Labour MPs John Attard Montalto and Noel Farrugia yesterday demanded a public inquiry into the way surplus workers at the shipyards were selected for transfer to other jobs or early retirement.

Dr Attard Montalto, opposition spokesman for investment, said an independent inquiry headed by a judge or a retired judge was needed, because the way the selection process had been carried out threatened the whole reform process at the shipyards.

Given the allegations of political discrimination that were being made, the government would be inviting trouble if it refused such calls for an inquiry, and it would continue to be labelled as being a government of half the people, Dr Attard Montalto said. It was not enough for the government to say that the selection process was carried out by the management, when the management was appointed by the government. It was now its responsibility to clear its name.

Mr Farrugia said the inquiry should also look into how various government initiatives to return the shipyards to financial viability had so far failed.

The remarks were made during the debate on the Dockyard and Shipbuilding Yard (Restructuring) Act. The main purpose of the bill is to replace Malta Drydocks and Malta Shipbuilding by Malta Shipyards, which will assume most of the workers, and Industrial Projects and Services Ltd, which will take over the surplus workers and provide them with alternative employment.

Mr Farrugia insisted the solution for the survival of the shipyards was not to reduce the workforce and cut the subsidies, but to modernise the shipyards through capital investment, attract more ship repair and shipbuilding work and diversify the shipyards' activities, a process started under the Labour government. Even the agriculture department had been working on an order for the building of trawlers for Libya and for dockyard workers to be involved in repairing traditional windmills. Malta also needed to improve its harbours to attract more ships to these shores.

Because of the government's mistaken polices, thousands of dock workers were now going through uncertain times through no fault of their own or their trade union's. The government should examine its conscience and see why recovery plans it had produced to date had not worked and orders had not been won by the shipyards.

Indeed, this was a situation common to other sectors, where investment had dried up, jobs were being lost, the economy was going downhill and the deficit was getting wider. Given this record, how could one be confident that the new government plan for the shipyards would succeed?

Evarist Bartolo, opposition spokesman on the EU, recalled that in May 1989 the Nationalist government had trumpeted an agreement which was meant to make the shipyards financially viable within five years. The opposite had happened.

In 1989 the shipyards had a debt of Lm40 million. Now they were in the red by Lm300 million. Clearly the government needed to give a detailed explanation for this dismal failure.

But this was not only a financial failure, but a human one. Following the selection of 900 workers who were being transferred from the shipyards, he had been told that the last time workers had cried as bitterly as they did over the weekend was when nine of their colleagues died on the Um El Faroud tanker. The way the selection process was carried out was highly questionable, with illiterate workers having been retained in preference to workers knowing three languages. It was a pity Malta did not have a Freedom of Information Act to enable the workers to see information about them held in their employer's file.

What was happening at the shipyards was clearly the result of pressure by the EU, which had complained of delays in the restructuring process and called for urgent remedial action. Now the workers were paying for the government's failure and inaction.

The opposition had always been of the view that sustained action was needed to enable the shipyards to be competitive in an environment made more difficult because the Maltese 'yards did not have a domestic maritime sector to support them with orders. Other countries hid their subsidies to the shipyards through orders placed by their fleets, something Malta could not do. Canada imposed a tax of 25 per cent on ships not built in its shipyards.

The EU, however, were being heavily criticised from within for not helping and protecting its shipyards and for not having a strategic plan for them. As a result, EU shipyards were continuing to lose their market share to the detriment of heavily subsidised yards in South Korea and other countries who could not care what the OECD and the WTO said. It was in this situation that Malta's shipyards were now finding themselves.

Malta had been given a five year transition period within which to phase out state subsidies to the shipyards. But Spain, Greece and other countries had been given longer transitions when they joined the bloc.

Mr Bartolo said that rather than introducing early retirement schemes, the government should have more effectively considered ways how the skills held by dockyard workers could be utilised elsewhere. Such workers could, for example, have been asked to train younger people - so badly needed if Malta was to attract foreign investment.

Joseph Cuschieri (MLP) said sections of the media sought to put dockyard workers in a bad light.

The dockyard workers in the past were catalysts who fought not only for their rights but also those of others. When given work, dockyard workers showed themselves to be dedicated and worked hard.

The Nationalist government certainly could not escape blame for the shipyards' ills because it had been unable to implement an effective restructuring plan.

Would workers at PBS and other parastatal companies go through the same trauma which dockyard workers were now going through? Indeed, would the port workers be next?

Was this the new spring the government had promised?

Clearly the dockyard workers had been deceived by the government? Was this the last stage before the shipyards were forced to close down in 2008?

Dr Attard Montalto also spoke on how the Labour government had started a process to diversify the dockyard's activities. It was clear that efforts had to be directed towards the yachting sector and commercial use of the Dock 1 area, and ship repair and ship building. The Labour government had viewed the shipyards as part of an integrated maritime sector. It had wanted to integrate the activities of Malta Drydocks into tourism, through greater work on cruise liners, and the Cottonera yacht marina, through yacht servicing work.

Part of Malta Shipbuilding would have been gradually converted into an industrial estate focused on maritime-related manufacturing. There had already been four applications for sites within this proposed estate, including one from an Italian firm which supplied patrol boats to the Italian coast guard.

Dr Attard Montalto said the dockyard had been the cradle of industrialisation in Malta. It should not now be seen as a source of public debt but as the enterprise which had given the country many of its skilled workers.

The Labour MP criticised the government for having failed to negotiate a transition period for the shipyards up to 2010. Once the time limit expired in 2008, Malta should immediately apply for an extension, which would take at least 18 months to be decided, either way.