This week's Ecofin, the meeting of the European Union's finance ministers of all member states, discussed Malta's plans to reduce the fiscal deficit to more sustainable levels, namely from last year's 9.7 per cent to 1.4 per cent of the gross domestic product by end 2007.

In effect, this was a meeting where all member states that are known to have a fiscal deficit that is not within the parameters set by the EU have had to show how they were seeking to rein in their deficit and satisfy the criteria set. The most stringent one is that governments should seek to balance their budgets but, in any case, the fiscal deficit should not be larger than three per cent of the gross domestic product.

I covered government's plans to achieve this target in last week's contribution. This plan essentially covered three main aspects - a growth rate of the economy higher than it is at present, a control of expenditure and a better administration of the revenue collection systems to minimise leakages. The acceptance of these plans by the European Commission and Ecofin is a signal to the government that it should continue to move on the path it is currently following.

It may be said that the various components of the government's plans are nothing earth shattering. However, do they need to be earth shattering?

A great deal shall depend on the growth of the economy, but expenditure and revenue issues need to be addressed as well. The Parliamentary Secretary in the Ministry of Finance has stated publicly that all items of expenditure are being reviewed in detail; that the Prime Minister shall be meeting all ministers and the heads in each ministry - that is the permanent secretaries - to discuss with them the need to control expenditure and to collect all revenues due; and that government-controlled entities shall come under close scrutiny such that the subventions they receive from the central purse are being used effectively and there is no waste.

We could liken this exercise to an exercise that any private company that is losing money would undertake to get back to profitability. The owners of such a private company would have the option to close down the company if they so wish, but let us for a moment assume that this is not the preferred option of this hypothetical company.

In any case, the government does not have that option. Its only option is to seek ways and means of balancing the books. In such a situation the owners of a private business concern that want their firm to survive would ask its management to look closely at the revenue and expenditure and see how it can increase one and reduce the other.

In this regard, the role of ministers and permanent secretaries is critical. They can assess where waste lies and seek to eliminate it. They can analyse each and every item of expenditure and determine whether the expenditure is really required in the first place and, if it is, whether it can be reduced while achieving the same results. In other words, the various departments in the public service and the various government-controlled entities need to implement both cost reduction and cost control techniques.

Experience consistently shows that, when one looks for waste, one finds it. There must also be the full awareness that, if they do not take a leading role in such an exercise, they cannot expect the rest of the staff, numbering well over 30,000 persons, to do so. In fact it is not an exercise that one does only once, but rather it is a daily chore involving everyone. The need to involve everyone emerges from another significant lesson that one gets from experience - people down the line know more where there is waste than people up the line because they live it on a day-to-day basis.

In certain instances they may have to think outside the box, in that they would need to be creative in the way to approach certain issues. Moreover, they can accept nothing as given; in other words, anything can be challenged.

Obviously, they will be faced with vested interests and claims from individual employees or individual sections that it is not them that are wasting resources but everyone else. They will also be faced with people who will pay lip service to the idea of cost reduction and cost control, but then will do all they can to maintain the status quo.

Experience shall also show that a positive end result shall not be achieved through one big idea but following a number of small wins which, when taken together, would add up to significant amounts.

This is what makes the attack on the fiscal deficit a daily chore. The upside of such an exercise is that results can be easily measured, and another lesson from experience is that what gets measured gets done. It needs to be a concerted effort where teamwork and mutual accountability are essential.

The social partners cannot sit back and wait for things to happen. They need to give the government all their support and forget about their parochial interests. Even for them, addressing the fiscal deficit is a daily chore.

A final comment is about the growth of the economy and its relationship with the growth in expenditure and in revenue. A sensitivity exercise shows that, if government revenue were to increase at the same rate as the gross domestic product and expenditure were to increase at the same rate less one per cent, we would manage to shave 1.5 per cent off the ratio between the fiscal deficit and the gross domestic product. A similar performance over a four-year period would resolve the issue. It is only daily attention to the issue that can get such a result.