The Malta Labour Party believes that the importance of the transfer of land for the SmartCity project warrants that the discussion should be held during a plenary session of Parliament, said deputy leader Charles Mangion yesterday.

Speaking during a press conference at the Palace in Valletta in the aftermath of Labour’s negative vote during Monday’s National Audit Office Accounts Committee session, Dr Mangion said the MLP has certain reservations over the contract that warrant a full parliamentary discussion.

For its part, a spokesman for the Investments, Industry and IT Ministry said every single objection presented by the MLP during the committee session was “given a clear and detailed answer by Minister Austin Gatt.”

Dr Mangion justified his party’s stand by stressing that once the media hype is over, and the agreement is signed, the contract will be the sole factor that binds the developer. “We don’t want another Chambray,” he said, referring to the Gozitan project which, after 14 years, has not seen the light of day.

The ministry spokesman said Chambray was a different story, as the land use was not defined, while the SmartCity project has a master plan outlining land use.

Dr Mangion went over a number of clauses of the contract that the government has presented to Parliament for approval.

The opposition’s first contention is that the government has not carried out a formal land valuation. Dr Mangion said the land involved has an area of about 350 tumoli, with a master plan that allows for buildings varying between four and 10 storeys high. Proposed development includes offices, hotels, other commercial buildings, yacht marinas and luxury apartments. The government has proposed an annual ground rent of Lm65,000. Dr Mangion claimed that such a valuation shows that the government has not carried out a formal land valuation.

In the event of the 99-year ground rent being converted to a perpetual ground rent, said Dr Mangion, the government is demanding a payment of Lm1.50 per square metre for commercial areas and Lm1.75 per square metre for residential areas. He compared this scenario to a client of his who was asked to pay Lm1,000 per square metre in order to redeem a ground rent of Lm19 per annum for an establishment in Sliema.

The ministry spokesman said that using Labour’s benchmark, the government should have asked Tecom Investments to assume all the risks involved, invest and redeem Lm180 million in ground rent. He pointed out that such a scenario is highly unrealistic, as SmartCity is not a “restaurant with a block of flats over it”. He added that Malta had to fight off competition in order to win the project, thus having the first SmartCity in the European Union.

Furthermore, the spokesman pointed out, Dr Mangion’s client is located in an established area in Malta. On the other hand, SmartCity will be located in an industrial area that has, up to now, accommodated factory tenants that have considered the area to be “a punishment”.

The ministry spokesman pointed out that the actual area is 318 tumoli – 357,000 square metres – a third of which will be used as public space. He denied that a yacht marina will be included in the project and remarked that the area between one building and another is excluded from the description of “public area”.

The contract, said Dr Mangion, binds the government to provide an uninterrupted water and electricity service, extend roads leading to the site and relocate the sewage treatment plant. Dr Mangion voiced his concern over how the provision of water and electricity to a new city would affect Enemalta Corporation.

He also mentioned the Water Resources Review carried out by the World Food Organisation, which stated that Malta is running short of its underground water. “The government has already spent Lm3 million on the relocation of factories that used to operate at the Ricasoli Industrial Estate.” Such obligations, he said, involve considerable capital expenditure. To this end, the opposition felt that the transfer of land carries public considerations that must be safeguarded in the national interest.

The ministry’s reply to this was that basic infrastructural needs are essential in order to attract foreign investment. The government is obliged to give SmartCity access to basic needs, while internal infrastructure falls solely under the responsibility of the developer. The spokesman pointed out that the neighbouring area will also benefit from the government infrastructure.

Regarding the Lm3 million spent by government, the ministry said that actual relocation costs amounted to Lm700,000, while Lm2.3 million had to be spent anyway on the refurbishment of the dilapidated estate.

The ministry appealed to the opposition to shake off clichés such as “the transfer of land carries public considerations that must be safeguarded in the national interest”. It suggested that the MLP’s comments show it is opposing investment in basic infrastructure in the south of Malta that would render the region better equipped to deal with new investment.

The MLP deputy leader also commented that the contract does not bind the developers to create 5,600 new jobs, 3,600 of which will be in the IT sector.

The ministry pointed out that it is very difficult to quantify exactly how many jobs will be created in a project of such dimensions. However, the government is ensuring that new jobs are created in the IT sector, as the developer is required to build 103,000 square metres for IT and media office space within eight years. The spokesman said an international benchmark of 18.6 square metres of office space per person would translate to 5,538 employees in the ICT and Media Business Park. In addition, added the spokesman, the government is committed to creating extra IT jobs, as the site needs servicing, thus creating job opportunities in the fields of tourism, administration, security, cleaning and crafts.

Dr Mangion also criticised the fact that Maltese firms that move to SmartCity will be considered as providing “new jobs”. He said the MLP wants a stronger commitment towards the creation of new jobs.

The ministry said the developer has pledged to “create, directly or through the tenants, not less than 5,600 whole-time jobs at the SmartCity development in Malta within a period of nine years from the closing date.” The spokesman commented that there are only a few hundred people working in IT companies in Malta.

Dr Mangion said that the agreement should specifically state that the foreshore space circumventing the site should remain five metres wide. He also contended that the government should state a priori where beach concessions can be given.

The ministry official replied that, according to the contract, the foreshore cannot be reduced and any reductions can be made only with the government’s consent, and pointed out that the master plan clearly shows which area can be used by the developer.

Dr Mangion said the opposition maintained that, in reality, the government will have little control over the company managing the site, SmartCity Malta Ltd. Its nine per cent shareholding and one director out of five is not enough to maintain control, as any two directors can take a decision for the company. He added that the government is only relying on a penalty ranging from Lm50 to Lm500 per day in the event of the project not being completed by the agreed target date.

The ministry spokesman pointed out that the government has the right to rescind the contract if completion of the ICT and Media Business Park is delayed by two years, and penalties are triggered if the park is delayed by three months. The spokesman pointed out that the park must be ready within eight years, based on a seven-phase approach. The ground rent cannot be redeemed before the completion of the park, he added.