Issue link: https://maltatoday.uberflip.com/i/1547431
IN his red tie and with a barely concealed air of glee, Clyde Caruana delivered the kind of budget speech that governments relish. It was one filled with cash hand- outs and tax relief. It was a feel-good budget, designed to reassure households that Labour re- mains on their side at a time when most European governments are imposing harsh austerity. But beneath the reassuring arithme- tic lies a more complicated story. The state is spending hundreds of millions of euros to protect household incomes, yet foreign non-EU workers, who help sustain the economy are being excluded from benefits and asked to pay more. With a few exceptions, wealth at the top remains largely untouched, while the government looks to tourism and con- tinued economic growth to help finance its promises. The question is not simply how much Labour is giving back, but what kind of economic and social model this gener- osity is designed to preserve. Is Caruana offering a helping hand to working peo- ple while preparing Malta for a different future, or using the proceeds of an ex- panding economy to make the existing model more palatable? And how socialist is a budget that pro- tects most workers but excludes the most vulnerable among them? Subsidies for some, exclusion for others The budget's generosity is real. The government will spend around €400 mil- lion next year subsidising energy and fu- el prices. The total expenditure on these subsidies reached approximately €1.4 billion between 2022 and 2026. The measures announced in the budget add to this support. Eligible workers are promised a €1,000 tax free super bonus, while additional cost of living adjust- ment grants range from €200 to €1,500. Pensioners will receive a €10 weekly in- crease, and families with children are set to benefit from further income tax relief as tax thresholds rise again next year. These measures put money into peo- ple's pockets and help households cope with the cost of living. For many, that support is welcome and necessary. But the political and ideological questions begin when we ask who qualifies. Making foreign workers pay Third country nationals are excluded from selected benefits, including free childcare, free public transport, the atypical workers' benefit and the super bonus. The budget also increases the cost of employment and living in Malta for some foreign workers. Work permit fees for non-EU nationals will rise from €600 to €800, alongside a new annual €400 "infrastructure contribution". Non-EU residents holding category B or B1 driv- ing licences will also face a new monthly administrative fee of €83. The budget thus draws a distinction be- tween groups of people who may live and work in the same country, pay taxes and NI here, contribute to its economy and face similar pressures on their household budgets. It is punishing a category whose median employment income is 38% low- er than the national average. While the median employment income for Maltese nationals who worked full-time for a whole year in 2024 amounted to €32,500, that for third country nationals stood at €18,200. In this sense it turns the table upside down. Instead of taking from the rich to give to the poor, on this aspect the gov- ernment is taking from the poorest to give to the natives, irrespective if they are rich or poor. And if foreign workers help generate the economic growth that finances these benefits, why should their access to support be more restricted? The government can argue that a growing population places additional demands on infrastructure and public services, and that those who use these services should contribute towards their cost. But the question is whether these charges are a fair way of financing that infrastructure, particularly when con- sidering that these workers are brought here by Maltese employers to cater for Malta's economic needs. Foreign workers pay rent, buy food, use transport and contribute to the economy through their labour and consumption. Crucially they pay taxes and nation- 8 maltatoday | SUNDAY • 1 NOVEMBER 2026 ANALYSIS How socialist is Clyde Labour is using state spending to protect household incomes while restricting benefits for non-EU workers, leaving wealth at the top largely untouched and relying on a tourism boom to help fund its promises. Is this a new form of social democracy, or has Labour lost its soul? JAMES DEBONO jdebono@mediatoday.com.mt And how socialist is a budget that protects most workers but excludes the most vulnerable among them? The budget thus draws a distinction between groups of people who may live and work in the same country, pay taxes and NI here, contribute to its economy and face similar pressures on their household budgets