29 March 2006

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Business Today

Pennies from Heaven

Now that Malta has secured over EUR800 million from the EU budget, the tricky part is how to spend the money

Last December EU leaders agreed on a final budgetary deal covering the period 2007-2013. Under this deal, Malta was granted EUR805 million in funds to be spent during the seven-year period on structural and cohesion projects.
This quota was improved and the jubilant prime minister was seen arriving back with a sack full of promised aid reaching EUR853.The interesting phase now is how to allocate the funds over the next seven years. A number of collegial meetings are being held with the party faithful and the prime minister Dr Gonzi is insisting, quite rightly, that we should spend the larger portion of EU funds on human resources rather than infrastructural projects.
Other worthwhile goals should include a stronger financial contribution to social mobility, promoting access to education and helping individuals and groups in need.
Gonzi cautions us that no progress can be achieved unless we pay more attention to consumer protection, the integration of unemployed to the labour market, including those with special needs. While extolling the benefits of membership the prime minister has a vision of Ireland in his perspective and wishes that we emulate this Celtic tiger in its great leap forward. So far, since accession in May 2004, the sectors which benefited most from funding were: enterprise (19 per cent), employability and adaptability (15.6 per cent) and improving processing and marketing of agricultural products (7.6 per cent).
But what were our pitfalls so far on utilisation of pre-accession and cohesion funds? Did we apply for the maximum benefit? The answer is amply given by a report compiled by PricewaterhouseCoopers for the Office of the Prime Minister. This shows inter alia that by last December a total of EUR85.5 million had been committed across all measures and projects, representing no less than 99 per cent of the total programme value. It goes without saying that some are questioning the efficiency by the Department of Contracts to allocate such funds to successful bidders and why delays in payments have dragged projects from reaching completion within the EU timeframes.
In one instance the report mentions that EUR47.4 million of unallocated spending is now forecast for the whole of 2006. With hindsight we notice that this adds to the considerable level of spending that would need to be achieved in order not to forfeit any funds. Regrettably one notices that for some unexplained reasons the process of adjudication and awarding of contracts was delayed. Although progress has been registered in certain sectors, the report mentions that only EUR2.3 million, or just under three per cent, of the total programme value was spent and requested back from the EU by this date. It is a pity that delays can crop up due to some frivolous claims by unsuccessful bidders.
This is common knowledge but we should be more vigilant in the future so as not to forfeit the lion share of the EUR853 million in the second tranche.
It is interesting to note that more funds will be allocated this year to the building of roads such as the three roads in Gozo which amount to 15 per cent of the arterial and distributor road network.
We are expected to see new works to be started soon on the Mgarr road which will be funded from cohesion funds in Gozo while work on the road to Xlendi will follow later. According to the local media Dr Gonzi has urged us to forge ahead in our endeavours to maximise value out of EU membership. He reiterated that as the main government priority in the previous legislature was to assure Malta's accession to the EU, the main priority now is to make sure we make a success of it so that the benefits begin to flow to all sectors of our society. Malta has secured her rightful place in the world but it ought to waste no time to catch up with the EU GDP average. Naturally this means that the business community, unions and NGOs must gear themselves towards identifying and exploiting all the many opportunities of membership.
This is apart from the indirect economic benefits arising from structural and cohesion funds mentioned earlier. There are a mass of EU programmes and initiatives that we can tap.
Without any doubt we cannot afford to fragment our efforts by creating various lobby groups that specialise in identifying programmes that we can participate in, projects we can join or initiate, or niches we can occupy.
Since accession, many ask their MEP the question that with so many EU programmes available where does one start to avail themselves of such grants and opportunities. Typically one can revisit the "Agenda 2000: For a stronger and wider Union", and this comprises a single complete framework offering a clear and coherent vision of the Union's future on the threshold of the 21st century. Agenda 2000 is an action programme whose main objectives are to strengthen Community policies and to give the European Union a new financial framework for the period 2000-06 with a view to enlargement.
It’s legislative package results from the combined effort of all the institutions; it was conceived at the Madrid European Council in December 1995. Focusing on the Union's future financial framework, having regard to the prospects of enlargement. The next question that is being asked by small business is why it so difficult to access such programmes. Rightfully many ask how can SME ’s stand to gain from such programmes in order to assist them to restructure when facing the enlarged single market?
Fortunately, the EU regards Small and Medium Sized Enterprises - companies usually employing under 250 employees and less than 25% owned by an other organisation - as a great source of employment generation with currently 63% of the community workforce employed by SME 's. On 2003 the Commission adopted a package of documents outlining policy towards small and medium-sized enterprises across Europe, the so-called SME package. Definitely our MEPs can lobby on behalf of our SMEs on how best to source support services and to facilitate inter-regional and cross-border co-operation. Ideally, SMEs and civil society groups should form a study task force to evaluate funding possibilities.
Ex-Communist countries that recently joined registered a number of societies with a typical statute encapsulating aims and objectives to assist in the contribution to the democratic integration of the countries and regions of Europe while respecting the linguistic and cultural diversity of the peoples concerned. This can be achieved by the proper dissemination of information on the European integration process in the widest possible extent in the different groups of societies. Of paramount importance is the contribution to the development of research and development activities, to the dissemination of research results.
Now that the Lisbon Agenda has been revised and upgraded the fastest way for Malta to catch up with its objectives is to strive for the establishment and development of a knowledge-based society through the promotion of life-long learning while investing on measures for the protection of the environment and of biodiversity. In line with the above goals and objectives, one agrees that the EUR853 million funding is a unique opportunity for the government to offer its citizens a transparent and unequivocal direction on how best to maximise the potential of such a one-off initiative. Since the EU is largely an oligopoly, so the plan on how to spend such funds needs to include all the relevant stakeholders pooling in together.
It is only in this way that we all stand to gain.

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Editor: Kurt Sansone
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