Finance Minister Tonio Fenech said in Parliament yesterday that Malta should view the EU directive on services in the internal market as an opportunity and not a threat, as Malta's relatively small population would be entitled to compete on much bigger markets.
He was introducing the debate on the second reading of the Services (Internal Market) Bill, which established the general provisions facilitating the exercise of freedom of establishment for service providers and the free movement of services in the internal market. It also provided a framework of principles on which the internal market could develop.
Mr Fenech expected the directive to give Malta an impetus to continue to develop in a market which was far greater than Malta's, especially because there had been heavy investment in human resources and education and training of employees and students.
The tendency was that each sector would defend itself from competition within the internal market as this would bring about pressures even on fees and charges. However, the concept of the EU was that of a single market in relation to both products and services.
The removal of barriers in the free movement of goods and services would increase Malta's opportunities if businesses tried to integrate in the European market.
Mr Fenech emphasised that Malta was proceeding well in implementing the required system to eliminate obstacles in the provision of services. Should an enterprise wish to provide a service in another member state, it need not pass through further restrictive bureaucratic procedures.
Simplification of procedures would also apply to the provision of services on a temporary basis. Residency could not be a prerequisite for the provision of services in EU member states.
Yet those offering services on a temporary basis were still subject to national social and employment laws. The directive covered consultancies, advertising, recruitment agencies, commercial agents, provision of legal and tax advice, services related to immovables and architects, car rental, travel agencies, services in tourism, and entertainment-related businesses. Other services of general economic interest, such as the provision of water, gas and electricity, public education, social services including social accommodation, childcare and services for persons with disability, were excluded from the application of this directive.
Online gaming sector was consciously excluded from this directive following pressure from other EU states that viewed this sector on the basis of public morality.
Minister Fenech said that financial and health services, and professionals who were already regulated under the mutual recognition of qualifications framework, would remain to be so regulated.
The directive did not apply to workers and did not affect the rights of workers or any collective agreements, but employers would be expected to comply with the minimal working conditions established under the Maltese regulatory system, thereby providing safeguards against loss of jobs.
All member states would have to scrutinise their internal systems to update all administrative and licensing procedures. Other subsidiary legislation would be needed to bring the national system in line with the principles of the directive. All member states were to implement the directive by the end of the current year, and from then on the European Commission would start to analyse the transposition of the directive into national law and its reflection on the national system.
Mr Fenech said a review of licensing requirements was already under way to simplify licensing procedures and would bind the authorities with time limits. A member state could not impose further conditions if not on grounds of health or public interest.
The directive still permitted some controls on recognition of qualifications and professional training. It also obliged competent authorities to give consumers basic information on any service, including rates or tariffs for a service.
Member states had presented reports to the Commission on the implementation of the directive for evaluation purposes. The implementation process obliged member states to set up one-stop shops to give the required information in electronic form.
The Finance Minister concluded that this legislation was a positive one, adding that it provided the opportunity for Malta to be a platform for providing services with high added value because the Maltese did not fear competition.
The opposition's spokesman on the economy, Gavin Gulia, said that after EU membership the government had retained certain control mechanisms to eliminate the possibility of distortions in the local labour market. The government had negotiated with the European Commission for EU citizens to obtain work permits to work in Malta in order to monitor the influx of workers from member states.
However, there was an influx of workers from non-EU countries in certain sectors and in the catering sector in particular. Dr Gulia said that he was concerned with this situation because these workers were accepting inferior conditions of work and pay to the detriment of Maltese workers who could easily perform such work.
He asked whether these persons were working legally or not when the same conditions for working in Malta before EU entry still applied to third countries. This situation also contrasted with the aim and objectives of this directive.
Dr Gulia said that government should tackle bureaucracy, and asked whether it was possible not to reach any targets after several budgets. The government was to be held responsible for the burden created by bureaucracy on businesses, which was exacerbated with the introduction of the electricity surcharge and higher utility tariffs.
The Bill sought to amend certain aspects relating to certain professions and obliged regulators to apply the criteria provided by it.
Malta needed to go beyond rhetoric. Where consumption decreased, business suffered. In circumstances where the country was facing problems, one should see that one was more conducive to the needs of the self-employed. How was the government treating them?
The Bill speared the regulatory authorities to apply transparency. He referred to the Malta Resources Authority and the manner in which it had dealt with the increase in water and electricity tariffs, saying it only spoke to approve the government's actions. He noted that the same authority had also remained passive when confronted with the increase in the price of gas, and had thus failed to protect the consumer.
Dr Gulia augured that, as a result of this legislation, regulators would truly protect the service providers, who were in turn also consumers of services and products provided by the government.
He expected that the self-employed would be assured that this law would also benefit them, especially because this was being introduced at a time when the private industry faced dismal circumstances.
Despite price increases, the wholesale and retail sector had seen a 20 per cent decrease in profits, possibly reflecting an increase in costs. A similar situation was found in the tourism and manufacturing sectors, the latter falling by at least 32 per cent.
Although the pharmaceutical industry had indicated positive developments before the international recession, this sector was now also sliding. A few sectors such as that of financial services and of online gaming have performed well.
He said that rather than supporting the economy by helping the self-employed, the government was ignoring this sector so as to implement its obligations under European law.
Dr Gulia said that there was disagreement within the Nationalist parliamentary group on the Ta' Qali crafts village, a project which had been on the government's planning board for the past 20 years.
Before the election, the government had entered into a promise of sale with about 60 hut operators who had invested there. This promise of sale would expire by the end of the year.
Meanwhile, the government had announced that the project would not materialise because of lack of EU funds.
It had later announced that the crafts village would be moved to the Dock Number One area in Cospicua, but Minister Austin Gatt had later said that the area would be utilised for other purposes.
Dr Gulia said the government was now applying "divide and conquer" tactics. Malta Enterprise had told some of the operators that they would be moved to different areas around Malta, with the excuse that their businesses, such as woodwork, did not really fall under crafts, but the Crafts Village Legal Notice of 2001 had established woodwork as a craft. The conditions offered in the new areas were inferior to those stipulated in the promise of sale.
The Crafts Village project was clear evidence of the incompetence, inefficiency and failure of the Nationalist government.
Dr Gulia concluded that in the current situation more government-induced costs had to be undertaken by self-employed and businessmen while foreign governments were increasing aid to businesses.
The House meets again on Monday.