Grech’s party: a political appendix needs surgery

The situation with Bernard Grech is that he is limited in bringing making the necessary changes in key positions as he seems reluctant to see blood spilt

Opposition leader Bernard Grech
Opposition leader Bernard Grech

Roberto Benigni once spoke about the importance of loving politics at all cost, even at a time when politics and politicians had such a bad name that nothing could wash it clean. Indeed, it’s not uncommon that declaring an interest in politics scares the bejesus out of everyone.

Many are those who believe that those who are in politics are not driven by true and honest intentions, which is why it is becoming increasingly difficult to attract the right people for the job.

The recent spate of political intrigue has not helped. Likewise, the reluctance of people who have been in politics to make way for the younger generation is becoming more than apparent.

But the need to regenerate and to present a new team and new faces is part of the evolution in politics.

On its part, the Labour Party has tried to invigorate its structures with younger people, just in the same way Muscat did before 2013. Some of the new faces on the block may lack the appreciation of the seriousness recent events, but they have their heart in place.

In the Nationalist party, the situation is more dire. Since Bernard Grech was elected PN leader, replacing accident-prone Adrian Delia, the Nationalist diaspora has been seen to.  The numbers have stabilised and the party seems to be in an electoral position that existed in 2017.

Yet, the situation with Grech is that he is limited in bringing making the necessary changes in key positions. He could... but it seems he is reluctant to see blood spilt. Believe me: when your problem is an appendix waiting to rupture, the only course of action is surgery.

Inaction on Grech’s part in forcing a rejuvenation of his party, will lead not only to inertia but a stagnant future in the polls and a race to the elections with old tired faces. I have said this, and I will say it again: the present deputy leadership line-up with David Agius and Robert Arrigo is not a winning formula. They themselves know it. New faces are needed to trigger the dormant middle-class vote and spark interest in the Opposition party.

The same applies to Francis Zammit Dimech, who serves as secretary-general. However noble his intentions and valuable his experience are, it is time for him to move aside for a new face, someone with a new perspective on politics and policies that can capture the imagination.

And then as well know, there are the established grandees of Maltese politics standing because of tradition. Experience and maturity are a vital ingredient of politics but not at the expense of mediocrity.

Both parties are seeking younger faces and, in some cases, well-known people to take up politics and present themselves as candidates. And though it is healthy to have a good mix of women and men, young and old, the criteria should really be focused on integrity, drive, vision and purpose.

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Malta has served to attract foreign companies who have unfailingly taken advantage of what is known as the 6/7 tax refund scheme. In a nutshell, a company with no significant physical presence here and with foreign ownership that is eligible for this tax refund, gets refunded the tax paid on profits remitted here. It turns out to an effective 5% tax rate.

This system has contributed to bringing so many companies to Malta and creating job opportunities and numerous advantages. International critics say the tax refund is a roundabout way of sucking taxable profits generated in other countries, so that a trickle of that profit stays in Malta while 6/7ths of the tax paid gets refunded to the shareholders. Supporters of Malta’s tax system argue that this scheme generates some €200 million a year in additional tax revenues, and is supported by an army of auditors and financial service practitioners: for a country that lacks resources, our tax services are part of our limited exports, namely tourism.

However, there is also an oceanic difference between those companies which are simply domiciled here, and those that actually operate here and enjoy the hefty tax rebate.

And in this case, the companies which operate here have such a competitive high edge that many Maltese competitors are suffering. They simply cannot compete with someone who gets a tax rebate at the end of the year.

Some very well-known companies operating here are making competition an ugly word: Lidl, Malta’s leading supermarket chain, offers a sterling service in consumer satisfaction thanks its reasonable prices, but the other supermarkets are operating on a different benchmark. They pay 35% tax... but Lidl gets a sizeable tax discount at the end of the year. That difference means a lot in terms of investment potential means a lot.

Of course we have a free market in Malta... but at different levels, with the Maltese companies suffering of course. Just like Lidl, other companies are filling a ‘niche’ in the free market (just like HSBC I hear you say, when they first dipped their toes over in Malta...) yet why are they allowed to do this at considerable tax benefit?

I am sure that we have no doubt that Maltese companies have the tenacity to rise to the occasion. But this 6/7 refund system should be revisited for certain situations. Not scrapped perhaps, but revisited.

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Ryanair’s CCO and Malta Air CEO David O’Brien announced this week that MaltaAir would add more connectivity to the islands with new routes.

As he spoke he could not hold back and query the Maltese government’s request to request the green light from Brussels for a €290 million state injection in Air Malta.

O’Brien’s company is theoretically a shareholder with the Maltese government in Malta Air, but it’s quite something to keep a straight face in expressing Ryanair’s opinion on its opposition to the protection of state airlines.

Ryanair surely has cheap prices, but let’s not forget that one of the reasons that keeps it inside so many airports in every single European country is thanks to the route support scheme, blessed by the European Commission, that allows each member state government discount or pay the landing fees for the airline at airports for flying on underserved routes.

So we have this low-fares giant whose business model strips down the flying experience to its constituent parts, makes it dirt cheap and then also flies those routes on which it pays little to nothing in terms of landing or airport fees, thanks to the route support scheme. Sound enough.

But how then can an airline that gets some form of state-approved finance, oppose an EU member state’s decision to save its own national airline, which is so key to our international connectivity as an island?

It’s ironic that an airline that is paid tax money to serve the routes that bring us tourists, gets to oppose what a government does with its own money to save its own airline!

I guess we should bang our handbags on the table of the European Commission too, which makes it so hard for state enterprises to carry out their mission as intended: a public service.

Well, O’Brien surely has no shame. Unlike other nations, Malta needs a national airline to survive. An island with no form of natural resource cannot depend on private airlines motivated simply by profit to guarantee connections between Malta and other important ports of call for tourists and business.

I’m sure that sounds more like Greek to the people at Ryanair where dollar signs flash in their eyes at every step they take.

Honestly, some people have given national ownership a bad name, but Air Malta is the best reason for us to fight tooth-and-nail the strictures of European Union rules on state aid.

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One last remark, to appreciate the importance of our democracy, please follow the proceedings marking the 100th anniversary since the 1921 Constitution.