News | Sunday, 22 February 2009

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Malta runs at €12.6 million loss on EU membership

David Darmanin
The Maltese government over the last two years tapped €97 million in EU structural funds – €180 million less than the €277 million available over the same period.
At the same time Malta contributed €109.6 million to the EU, which, when subtracting the €97 million acquired in 2007 and 2008, means that the national coffers are running at a loss of €12.6 million on EU membership.
Our contributions to the EU are calculated on a percentage of Malta’s collected VAT, GDP and customs duties.
In April 2002, EU Budget Commissioner Michaele Schreyer had affirmed that Malta would not lose out financially from EU accession. But though the Maltese government has so far had every opportunity to be a net beneficiary of EU accession, figures for the past two years prove otherwise.
This came to the attention of PL leader Joseph Muscat, who in a recent party event said that this situation is not due to “the EU being bad”, but rather to the Maltese government being incompetent.
However, Malta’s current agreement to benefit from EU structural funds is of a seven-year term ranging from 2007 to 2013. So technically, the unspent €180 million is money missed rather than money lost: which means that if the process is severely accelerated, the government would still be able to use the money.
Speaking to MaltaToday, economist and Labour EP candidate Edward Scicluna yesterday said that Malta no longer seems to be a net benefactor of EU funding.
“The onus is on the government to prove otherwise,” he said. “This is a very serious charge and the government is expected to take it seriously and forthwith report to the Maltese and Gozitans the exact financial situation regarding net funding.”
Although the funds will be remain at the Maltese government’s disposal in the next few years, spending unused EU funds becomes more difficult as time passes. Scicluna compares this situation to keeping “uneaten food in the fridge”.
“It is not thrown away but I cannot imagine any person eating today’s lunch and the previous three days’ refrigerated uneaten food all in one day,” Scicluna said. “It is physically impossible. The same may be said for the EU funds. They will be kept for us, but the problem of spending them all becomes more difficult as time passes.”
The economist also referred to statements issued by the EU commission that we were record spenders, saying that obfuscating the debate with such claims does not help to solve the problem.

Spend on projects, not airline tickets
Scicluna, who between 2002 and 2005 was involved in the evaluation of Malta’s pre-accession and transition facility programmes, said that seemingly, “the record on spending monies by civil servants on civil servants was not bad”.
“Spending money on projects is a different matter. It is not a question of buying airline tickets and going on training programmes. Now we have to deliver on projects such as the urban waste-water treatment at Tal-Barkat and such like.”
The economist also criticised government for giving the impression that the €855 million allocated by the EU for the seven-year agreement, represented a net amount to national coffers, whereas our contributions should have been taken into account.
“We should have been told that the net contribution was more in the region of half of that amount (€855 million), in view of our various contributions and dues to the European Union,” he said. “These range form our GDP or GNI contribution, custom duties, VAT contributions, and various others. As soon as we utilise less than what we are given for the year, the net contributions falls.”
In fact, prior to the introduction of the Commission’s seven-year funding agreements, Malta had also under-spent funds available to it on a year-to-year basis. In 2006, the Maltese government was asked to pay €1 million less in EU contributions.
The rate at which contributions reduce varies, but if Malta spends less than about half of the available EU funds, our contribution disappears.
In 2007, government spent 29% of available funds, and 44% the following year.
Asked what he thinks should be done to avoid losing the €180 million unspent funds, Scicluna said: “Malta, and especially the public sector, is lacking the capacity to deliver projects and programmes on time. No one wants to take a decision unless he or she receives a nod from a Minister or Prime Minister. Our government-appointed regulators are yet to strike a balance between upholding standards while taking some risks and giving the go-ahead for operators to undertake projects. I have long said that Malta is suffering from an institutional schlerosis. Not spending monies given to us by the EU for worthwhile development and environmental projects is a clear symptom of this malaise.”

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