Forced by Brussels to cut funding incentives for industry, the government yesterday rebutted criticism it was to blame for adopting a weak negotiating stance.
Deputy Prime Minister Louis Grech, responsible for EU affairs, said the Labour government was faced with a fait accompli when elected last year.
The European Commission had adopted the funding guidelines for industry in February 2013, Mr Grech said.
“The first steps to curb funding were taken in 2011 and initially there was not going to be any funding at all for large companies. But the Labour government managed to persuade Brussels to allow limited funding for big firms.”
Under the guidelines, big companies will be eligible for 15 per cent funding on their investment up to 2017 and 10 per cent up to 2020.
They represent a drop in aid of 15 percentage points for the period 2014-2017 and 20 percentage points for the period 2018-2020.
The Nationalist Party immediately reacted, with deputy leader Mario de Marco insisting the government could not escape the fact it has been in government for 14 months.
Dr de Marco said the final decision by the European Commission was announced earlier this month and the result showed the government’s incompetence to negotiate a good package.
Financial incentives, including fiscal advantages, have been a mainstay of Malta’s attractiveness to foreign investors. The matter was raised on Sunday by Opposition leader Simon Busuttil, who also accused the government of hiding the EU decision. However, Mr Grech denied the decision was kept hidden, saying it had been public since July last year.
Mr Grech said the government would step up pressure on the European Commission, even though outgoing commissioner Joaquín Almunia insisted very little could be done.
The Opposition is not here to score political brownie points
This was not an issue of incompetence by the government, he insisted. “If anything, this was the case for the period between 2011 and 2013, when the PN was in government.”
Asked what will happen after 2017, Mr Grech said the government had to seek solutions and the reduction in utility tariffs for industry would help.
But Dr de Marco blamed the lowering of the funding threshold squarely on the government, insisting this came on the back of recent figures that showed a significant drop in exports and retail trade.
“The Opposition is not here to score political brownie points but because it is genuinely worried about the performance of some important economic sectors,” he said in a press conference outside the Chamber of Commerce, Industry and Enterprise.
Dr de Marco noted that recent figures released by the Central Bank of Malta also showed a drop in bank lending, driven by a loss of investment apetite by businesses in the importation sector.