The saying goes that micro and small and medium enterprises are the backbone of the Maltese economy. Indeed they constitute the great majority of businesses in Malta and Gozo and they are in the main family-run. The socio-economic implications are therefore greater in Malta than anywhere else in Europe. But improving the enterprise environment for Europe's SMEs is key to delivering economic growth both europewide and nationwide.

In this vein the Labour Opposition supports the initiative to develop an EU Small Business Act (SBA) and welcomes the emphasis placed on it by the European Commission. The work of the SBA identifies, besides other factors, main enablers of enterprise – culture, knowledge and skills, access to finance, a regulatory framework and business innovation.

But as the SBA is not legally binding on member states, action is predominately for member states to take forward, addressing individual national issues and circumstances. This can be identified as a weakness of the Act as its implementation depends very much on the political will of national governments to bring changes to their laws affecting the growth and development of SMEs.

Indeed, on this point economic observers, not least representatives of SMEs, are skeptical about the effectiveness of the Act and insist that the core of the SBA should be a legally binding instrument, which should also serve as a legal basis for further legislative proposals. It appears however that some national governments have resisted this request and in lieu the Act envisages a monitoring and reporting system that measures progress transparently in member states.

In the circumstances the EU should act where it can have the most impact and in my view this should primarily be ensuring that Europe has a well-functioning Single Market that is underpinned by the best possible regulatory environment.

I have followed the finance minister's comments and press statements on this Act and I acknowledge that he has also mentioned it extensively in the pre-budget document together with an overview of how his ministry is currently tackling the problem of administrative burdens and costs to SMEs. Of course there is much more to be done than has already been done, and I still subscribe to the belief that the pre budget document is an ambitious wish list of measures that have already been promised in budgets of yesteryear and which will most probably show up again in budget 2010.

I am heartened by the minister's enthusiasm and sense of commitment to deliver for the benefit of SMEs. But I earnestly hope that the target-date for the introduction of the General Accounting Principles for Smaller Entities (GAPSE) will not be identical to that of the removal of the vehicle registration tax which seems to have assumed the characteristics of a perpetual emphyteusis in our fiscal regime, much to the detriment of car importers whose sales are plummeting because of the delay.

Indeed on the 24th June 2008, at a joint GRTU-Forum Malta fl-Ewropa meet on SMEs, the minister was pleased to announce that the GAPSE – meant to reduce the audit and financial statement reporting requirements of SMEs – “will be launched in the coming weeks.”

The delay is already assuming the proportions of months rather than weeks and with the bill concerning the accountancy profession having been given a third reading in Parliament in mid-July, it is hoped that the simplification of procedures will be in place in the last quarter of this year in line with the express wishes of representatives of the self-employed.

According to the pre-budget document Government is also currently undertaking a review of our legislation underlying the authorisation of service providers in order to identify, simplify and remove barriers to the provision of services. This exercise “will be concluded by November” – it is hoped. But Government hasn’t got a good reputation for meeting deadlines.

Of course cutting red tape is only just one aspect. At that GRTU-Forum Malta talk the minister, re-evoking the EU SBA, referred to a list of objectives without pegging dates to them – like for instance the review that “we have recently commenced to bring investment incentives within reach of all enterprises, whether large and small” and the need of “access to finance for many small businesses.” He suggested that micro credit (and small credit) schemes should be further promoted and that accessing credit also needs to be facilitated and made less expensive for small businesses. How and when is the question?

And with the deficit spiralling out of control because of pre-electoral hand-outs – many of them with the blessings of the finance minister himself while he patrolled finances as a parliamentary secretary – I’m curious to know whether he agrees with the SBA’s objective for the introduction of VAT reduced rates for SMEs.

Indeed nowhere is it mentioned in the pre budget document. Is this a game of choose and pick?

DR GAVIN GULIA LL.D., M.P.

Dr Gulia is the Opposition’s Main Spokesman on the Economy and the Self-Employed