Anna Mallia | Wednesday, 11 March 2009

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So Trelleborg and Methode made history in Malta as a member of the European Union. They were the first companies to benefit from state aid from the same government who up to some time ago preached that the time for state aid is over.
Remember the saga of the employees of the other factories when they lost their job? The response by the government was that we do not need them, that the employees have to be versatile and that they have to look for another job.
Now the tables have turned and in 2009, we are back to state aid. Everybody praises the stand taken by the government in safeguarding jobs, but nobody dares ask for details about the amount of money the taxpayer is forking out in the form of state aid to these companies. The only part that gets reported in the local media gathers is that jobs will be saved, and more investment will be made by the companies.
So once and for all, can we please know how much money the government gave to Trelleborg and to Methode?
It is very irresponsible for Minister Tonio Fenech to refuse to quantify the cost of the financial package on public finances to these two companies. It is also irresponsibility on our part not to pursue and insist that the details of these two financial packages be divulged, and the reasons are twofold: first this is taxpayers’ money and second, other companies have the right to be provided with information so that aid is applied equally to everybody.
We have nothing against state aid as long as it is done diligently and rewards the state in the long run. But we cannot understand the criteria (if any) used by the government in deciding to help one company and not another, in helping one sector but not the rest.
We have also learnt from the local media that the same government task force set up to negotiate support schemes with companies facing difficulties, is also currently in talks with Stainless Steel Products Limited. But again, we are kept in the dark and the news flashes tell us only how much these companies are investing... leaving out how much of our money the government is giving them in state aid.
Under the law, they are all equal and there is no investment in Malta that is more equal than others. It is therefore in everybody’s interest to know who and what will be benefiting from state aid, as otherwise we will risk facing charges of discrimination and claims for damages in helping out one company and not another.
As a rule, state aid is prohibited by the European Union unless expressly authorized: the Malta shipyards are one example of how state aid was stopped because Malta was not authorized to continue to pump in money in this company (albeit, let’s face it, Malta made no attempt to seek any authorization from the EU either.)
But now the EU has eased state aid rules because of the credit crunch. On 17 December 2008 the Commission adopted a temporary framework for State aid measures to support access to finance in the current financial and economic crisis. The EU Commission relaxed EU state aid rules until the end of 2010 to help companies secure crucial financing in the face of the present situation.
Under the changes, member states can grant companies a lump sum of €500,000 per company over the next two years to help them cope with the lack of credit (companies and GRTU take note).
Governments will also be able to provide loan guarantees with reduce premiums as well as soft loans, particularly if they are for producing environmentally friendly products.
The Commission’s measure was coldly received by UEAPME, the association representing small and mid-sized businesses at the European level, which voiced fears the changes would only distort competition.
“It is now up to member states to ensure that aid goes to the enterprises suffering because of the crisis, and not to those that are in difficulty due to structural problems and overcapacity,” UEAPME’s secretary general Andrea Benassi said. “However, our experience shows that this is rarely the case. Put simply, the commission has given member states a licence to burn taxpayers’ money today”, he added.
Pity we did not hear anything of the sort by the GRTU, who is a member of this association. Ooops! I forgot that the GRTU has now decided that there is nothing wrong in having its boss run for the European Parliament elections under the Nationalist flag!
In the past Labour was criticised for forking out millions of liri to help safeguard jobs. Now we have turned the clock back and went not one, but two steps backwards, as the government is refusing to provide the information on aid that it is awarding to private commercial companies. At least under Labour there was a law regulating state aid, and the criteria and details were provided to all. Now the information is provided only to Brussels but not to the Maltese Parliament and the Maltese public!
The members of the government task force are also anonymous, and their terms of reference remain unknown. We are therefore kept in limbo, and everything is being orchestrated hush-hush, indirectly telling the taxpayers that it is not their business to know how their tax money is being spent.
The Government, Malta Enterprise, the Employers’ Association, the GRTU and the unions are all one big happy family now: state aid is back on the menu, a virtue to the Nationalist Government where before it was a vice. They do not care how much money is going from our coffers towards state aid, and they do not care what criteria is applied both in the selection of the companies, and in the amount given. They do not care who the members of this phantom task force are.
The employers no longer scream blue murder at seeing their taxes used to bail out companies, as they did some time ago. When KMB preached that job security is sacred, all hell had broken loose... but now that the government is saying the same thing, the same people and organizations who massacred KMB are now congratulating the government in giving state aid to safeguard jobs.
How amazing history is!

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