The Malta Independent 22 January 2021, Friday

Indepth: Air Malta - EU allows relaxing of state aid rules, top officials accept pay cut - Schembri

INDEPTH online Saturday, 4 April 2020, 11:00 Last update: about 11 months ago

The European Union has agreed to make state aid regulations more flexible for Air Malta due to the difficulties that is facing as a result of the Coronavirus pandemic, Economy Minister Silvio Schembri said on this week's session of Indepth.

The interview centred on the financial packages that the government has released during the past few weeks which are aimed to help those sectors that were impacted by this crisis.

Tourism has been one of the hardest hit sectors as both in-bound and out-bound flights are at an all-time low. Consequentially, all airlines are facing a predicament, including Air Malta.


"The airline was already facing great challenges in normal circumstances so you can only imagine the challenges it is facing in this context," Schembri said.

However, there are ongoing discussions between the ministry and the company's top management and employees.

He believes that the most important thing for now is for everyone to understand the extraordinary situation we are living in and cooperate, and Air Malta's top management seems to have done just that.

Following in the footsteps of Cabinet ministers, the airline's top management has accepted a "substantial" pay cut, Schembri said.

The mister said that, lost month he made Air Malta's case during a meeting of EU economy ministers last month, and the EU has agreed to relax state aid rules in view of the ongoing Covid-19 crisis.

The ministry is currently seeing how this will help out the national airline, not only for the next year or two, but for many years to come, Schembri said.


Economic measures

Asked why certain businesses were only added to latest round of economic measures, and not in the first round, Schembri said that the money being used comes from people's taxes so the government has to ensure that they are being used in a justifiable manner.

"This means that we could not immediately give everything to everyone in the first round. We had to prioritise, so we started with obvious sectors like tourism and establishments that were forced to close. However, there were obviously other sectors that were affected, which is why we made it clear from the start that the first package was just the beginning as we will keep on consulting and adapting packages accordingly," he explained.

He went on to say that one must remember that this situation affects everyone whether it is from a social, economic or health perspective. "Like any other war, as we can look at this as a modern war, one must first attend to the hardest hit, but this does not mean that others will be overlooked."

Like other governments across the world, the Maltese government is taking a staggered approach to the procedures it is implementing. This is being done so that the government can maintain a balance between making decisions and consulting with those businesses that are seeking help.

The first thing it addressed was liquidity, and measures were introduced in the first financial package to help businesses in this regard. Schembri said that the latest package saw over 60,000 individuals benefit with an €800 per month salary but, overall, the measures address over 100,000 people. "This is the process we have to adopt; listen and consult those in need so that every situation is addressed."

Recently, Finance Minister Edward Scicluna has said that Malta will be facing a deficit as it has been estimated that these financial packages will be costing the government €70 million per month, which dent Malta's economic status.

Asked how severe the consequences of this will be, Schembri pointed out that in 2013 Malta had a broken economy with the government's debt being 70% of GDP. Over the past seven years, this government has managed to reduce this amount to 40%, he said. With this in mind, he believes that Malta is going into this crisis from a strong standpoint.

He said that the government has been working on increasing surplus for a time of crisis, much like the one we have today. So, even though debt will definitely increase, people will not have to carry the weight - "now is the moment where we practice what we have preached."

"My priority will always be to safeguard employment and people's standard of living, therefore, at the present moment, surplus and deficit are of secondary importance," he emphasised.

This crisis came as a shock to most businesses, and while Schembri believes that the government was prepared, these people where in a state of panic.

Malta Enterprise, which mans the 144 helpline, reported an overload in the system when the measures were first announced. Schembri said that, according to statistics this helpline received over 30,000 contacts but some were mixing up this helpline with another - 153. The 144 helpline is dedicated to the economic aspect while the 153 helpline handles the social side of things.

"The message we want to drive through is that these measures are not on a first come first served basis like people might have thought. Help will always be provided till these measures are in place so anyone who did not manage to get in contact before can do so in the coming days," Schembri said.


Current and future measures that the government is considering

Schembri was asked why the government seems to be resisting the Opposition's proposal for the reduction of water and electricity bills by 50% since the income of many workers has taken a hit.

He said that the issue is not that the government is resisting but that the Opposition is not handling the current situation mindfully.

"This is not a time to gain some form of political popularity. According to their (the Opposition's) proposals, the government should be paying for water and electricity bills and salaries while also cutting off taxes. These are infantile arguments as they are not realistic which is why they are not being taken seriously," he argued.

He said that the government's first priority is to save jobs and address the most vulnerable sectors and while it still has a plan for every sector, the measures will be announced when it is most sensible. "We are not excluding anything, but we also have to consider everything."

He went on to say that the government knows that it is capable of reviving Malta's economy when this all blows over, "but right now the priority is people's health."

Another topic discussed during the interview was the reported abuse by some businesses who are increasing the price of essential items. Schembri was asked if the government has a plan in place to combat this.

"It is disgusting and unacceptable for anyone to try and profit from the current situation. This is an argument that we brought up weeks ago with the Chamber of Commerce," he said.

He explained that till now there have only been isolated incidents of such cases and these are being handled by the Chamber itself. However, if this system is deemed to be insufficient, the government is ready to take any necessary steps.



On a different note, the minister was also asked for his opinion on the current controversial debate on whether hunting season should be opened or not.

The ORNIS committee has recommended that a 20-day season should be allowed for quail hunting but this is being criticised since the health authorities are saying that people should stay inside.

Schembri said that hunting for quails has an element of social distancing within itself as to hunt this bird one has to go alone with just a dog as his companion. Hunters have to shoot as a low angle so if there is someone else with them, there is a risk of hurting the other person instead.

He believes that the decision on whether or not to open hunting season needs to be taken in its context, which also includes the health authorities' decision to have those who are vulnerable stay at home.

He pointed, however, out that Malta is not in a state of complete lockdown so people can still  go out as long as they respect social distancing. 

"Let's make sure to keep everything within its context as at the moment we are living in a sensitive period where it is easy to turn one group against another," he said. "We are talking about making a decision as things stand today but it could be that as time passes different decisions need to be made if the context changes." 


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