The governments of the EU member states, including Malta, have submitted their budgets for 2015 for scrutiny and feedback by the European Commission. There are certain criteria that need to be met, such as the 3 per cent ceiling for the fiscal deficit as a percentage of the gross domestic product. However, one would expect the familiar tussle between the European Commission and some governments as to whether priority should be given to economic growth or to fiscal consolidation.

Irrespective of who wins this tussle this time round, I believe that one can safely say that all governments have undertaken an expenditure review to seek to reduce, if not eliminate, wasteful and unproductive expenditure. In approaching such a task, governments have adopted different strategies. Some have sought to achieve a linear reduction in expenditure, such as a 3 per cent cut across the board, while others have sought to zero in on certain expenditure items and reduce drastically the amount spent on them.

It is always difficult to determine which is the right approach. Similarly, it is also difficult to determine whether governments should focus exclusively on the large expenditures in order to make a big impact or whether it should also focus on those items which involve an expenditure level which is not so material. These various issues raise a number of considerations which, in my opinion, can only be tackled through a number of questions. The way we answer these questions would reflect our own outlook, our own world view of things.

I believe that one can safely say that all governments have undertaken an expenditure review to seek to reduce, 7756if not eliminate, wasteful and unproductive expenditure

If a government were to go for a linear reduction in expenditure (say 3 per cent across the board), would it be penalising those public sector activities and initiatives that the country really requires, as even those would be allocated less resources?

Would such a linear approach punish the virtuous segments of the public sector that would have been careful in the way it used the resources allocated to it?

Would focussing on the smaller expenditure items mean that there would be a great deal of effort, with very little to show for it? On the other hand, should wasteful expenditure be allowed when it comes to public funds, irrespective of how big or small it is? Would tackling such waste send a message that would force public officers to look after the cents, as much as they look after the euros?

Should governments risk becoming unpopular by reviewing the costs and benefits of social benefits? Should there be a review of social benefits to make them more relevant to our times?

Should government make a review of the services it provides to the public and assess whether they can be provided at a lower price through different working arrangements?

It is interesting to note what is ­happening in other countries such as Italy. The government, led by Prime Minister Matteo Renzi, has decided to cut down the number of official cars (they call them auto blu) allocated to each ministry. It means an immaterial reduction in expenditure but it sends a strong material message.

It also asked the regional governments, which are responsible for expenditure on public health services, to undertake better purchasing. It could not be that the same item is purchased at one price by one region and at a multiple of that price by another region.

Maybe one should have a look at what Sweden has achieved. Its public sector expenditure had risen to unsustainable levels but it managed to rein it in without losing its penchant of looking after its citizens from the cradle to the grave.

What is required is the right mindset to deliver the required change.

Is there this mindset in the finance ministries and the social partners around the EU?

Time will eventually tell.

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