04 October 2006

The Web
Business Today

Keeping a promise

Port reform talks are set to restart next Friday after a lull caused by the turmoil in the General Workers’ Union.
This leader expects government to live up to the commitment made last year that it intends cutting port costs by 25 per cent. That was a promise made by Ports Minister Censu Galea and which gave industry good reason to hope for better times ahead.
Anything less than a reduction of this magnitude would be a total let-down and a far cry from the supposedly beneficial impact on industry and consumers port reform should have.
The ports have long been a bone of contention for the business community in Malta. Port costs are a major contributor to the lack of competitiveness Maltese industry is suffering on the world stage. They are also a culprit for raising consumer prices for goods sold domestically.
Being an island economy, with no possibility of different transport services offering industry a competitive choice of prices, port reform is of crucial importance to the continued advancement of the Maltese economy. We literally live off our ports, they are our lifeline.
Unfortunately, the rumblings we have heard until now are not encouraging. The agreement reached with the new cargo handling company promising a reduction of five per cent in costs was a far cry from what industry was expecting apart from the fact that there still are conflicting claims on whether the tariffs have actually dropped or not.
The Dockers’ Union today tells Business Today that it cannot be expected to shoulder the whole 25 per cent reduction. It might very well be true that reductions cannot come solely from port workers, but they do have a significant contribution to make to the whole equation. For starters, work practices have to reflect modern exigencies to instil more efficiency. Secondly, port worker costs need to come down as well.
As yet it is unclear whether government has agreed to reductions with other entities plying their trade in the port. The secrecy shrouding negotiations does not help either.
Admittedly, the situation in our ports is not simple to decipher; there are too many sectoral interests and lobby groups making a good buck. But government must be brave. Economic growth hinges on a thorough review of port costs.
Censu Galea should not rescind on his promise. Discussions need to continue but they also have to have a deadline. Reforms had to be put in place by the end of this year and this leader expects that this timeframe is respected.
Postponing the deadline would only perpetuate the exorbitantly high costs but it would also create instability since industry would be left with no clue as to whether it should expect lower charges for future orders.
Lawrence Gonzi during the Independence Day mass meeting promised that his government would deliver on port reform by the end of the year. It is crucial that 2007 dawns with lower port charges already in place. It could also help to lower consumer prices for imported goods, possibly contributing to a drop in the retail price index.
Half measures won’t do and the organisations involved in the discussions need to understand the importance of lowering costs across the board.
The Chamber of Commerce that represents ship agents and the GRTU that represents cargo haulers should be in a better position to understand the need for lower costs and greater efficiency at the ports. They are two business organisations that have for long dwelt on the importance of having a more competitive economy. Now is the chance for these two organisations to rise above the petty concerns of their members and implement what they have been harping on for so long.
Change is necessary and this time around there won’t be the GWU to blame for standing in the way.
We shall wait and see whether government will deliver on its promise; this newspaper expects a stocktake of the situation during the budget speech.

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