Opposition MP Alfred Sant told Parliament yesterday that the Small Businesses Bill was nothing but “a bureaucratic mix-up” that would complicate the situation because it was not true that the government was working in favour of SMEs.
Speaking during the debate in second reading, Dr Sant said the Bill had been presented by a person who had no clue on the self-employed and could not truly understand their problems. The proposals presented in the Bill were “pie in the sky” which portrayed progress but in actual fact would not solve any problems.
The government had embarked on a propaganda programme to convince the people that the economy had expanded and that the government had managed to overcome the problems created by the recession.
Dr Sant argued that the economy was stagnant. There was a contradiction between the hundreds of families who complained that the standard of living had slipped and the government figures which showed that the economy had expanded. This was misleading, because this was due to only two sectors: the remote gaming sector which in the past five years had increased to nine per cent of Malta’s economy, and the financial services sector. All others, including manufacturing, tourism and the self-employed, had seen additional problems.
The large sectors employed a few specialised people who were very well paid. This affected the economy because the trickle-down effect was very limited. This left Malta in a situation where between 14 and 20 per cent of the economy was making large profits while the space for the remaining sectors was always more restricted.
The government had failed to appreciate that the increased burden of higher electricity tariffs had left its mark on the economy. People’s spending power had weakened and thus they spent less with SMEs.
The self-employed were in a situation of concern and the government seemed to be unaware of this. Although the income of the self-employed had dwindled, more people were opting to join this sector. It seemed that such people were accepting to earn less as long as they had a job which enabled them to pay national insurance contributions.
Dr Sant said the government should help the self-employed. Back in the 1970s the Labour government had increased the spending power of all sectors when it increased the social welfare through the minimum wage. Liberalisation had also helped competition in the retail sector. The current economic strategy did not help SMEs to progress.
Another problem SMEs faced was the lack of economies of scale. The small size of the country inflicted expenses onto SMEs which had to be spread over a small volume. The introduction of VAT had resulted in less opportunities and fewer profits. The way certain EU regulations had been implemented had also resulted in an added burden on the self-employed. The government had not analysed the affect of such regulations: a case in point was the liberalisation of gas distribution, he said.
The way in which the Bill had been brought forward showed the government’s lack of understanding of the problems faced by SMEs. It would have made more sense for the government to directly tackle problems such as the impact of VAT on SMEs. Last year, the European Commission had presented a report where it suggested ways in which VAT in the EU could be amended to trim bureaucracy. The report presented findings and statistics from different countries. No information and statistics were available for Malta. How could the government declare it was working in favour of the self-employed when it did not even have the right information in hand?
The self-employed often had to accept late payments from clients but they had to pay VAT on time. The report presented by the Commission spoke about this problem and offered ways how this could be tackled. When the government itself did not pay private contractors on time this had a knock-on effect since they in turn would not pay their debts. The government had to be the first to set an example.
SMEs usually faced great problems with cash flow.
One should be careful when analysing statistics since these often did not reflect reality. NSO figures showed there had been a substantial increase in exports compared to imports.
Exports last year had risen from €520 million to €735 million. However, when this was analysed, one realised there had been a large increase of €120 million in the export of fuels and lubricants. Malta did not produce fuels and lubricants but only re-exported them. The figures did not distinguish between exports and re-exports and this did not reflect economic reality.
The government had chosen how to present statistics. Certain institutions were being managed by persons smacking of partisan politics.
How could Vince Farrugia defend the interests of the self-employed when he occupied a role in the Nationalist Party? he asked.
Other persons who had worked in favour of the government were currently occupying high posts in important institutions such as the Chamber of Commerce, the NSO, the university, state broadcasting, Malta Enterprise and the Central Bank.
Dr Sant said that the self-employed did not need this Bill. What they needed was the government to truly believe in them and assist them.