive sectors. These include support services such as cleaning and recruitment, food and accommodation, and construction. Many of our proposals are aimed at encouraging these sectors to invest more in productive capital, modernise how they operate, change their processes and use more modern systems, often through digitalisation. We want businesses to grow their turnover without their workforce having to grow at the same rate as it does today… Government also has a role to play in improving productivity within the public service. As an employer and a participant in the economy, it should improve the efficiency of public services rather than employing additional people to meet demand. Beyond that, government is the policymaker. It guides the economy by creating incentives and disincentives. Its policies should encourage productive investment and make it more attractive than what we call passive capital investment. One problem is that the incentives and risks associated with passive investment are still much more attractive than those associated with productive business investment. You're talking about property. Exactly. A business owner might invest in improving business processes, bring in experts to identify how operations could be improved, and invest in better digital systems. That could require a substantial investment. Alternatively, the owner could leave outdated systems and manual processes in place, continue relying on people to compensate for inefficiencies, and invest in an apartment block instead. Today, the incentives can make the property investment seem more attractive. Do you think Malta is too dependent on property investment? Is it too late to move away from the incentives currently in place? Have we gone too far in that direction to change course? Every thousand-mile journey begins with the first step. If we do not take steps to better align the incentives and disincentives for productive investment and passive capital investment, we will move towards becoming a country where many Maltese people own property and live off rental income, while the workforce becomes increasingly foreign. That would be a model resembling Dubai, but the difference is that Malta is a country of just 316sq. km. I do not think we have reached a point where we cannot realign things gradually, without hurting people, while raising productivity and changing the direction of investment over time… In your pre-budget document, the chamber says Malta needs to move away from a growth model based on volume and consumption. Yet busi- nesses often say their biggest prob- lem is a shortage of workers. Where does this contradiction come from? The chamber has always tried to represent the interests of its members and businesses in the best possible way, but not in a narrow, sectoral, selfish or short-sighted manner. We do so within the wider context of what is good for the country. We have always believed that the country's interests and the interests of businesses must go hand in hand. I work as a business consultant, particularly with family businesses, and I deal with their realities every day. I see outdated processes and a lack of investment in systems. I also see a kind of addiction—instead of investing over the years in modern systems and processes, some businesses have simply hired people to compensate for inefficiencies in the way they operate. But the fact that this happens does not mean it is a good thing. The chamber has a leadership role with its members, and we are telling them that the country now needs to take the next step, and that businesses must also change how they operate and make the investments needed. Our proposals to government are intended to encourage those investments through incentives and raise productivity. Is this addiction also a question of incentives? Yes. I think it is a question of incentives and disincentives. For example, when a third-country national is already working in Malta and wants to change employers, we believe the process should be much faster. The person should not have to start almost from scratch… The people who come here should be able to develop additional skills, increasing the likelihood that they will stay in Malta. Higher skills can also lead to higher wages and greater income, while raising productivity. That is the key to our future. The chamber frequently speaks about competition between the pub- lic and private sector. Maybe this is a political question, but do you think there is the political courage to carry out an audit of the public sector as proposed by the chamber? …When we make proposals, we do not ask whether they will be popular with politicians. We make them according to what we believe is in the best interests of the population and the country as a whole. If we want to raise productivity, everyone must play their part. The private sector must do so, and, as I have said, we are insisting that our own members do their share… But the public sector, as one of the country's largest employers, must also examine its own operations and ensure that productivity improves within it. We need a holistic approach to raising productivity. That is one reason we are calling for an audit of the public sector.