The President of the Malta Chamber of Commerce William Spiteri Bailey has told The Malta Independent on Sunday that the government's new measures relating to Third Country Nationals do not appear to be "sufficiently calibrated" to achieving the economic transformation that the country needs.

Spiteri Bailey was speaking in an interview with this newspaper days after the announcement of the Budget for 2027, which will increase fees for the hiring of Third Country Nationals (TCNs) and also remove certain free services for them such as public transport and childcare.

Asked about these measures, Spiteri Bailey said that the Malta Chamber has for years consistently argued that Malta needs to move away from its current economic model which he said relies excessively on increasing the number of workers rather than on increasing productivity, innovation, and higher value sectors.

"We recognise and support the economic transformation that the government may be seeking to achieve [with these measures]. But agreeing with the destination does not mean that we are automatically agreeing with the route taken to get there," he said.

Spiteri Bailey said that economic transformation cannot happen overnight and requires planning, consultation, investment, and realistic transitional periods while understanding the realities around it.

He said that while the government appears to be recognising the need to change the economic model, the measures announced in the Budget, particularly those concerning TCNs, "do not appear sufficiently calibrated to achieve this transformation without planning additional pressure on businesses and the TCNs themselves."

Spiteri Bailey said that the Chamber welcomes the Budget's social measures, but added that the economic transformation needs to be "carefully planned and also take other areas into consideration."

He said that there was a total absence of prior stakeholder consultation and social economic impact assessments about the proposals relating to TCNs.  Asked to confirm that these measures were not brought up in any of the government's pre-Budget meetings, Spiteri Bailey said that "it was not discussed with us at any point in time."

"We expected that we and all other social partners would have been approached like in the consultative process for the Malta Labour Migration Policy.  It wasn't the same situation," he said.

Spiteri Bailey said that the Chamber is not opposing reducing dependency on TCNs, but said that this practice which has been happening for years cannot be changed without properly assessing how it will affect businesses, services, consumers, and a host of industries and sectors.

Such measures, he said, must go hand in hand with incentives for companies to use technology to digitise and transform themselves. "In last year's Budget there was the mention of a €100 million fund towards digital transformation, but most of it went unused because the necessary criteria weren't issued," he said.

"Let's be realistic: not all companies are doing well," he said.  "There are some companies which are struggling with labour shortages and rising costs due to the geopolitical situation.  There are transportation costs and logistical costs which are hitting companies, and this will be another core cost which, as the Prime Minister said, businesses are being asked to absorb," he said.

The measures, he said, may also lead to fewer TCNs coming to Malta, even in sectors where they are needed.  He estimated that the costs for a TCN will increase by between €1,500 and €2,000 per year which is enough that it may make some think twice about coming to the country.

"We might have problems in certain sectors where we need them like in the care sector, and at the same time it's going to create problems for businesses.  Some might not be able to find workers, some might not be able to carry this cost, and others working in the export industry might find problems in competing with other countries," he said.

He said that there is a possibility that certain businesses might decide to increase their prices, therefore causing an inflationary aspect as well.

Asked whether he thinks that this is a distinct possibility, Spiteri Bailey said that it is.

"Yes, it depends on the industry and the particular company.  There are companies which can increase the prices, but there are others which cannot and they will have to absorb the costs.  Why?  Either because they are competing with others on export, or because they have a contractual agreement which must be honoured, or because their prices may be fixed from abroad," he said.

Those who might increase their prices, he said, could be minimal, but he warned that there may be companies which cannot carry the added costs and end up in financial difficulties.

The costs for some companies will run into the tens of thousands of euros, he said.

A key measure which is also not being done by the government is an audit on its own operations, particularly in terms of its workforce.  Spiteri Bailey said that where there is excess, a system needs to be created to pass it on to the private industry.  That way, the private sector would not need to bring in as many TCNs and be able to use more Maltese workers.

"The problem is that this is not being done either, and we know that this needs to be done, and needs to be done in conjunction with several other measures," he said.

Eco-contribution increase can bring about quality tourism, but only if income is re-invested into improving country's product - Spiteri Bailey

The Budget for next year will also bring about major increases to Malta's tourist eco-contribution - a tax that each tourist pays for every night they are in the country.

The eco-contribution will increase from €1.50 per person per night to €8 per person per night if a person stays in a hotel, and €10 per person per night if a person stays in a short-let accommodation.

Asked about the proposed increase to the country's tourist eco-contribution - an increase which the Chamber has expressed its agreement with - Spiteri Bailey said that the shift from quantity to quality in this sector is something that the Chamber has been advocating for since at least 2021.

"The Chamber supports this eco-contribution and other tourism-related fees [that are to be introduced], provided though - and this is very important - that the revenue that these increases generate are directed towards improving the tourism product and the localities affected by the sector," he said.

"It's only in that manner that we can actually start elevating the quality of the tourism sector," he said.

"We need to look at our localities, the maintenance, public cleanliness, improved infrastructure, and creating what is overall a better visitor experience," he said.  "If this income is directed to ultimately create a better visiting experience for tourists, then we can start moving in that direction," he said.

Asked whether he thinks that these increases can have a tangible impact in this regard, he said that if the millions of euros that will be collected is re-invested in this manner, then it will.

He also noted that the increased fee may also make tourists who leave less value in Malta to think twice about coming due to the increased cost.

"On the whole I would say yes, it would [have a tangible impact], as long as it is re-invested in the right manner," he said.

Vision 2050 went unmentioned in the Budget speech, Spiteri Bailey notes

Finance Minister Clyde Caruana's Budget speech was far shorter than usual, coming in at just over 90 minutes, as he glossed over several sectors - and many questioned that it was a more short-term budget than a long-term one.

Asked whether he felt that the Budget outlined a long-term blueprint for the country, Spiteri Bailey noted that the government's Vision 2050 - launched earlier this year - was not mentioned even once.

"There was no mention of Vision 2050 and how what is being proposed will fit in with it," he said.

The current economic model, he said, has created pressures on various infrastructure and sectors and on the quality of life of citizens as well : "But everyone wants to change the direction now and we should have a plan - and that plan may be Vision 2050; but nowhere in that document or in any discussions were these initiatives ever thought of."

"They are going to be introduced just the same, so I would say probably yes, there is a lack of this long-term vision especially in comparison with Vision 2050," he said.

"It's more like 'we listened to the people and we've decided to do something about it'," he said of the Budget.

"But the long-term vision, I think, requires more in-depth analysis, more in-depth discussions with the relevant partners, and understanding where these changes will take us not just in the short-term but also in the long-term," he said.

He said that in the short-term these measures "are going to hurt" and in the medium term "we'll have to see what the effect on TCNs will be" particularly in certain sectors.

"One would have wanted to see or understand what the vision is, as it could be that we don't know what it is because we weren't consulted.  But we need to know what the vision going forward in the short, medium, and long-term is," he said.

"We know what the short-term is; we aren't sure what the medium-term is; the long-term should be Vision 2050, but we aren't sure whether there is alignment with that either," he said.