Maltese and Gozitan residents will be able to travel between Malta and Gozo free of charge as foot passengers from 1 January, Prime Minister Robert Abela announced during his replica speech on the Budget 2027 debate on Tuesday evening.

The measure will not cover vehicles and will apply to Maltese and EU citizens, as well as people with long-term residency status.

Other third-country nationals (TCNs), who will also lose access to free public transport under the Budget's new measures, will continue paying for their journeys.

Abela also announced that Qatar Airways would resume flights to Malta next March, while Lufthansa Technik would open its fourth hangar during the first quarter of 2027.

He further said that clean-up works had started at Manoel Island, with the intention of improving public access to the site.

The announcements came as Abela defended the Budget as a plan to preserve economic stability amid international uncertainty, describing it as the "only progressive budget in Europe."

He said that, even if the continuation of energy subsidies had been its only measure, it would still have been the best in the European Union.

The government would allocate another €400 million towards energy subsidies next year, maintaining stable prices for electricity, fuel and gas, following an equivalent allocation for the current year.

He said that other countries had passed rising energy costs on to their populations, while Malta had chosen to absorb the burden.

Abela questioned why Opposition Leader Alex Borg had devoted more attention to pensioners receiving additional benefits than to the energy subsidies during his Budget reply.

He also cited comments by former PN Leader Bernard Grech, who had said prices in Malta would rise when international prices increased, and an article by PN MP Adrian Delia calling for a review of the subsidies.

Describing Borg, Delia and Grech as a "political triumvirate," Abela sarcastically said Borg had offered the "best response" on subsidies because "he said nothing."

He also took aim at Borg's description of Malta as being "royally screwed," a phrase previously used by Finance Minister Clyde Caruana when discussing the risks of a costly mass transit system.

"You know who's royally screwed? The PN that has been lumped with you," Abela said.

The Prime Minister defended the Budget's social measures, particularly the annual €1,000 super bonus for local workers, which he said would be non-taxable.

Part-time workers would receive at least €500 a year. He said the measure represented an estimated €200 million injection into the economy, from which businesses would also benefit indirectly.

Pensioners would also receive the super bonus, while pensions would continue rising through the cost-of-living adjustment (COLA).

Stipends would rise in line with COLA, and new stipends would be introduced for students pursuing studies in maritime-related fields and aviation, Abela said.

Abela said income tax changes would allow families to save thousands of euros, while the government would cover therapy costs for children with disabilities.

The carers' grant would increase by €7,500, as he also referred to the transfer of social security contribution credits, expected to begin next year, which would allow thousands of women to improve their pension entitlements.

For businesses, he spoke of a planned 10% reduction in the corporate tax rate, five years of exemption from business registry fees and free legal assistance for start-ups.

The first-time buyers' grant would also be extended to people going through a divorce who want to purchase a separate property.

On healthcare, Abela referred to plans to accelerate the expansion of Mater Dei Hospital's Emergency Department and the development of a new hospital dedicated to mental health care.

He accused Borg of having previously disrupted the mental health hospital project and described the Opposition leader as inconsistent.

He insisted that Labour had consistently supported IVF and highlighted increased allocations for rare disease treatments, older people and additional medicines.

Abela also defended the Budget's measures affecting third-country nationals, which have proved controversial because of restrictions on access to free childcare and public transport for those who do not meet long-term residence requirements, alongside higher work permit fees and additional charges.

He said the discussion on foreign workers needed to be approached sensitively, insisting that migrants were entitled to dignity and protection like everyone else.

He referred to an Indian nurse who had cared for his parents after they were grievously injured in a car crash last year, thanking her for her work.

Abela accused the Opposition of contradictory positions on migration, saying that some PN representatives had spent months raising concerns about overpopulation before criticising measures intended to manage the number of foreign workers.

Net migration had been reduced by a third while Malta remained among Europe's strongest economies, he said. The government had also introduced a distinction between fees for new work permits and renewals, to discourage employee turnover, he said.

On tourism, Abela rejected criticism that increasing the eco-contribution would deter visitors, saying the aim was to attract higher-quality tourism throughout the year rather than focus solely on peak months.

The revised contribution would distinguish between types of accommodation, including short-lets, hotels and cruise passengers.

He defended the decision not to limit the increase to the summer months. He also accused the PN of previously circulating misleading information about Malta's drainage system in a way that could discourage tourists.

Qatar Airways to resume Malta flights in March

Abela announced that Qatar Airways would resume operating flights to Malta next March, saying the development would reconnect the country to the airline's international network.

He said attracting investment and visitors from different markets formed part of the government's efforts to diversify the economy and improve the quality of tourism.

Lufthansa Technik to open fourth hangar

The Prime Minister also announced that Lufthansa Technik would open its fourth hangar in the first quarter of 2027.

The facility will allow the company to carry out maintenance on commercial aircraft from around the world.

He referred to a separate renewable energy-related industrial investment expected to employ around 60 highly skilled workers, as well as developments in gaming and esports.

Abela said that Malta had already reached targets originally set for 2030 in the gaming sector, including the development of prediction markets.

A response on the licensing of space-related activities was expected in the first months of next year, and an agreement with the United States would give Malta-flagged ships and yachts preferential treatment, creating opportunities for the superyacht-building industry.

On foreign investment, Abela criticised the PN's position on fiscal arrangements for international companies.

He cited parliamentary questions by PN finance spokesperson Adrian Delia seeking information on companies benefiting from particular tax arrangements, and on whether these could damage Malta's reputation and governance.

The companies concerned employed around 45,000 people, Abela said, accusing the Opposition of putting the financial services sector at risk and comparing its approach to the earlier citizenship-by-investment controversy under former PN leader Simon Busuttil.

"My government will keep protecting and incentivising all foreign direct investment operating in Malta," he said.

Abela described education as essential for social mobility, saying schools needed to prepare students for a changing world, particularly as artificial intelligence grows in importance.

Three new schools would be inaugurated next year, while 10 others would have air-conditioning installed. He called for greater emphasis on critical thinking and psychological development, alongside better pay and conditions for educators. The government was preparing a second national AI strategy, he said.

On energy infrastructure, three electricity distribution centres had been completed, including in Siġġiewi and Naxxar, with another 15 planned. Research had also begun for a third electricity interconnector, Abela said.

Next year's capital expenditure of €1.5 billion would be the largest in Malta's history, he said.

Abela said the Budget allocates €141 million for Gozo, with improvements to ferry schedules, progress towards an agreement for a fourth vessel and plans for new Gozo Channel ships.

On Manoel Island, he said the clean-up aimed to make the site an open space, comparable to White Rocks.

Abela said Malta needed to move beyond an economic model focused exclusively on growth, ensuring prosperity translated into better services, stronger communities and an improved quality of life.

Referring to Malta 2050, he said the aim was to build on the country's economic foundations while creating a more sustainable future.

He concluded by insisting the government would fulfil its electoral commitments despite international uncertainty, urging people to leave their worries to the government.

"Others would burden you, we give you a super bonus instead," he said.