MP calls for new finance opportunities for SMEs

Labour MP Joseph Sammut has urged the government to help small businesses by providing them with easier access to finance, by easing taxation and slashing bureaucracy.

He said when speaking in Parliament that criticism of the budget last year had focused on economic uncertainty, lack of preparation for outside competition, high production and compliance costs, a drop in demand, the attitude of civil servants and delays in payments by the government. The new budget was little different from the old one, and the same criticism applied.

One could only laugh when the government claimed it was meeting 80 per cent of its targets under the Lisbon agenda for competitiveness.

The problems that the self-employed had faced for a long time were still there. There was a lack of liquidity, and this could be seen by the way how the VAT department had even been unable to collect arrears despite incentives introduced by the government. Furthermore, many businesses, notably contractors, were working on a barter basis.

Bureaucracy remained high and no concrete action had been taken to reduce it. New regulations were being imposed without sufficient consideration of their compliance cost and their impact on the economy and society.

Dr Sammut insisted that traders needed to have easier access to finance. This was an area where Malta Enterprise should help businesses, such as through the creation of a fund to help business start-ups. Finance should not be totally reliant on the banks. Business start-ups, in particular, often did not have sufficient collateral for borrowing.

There was also need for more consideration by the banks with regard to the charges they imposed.

Malta also needed to be careful not to lose EU funding opportunities, as had happened on several occasions.

Dr Sammut said the stamping out of the element of corruption which still existed in government departments, the need for continued efforts to cut red tape, easier access to finance and lower taxation were all essential elements for the creation of a business climate which encouraged investment.

Dr Sammut said the budget said nothing about self-employed women. Women frequently partnered their husbands in business and this should be duly recognised, including in areas such as maternity leave, annual leave and pensions.

Labour MP Jose Herrera briefly reviewed the financial performance of the Ministry for Competitiveness and Communications, raising a number of questions.

Referring to the Communications Authority, he asked why revenue was declining. He noted that by 2010 all broadcasters would have to broadcast digitally according to an EU directive. But he had reservations about how this law was introduced in Malta. The operators would be losing their licence and they would have to reapply to one of two service providers. This raised their costs. The law was not being applied in a reasonable manner and could give way to administrative abuse.

On civil aviation, Dr Herrera said that estimates showed a slight increase in revenue while expenditure remained the same. But while Lm1.8 million a year used to be generated from the airport tax before 2004, revenue was projected to rise to over Lm4 million next year. Unfortunately tax on travel sometimes even exceeded the flight costs.

The Consumer and Competition Division gave a service but since it did not generate a profit did it make sense for it to be in a division on its own. The section offered the services of a tribunal free of charge when other tribunals of lower competence charged fees.

Dr Herrera observed that revenue from trading licences had remained constant. Did this mean that the number of licences did not increase?

In his speech Dr Herrera also complained that both the Mgarr/Cirkewwa harbours projects and the Ta' Qali crafts village redevelopment had fallen considerably behind schedule. Marie Louise Coleiro (MLP) said competitiveness was not achieved overnight but was a long, planned process. That the government was claiming it was tackling competitiveness now only betrayed its inaction of the past.

Still, concrete action to improve competitiveness was seriously lacking, and Malta's world competitiveness ranking was continuing to slip.

The World Economic Forum in its definition of competitiveness said this was a collection of factors, policies and institutions which determined the level of productivity achieved by an economy.

The forum also underlined the need for proper use of taxpayers' money and the need to reduce bureaucracy.

In Malta, was tax revenue being reinvested in wealth generating activities and social progress? The spending on Dar Malta and Mater Dei showed otherwise. And bureaucracy was still as high as ever with authorities competing among themselves to issue new regulations, thus raising compliance costs.

The education system, particularly tertiary and vocational, needed to be improved if Malta was to achieve competitiveness. That eligible candidates were denied entry to Mcast courses because there was no space was simply unacceptable. And 16-year-olds who did not achieve all the qualifications they needed for courses should not be allowed to fall by the wayside. It was fundamental that the young were directed to the skills and professions which the economy needed. Malta needed a multi-skilled workforce.

What had happened to the National Vocational Qualifications? The University was not recognising Mcast displomas, while British universities were.

The need for competitiveness was not restricted to industry. Tourism too was facing major problems. And the latest increase in power tariffs had continued to raise production costs and made the situation worse, Ms Coleiro said.

Remarks by government speakers will be reported tomorrow.