Category: Archive – 2009

COM (2009) 6   On 1 January 2007 the European Fisheries Fund (EFF), which covers the period 2007-2013, replaced the Financial Instrument for Fisheries Guidance (FIFG).

The EFF programming process has been rationalised and simplified compared to the FIFG, notably by streamlining the procedures for presenting the programming documents.

In accordance with Article 6 of the EFF the Commission has ensured coordination and consistency between assistance from the EFF and the European Agricultural Fund for Rural Development, the ERDF, the ESF, the Cohesion Fund and other Community financial instruments by making sure that Member States clearly define demarcation lines for support under the different funds in the OP and set up appropriate coordination mechanisms between the authorities responsible for the implementation of these funds.

COM (2009) 39 – Communication from the Commission towards a comprehensive climate change agreement in Copenhagen.

In order to limit the global average temperature increase to not more than 2 degrees above preindustrial levels, developed countries as a group should reduce their emissions to 30% below 1990 levels in 2020. The EU has set the example by committing to a 20% reduction in its emissions compared to 1990 levels by 2020, irrespective of whether or not an international agreement is concluded.

This is by far the most ambitious commitment by any country or group of countries in the world for the post-2012 period.  This communications sets out concrete proposals to achieve the goal of extending agreements of the Climate and Energy package with third countries, both in the UN context and beyond.

Malta still has a lot of road to cover to achieve the standard of competitiveness that can really get us moving. We've moved  forward substantively over the years given our limited resources but the recession,  which is now beating heavily on our doors, shows most clearly that we have not taken this issue of competitiveness seriously enough.

 

The problem with us is our failure to prioritise. I am now the longest serving member of MCESD. Hardly a meeting is held without competitiveness cropping up on one item or another of the agenda. At one time we had an excellent working group with all the leaders of the top national organizations participating. I used to enjoy these meetings and used to contribute greatly. Economist Gordon Cordina drew an excellent report, following six months of weekly meetings. This report was then followed by a year of discussions that should have lead to Malta's first Social Contract among social partners.

 

This never materialised however. The General Workers Union invented one excuse after another not to sign. The Unions argued among themselves and the social contract was doomed. Since then MCESD, has been one big fat sleeping beauty. The enthusiasm has never been regained.

 

We pay today a high price for this failure. Workers never understand why they have to pay the high price of unemployment. As recession in our major markets bites, more workers will be laid off. Who can explain to these workers that their jobs might have been saved if their leaders sacrificed their pride a little more and accepted the Social Contract.

 

Competitiveness it's not something that employers, trade unions or Government can achieve on their own. It needs a collective commitment.  Unfortunately the concept of representation in Malta remains archaic. Many of us strive to seek solutions and try to lead from up front. Many others are weak and they allow themselves to be backseat-driven by militants and people with silly partisan political motivation. Some are completely myopic in economic terms. I have heard so many silly economic arguments over the years I could write a best-seller: We would be years ahead and our restructuring in industry, in commerce, in tourism in Government would be much, much more advanced if our representative organizations left more of the serious economic planning and analytical work to the experts. But we're democratic aren't we? We prefer to push ahead the most popular and not the most capable and the most efficient.

 

The end result is that in the Global Competitiveness Index of the World Economic Forum Malta's economy ranks 52^nd out of 134 countries. We should be facing the impact of the world recession blow from a strong position but our failure to move faster in restructuring holds us down in ranking. From 134 countries measured by the Competitiveness Index for Labour market efficiency Malta ranked 100^th, 68^th for macroeconomic stability and 56^th for innovation and sophistication factors. We scored better in the area for goods market efficiency at the 43^rd place, proving that the removal of trade restrictions since joining the EU has had a tremendous affect, this is however still not enough. We do very well in financial market sophistication at 18^th and 27^th in technological readiness.

 

Our performance continues to suffer due to our failure to take serious remedial action on the problems that keep burdening our competitiveness. The five most problematic areas identified by the World Economic Forum Competitiveness Index are inefficient government bureaucracy, access to finance, inadequate supply of infrastructure, the rates of taxation and the restrictive labour regulations. Other negative factors are inadequately educated workforce, the rate of inflation, tax regulations, poor work ethics in the national labour force and corruption. 

 

It is the responsibility of all of us on MCESD to watch carefully what bodies like the World Economic Forum are saying about our economic performance. It is not so difficult to identify the areas that matter and that need remedial action. That is what we tried to do the last time round. We failed then because not all constituted bodies and trade union members of MCESD were convinced that economic recessions do occur and that in a recession only the best survive and only the efficient continue to expand.

 

The cause of all our economic problems is our competitiveness. Were the problems of competitiveness addressed earlier, as it was the intention of all of us who strived so hard to get the Social Contract signed and implemented, today we would have been facing our economic problems with a much better structure and with a sharper competitive edge. In the absence of the Social Contract we have now allowed the market forces to correct our competitiveness. This is the costliest way of revolting our economic problems, and who is paying the price? The market economy even though we have all been talking about a social market economy corrects uncompetitive structures and situations in the crudest of ways: job losses, unemployment, bankruptcies, closures and defaulters.

The way forward is to restructure and restructure in time. Restructuring is not a political slogan. It is an economic necessity. No trade union leader can truly wish the best for workers if trough his efforts he holds back the process of restructuring. The best form of restructuring is that which is achieved through national consensus. That is why they call us social partners: we are partners because we believe that together we achieve more. 

 

The way forward is to drive home those policies that sustain competitiveness at all times and at all levels. Competitiveness may happen on its own but it takes times and remains subject to market forces on which we have no control. If we do it correctly, keeping an eye on what our competitors are doing and providing the right policies, then we can remain ahead of our competitors and cleverly shift more of our economic structures away from susceptibility of the cyclical economic forces.

 

The problem with our economy is that too much of our productive capacity is subject to what happens in the short term in the markets on which we depend. An intelligent economic strategy based on a forward looking Social Contract can effectively cause little Malta to move upwards in the competitiveness ranking. This is something we need to do with great urgency, if we do not do it by ourselves the market will force it upon us and many will suffer. Lets not fool around with the concept that Government can do it on its own. When Barack Obama says "Yes we can", it doesn't mean Government on its own can. This applies even more so to Malta as Government doesn't really have the financial or other resources to really do the intervention that is needed when competitiveness falls sharply and recession in our most important markets is hitting hard. 

 

Fortunately thanks to all those who have striven to ensure Malta's membership of the European Union we are now an integral part of an Economic and Political Union that is helping us to invest and improve in many areas where in the past we were extremely deficient.

 

We have indeed moved forward. Let us all be positive about this. The European Union has not only been a great instrument of change but also a great financial source of support. It has successfully installed in us a better way of designing and implementing policies. But we need to do much, much more to ensure that we get the maximum support that the EU offers to uncompetitive regions and economic sectors.

 

Building a competitiveness consciousness is very important; we all need to strive to ensure that we Maltese workers, entrepreneurs, management and bureaucratic institutions of Government place competitiveness on the topmost notch of the agenda.

 

Surviving together to get agreements at national level on the way forward is a top priority. Let us not keep wasting more time arguing and doing nothing. The people who suffer the cause of our inaction will not forgive us as the economy fights its way out of a difficult period let us not forget that things could have been better if we did the things we needed to do in time.

 

 

GRTU has this morning called a press conference on the Electricity Tariffs to explain GRTU's comments as sent to the Malta Resources Authority and to give an update on GRTU's position on the tariffs.

The Press Conference was chaired by GRTU President Paul Abela and addressing were also Vincent Farrugia, Director General and Joseph Attard. Mr Abela explained that "to the GRTU it was clear from the first report presented by the KPMG that the capping system would be retained and that SMEs as a result would be carrying the burden. GRTU stays by its principle: We pay for what we use"

 

Mr Abela continued by explaining how the subsequent events took place.

He said that:

"after making our position clear with the Prime Minister Hon Laurence Gonzi and Deputy Prime Minister Hon Tonio Borg they both reassured us that our proposals were reasonable and therefore would be taken into consideration. GRTU was therefore very taken aback when we learnt that a meeting was called with some constituted bodies, excluding the GRTU, were an agreement was signed that would have diminished the cost of the biggest users and eventually increasing it on the smaller ones."

 

This, he continued explaining, was subsequently proved by Hon Austin Gatt's presentation of the 6^th Tariff structure. Mr Abela admitted that GRTU and Government have been discussing this issue for now over 6 months and GRTU is tired of the current situation. He therefore called on the Prime Minister to intervene and cut the chase so that our members and the whole Maltese population can put its mind at rest, at least on this issue.

 

Mr Vincent Farrugia, Director General of GRTU took over from the President saying,

"the issue is very serious for GRTU and its members because small enterprises are having their rights under European law ignored. The new electricity tariffs infringe the Electricity Directive because they have a strong element of discrimination."

 

Mr Farrugia further insisted that it was up to the Malta Resources Authority to ensure, as outlined by the Directive: non discrimination, effective competition, efficient functioning of the market and a high level of transparency by the monopoly undertaking and itself.

 

"GRTU has already taken the issue to the European Courts, who in turn insisted we should exhaust the local jurisdiction procedures. GRTU is presently doing exactly that by insisting that the issue of non-discrimination is taken away by the Malta Resources Authority.

 

At this particular moment Government has all our support in relation to the adverse situation brought about by the global economic crises and Government is doing well by moving ahead and helping industry as they do need Government's help. It is however unacceptable for Government to help industry without helping SMEs. I would like to remind Government that SMEs in Malta employ 65,000 persons and to Government these should not be any different from the workers in hotels and factories.

 

Small Enterprises not helped by the state cannot choose not to pay the electricity Bill, the water Bill, VAT, or the material they need to work or sell. Doing any one of these would close their business. The only expenses they can afford to give up when the going is slow is one or two of their employees. GRTU would rather not have this situation occur and we are sure that to Government safeguarding the employment of a worker at a hotel is as important as safeguarding that working within a small enterprise. The electricity tariffs are threatening their livelihood. GRTU therefore proposes that this burden is alleviated".

 

Mr Joseph Attard gave a description of the chronology of events as they took place. Mr Attard also emphasised that the Electricity Directive is being infringed as the new tariff structure could not have been introduced until a due diligence impact assessment is carried out for all end consumers.

 

"The Minister for Resources and Rural Affairs and the Authority have acted against public interest, customer protection and the scope of the Directive when they endorsed the tariffs issued in December 2008, by the said monopoly utility, backdated and without proper investigation and analysis resulting in unfair and discriminate application on public groups, affecting SMEs extremely negatively.

 

Enemalta and the Minister responsible for the said entity did not submit the new tariffs to MRA for approval prior to their entry into force as required by the Malta Resources Authority Act, the Electricity Directive and the Maltese Legislation in place."

 

The way forward Mr Attard explained is as follows:

–         The electricity provider should not incur a loss in its operations but stricter controls should be put in place to bench mark all operations and processes.

–         Return on capital employed is to be based on longer term recuperation of invested capital and thus move away from current EU proposed of just over 6%

–         Large account holders should not be given quantitative discounts under the EU principle of "Think Small First". 10 or 20 users together use the same energy as one large account holder.

–         Billing being issued by Enemalta Corporation from October 01 to date is ultre vires in its totality taking into consideration that MRA and the Minister responsible for this entity did not abide to the EU Electricity Directive and accordingly to its transposition to Maltese Law.

–         Billing issued according to second schedule of LN 330 of 2008 (2A) to non-residential accounts consuming less then 1.2 million KWH, will for a period of time benefit from a reduction in the billing. This to make up for the bill received to date. This should consist of a one time reduction of 40% of the value of units billed from October 1^st 2008 until when the new tariffs are issued, according to appropriate and acceptable guidelines.

–         All new applications for electricity which were made to pay the new tariffs (€300/900) for new installations before October 1^st 2008 are to be reimbursed the difference.

–         Removal of the payment of maximum demand to SMEs/ non-residential users effected

GRTU has been informed of the following consultation concerning the proposed Legal Notice to ban and restrict certain ingredients used in cosmetic products – namely, Diethylene Glycol (DEG), Diethylene glycol monobutyl ether (DEGBE), Ethylene glycol monobutyl ether (EGBE), Vitamin K1 and Toluene.

DEG shall be banned for use in cosmetic products and its traces limit shall be fixed at 0.1 %.

 

The use of DEGBE and EGBE is not considered safe when the product is presented in aerosol/spray; this potential use should therefore be banned.

The use of phytonadione (Vitamin K1) in cosmetic products is not safe therefore the substance shall become banned.

Toluene is safe from the general toxicological point of view when present up to 25 % in nail products; however its inhalation by children should be avoided.

Please contact Abigail Mamo @ GRTU should you have any comments.

COM (2009) 73  This Annual Policy Strategy paves the way for establishing a policy agenda for 2010 and launches the interinstitutional dialogue on the priorities for next year. While it is the responsibility of the current Commission to ensure the continuity of the institution's strategic planning and programming system, it must also take account of the fact that a new Commission will be in office in 2010.

The European Economic Recovery Plan provides a solid basis for building the conditions for recovery. Its implementation during the rest of 2009 and into 2010 will be a matter of high priority. To make sure that the EU comes out of the crisis stronger and better able to take advantage of the upturn we need to continue with the structural reforms under the Lisbon Growth and Jobs Strategy, in a spirit of partnership between the European institutions and Member States.

Communicating EU issues will be crucial in a year marked by several institutional changes and amongst these issues is the economic and social recovery issue which is of direct interest to citizens. Thus, the Commission will seek that all member states meet their commitment to pursue and coordinate their national efforts under the Lisbon Strategy for Growth and Jobs and under the Stability and Growth Pact.

The Commission is committing itself to ensuring that all systemically-important institutions are appropriately regulated and will shortly be presenting proposals for financial services reform so it could address the exposed inadequancies and weaknesses following the crisis. The Commission will also attempt to continue and work on the open single market with all the member states respectively. One of the priorities in 2010 will be to manage the impact of crisis-related changes in Europe's economy through state aid and merger control activity. Stepping up the fight against cartels and the enforcement of competition rules in network industries (energy, ICT, transport, post and financial services) will also aid economic recovery.

Furthermore, in 2009 it is expected that network industries will make gas markets, etc more competitive through the implementation of legislation and in 2010 the establishment of an integrated policy approach to the digital services economy and recast the current ICT policy framework. 2010 will also see the follow-up to the renewed broadband strategy to be rolled out by the Commission in 2009, including the likely extension of broadband access to rural areas.

The need of combating counterfeiting and piracy is to be addressed as well. Efforts to create a Community patent and patent litigation system will continue. As regards Europe's research to be more effective, the 7th Research Framework Programme will remain a cornerstone of the construction of the ERA. Effective implementation of the broad-based innovation strategy will help to convert research into commercial success. As regards the transport sector, Commission will further seek the future of an EU transport policy. Undoubtedly, the Commission addresses other issues such as climate change and sustainable Europe, putting the citizen first, Europe as a world partner and better regulation and transparency which can be found in the document.

Following the successful conclusion of UN's climate change conference in Copenhagen, EU decided to give it a key priority. Finally, the requirements for the Middle East Peace Process, Cuba, Georgia, Kosovo, support to the reunification process in Cyprus and climate change will depend on developments in the coming months. The Commission will complement its requests during the budgetary procedure.

First it was speculated that GRTU had the intention of changing its Director General, a pure journalistic speculation, then it was said that members started resigning from GRTU, another journalistic invention, rumours were also heard that a secret vote was called when the GRTU Executive Council was asked to endorse the Director General's candidature for Member of the European Parliament.

The reality is no one asked for a secret vote. The GRTU Executive Council are not man or women of straw, they stand to be counted. When they express their views and are required to vote, they do so without fear. GRTU in fact published earlier on this week that the Council, when asked to vote on the endorsement of Vince Farrugia's candidature for MEP, saw the approval by the Members of the Council less three.

GRTU is 60 years old and now we have now got used to speculation and inventions for a political end. During the last couple of weeks alone GRTU has enrolled over 70 members. GRTU keeps growing because GRTU remains faithful to the truth, of this our members can rest assured.

In an interview given to The Times Business and reported yesterday in the paper Vince Farrugia stated that he has "absolutely no intention" of abandoning the GRTU despite contesting June's European Parliament elections, he told The Times Business.

The GRTU director general, who is running on the Nationalist Party ticket, said: "Today I have reduced my public function at the GRTU but I am continuing with my day-today work running the organisation which is what the GRTU members want me to do." He added that during the campaign he will not be acting as a spokesman for the GRTU. "Then in June we will see what happens," he said.

He also said that he will not be campaigning full-time "because I still have my responsibility towards the GRTU" . Mr Farrugia explained that campaigning to become an MEP is very different from running for a national Parliament. "As an MP the government is dependent on your vote to get laws passed and you would generally have to support government policy which some rank and file members might not be comfortable with. "As an MEP I would be working on the programme of the European People's Party which takes into consideration the needs of SMEs. My role in the European Parliament would be similar to my role as GRTU director general, lobbying for SMEs," he said.

Asked whether he'll resign from the helm at the GRTU should he not be elected, Mr Farrugia said there was nothing in the organisation's statute which precludes any official from contesting the European parliamentary elections. "As a full-time employee of the GRTU – and the GRTU is an exemplary employer – we abide by the right of every European citizen to contest such elections and not to lose his job. At the end of the campaign, if I am not elected, it will be illegal not to allow me to return to my post. "In Malta we must recognise that there are capable people who wish to offer their services in such elections and then go back to what they were doing. This is a culture we have to accept, otherwise we will be limiting quality players from contesting and the country would be worse off," he said.

Can the GRTU afford to have its director-general focused on his campaign at a time of such economic uncertainty? "A major reason why I am contesting is precisely because of the present economic climate. Business and SMEs need a strong voice not only in Malta but also in Europe. It is important for one of Malta's MEPs to be able to play a leading role in defending SMEs and to be well versed in economic policy and in how the EU can help small economies," he said.

Mr Farrugia said there was no doubt that the EU needs to focus more on SMEs, adding that he was active in the European Federation of SMEs which will help him lobby on behalf of this sector should he be elected. By concentrating on the needs of SMEs, he said, he would be "safeguarding the backbone of Malta's economy."

How confident was he of being elected? "I would love to use the word ‘confident' but I can't. There are many candidates contesting and the public has a wide choice. I am contesting because I have baggage which is particular and different from the other candidates," he said. He admitted that he has been pleasantly surprised with the reaction so far to his decision to run for the European Parliament. "Last Sunday I had my baptism of fire when speaking at a PN club, for the first time. I think I was welcomed with a lot of enthusiasm and that the people who traditionally vote PN were happy to have me and to hear why I decided to contest this election." He added: "Of course, some people thought I should have contested as an independent, and I did consider this option. I also had a nice discussion with Labour leader Joseph Muscat who told me if I decided not to stand on the PN ticket he would be happy to have me contest with his party – this is the excellent relationship I have with Joseph Muscat.

"A lot of my friends in the Labour Party have congratulated me and told me they accept that I am a valid candidate – even though they don't like the idea of me contesting. My challenge now is to talk to as many people as possible and convince them that even though I am contesting on the PN ticket I am contesting on behalf of all Maltese. Once an MEP is elected- and this is true for most of our MEPS -we have to speak on behalf of all the Maltese."

Asked why he chose to run as a PN candidate he said the Nationalist Party has a greater European political vocation, it is more prepared to assume its role in Europe and it is far ahead in its commitment to European institutions and to the way the European model ought to be adopted in Malta. "The Nationalist Party is the leading party for Europe," he said.

 

COM (2009) 38-1  Proposal for a COUNCIL REGULATION on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)

EUR 1.5 billion should be made available to all Member States via the European Agricultural Fund for Rural Development (EAFRD) with a view to developing broadband internet in rural areas and to strengthen the new challenges as defined in the context of the assessment of the 2003 midterm reform of the Common Agricultural Policy – the "Health Check" – which was completed in November 2008. One third of this amount (EUR 0.5 billion) should be spent on new challenges related operations and two thirds (EUR 1 billion) on developing broadband internet infrastructure in rural areas.

The motivation for this allocation of additional funds to the two priority areas of the EU's rural development policy is the following:

Rural communities can be amongst the most vulnerable to economic downturn.

In difficult times, there is a greater risk of exclusion and when the economy starts to return to growth, the benefits can flow more slowly.

The European Economic Recovery Plan set out a goal of developing broadband networks to achieve a full 100% high-speed internet coverage by 2010. It also underlined the need to upgrade the performance of many existing networks, alongside efforts to promote competitive investments in fibre networks and free up spectrum for wireless broadband.

By 31 December 2009, Member States shall provide in their rural development programmes, in accordance with their specific needs, for types of operations having the following priorities as described in the Community strategic guidelines and specified further in the national strategy plans amongst which is the broadband internet infrastructure in rural affairs.