Who pays for politics in Malta? And what do they get in return? This is the question driving Malta’s party funding debate.
Many observers argue that private party funding, and its historically poor enforcement, allows major developers and wealthy interests to disproportionately influence government policy in Malta. Hence, the push for public funding: to turn politics from a marketplace of influence back into a public service.
Still, the real question is not just how parties are funded, but why private money has so much leverage in the first place.
While it is true that private, large donations can and currently do create influence, it is the very state that many advocate for taking care of funding that repeatedly fails to fulfill one of its most basic functions: enforcing its own laws.
According to investigative reporting, over 99% of political donations in Malta cannot be traced to identifiable sources. (maltatoday.com.mt). This is in spite of a legal framework governing party financing, including requirements for disclosure above 7,000 euros, contribution limits of 25,000 euros, as well as legislation for the publication of party and subsidiary finances. In practice, these laws are routinely ignored or selectively applied.
Both major parties frequently fail to submit complete or accurate accounts, including donations to media subsidiaries. For context, both main parties enjoy their own broadcasting stations and media outlets, something unseen anywhere else in Europe. Whilst the Labour Party does file its own accounts, its media wing and subsidiary, ONE News, has failed to publish its own accounts since 2010. On the other hand, the Nationalist Party only 3 weeks ago filed their accounts for the previous 4 years. As for their media wing, NET News (MediaLink), their accounts have been missing for over 20 years.
Enforcement agencies lack the independence, resources, or political will to investigate violations effectively.
This is not merely bureaucratic inefficiency; it is a systemic institutional failure. When the state cannot enforce its own rules, donations become valuable not just because of their size or intent, but because political actors can act with near-impunity. Developers and other actors seek influence because the government controls permits, land use, large contracts, and other discretionary resources. The returns on political access are enormous, creating a strong incentive for rent-seeking rather than productive investment.
So, why wouldn’t public party financing work?
Broadly speaking, party funding systems around the world fall into three categories: public funding, private large-scale funding), and private small-scale funding. Malta’s system is formally intended to be private and small, but in practice, it has evolved into a hybrid of private-small and private-large funding due to weak enforcement and opaque donation channels.
Under the current political establishment, none can be a lesser evil, especially not public funding. The reason is straightforward: if the state cannot reliably enforce its own laws, can it be trusted to allocate political funding impartially?
Malta’s history says no. Centralised allocation tends to benefit politically entrenched actors, while ordinary citizens retain little meaningful control over how their money is spent.
Despite this argument, public funding may still appear attractive in theory, but in practice it raises yet another fundamental problem of allocation: How should public funds be divided among political parties?
One possible model would allow taxpayers to “direct” their share of funding to a party of their choice. However, such a system would introduce substantial administrative complexity, bureaucratic cost, and enforcement challenges, notably to, for example, process, and audit millions of individual funding directions. And it still risks influence from enforcement actors in the future.
Therefore, to avoid the risk of state discretion, the most “neutral” alternative would be to allocate funding proportionally based on vote share.
Yet this approach still raises serious questions. Notably, would you or I be comfortable funding parties that either have historically failed, and may continue to fail, basic standards of transparency and accountability, as is the case in Malta or parties that espouse so-called “extremist” positions, whether on immigration, civil rights, or other deeply contested social issues?.
Many advocates of public party funding would be appalled knowing their taxes are used to support parties that threaten their core values. Why should a gay couple, for instance, be taxed and forced to fund a party fighting against same-sex marriage? But under any centrally allocated public system, this outcome is unavoidable.
Furthermore, there is also the argument that this structure may just reinforce the political establishment. With proportionate public party funding, Malta’s two main parties would collect over 95% of all funding, and with minor parties being banned from convincing more citizens to support them financially, they would be restricted to a very small proportion of funding.
Therefore, the critical difference is that private small-scale funding aligns political financing with voluntary association rather than compulsory redistribution, reducing both the stakes and the incentives for capture.
This issue echoes a core argument advanced by Milton Friedman in Capitalism and Freedom. Friedman emphasised that political freedom depends on economic freedom as it cannot thrive without the existence of multiple, voluntary, and decentralised “patrons”.
When political actors depend on a single, central authority for funding, dissent becomes costly and pluralism fragile. By contrast, when support is voluntary and dispersed across individuals, citizens can exercise political freedom by choosing which party to support…or none at all…without coercion.
In this sense, compulsory public party funding risks undermining political freedom rather than strengthening it. If parties rely on the state as their primary patron, political competition shifts away from persuasion and accountability toward institutional entrenchment. A voluntary framework, by contrast, preserves political freedom by ensuring that financial support remains voluntary, decentralised, and conditional on public trust, rather than guaranteed by state allocation.
For these reasons, private and small-scale funding seems the least of evils. But this does not mean that private small-scale funding requires less oversight. On the contrary, robust enforcement and transparency are essential. However, as previously mentioned, this requirement applies to every funding model.
In Malta’s context, the question is not whether party funding should be regulated, but whether political support should be voluntary or coerced.
A system built on decentralised, small-scale private funding does not eliminate risk.
But it limits power. And in a country where power has too often gone unchecked, that distinction matters.
