Last week's contribution focussed on the trend that is possibly emerging with regard to government expenditure. Data published so far for this year shows significant control of expenditure.

This has happened across the board in that it appears that savings compared to budget estimates have been made in both capital and recurrent expenditure. However, I ended my contribution, expressing doubt whether this is a real trend or not; whether we will wake up tomorrow and find that all the savings made, have vanished into thin air.

Someone I met this week noted to me that this is the first time I had expressed any doubt on government's ability to deliver. In fact I believe that there are some real objective reasons as to why this positive short-term data may not consolidate itself in the medium-term, reasons that essentially relate to the uncertainty brought about by the volatility of the economic cycle, that impacts directly on economic growth and government revenue.

This volatility of the economic cycle can be best exemplified by the fact that in certain industries, international analysts have stopped making forecasts of future trends that go beyond one or two years.

However, there is another issue that tends to make me doubt whether this year's results in the control of expenditure will consolidate into a trend. It has to do with outcomes.

Will the reduction in government expenditure mean a rolling back of activities by the public service departments and government entities in the sense that it is only achieved at the expense of the outcomes the public sector is meant to deliver?

Or will there be an effort to produce more with less by seeking to make gains in the effort put in, in the efficiency with which the work is done, and in the effectiveness of the work done?

The challenge is obviously represented by the latter of these two hypotheses, while the problem is represented by the former. It is a challenge that is not any different from that faced by management in the private sector. Both Maltese subsidiaries of foreign firms as well as Maltese-owned companies know only too well the pressures of delivering more every year with less. This is because their income has been drastically reduced because of the lower prices that they have to charge for their goods and services as a result of increased competition.

Public service departments and government entities do not have an income that arises from the sale of goods and services - their income comes from the taxpayer. Nor do they have a profit to deliver but they have to meet expenditure targets and ideally make savings on those targets. In terms of quality, private sector management has to deliver or else lose customers, while public sector management has to deliver or else face customer complaints. Thus the situations are, to my mind, identical.

However, within the private sector one may rest assured that management will do all it can to ensure that outcomes match, if not exceed, expectations irrespective of the circumstances, while within the public sector one cannot rest assured that this will happen. It may well be that heads of department take the easy option of going through expenditure cuts but at the same time reduce the deliverables. This would be really an ideal situation for some, as they would have the perfect excuse not to deliver.

What this would mean for government is that it would face criticism that there are no satisfactory results to show, panic, and then decide to increase spending to be able to show these elusive results. This would obviously bring about an increase in the fiscal deficit, and we will start, all over again: A whole discussion as to whether the fiscal deficit is sustainable or not. This is a story that we have already been through and I sincerely hope that we would not have to go through it again. And we would not go through it if ministers hold the senior civil servants within their ministries to account not just for what they spend but also for what they produce.

This is why the issue of the fiscal deficit should not just be a debate as to whether government should tax more or less; or whether government should reduce its expenditure and therefore risk a contraction in aggregate demand in the economy.

It should incorporate a debate about the outcomes that the public sector is expected to deliver. This requires the unconditional support of all the trade unions or else they risk losing their credibility. This is what would transform the positive short-term results in curbing expenditure into sustainable medium and long-term positive trends.