Finance Minister Clyde Caruana said that drastic action is needed in order to combat Malta's declining birthrate, which currently stands as the lowest birthrate within the European Union.
During a parliamentary session on Wednesday, Caruana suggested that the government should create a new tax rate for families with two children.
He stated there should be heavy government investment aimed at encouraging parents to have a second child. He continued that for a country to be strong and prosperous, it must have a "well-prepared young generation", as he remarked that the numbers in Malta show that this is not currently the case.
Caruana commented that combatting the declining birth rate needs to be done by looking at creating a new tax rate for families who opt to have a second child. He remarked that increasing children's allowance is done to help families care for their children, "and we have done that". He added that families need to be incentivised by being given thousands of euro a year and that such a tax regime would need a significant injection of funds by the government.
Caruana stated that such an initiative has to cost many millions of euro if it is to make a difference, but added that such a change would go down in history for changing the population trajectory.
Referring to a study by Professors Anna Borg and Liberato Camilleri, Caruana said that he analysed the numbers included in the study and focused on the reasons why parents opt to have one or two children.
He said that based on the study's findings, fathers of a newborn only child have an average age of 32.4 years, while mothers of a newborn only child have an average age of 31.4 years. Meanwhile, parents of two children seem to have their first child at an average age of 31 years and 29 years for fathers and mothers respectively.
Households with two children also had a higher average annual income of €58,500 compared to households with one child with an average annual income of €50,800.
Having gone over this, Caruana remarked that the study suggests financial considerations play a role in family planning decisions. "You can understand that," he commented, "raising children is expensive."
Additionally, he said that education also functions as a significant factor in family planning, with the study suggesting that higher education levels increase the likelihood of working well-paid jobs and benefiting from more family-oriented measures. Individuals with lower levels of education, on the other hand, are more likely to earn less and are more likely to have one child.
The Finance Minister commented that the choices parents make and the way they invest in themselves when they are younger ultimately impact the likelihood of them having more children. He said that children should be encouraged to remain in the education system as it has a direct impact on the future of the country.
Presenting demographic projections based on data from the study in parliament, Caruana stated that if the current birth rates persist, then the native Maltese population is projected to decline to 336,000 in 25 years, with it currently standing at 406,000 today. He added that of that 406,000, 24% are aged 65 and over and that the projected population of 25 years includes one-third of the population being aged 65 or older. He continued that by 2075, the number could drop to 240,000, with 40% being aged over 65.
Caruana said this data shows that Malta needs to address the declining birth rate with aggressive action, as he added that the government needs to incentivise families to have a second child.