Fabian Demicoli

NO CONSULTATION ON EURO ADOPTION ACT

GRTU: the Malta Chamber of Small and Medium Enterprises is once again highly disappointed that in spite of the Prime Minister’s promise to consult better in order to avoid negative impacts on businesses, the Cabinet and NECC continues to take their own route on a delicate issue as the Euro Adoption.

GRTU: the Malta Chamber of Small and Medium Enterprises is once again highly disappointed that in spite of the Prime Minister’s promise to consult better in order to avoid negative impacts on businesses, the Cabinet and NECC continues to take their own route on a delicate issue as the Euro Adoption.

1. The issue of the Euro Adoption Act is very serious.

The Euro Adoption Act was never put on table at the NECC Consultative Committee level despite the fact that the GRTU following strong pressure on Government was included in NECC. GRTU precisely wanted to be part of NECC so that no decisions were taken without GRTU’s knowledge. It is therefore insulting that a major decision is taken when GRTU is in Committee and GRTU is not consulted. In this respect, this Bill had no feedback or input from the experts in the related areas.

To add insult to injury the Bill itself includes items that have been discussed at a later stage during NECC Committees and which once again were totally ignored by the Steering Committee. Then wherefore have a Consultative Committee when the views of its members are disregarded.

It is obvious that the current structure of NECC is not functioning the way it should be and the way GRTU was promised that it would function, by the Hon Tonio Fenech. The Malta Chamber of Medium and Small Enterprises considers this non-functioning at this late hour to be very dangerous for the country and the economy. Euro Adoption will move ahead smoothly only if the stakeholders are involved.

The Chamber of Small and Medium Enterprises has given its full input at all times but the NECC Structure is made in such a way to kill all feedback which is not in line with that of individuals within the Executive Committee.

2. The Euro Adoption Bill

The way the Bill is structured leaves no room for discussion for future guidelines and Legal Notices. Effectively businesses will henceforth depend on the whim and character of the Minister holding the Finance Portfolio.

GRTU objects most strongly to the tendency adopted frequently by Government to design an Empowering Act then leave it to the Minister concerned to produce Legal Notices at will. GRTU strongly objects to Malta being governed by Legal Notice. Businesses cannot plan and have faith in the institutions if rules are changed at will by a Minister while Parliament abdicates its responsibilities.

Despite a clear disagreement on the most delicate issues, it appears that Cabinet intends to proceed with the Bill as it presently is. The NECC is failing to recognise that private enterprise shall be facing problems with what is being IMPOSED.

Should Cabinet and the NECC not take into account the various problems that the businesses shall be facing, the Malta Chamber for Small and Medium Enterprises shall have no other option but to give its members the necessary directives. Businesses in Malta are under enough pressure and it is the role of GRTU to ensure that businesses flourish without additional hindrance. GRTU will not tolerate a situation where shop owners are blamed for the rise in inflation which is essentially government driven.

Through the bill the government is already prejudicing its position and leaving no room for consultation. This is clear and evident from the way the wording particularly in article 3(1). That is why GRTU believes that NECC is just a façade.

This Act as opposed to what the Prime Minister promised shall create further bureaucracy, penalties and abuses which will continue to hinder business growth and will continue to slow down the economy. It infringes on principles that are sacrosanct to GRTU.

Also this Authority will be empowered to absurd levels and the fines to be inflicted are astronomous. The system as discussed in the Bill is only aimed at hindering businesses and not to help and educate the latter in the process. The design of the bill shows the insensitivity of the legislator to core business issues.

This once again goes contrary to all the discussions taken place at NECC to educate rather than frustrate!

The Bill also gives various authorities to the Minister which if implemented ahead will create chaos, confusion and further bureaucracy.

The way the bill is drafted is aimed as a revenue generation for government as it is foreseen that fines and penalties be inflicted and there shall be no way in which a business can avoid such economic measures. The bill will also be conducive to the closure of business and suspension of licences.

In spite the appeal of the Malta Chamber of Small and Medium Enterprises inviting the Government to avoid confrontation on the matter, Cabinet and the NECC, still prefer to go ahead without prior discussion. The Malta Chamber of Small and Medium Enterprises is being left with no option but to take the necessary steps in the interest of its members and enterprise in Malta.

GRTU this morning had an urgent meeting with the Hon Tonio Fenech, Parliamentary Secretary at the Ministry of Finance, and informed him of GRTU decision to withdraw from NECC. The Hon Tonio Fenech appealed to GRTU to hold its withdrawal. GRTU gave Hon Fenech the objectives it has to the way the NECC is function and demanded a restructuring or at least a re-direction. GRTU made it clear:

a) That GRTU will not serve on Committees that are only a front for others to decide elsewhere
b) That GRTU will not be part of any scheme that will make shop owners the scope goal for Government’s misguides policies that are primarily responsible for the current and rising rate of inflation.

Objections to Bill

Article 3

1. The bill already states that it shall be mandatory to display prices in both Euro and Maltese Lira. This in spite various discussions on Voluntary systems and in spite of the recognised fact that certain sectors will not be in a position to display dual pricing.
2. Sub article II of article 3 reinforces sub article i
3. There cannot be new administrative procedures to add further to the bureaucracy in the country and to add to the possibility of already existing abuses by certain authorities.
4. The imposition of penalties in Article 3(v) with the provisos therefore show clearly the intention of government and that in spite of its continuous declaration to eliminate bureaucracy and to do an business impact assessment with respect to new regulation is in reality not coming to effect. Even the way that there is the intention to handle any appeals shows that the drafting of the bill is not aimed at educating but at revenue generation.

The imposition of penalties by authority/authorities
§ Another authority or existing authorities are to enforce the act
§ Fines are excessive
§ Suspension of trading licences are not acceptable
§ Imposition in spite of pending appeal
§ Powers of search and entry
§ Article 3 (v)(h) means price orders
5. Article 3 (vi) is imposing to not only comply with the European Union Regulations, directives and decisions but also to any recommendations. The recommendations need to reflect the circumstances of the Maltese environment and there are no better experts than the Maltese themselves in this.
6. Article 3(vii) regulates intentions. Malta cannot afford to start regulating a priori on the international obligations it intends to assume. The country is becoming all the more over regulated.
7. Article 4 gives power to the Prime Minister to change laws without going through the democratic process of Parliament
8. Article 5 heads to total chaos with the delegation of various parts of the Act to one or more authorities.

The Bill gives the impression to have been drafted by a legislator who is not aware how free enterprise and a free market work. The Bill shows a total lack of faith in the market and throws Malta back a number of decades. The Bill as is will ensure to slow down further business activity and to take off energy from the market, energy that could be utilised to generate and create business. Furthermore, the Bill as is will ensure to consume essential resources that could also be used for business growth.

GRTU RECOMMENDATIONS ON DUAL PRICING

This paper is being produced after GRTU meeting with Hon Tonio Fenech, Parliamentary Secretary in the Ministry of Finance and Mr. Joe Zahra, Chairman of the National Euro Changeover Committee.

The GRTU firmly believes that in the process to the adoption of the Euro the consumers need to be empowered through education and through an adequate information campaign. This education will also assist enterprise to eliminate the wrong perception that enterprise is there to abuse.

Understanding pricing practices and learning to think in Euro will take most people longer than the very short period of the dual circulation in early 2008. This however, need not be at the expense of the enterprise. We trust that the voluntary approach to providing guarantees of fair conversion and information to consumers can deliver a timely impact. If all consumers are to feel confident using the Euro by 2008, efforts must be stepped up now. We do not want shoppers feeling disoriented or suspicious. It is crucial that NECC assumes its responsibility in ensuring progress in this sense.

A voluntary agreement should be engaged into and NECC should mount heavy information campaigns to promote the voluntary agreement. The agreement should encourage dialogue between consumer and business organisations. GRTU has already proposed a draft of this agreement/code of conduct which the consumer organisations have already agreed to. This was discussed in the pricing task force within NECC and a copy of this has been forwarded to the Prime Minister and NECC.

With respect to the dual pricing “in an appropriate and agreed upon form”, the GRTU agrees that the following minimal information is provided in each shop:

§ Poster with Conversion Table
§ Conversion Cards to each customer
§ Display of Euro helpline number on tills
§ Dual Pricing on all items in Windows
§ Provision of “Convert your bill in Euros” Competition Cards
§ Assistance in compiling competition cards, where needed
§ Provision of Euro Games

All the above should be provided by NECC free of charge. Furthermore, NECC should reach an agreement with the mobile providers whereby one may text an amount in Malta Liri to a specific SMS number and the equivalent in Euros is received back. This should be provided free of charge.

The retailers should be empowered to provide further information to customers on a voluntary basis.

GRTU should be provided with a reasonable budget to organise training sessions in localities. The GRTU has already organised training seminars in certain localities in 2005.

The NECC should however, engage in a massive campaign using all communication channels in order to ensure consumer education. The GRTU has in various occasions provided ideas and recommendations with respect to the educational campaign.

NECC – National Euro Changeover Committee

1. The scope and aim of the consultative committee is not clear. The committee is NOT a steering committee nor a decision-making committee. Yet, every time the executive committee goes public, it incorporates in it the members of the consultative committee.
2. The executive committee goes public on issues that have never been discussed at the consultative committee level. Furthermore, they are saying that there was agreement on issues that have not been discussed or on which there was no agreement at all.
3. Major issues have been discussed at the consultative committee before the private sector was represented and these issues have not been put on the table again for discussion. These are the said Bill on Euro Adoption and also other issues such as the Optional Dual Pricing
4. In spite of the fact that on certain issues the private sector has been proactive as encouraged by the Chairman, the executive committee has totally ignored certain recommendations. This in spite of the detailed analysis done by the private sector which took into consideration also the costs to enterprise.
5. Within the current set up there is no for a where to raise certain issues as the Chairman heads rightly to discuss strategic issues at the Consultative committee whilst the NECC Executive committee says that even operational issues already discussed at the sub committee need to be re discussed at the Consultative Committee level. The result of all this is that the recommendations are again ignored.
6. The NECC Consultative committee is requiring feedback within unrealistic deadlines which do not allow for appropriate analysis. Furthermore, the analysis is required in pre-defined formats. It seems the executive committee is turning the Euro Changeover into a form compiling exercise. This further shows that there is not real awareness of the issues within the committee itself.
7. The NECC tried to avoid discussion with the main representative bodies on certain issues such as regarding the cash registers. In fact a meeting was called and the GRTU and other bodies had to discover this through their members. It must also be noted that the VAT department called such meeting for and on behalf of NECC and that not all cash register providers were invited to the meeting.
8. There were also occasions were the NECC executive committee refused feedback from GRTU as they could only accept it through committees, committees which were formed a couple of days before certain deadlines.
9. The NECC Executive Committee is coming up with issues without substantiating them with appropriate analysis.
10. The private sector has not been provided with the necessary tools to give the necessary input.
11. The Private sector was not made aware of certain activities being held regarding the Euro.
12. The Private Sector is and has been informed on certain issue only through the mass media. The examples are the Optional Dual Pricing, the Dual Pricing Date, the publication of the handbook, the Euro Adoption Act and so on.
13. The NECC Executive Committee has no real experts on economics or on Euro. The technicality required in such process warrants for better-informed staff and not resources that merely copy what other countries most of which ex communist countries do.
14. The Maltese reality is NOT being considered in this process.
15. The NECC is heading towards a total failure and this only because it is refusing what the experts in the various sectors are saying. The NECC has reached an unacceptable level of arrogance whereby it wants to give the impression that it is being consultative and then one person decides on his personal impressions of how the market works.
16. The GRTU refuses that anybody of the NECC talks on its behalf especially when it has not been consulted.

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