You are spearheading an upcoming port reform. Why has the government embarked on this exercise?

When one takes a look at the work practices being delivered by service providers within our ports, the conclusion to a logical and studied examination is that many of the work practices are outdated and no longer necessary in modern times. Putting it into plain words, if decades ago a cargo vessel carrying sacks of cement used to call at our port, a gang of 20 people or more were needed to unload its cargo; after technology took over, this manpower practice is no longer carried out. But yet, today, we still pay for that service, even though the gang does not physically do the job.

The success of port activities can be achieved if a high quality service is delivered, a close relationship with end users is maintained, and the use of available resources is optimised. It is ultimately the service providers who should ensure the smooth running of port operations, providing value for money and reasonable charges for their services. Perennial difficulties have existed in the port of Valletta due to segregation between ship and shore operations. It is unreasonable to expect the consumer and the local industry to foot the bill for such irrational practices.

Are you saying that our port services have become obsolete?

One has to be careful how to use certain definitions. I would not say that our port services have become obsolete but rather that certain traditional service provisions within the ports are no longer required or used – as we have modernised throughout time – but are still charged for. Obviously, we are not saying that these people have been earmarked so that their source of income will be terminated. We are insisting on a strategy whereby a modern operational system is in place, a system that could also possibly absorb these workers.

Our vision is to enhance the efficiency of our ports that will result in a competitive working environment. After all, we must remember that we are competing with other countries, and I am sure that we cannot pride ourselves in being one of the most expensive ports in the Mediterranean region. This is beyond reason.

I have constantly maintained that reducing the overall tariffs does not necessarily mean a reduction in income of the various individuals who offer a service within the ports. On the other hand I have always stressed that if we succeed in delivering a high quality service at competitive tariffs, the workload could increase by attracting more vessels to call at Malta and resulting in a potential increase in income.

So this port reform will ultimately benefit the workers themselves…

Certainly. We are not after the reduction of jobs. On the contrary we constantly seek to enhance them. However, it has to be clear to everyone that port tariffs have to reflect work that is really being undertaken and not work which has throughout the years been replaced by other practices, but is still charged for. This is illogical. This will unquestionably and categorically not be accepted.

Let me give you an example. When a vessel calls at Grand Harbour, after being assisted by pilotage and tugs, it berths at the designated quay to commence its cargo operations. An endless list of workers is then involved: mooring men, tally clerks, port delivery clerks, ship and shore foremen, the ship agent, the port workers, the cargo handler company and maybe finally the truck driver.

All these service providers, utilised for the handling of a mere 20- or 40-foot container, is ridiculous, in turn contributing to unwanted and unnecessary expenses which are absorbed by the importer, and obviously relayed onto the consumer. It is generally known that the costs for handling surpass by far the actual charge for freight. Therefore we have a situation of double handling and double charging across the whole portal system.

How does the consumer come into the picture?

Obviously if an importer has to absorb a cost, he has to see that this cost is part of his selling price prior to the addition of profit margins, in order to retrieve his expenses. I do not believe that any business would operate at a loss, so additional costs are passed onto the consumer.

Therefore, in the port reform exercise, we are saying that besides safeguarding the interest of workers within our ports, new justified tariffs will be an added benefit to the manufacturing industry, thus ensuring that the thousands of jobs within the sector are maintained due to the creation of a competitive environment.

If the cost for the importation of raw material is reduced, this will enhance the industry’s operations, and potentially also deliver a lower priced product to the consumer. The way I see it, there is a whole circle of events, all intrinsically linked to one another, which this port reform will bring about. Therefore, if it is in the national interest to pursue such a reform, the government is determined to move ahead and succeed.

Am I right that discussions about this port reform are now long overdue?

I am in absolute agreement. Some years ago, through the Ports Consultative Council, which had brought together the main key players, a document was drawn up. Not everyone was in agreement with it so I cannot say that there was a consensus across the board. Some suggestions were unthinkable, and others were taken into consideration.

This is the result of a democratic and robust debate when certain issues are under scrutiny. However, each and every member present in that council has a copy of the report, which followed others compiled before that. Therefore the main proposals are no hidden issue, and there is at least a consensual understanding that this reform is of the utmost importance.

Now that Malta is losing cargo to its competitors due to inefficient and uncompetitive work practices, the situation is no longer tenable. Whereas discussions are still important for the proper proceedings to be implemented, the time is ripe for the actual reform to gather momentum, and we are determined that the whole new system and pertinent legislation is in place in the near future.

What do the stakeholders say about the planned reform? I believe there have been discussions about it.

I have always been readily available for discussion. Ironically, throughout this process, I have discovered groups of service providers referring to agreements dating back to 1959, or even beyond, and which till now were unheard of; perhaps some others will follow.

As you can see, the situation within our port is a complex one. Upon the vibrant sounding of the reform, many were those who approached me and explained their state of facts; some were acceptable, others were not.

In fact I met with the port workers, the foremen, the clerks, the Cargo Handling Co. Ltd., and, in a wider perspective, the Chamber of Commerce and Enterprise, the Federation of Industry, the GRTU, the General Workers Union and the UHM. All constituted bodies are on board about the concept of the reform, and I have stressed with them that we need to depart from personal interests and must, instead focus on national ones.

In blunt words, if a section within an organisation will be against the reform, but the organisation as a whole is in favour, I expect that we will have a collective voice about the matter, and not one focusing solely upon interests which are no longer tenable. I am also aware that I am portraying a favourable scenario, and that when implementations will start taking place, it will be completely different, but then again, only time will tell. What I can say till now is that I have untiringly explained to all the various service providers that the time is now mature to stand up and be counted.

As Competitiveness Minister – a new concept altogether for Malta – you have been in office for only six months. Do you believe you can really translate this concept into actions?

The government has identified two main priorities – competitiveness and the fiscal deficit. These besides many others like employment, environment, investment and so on. I have been entrusted with the political responsibility for competitiveness, which, as you say, is a new concept altogether, or rather a concept that was always present but never really highlighted to this extent.

Competitiveness has in recent months not only become a domestic issue, but a European and global one. The EU has identified competitiveness as the key to social and economic growth. If Malta is living through new realities we have to play ball. We do not exist in isolation from others. It is within this context that I am confident we can deliver, indeed translate visions or concepts into actions.

Also, it is pertinent to highlight that competitiveness is not a responsibility to be carried by politicians only, but as I have constantly maintained throughout this new term of office, it is a responsibility to be shouldered by all as it is in our national interest to do so. The promotion on the use of standards, efficiency, innovation, a dynamic economy, a sound communications infrastructure and most recently the upcoming port reform are top on the agenda of my ministry.

But what do you expect to achieve?

Competitiveness is not a concept that can be physically measured. It is only the projection of its applications that give tangible results. I believe that the significance of operating within modern demands is now sinking in. For example standards and certification are no longer concepts seen as an extra financial cost to be borne by a company. They are crucial in ensuring that the products delivered meet the ever-changing market demand. These concepts are paramount to ensuring a sustained economic growth within a competitive market.

On the other hand, we have to move away from certain earmarked bureaucratic work practices that hinder industrial operations. These are precisely the government’s intentions, and the overhaul of various authorities, organisations and government entities are aimed to achieve these aims. With the help of constituted bodies, which I regularly meet, we express common working parameters as to how, together with the government, Malta’s competitive environment can be enhanced.

Back to the port reform. What role is the Malta Maritime Authority playing in this exercise?

It is playing an important role. I still believe that there is much more that we can do. Malta’s strategic location in the region gives us an edge over our competitors, thus enabling us to attract new opportunities. Being the fifth largest flag in the world is a very positive accomplishment; moreover, after joining the European Union together with Cyprus last May, and with Greece already being a member state, we ensured that Europe becomes the largest flag in the world.

The Malta Maritime Authority is the port administrator and the port regulator. Much more can be done to ensure that our maritime vocation and port obligations are maintained. It is my intention to carry out a significant overhaul in its regulatory functions and operations, creating in the process a one-stop-shop for maritime services, leading to greater efficiency and attracting greater possibilities of work and business within our ports.

There have been various references in the past few days about the future of Cargo Handling Ltd, which is owned by the General Workers Union. It has been said that the government has not accepted the proposals forwarded by the union….

First and foremost let me put the record straight. Valletta port is made up of a number of service providers, one of which is the handler of cargo, in this case Cargo Handling Co. Ltd. Therefore the company has to form an integral part of the port restructuring exercise. It happens that this company is owned by the General Workers Union, which is the only shareholder, and with whom I had discussions in the past days.

What has transpired from these discussions?

Cargo Handling Co. Ltd has an agreement with the Malta Maritime Authority which expires in July 2006. Therefore, as the government, we had to take into consideration this approaching expiry date and prepare the groundwork to ensure that after this date a service provider is still in place. Also, having the port reform exercise in place, we could incorporate all necessary changes in present operations to ensure maximum efficiency.

Therefore we have opted to proceed with the issuing of tenders as early as possible, something with which the GWU did not agree as it pressed for an extension of the current contract. I told them that this will not happen, – instead, the union insisted for a right of first refusal, something which again was not accepted by the government. I maintain that all interested parties have to enjoy the right to tender within a competitive environment, and as is the normal practice, the most advantageous offers are then considered by the government.

But you also maintained that Cargo Handling’s operations are inefficient…

The Malta Maritime Authority has, on several instances, drawn the attention of the company’s management to their blatant disregard to clauses listed in the agreement entered into with the MMA. But most of them were never corrected. I am also questioning the engagement of a sub-contractor by the company.

To make it clear once again, I am not against the sub-contractor; neither against payment for services rendered; but against a payment to a sub-contractor over and above another one to Cargo Handling Co. Ltd for same services rendered, but which are not carried out. This is besides the fact that Cargo Handling Co. Ltd is still being the largest service provider within our ports, with a good 30 per cent absorbed into their coffers.

It is also the general feeling among ship agents –and therefore the port users – that the company has done very little to restructure its operations, maintain the equipment it is responsible for and deliver an efficient and cost-effective service. It is within this context therefore, as a prime port service provider, that Cargo Handling Co. Ltd, fits into the reform exercise.

How would you describe the meetings held until now?

Very cordial.

But is the government determined to issue the call for tenders for the handling of cargo irrespective of what the GWU says?

Yes.

As the contract for handling of cargo expires in July 2006, does this mean that that is the kick-off date for the implementation of the reforms?

Absolutely not. Cargo Handling Co. Ltd, as I said is only one sector, though significant, of port service providers. The reform will have kicked off much earlier than that, definitely by next year.

Do you foresee any escalation in events, possibly industrial unrest?

Throughout my political career I have always sought to spearhead negotiations and discussions through a mature and logical manner, keeping close at heart what we intend to achieve for our common national interest. On the other hand I am no fortune-teller.

What do you expect from the Malta Labour Party on the port reform issue?

In many circumstances the MLP has adopted the stance of not commenting in the initial stages but then delve into criticism once things start moving forward. I underline that this is no mature political approach. After all, the Labour Party still represents a good percentage of the population.

We have witnessed several weak attempts at undermining national issues such as employment, finances, environment and pensions. If the MLP will adopt this position in view of the upcoming port reform too, then we will again be witness to a Labour Party which does not really have the interest of our workers and people close at heart, but which will be, as in several other instances, merely promoting its own partisan agenda which is detached from factual realities, based upon misinformation and mud-slinging. I am sure that the Maltese people deserve much more than that.

What is the way forward?

A steering group, reporting directly to me, has been appointed to lead negotiations with all the port sectors. The steering group has as its terms of reference the conclusion of a new agreement in order to reform and revise present work practices and conditions, organisations, licenses, tariffs, regulations and other legal provisions relevant to operations within Valletta port. I have instructed the steering group to conclude negotiations within reasonable time parameters in order for the government to be in a position to implement a good portion of the reform in the first few months of next year.