Aaron Farrugia, Parliamentary Secretary for EU Funds and Social Dialogue
EU rules on cohesion policy establish that a member state should be given more assistance when it needs most, thus favouring less developed regions over more developed ones. So as a country’s economic prosperity increases, it might need to wean itself off certain EU funding arrangements.
In recent years our families and businesses have witnessed a record economic growth. In 2017, for instance, Malta benefitted from a GDP increase of 6.6 per cent, three times higher than the EU average. As a result, our contributions to the EU budget (most of which are based on the gross national income) have started to increase. The government has been able to manage these increases in contributions, and they did not derail our fiscal plan and the achievement of a fiscal surplus earlier than planned.
Over the past years we have invested EU funds in physical infrastructure as well as the country’s human capital and knowledge infrastructure and in the social field ranging from training and development to initiatives earmarked to address social exclusion. This has been important to enhance and extend our industrial base thus enabling and stimulating economic growth. It has also provided the necessary tools and funds to promote social inclusion and social solidarity.
While it is true to say that on one level Malta is becoming a victim of its own success by outperforming most other EU countries economically, it is too early to draw any firm conclusions. The “net contributor status” after 2020 is affected by hundreds of variables. We cannot escape the likely realities of a changing Europe and the impact of Brexit. As the second largest net contributor, Britain’s departure from the EU will leave a significant gap in the overall budget.
We believe the level of contributions should be linked to the concept that the whole process must respect the sensitivities of each member state. Malta has the strategy, the arguments and the proposals for our citizens to continue benefitting from EU funds, including those which are pre-allocated to Malta, such as rural development, direct payments to farmers, and migration/security, as well as education programmes such as Erasmus+, and non-pre-allocated programmes, which are generally subject to direct competition from all member states, such as those in the areas of transport, energy, ICT, and research and innovation.
It will not be an easy process but I am convinced that we will manage to achieve the best results. Our work will be facilitated if Malta presents its case as a united front, away from partisan tactics.
We will strive to obtain the best possible package
It is important to note that member states who are net contributors still benefit from EU funding. In this regard, the share of EU funding is not only measured in terms of the funding it obtains from structural or cohesion investments but there are also other EU programmes, such as Erasmus and Horizon, among others.
These “centralised funds” are also important for our future economic growth prospects and we are consolidating our administrative capabilities to enhance our access to these EU funds in future.
Looking forward, as a country we need to consolidate, nurture and sustain our achievements. This is necessary not to lose momentum and to enable us to compete effectively in the Single Market and beyond. It is also important in order to enhance social cohesion in Malta and meet the needs and aspirations of our citizens.
In this context, I look forward to the forthcoming negotiations on EU cohesion policy post-2020. As was indicated by the Prime Minister, this government is well prepared. We will strive to obtain the best possible package which will be commensurate with the current state of economic well-being in Malta but also taking into account instances where maintaining and sustaining a good level of development is a continuous challenge, particularly for an island member state at the geographic periphery of the EU.
David Stellini, Opposition spokesman on European Affairs and Brexit
We should thank our lucky stars that those who sought to get us into the EU were not blocked from doing so. God only knows where Malta would be right now otherwise! We must also be grateful to those who negotiated two full rounds of an excellent amount of funding for Malta. This has helped Malta develop into the success it enjoys today.
At this point, Malta should be working with its foot to the pedal to be sensitising the EU to Malta’s specificities and make the case for a large amount of funding. There are many avenues that can be explored, and I hope government is making its case.
The European Commission, in its latest report about Malta (as part of the so-called winter package), in its very first recommendation, states Malta needs to invest heavily on infrastructure. This means the EU is acutely aware of Malta’s needs on infrastructure and thus the Maltese government does not need to convince the European Commission that it needs plenty of EU money for infrastructure. The EU knows that Malta needs structural funds which are also known as cohesion or regional funds; all meaning EU money for large infrastructural projects.
‘But the EU has said that it will reduce EU structural funds this time round,’ I hear you say. ‘Malta is doing well economically,’ is another phrase we hear every so often. Well, the Maltese economy is growing faster than that of the EU average. That is true, but it does not necessarily mean that Malta is wealthier than other EU countries. It does not mean Malta has reached the socio/economic levels of other EU countries. Is Malta the best in Europe as the Prime Minister would have us believe?
Government can explore ways on how to attract direct EU funding to the Gozo and south region
We would do well to take the latest analysis report published by the European Commission seriously as it carries weight in the way foreign investors view Malta. The Maltese government cannot say this report is a political ploy against Malta as the only Maltese member of the European Commission is Karmenu Vella, nominated in the post by the Maltese Prime Minister himself.
The European Commission starts its report by reminding us that “the mounting pressure on infrastructure and natural resources, rising housing prices, as well as shortages of labour and skills may create challenges in the future. Reducing the infrastructure gap, improving labour supply, strengthening the business environment and promoting environmental sustainability remain key policy priorities to sustain long-term growth.”
This unequivocally shows that the European Commission’s take on Malta is not exactly glowing with praise and that the Maltese Prime Minister can clinch a better deal than that of Lawrence Gonzi who was PM at the time of the negotiations for the last budgetary cycle.
These talks will be held behind closed doors so the Opposition will not be involved at all. However, we will play a very constructive role in the interest of each and every Maltese citizen. We will give the government ideas and see how we can help with our contacts in Brussels. The next milestone is the publication of the European Commission proposal, next May, and then the negotiations between the EU governments will start within the framework of the Council of Ministers. The European Parliament will also be involved.
The government can also explore ways on how to attract direct EU funding to the Gozo and south regions which are quite clearly lacking behind in terms of socio- economic development. The government might want to empower regional authorities in Malta to be able to tap EU funds directly from Brussels, shunning the central government. It seems to me that these two regions would qualify for millions of EU funds irrespective of Malta’s general status. The future is indeed bright for Malta. The Maltese government and its team of advisors just need to put their minds together to get more EU funds than Gonzi did five years ago.
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