Political debate around the world very often obscures the economic debate (Malta is no exception), because the former focuses on short-term results and on subjective issues. Another reason why political debate crowds out economic debate is because the focus is more on inputs rather than outcomes.

Politicians find it easy to speak about inputs because they reflect the past, while outcomes reflect the future.

Inputs are short term in nature and very visible, while outcomes take longer to realise themselves and they do so gradually and thus are not very visible.

There are three points to consider in order to place the matter into perspective. First, inputs become outcomes (even if not the targeted ones) through a third variable – outputs.

Secondly, inputs, outputs and outcomes all have an economic dimension. Thirdly, inputs, outputs and outcomes are particularly relevant to public policy, which is funded by the taxpayer, which means that there is no connection, in several instances, between the persons paying from a public service and the persons benefitting from that service.

Let us define these three terms. Inputs are the physical, human and financial resources allocated to or used by a particular public sector initiative or programme.

One needs to remember that even physical and human resources come at a cost and so they have a financial dimension as well. Moreover, in public policy, one needs to take into account the concept of opportunity cost.

Whatever resources are used to implement one initiative or programme are taken away from other programmes and initiatives.

So we need to take account of what is foregone as much as we take into account what a project costs in terms of money.

Outputs are the elements of operation, the activities, and the tangible products and services that are generated by the inputs allocated to the project.

Thus outputs are observable and measurable as they reflect what the public sector offers and does in relation to each initiative or programme. They are intended to reach specific segments of society, also with a targeted level of participation. Outputs are in turn expected to lead to outcomes.

Outputs are the benefits that society derives from the initiative or programme. Thus the outcome is the impact that each specific public sector activity creates in terms of the ultimate longer term effects. These outcomes should reflect the aspects which the public at large values. Outcomes will eventually become observable in the fundamental changes that take place in society and our economy.

Again, it needs to be stressed that fundamental changes in society also have an economic impact and this explains why they should also form part of the economic debate.

We need to take a practical example to explain this process. One policy that both political parties have agreed upon is to encourage a greater female participation rate in the labour force.

The inputs that are being used to achieve this objective are the provision of educational services for children before they actually reach the age when they start compulsory education, the adoption of family-friendly measures, and free or subsidised childcare facilities.

Politicians are only too happy to talk about these factors as they can boast about the efforts being put in.

However, just because we have kindergarten school facilities in every locality in Malta does not mean that we have achieved our aim. The outputs related to these inputs would be the attendance rate at school kindergarten facilities or childcare centres and the take-up by employees of family-friendly measures.

Yet, even if attendance is high, as is take up, we still cannot say that we have achieved our aim.

For this reason, we need to focus on outcomes. And the outcomes on this policy initiative should not just be female participation in the labour force. We would need to analyse if the economy has grown as a result of this increased female participation. We would also need to analyse quality of service provision or the levels of efficiency in those areas where family-friendly measures have been implemented.

This thought process is required for all public policy initiatives, programmes and projects.

So, while the political debate may focus (rightly or wrongly) on whatever amount is spent (the inputs) on childcare facilities and other initiatives, the economic debate would need to focus on whether this initiative has generated the economic growth (the outcome) it was expected to achieve through increased female participation in the labour force. It is only by focusing on outcomes that we can develop economically sustainable public policies.