There was all-round praise, and some criticism, for the government's June budget aimed to kick-start the economy after the Coronavirus pandemic.
The following are some of the reactions:
Malta Chamber of Commerce
The Malta Chamber of Commerce welcomed the measures announced during tonight’s special budget which were based on the three principles outlined by The Malta Chamber in its document ‘Making a Success of the New Norm’, namely:
• Reduction in operational costs for enterprises
• Kick-starting aggregate demand by stimulating domestic consumption especially considering reduced Tourism activity
• Future-proofing the economy by supporting companies to obtain professional assistance to alter their business models and strategies The Chamber is particularly satisfied that Government accepted and announced measures it had itself proposed such as:
• the retention of the wage subsidy on a selective and tapered basis,
• support for business operating costs particularly in terms of rental expenses and fuel costs
• direct support to help businesses re-engineer their business plans to consider new opportunities The Malta Chamber also
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Malta Employers Association
The incentives announced by government are a timely intervention given the extent of the COVID crisis, the Malta Employers Association said. The indications are that government finances will suffer a deficit of 5.5% in 2020; many tourism related businesses are at a standstill and the figures will remain low during the summer months in spite of the opening of the airport. Many people and families are presently suffering from a drop in income. Consumer population is down by about 70k persons compared to June 2019. On the other hand bank deposits have increased by ten times as a result of withheld consumption.
These focused measures address both businesses and consumers and focus mainly on the tourism related businesses. The measures will not restore the economy to pre-Covid levels of activity, nor are they expected to, if one is realistic. Yet they will certainly boost economic activity and sustain both businesses and consumers in the coming months.
The period July to September is critical for the country, as many businesses will decide whether to scale down or to retain their operations. The voucher scheme will not only inject funds where they are most needed, but also reassure those consumers who are holding back expenditure due to safety perceptions. The fact that among the measures mentioned, there are many that address longer term investment is an encouragement to businesses to think post Covid, for example the investment in the Life Sciences Park and the Marsa SME Industrial Park.
Some points of criticism:
• The reduction of the wage supplement to €600 may result in an increase in redundancies
• Shifting companies from the benefits of Annex A to Annex B is premature at this stage, as many businesses are retaining their employees by digging into internal resources.
• The grants to the construction industry to invest in modern equipment should be extended also to other sectors who need similar incentives to be able to shift to more environmental friendly technology.
• The reduction in utility rates should be permanent, even if not at 50%, and extended to households.
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UHM - Voice of the Workers
The UHM Voice of the Workers said the government took great care of the businesses but had little for the workers.
In a statement, the union said that employers should pay the additional €400 they promised to add to the €800 the government is covering during the pandemic phase. There are workers who have not received this money since the crisis started.
This agreement should be honoured, CEO Josef Vella said.
The mini-budget is intended to give a push the economy, but if workers do not have money to spend it would be a futile exercise. The union expected that the take-home pay returns to what it was before the pandemic.
The union said it is also disappointed that the front-liners were not given compensation for their efforts.
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Government stimulus package - well thought out and major boost for the Tourism Industry: MHRA
The Malta Hotels and Restaurants Association (MHRA) welcomes the financial and business development support announced today by government.
MHRA President Tony Zahra noted that, “the economic regeneration plan demonstrates that the Government has the right feel of the economic and social situation brought on by Covid-19 and this plan will effectively contribute to reigniting the tourism sector and the rest of the economy. The coming months will not be easy for hotels and restaurants, however, an economic stimulus of circa €900 million will definitely boost confidence in the tourism sector as a whole and augurs well for consumers, employees and all other stakeholders including investors.”
The plan is very far reaching and includes in so far as the hospitality industry is concerned:
€200 million in tax deferrals till the end of August;
50% refund on electricity bills for next three months, dedicating €30million to aid businesses hit badly by the pandemic;
7c reduction in fuel prices from Monday 15th June 2020;
Inwork benefit scheme to be enhanced with a €4 million investment;
COVID-19 wage supplement for tourism workers to be paid until end of September;
€100 voucher to everyone aged 16+. Money is to be used in hotels, restaurants, and shops to help boost local economy;
€50 million dedicated to helping business with operating costs related to rent;
Businesses under Micro invest will benefit from a conversion of tax credits into grants;
The cost of business licenses for an entire year will be refunded to allow businesses;
€5 million invested in a promotional campaign for Maltese and Gozitans businesses.
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Malta Developers Association
The Malta Developers Association (MDA) welcomes the incentives announced by the government for the property market as part of the post-Covid-19 stimulus package. During various meetings held with the government during these past weeks, the MDA has put forward proposals to further boost the property market through the reduction of taxes related to sales, both in terms of capital gains and duty on documents. T
he MDA’s proposals were accepted in full. “We are very satisfied that our proposals have been taken up as this will mean that the property and construction sector can continue to help our economic recovery. Our country will be passing through difficult times and with the right incentives we believe that the property market can contribute significantly to kickstart our economy again,” MDA President Sandro Chetcuti commented.
Marthese Portelli, Director General of the MDA said that the lowering of property taxes has a two-pronged target. “These incentives will help demand to regain its momentum, benefitting both the buyer and the seller. Property buyers will be in a better position to continue with their plans and afford to buy the property they were after. It will also incentivise developers to invest more in the market and on higher quality and standards,” Dr Portelli sai
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Chamber of SMEs
The financial plans announced by the government will give a much needed helping hand to enterprises and to our economy to reignite, the Chamber of SMEs said. “Our requests have mostly been met whereby businesses will be helped preserve their current situation through support in their running costs and local consumption will be incentivised to boost consumer confidence. “
Malta Chamber of SMEs President Mr Paul Abela said hard times are ahead for Malta and the current months are crucial because they will define our economy post Covid. For many businesses these months have proven to be harder than when the Covid pandemic was at its peak in Malta and most businesses were closed.
The moment businesses were given the go ahead to open, costs started piling up and income was close to none. Paul Abela said that addressing rental costs, utility costs and costs on human resources is key for business survival and we are pleased to note that the Covid Budget has addressed these in agreement with the proposals we presented.
On a negative note, whilst we appreciate the step in the right direction the rental aid is still deemed as too low. Most businesses have continued paying rents throughout and a Eur 2,500 to cover the rental burden during the pandemic still falls short of the desired impact. More efforts will be necessary in this regard if we want this measure to make a real difference.
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Gozo Business Chamber
The Gozo Buziness Chamber notes with satisfaction the initiatives announced today by Government which are targeted towards incentivising the economy. The GBC had already provided its feedback through a policy and strategic document containing a number of measures on specific sectors. It is crucial at this stage to instill the required confidence in the economy. It is important to highlight that the wage supplement in the tourism sector will be retained in an integral way, and that the wage supplement for Annex B will also be retained.
The GBC expects that the positive discrimination contained in Annex B for Gozitan based enterprises, should continue as is. The GBC believes that the voucher system will also assist the domestic tourism sector in Gozo, which at this stage is crucial, given Gozo’s strong dependency on tourism. The assistance to be provided on rents and electricity bills will also give a much needed breathing space to a lot of businesses. Rents was one of the main concerns of businesses which have seen their earnings drop substantially during this period. The wavering of license fees should also provide a much needed assistance to businesses at this point in time.
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Association of Catering Establishments
The Association of Catering Establishments (ACE) welcomes the pro-market incentives announced by Government today.
Amongst the announced measures, ACE commends the extension of wage subsidies in the catering establishments sector until the end of September, subsidies on rental, licenses and utility expenses, and the provision of vouchers to be spent in leisure activities.
The latter will serve as a much-needed demand stimulant, which, paired with the cost subsidies, are expected to serve to bridge the gap in profitability and liquidity brought on by recent operational pressures and social distancing requirements regulating the dine-in product.
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National Youth Council
The National Youth Council welcomed the measures aimed at maintaining the quality of life for youth during the pandemic.
KNŻ notes that although they are being introduced three months later, the proposals concerning students have been welcomed and will be put into effect.
KNŻ now calls for the payment due to students to be given as soon as possible to eliminate the discrimination which currently exists between working students and their colleagues.
Regarding the proposals to strengthen mental health among youth, KNŻ regrets to note that services will not increase. Despite this, KNŻ urges the authorities to boost the existing services by advertising them amongst the young generation.