Labour Party backbencher and economist Clint Azzopardi Flores told The Malta Independent that for the Maltese economy to have "more quality growth" or rather, more "equality growth" Malta must tap into its fast-growing industries that are offering more productivity than others to grow the country's gross value added (GVA) per worker.

Azzopardi Flores said that by tapping into sectors that have a higher GVA per worker, like ICT, AI, finance, gaming, professional services, and many more, "the growth that one can have is larger".

He believes that Malta can have higher-productive sectors that output higher productivity if it harnesses these sectors with a greater GVA per worker, that is, production per capita of workers.

Simultaneously, he said that, as a Mediterranean country, Malta must be realistic when discussing productivity given that it must retain its niche markets and the typically Mediterranean sectors, like family businesses, hotels, and others related to tourism.

"I think the focus should be on how we are going to restructure sectors where economic growth is coming from, so that we can have more quality growth," Azzopardi Flores said.

Azzopardi Flores is one of Parliament's new MPs following this year's general election. Before being elected to the government backbenches, Azzopardi Flores had a solid showing in the 2024 European Parliament elections, his first experience in politics, where he accumulated 7,482 first-count votes and ended up with 12,951 votes.

Azzopardi Flores was elected as an MP following the Labour Party's casual elections. He made his way to the House of Representatives by taking up Prime Minister Robert Abela's vacated extra seat on District 2.

Before dabbling in politics, Azzopardi Flores worked for the Maltese representation in the European Union, across several EU institutions, where he worked in the fields of EU budgets, European security, diplomacy, geopolitics, among others. Aside from his new parliamentary duties, he is best known as an economist.

Citing the Malta Fiscal Advisory Council (MFAC), Azzopardi Flores noted that Malta has been able to fill its productivity gaps by getting more foreign workers to work in the country, rather than raising productivity levels to have less workers overall. He observed that to expand certain sectors, since the economy continues to grow and needs to be serviced, the country had to see whether to increase the size of the workforce, through the importation of foreign labour, or else get employees to become more productive to reduce the country's dependency on human capital.

But when this entire equation was being discussed, he said, "they left out the issue of those sectors that can increase productivity without raising the number of workers", that is, sectors with a higher GVA like the ICT sector, family offices, and others, that he'd like the country to tap into moving forward.

Azzopardi Flores stated that if Malta had to decelerate the rate of workers needed to service these industries, a "transition period" is needed to avoid shocking the system. In this transition period, the market would be signalled in advance that these key sectors will advance "a lot more" in the coming years so that when they grow, they grow "at a much slower rate than others". He said that by advising the market on these upcoming developments, infrastructural strains such as the increasing number of tourists, hotels, and holiday flats must grow sustainably - and that he expects some resistance should a transition period be declared, as many would prefer their sectors to continue growing at current rates.

"To be sustainable, you must tell the market that over the coming years, during this transition period, we must begin reducing this acceleration and focusing that acceleration on fast-growing industries to keep growing the economy and have more quality growth," he said.

Azzopardi Flores said that this wouldn't change Malta's economic model, though "one must manage the way the economic model, sectors, are structured" because "much greater management here is required".

The Labour MP remarked that while he has heard plenty of criticism from the Opposition benches on Malta's economic model, he is yet to hear how exactly the PN would manage these sectors.

He expressed faith in Finance Minister Clyde Caruana to handle Malta's finances, including the national debt, which stands at an all-time high at nearly €12 billion. Azzopardi Flores said that these debt levels, however, are sustainable due to Malta's significant, and rising, GDP. Malta's burden of debt (debt-to-GDP ratio) also lies well below the EU's recommended 60% threshold, at around 48%.

Azzopardi Flores stressed that debt levels should be assessed in relation to other economic indicators rather than in isolation, noting that the PN Opposition criticises the national debt by focusing on the figure alone. Meanwhile, PN leader Alex Borg had justified the party's debt to be sustainable last December on the notion that it held more in assets than liabilities.

For the tourism and wholesale and retail sectors, the MP said that the "marginal benefit" that could come out from here "won't feel as good" as this would press against the economy's infrastructure. He noted that with so many more people living in the Maltese islands since 2013, these sectors are subject to diminishing marginal utility, meaning that they provide progressively less satisfaction and benefit.

In this regard, he stated that "there is the need for better management and strong planning" to retain these marginal utilities.

Azzopardi Flores said that Malta's economic growth could be larger, though this would aggravate existing infrastructural strains. "That's why we must decide the direction we want to head towards as a country; are we happy with the pace we're moving at, with the PL's Int Malta forecast of 4% economic growth annually till 2031? Should we keep that [forecast] or aim higher, for 6-7% economic growth, but then, obviously, have more people wanting to work here as some growth comes from a select few services?"

One area where he believes "strict protocols" are required is the situation with holiday flats and apartments. He said that "we must be strict in the way we execute regulations".

Azzopardi Flores told this newsroom that beyond just enforcing the law, he believes that "the way we design our laws and regulations should allow us to operationalise" the sectors at hand. For instance, he referred to cases where individuals were issued fines, but the subsequent steps were "unclear", resulting in them receiving heftier fines because they were unaware of what they were required to do next.

He mentioned that this concept should be applicable to even sectors where the market is allowed to function freely in comparison to others. The government backbencher stated that if the market is indicated that it can go about as it pleases, then "you would be sending wrong signs to investors if you clamp down on them aggressively when they were working in a laissez-faire environment", ultimately shocking the sector and causing hiccups.

Azzopardi Flores observed that the social costs, such as noise pollution and social behaviour, garnered by certain areas outweigh their derived benefits. Here he cited the deployment of police and soldiers, as well as that "more capacity building is required for waste management".

"This is an area that, I think, needs to be thoroughly managed to the point of precision. Why? Because we have more people and, as we have more people, more tourists, there will be more problematic situations and occurrences," the PL MP said.

He noted that tourism in the Three Cities is starkly different to the experience of locals in the whereabouts of St Julian's.

Overall, he added that while tourism has positively motivated the restoration of heritage sites and raised the level of buildings in certain areas, it has also come with its own repercussions, such as driving up rent prices, he said.

The government MP does not believe that Malta's housing market is in a bubble, though property prices have gone up so much that, in his opinion, the country must correct instances of market speculation and offer units to help young people find a place to live.

Azzopardi Flores thinks that helping youths become homeowners is something that authorities can do to curb Malta's diminishing, and alarmingly low, fertility rate. Women in Malta are having just 1.01 live births each, according to Eurostat; this is the lowest figure in the EU today and Malta's lowest on record. Malta's fertility rate in 1990 was exactly double today's rate.

Azzopardi Flores maintained that "the Maltese government cannot do much" to curb this Western trend beyond providing affordable housing, incentives, helping youths with rent, and expanding IVF services. "God forbid we come to a point where the government must decide how many children people should have," he said.