Former parliamentary secretary Edwin Vassallo told Parliament on Wednesday that the Small Business Bill showed there was insistence and commitment on behalf of the government with what was innovative and had been achieved under his direction in the 10 years he had been responsible for the self-employed. What he had done was in conformity with EU directives at a time when Malta was not yet an EU member.
Today, he said, there was continuation with the country adapting to changes in the market. He complained of having inherited some files from his Labour predecessor who, in his short period of 22 months responsible for the administration, could not achieve much.
Therefore, he had to start from scratch. In his time he did not have enough time to set up permanent structures but he regularly consulted with business organisations.
The structures that were being set up meant decisions would be taken on a permanent level. These bureaucratic structures would not hamper initiative and ensured that all ministries were responsible for the self-employed.
He proposed that the introductory chapter of the Bill would include the European Charter on SMEs which Malta had ratified. The charter provided a roadmap for the way forward.
The Bill provided a legal regulatory framework whose functions could not be performed by the MCESD because its agenda was full. The College of Regulators had to acknowledge that the government had European objectives to reach. It would work in favour of SMEs and consumers.
Mr Vassallo said that the impact assessment test was proof that the government was fighting bureaucracy which he said was like fighting cancer.
Under his administration bureaucracy was infantile compared to today’s bureaucracy in the public service.
Today there was automatic computerised bureaucracy which was cruel. Public service officials were becoming faceless and less human.
This type of bureaucracy was a side effect of the government’s successes said Mr Vassallo. These officials needed to understand the commercial sector better.
The government was right to set up a structure that embraced business organisations. But one should ask what membership these organisations had because 60 per cent of businesses were not represented in any organisation.
The government had to ensure these organisations were truly representative and that there was dialogue with SMEs and self-employed. Similarly employees should be obliged to join a trade union if the country was to advance.
Business organisations should become more pro-active and be afforded more space to form part of public services. This was premature but would be realised in time. The GRTU and the Chamber of Business Enterprise and Commerce should have stronger executive functions. This could only be achieved if trust was strengthened, said Mr Vassallo.
Gino Cauchi (PL) recalled that Mr Vassallo had said that in 10 years overseeing the SME sector he had left nothing for his successors to work on. Then he contradicted himself, saying his successors had not continued to work on what he had done. Within a few minutes he had also contradicted himself on bureaucracy, first saying it was bad and then saying it was good.
Mr Vassallo had also said that what the government had lacked was the time to officially inaugurate a lot of what it had done. All this when there were records of inaugurations and parties galore, spending funds that could have been spent in more worthwhile causes.
Mr Cauchi said that the country was labouring under runaway bureaucracy. As Mr Vassallo had said, from bureaucracy of spite (tal-inkejja) it had turned to one of cruelty (krudili).
It was no use blaming computers, because these churned out what they were fed. It was not computers that had driven so many SMEs to close down. The reason was the severe problems they had faced through “cruel” bureaucracy with the absolute blessing of the government.
Now Mr Vassallo was agreeing that the GRTU was said to be representing SMEs when in fact it was not. Some 60 per cent of SMEs were not represented by the GRTU, and Mr Vassallo would like to see them organised in a trade union. The government was not only letting contractors employ people precariously but allowing them to threaten workers with dismissal if they joined a trade union.
Mr Vassallo had given the government a certificate of inconsistency, failure and destruction of all those committed to SMEs.
Turning to the Bill, Mr Cauchi said it was just a lot of rhetoric and promises that SMEs knew well enough not to trust, having heard them for years. Schemes announced in the past had petered out and nothing had been done. SMEs could not be impressed because they were fed up of being cheated.
The “economic motor” the SMEs constituted might seize because the government was not heeding the warning lights and not giving them what they really needed. And when the SMEs got into a jam, the economy itself would seize.
A government backbencher had said that, if each SME employed one more person, Malta would have no unemployment problems. Unemployment now stood at 6,000, while the primary jobs of 29,000 of the “employed” were part-time – another sign that the sector was stagnating.
Instead of strengthening the already-existent MCESD structure as per Labour’s proposals, the government was erecting another structure to eliminate or bypass the trade unions, eliminating the workers’ voice so that their pleas for help would go unheeded.
Mr Cauchi said SMEs faced either going out of business or having to stay away from what hurt them, even though micro-credit was not prima facie something to criticise. While the government praised the interest shown in the micro-credit scheme with 120 applications, these would take up only €15 million of the €150 million available.
Mr Vassallo had claimed to have inherited just a cardboard box from Labour. Maybe he had forgotten IPSE, a structure set up by Labour to sustain SMEs and encourage them to develop, grow and create new jobs. But the Nationalists had wrecked IPSE.
Mr Cauchi said the opposition really believed SMEs were very important to the country. Instead of the government’s rhetoric they needed concrete action and a scaling down of bureaucracy. The Bill would serve for nothing except to increase that bureaucracy.
Chris Agius (PL) said the Small Business Bill was a concoction of nice words set to give hope to the people involved in the sector. Everyone knew the problems that SMEs were facing and thus it was highly unlikely that the enterprise consultative council would unearth anything new. It was a well known fact that bureaucracy and government induced costs was impeding SMEs from progressing and being efficient.
Furthermore, the number of members in the council was too big; this would lead to the duplication of work. The same thing applied to the proposed college of regulators.
One had to keep in mind that such entrepreneurs had taken big risks and large loans to set up a business. It was not fair that such persons who had never been a burden on the government be treated differently to other persons who worked in other sectors.
A report published by the EU showed that between 2002-2008, the number of SMEs in Malta went up by 12 per cent. This rate was slightly lower than the average in other EU countries. However, while in EU countries employment in this sector rose by an average 12 per cent, in Malta this slipped by two per cent. The report suggested 10 principles that could enhance competitiveness for small businesses. The first principle proposed a bureaucracy-free one-stop-shop.
The enterprises at the Ta’ Qali Craft’s Village have lived in constant tension over the future of their business while the place continues to deteriorate.
Although businesses in Cottonera have grown, the parking has proven to be a headache. Back in 1998 the government had promised a multi-level car park, but more than 12 years later this was still on plan. Furthermore, the project currently under way in Cospicua had led to great disruptions that affected businesses badly.
A survey by the GRTU a couple of months ago asked SMEs how their business had fared during the first six months of 2010 when compared to the previous year. The results showed that 25 per cent said business had remained the same, 15 per cent said that business had increased, seven per cent that business had increased by 20 per cent or more, 20 per cent said business had shrunk by 10 per cent and another 34 per cent said it had decreased by 20 per cent. With regard to profit, 61 per cent said they had seen a smaller profit over the previous year.
The survey also showed that entrepreneurs believed that the government could help businesses through reducing bureaucracy, taxes and the cost of energy.
Chris Cardona (PL) said the opposition criticised the Bill because it tried to woo SMEs at a time when, faced with economic recession, they were continuously burdened with government-induced costs. SMEs in the construction industry were burdened with increased fuel, energy and cement costs.
SMEs had to pay €5 million more in energy costs. The government failed to give direction to banks on how to respond to pressures on the country’s economy.
The proposed structures were similar to government boards and would continue to pile up bureaucracy. The government had downtrodden over hawkers at Ta’ Qali. The opposition believed that the operative environment for SMEs could be strengthened through education. Malta had one of the largest percentages of students leaving school early. 36 per cent of Malta’s young people were unskilled. This was detrimental to SMEs.
The self-employed in Valletta were not consulted on traffic changes and were suffering the consequences through less business. The government was only interested in spending more of the taxpayers’ money through the Enterprise Consultative Council and the Regulatory College.
Could anyone believe the government when one sees what happened in the VAT department where the small fry had to pay for the mistakes of the few who were strong? The opposition wanted to see how these schemes would be used for SMEs to strengthen their operational environment. How could one measure the effectiveness of the Bill, Dr Cardona asked.