€20 million not a grant but an allocation, says Gonzi

Prime Minister Lawrence Gonzi told Parliament yesterday that the €20 million which Malta had got from the EU for the energy cable connection between Malta and Sicily were not an outright grant but an allocation, and the expenses would be recouped if the project was finished by the end of 2010.

Replying to questions by Opposition Leader Joseph Muscat after a statement on last week's EU summit meeting, Dr Gonzi said this was in itself an accomplishment because it was not easy to get such an allocation while other countries got relatively less. Another sum of €5 million was to be spent on another alternative energy initiative which would be identified by the end of next week.

Malta could not submit the wind farm project for these funds because the government was still awaiting the results of a scientific study.

The Prime Minister said that the EU allocation to Malta between 2007 and 2013 amounted to €1,158.9 million, and this was over and above the pre-accession funds and other programmes.

Dr Gonzi said that when the opposition leader had declared that Malta was a net contributor to the EU, Dr Muscat had not taken into consideration the EU funds held by the Central Bank because, he said, they were not mentioned in the financial estimates.

The Prime Minister underlined that even though the government did not use these funds, these still belonged to the government. If one were to calculate the government's take-up of EU funds and add the funds held at the Central Bank, one would conclude that Malta was indeed a net beneficiary (see accompanying table).

Dr Gonzi said the two-day EU summit had focussed on the financial and economic situation and on climate change. The global recession was one of the greatest challenges which the bloc was facing. The member states had agreed on a coordinated approach to stimulate the economy, to help citizens and to lay the basis for an economic revival.

The single market was crucial to such a revival, he said. There was also the need to renew the regulatory framework, and Malta agreed with the accountability concept and the implementation of the Rosier report within an established timeframe.

The structural reforms were important, although no radical changes to the Lisbon strategy were envisaged. First decisions would be taken in the June summit and more proposals would be forthcoming in October. Malta had also agreed to support the proposed measures, including credit priority and fiscal consistency, while avoiding protectionist measures.

Referring to climate change, Dr Gonzi said Malta was faced with the challenge of securing its energy needs at a reasonable price. Energy security was a main priority for the EU. There was the commitment to decrease emissions, and the EU was to arrive at a global comprehensive agreement on the sector.

The financial ministers' conference had discussed ways of strengthening international institutions. The EU had agreed to double its contribution to the International Monetary Fund from €25 billion to €50 billion, while the IMF was to double its contribution to former Soviet republics to $500 billion. Japan was to contribute a further $100 billion to restore financial stability in Eastern European countries.

Later, Dr Gonzi told Dr Muscat that Malta's contribution to the IMF was being calculated. This contribution would be taken from the Central Bank reserves, as had been done in the past.

He said Malta was participating in the draft measures and the instruments used to change the global crisis into an opportunity.

The European Council had also discussed the Middle East situation and supported the Egyptian initiative for a Palestinian unity government, and to persuade Israel to fulfil its obligations in the region.

Dr Gonzi said Malta may have reached a plateau in the employment sector, with the number of new jobs balancing the number of dismissals. The global economic situation was affecting Malta, but the local economy was proving to be resilient and was moving forward.

Although the employment situation was not as good as it had been a year ago, figures given to him on a daily basis showed that redundancies and new jobs were balancing each other. There was no doubt, he said, that direct government intervention had saved thousands of jobs, and while one had to keep a watchful eye every day, he was cautiously optimistic.

Dr Gonzi said the government had discussed the interest rates scenario with the local banks. While he could understand the concerns of those who complained about the banks not having adopted the latest rate cuts announced by the European Central Bank, it was very important that the local banks continued to have a strong base of local depositors, but that could not happen if interest rates were lower than somebody else's.

The percentage of government expense allocated to environment and alternative energy, including energy-saving bulbs, had never been so high. Hopefully, €300 million would be allocated exclusively to environment and alternative energy measures.

Turning to tax havens and the ratification of the double-taxation agreement with the US, Dr Gonzi said he had been informed that there were no problems.

He insisted that Malta was not a tax haven. It insisted on serious dealings, and competitiveness built on professionalism and seriousness. Malta had numerous advantages over other countries, such as the fact that it was English-speaking.

The Balance of Payments Instrument, the EU's own fund to help its members when they were in trouble, had been doubled from €25 billion to €50 billion. He assured that the EU already had the funds for this, and Malta did not have to contribute anything.

Reducing bureaucracy, he said, was an uphill battle. He had been told that the public sector, on a global level, had a tendency to create unnecessary bureaucracy. There had been positive steps in this area, although at times others were not so positive.

Dr Gonzi said gender equality had been mentioned during the summit, but not in detail.

Regarding the proposal of extending maternity leave to 18 weeks, the Prime Minister said it was better to consider the whole scenario, as some countries did not give the full pay for the 14 weeks, but just a percentage. Such countries would have no problem with such an extension. Malta had suggested a whole package to deal with the issue.

He was in full agreement with Franco Debono (PN) that both parties should present a united front, especially on an EU level and on points that were not up for question, such as EU funds.

The globalisation fund for redundancies was specifically to be used when a company closed down to set up shop in another country, and the fund would help with retraining. Malta had benefited from this fund and a number of unemployed had found alternative jobs.

This was not the case in Europe; factories were closing down, not moving to other countries. Malta had to be ready once the crisis wound down and results-driven changes had to be made.

Concluding, Dr Gonzi said this had been the spirit of the summit. The deficit had to be controlled and if possible reduced, but Malta had to be careful not to miss out on a golden opportunity when other countries were overriding the crisis.