|
Government has made it clear that port services are in for a reform but the General Workers’ Union, which also has substantial commercial interests in cargo handling, is warning of “unpredictable reactions.” Competitiveness Censu Galea here says he intends to issue a call for tenders by March next year that will bring the union’s monopoly to an end 
After years of pleas from industry and business to get the port services into shape, Competitiveness Minister Censu Galea is determined to bite the bullet and end the existing monopoly of Cargo Handling Co Ltd, owned by the General Workers Union.
Inefficient work practices there have only served to keep prices high – among the highest in the Mediterranean – even when services are not provided, with the ensuing extra costs for industry and eventually for consumers to shoulder.
Galea has already declared he does not intend to postpone reforms any further. But why did it take so long for these reforms to materialise?
The minister says that in 1998 the government commissioned an analysis of port services and a clear picture of the inefficiencies there emerged. Galea then set up the Ports Consultative Council which represented all stakeholders, including unions, the Chamber of Commerce, the Federation of Industry and port workers.
“It became clear that one of the pivots of port reform was cargo handling,” Galea says. “As is now publicly known, the contract for cargo handling was extended a few weeks before the 1998 general election and expires in 2006.
“It would have been useless launching reforms when there is a cargo handling contract in place which is difficult to terminate. It would have been very problematic, and some of the problems are even surfacing now that we are close to the expiration of the contract.”
The minister says the agreement with Cargo Handling does not provide for any measures to redress any breaches to the contract, apart from terminating it outright – “a drastic decision” that would upset port operations even though the Malta Maritime Authority is claiming that certain clauses of the agreement have been breached.
One of the accusations made by MMA is that service users have to pay extra charges which are over and above normal tariffs.
“Cargo Handling has the right to commission sub-contractors – we are not disputing that – but the sub-contractor is being paid above the established tariffs to do the job that Cargo Handling is getting paid to do in the first place,” Galea says.
“There are no realistic disciplinary measures for any breach in the agreement, so it seemed to me that terminating a contract several years before its cessation would have created more damage than good. It would have been chaotic. Don’t forget that we had to keep our ports running, we’re totally dependent on them – every piece of cargo that is brought to Malta or leaves the islands goes through our ports. We can’t afford turbulence in our ports, we have to keep things running as smoothly as possible, that’s why we’re planning ahead and launching our plans a year and eight months before the contract expires.”
The government has already refused to extend the agreement and also to grant GWU the right of first refusal.
“We didn’t accept the union’s requests precisely because we want to turn a new leaf in the way we handle cargo. I hope that even the union’s top officials, as shareholders of Cargo Handling, appreciate the fact that we are doing this in the interest of the thousands of workers they represent.”
But the problems are further complicated by the GWU’s conflict of interest on this issue. On the one hand, it represents port workers while on the other, it is the owner of the company in question, which means that this issue is also a question of financial survival for the union.
“It’s an issue which complicates matters, the fact that the owner of the cargo handling company is also the representative of practically all port workers,” the minister says. “It’s an ambivalent situation. I would say that as long as cargo handling is efficient, I don’t really mind whether it is being carried out by a union or by someone else, but one has to always keep in mind the conflicts that can arise from this situation.”
The upcoming tender will be open to international competition, the minister says, and it will also expire after a specified period, after which the contractor will have to compete again for another tender.
“We’re going to use the next weeks until the end of this year to draft a document that would cover all port services, so that by the first three months of next year we will issue a formal call for tenders.”
The way cargo is loaded and handled is very complex and that can be problematic for the new contract itself.
“There are a lot of ‘hands’ involved,” the minister says. “As soon as a vessel reaches Malta, there are the pilots who direct the ship inside the port – today we have an agreement that was reached last year which has eliminated most of the problems. Once a vessel is berthed, there are the mooring men who have to tie it up to the ground. Of course a ship needs to be moored, but do we have to keep the same system? I would say no. There is the foreman working on land and another one onboard. Again, do we have to keep the same system? Can’t the foreman working onboard also do the work carried out by the ground foreman? I believe it is possible and reform will tackle this point. There are the tally clerks who in the past used to physically check the freight that is loaded off the vessel. Nowadays most of the freight arrives in containers and they never check what’s in the container, they just take note of whether a container is offloaded or not. So do we need this service? I would say no, nowadays we don’t need this kind of service.
“You also have the port workers. These are necessary, but they operate on a very rigid system, there are always seven port workers, when you may have cargo which needs more and cargo which needs less port workers. We don’t need to have this rigidity.”
I quote what Charles Polidano, ic-Caqnu, had told me a couple of years ago about the costs to transport cement from Marsa to his plant in Hal Farrug, which amounted to twice the costs to ship from Sicily.
“Yes, these are claims which I have verified,” the minister says. “There is also another thing. Part of the fees collected go to what is called the ‘pensions and contingency fund’ which was set up in 1973. It was set up with good intentions 30 years ago, but do we still have to keep the same tariffs to contribute to this fund which nowadays amounts to some Lm10 million – quite a substantial amount in the present circumstances – when the port workers have their pensions guaranteed from elsewhere anyway? So we have to tackle all these issues in our reform.”
And yet, the GWU’s Deputy Secretary General, Emmanuel Micallef, has already warned that ‘the patient’s reactions can be unpredictable’ in a veritable threat to the minister.
“Well, if that is a threat I don’t really understand it,” Galea says. “It’s in stark contrast with the union’s attitude when I met its officials to discuss port reforms. The GWU, like all other stakeholders whom I met around the discussion table, said it agreed there was a need for reform. Besides, who is the real patient? Cargo Handling or Malta? He is referring to Cargo Handling and its shareholders of course – the GWU – but he should remember that apart from the commercial interests he might have, there are around 400 port workers and around 800 others whose work centres around the port. How could it be that he doesn’t realise that the effect of inefficiencies at the port are then shouldered by thousands of other Maltese workers in industry, and by consumers? When you look at the full picture, you have to detach yourself from the immediate commercial interests and take into account all the other workers in our country.”
I ask Galea how the changes at the port will be visible for the public at large. Will this reform mean lower prices for supermarket products?
“Somehow yes, although it is difficult to quantify the exact price of every individual item now,” Galea says. “But yes, globally prices should go down. From our analysis of costs, which we deem to be excessive, there should be a decrease of around 20 to 25 per cent on container management, which is being shouldered by importers, industry and consumers.”
This would mean around Lm30 to Lm40 less on every container, Galea said, although at the Freeport expenses are even higher. So how will Galea make sure that the reforms he is launching at Grand Harbour are mirrored at the Freeport?
“I don’t think there should be any conflict in this regard,” he says. “The MMA and the Competition Division were looking into the practices there to see how these were affecting our overall competitiveness. Today almost 80 per cent or more of the cargo that enters our shores for re-export goes through the Freeport. While the Freeport and Grand Harbour are separate, the end result should be more or less the same when it comes to expenses, because otherwise whoever imports and export will start seeking the cheapest option and this can result into conflict. So at the end of the day the tariffs at Grand Harbour and Freeport have to be basically the same.”
Does he have any guarantees this will happen?
“Not really, but we had discussions with the Freeport management about this, when it was still government-owned. I haven’t had any discussion with the new operators so far but there have been formal submissions by the Federation of Industry and the Chamber of Commerce which I will naturally raise with the new management.”
How can he guarantee this will happen when the Freeport is now in the hands of a private company which has its own commercial priorities?
“There are clauses in the agreement which bind the Freeport when it comes to cargo imported to Malta and we have to ensure that apart from the company’s commercial interests, the national interest is also safeguarded.”
Galea is responsible for the country’s overall competitiveness but, I tell him, it does not seem he is able to do much when it comes to excessive bureaucracy and soaring tariffs that are implemented across the board.
“Bureaucracy in itself is not bad,” he says, although he is clearly irritated by MEPA’s red tape when it comes on deciding on permits. “I am not against environmental impact assessments and traffic impact statements; they should be carried out, but applications should be processed in due time and wherever possible MEPA should use its information about certain areas to decide whether to grant permits or not.
“On my own I don’t have the power to change all this,” he admits, “but on the Committee on Competitiveness which is headed by the Prime Minister, we are looking at the excessive red tape to eliminate it. Eventually we can set targets and say publicly how excessive bureaucracy can be removed within timeframes.”
And what about the mushrooming authorities that are setting new fees autonomously to finance themselves? They are definitely not helping competitiveness.
“Although the authorities are autonomous and ministers cannot really interfere they cannot impose new fees without the final authorisation of government. What you’re mentioning is a reality and there may be some authorities that try to compensate for government’s cost-cutting exercise by increasing tariffs. This shouldn’t be happening, and we are taking measures to ensure that before any new fees are introduced they are approved by government.”
|
