The Malta Independent 14 July 2024, Sunday
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Film industry rebate - Three new schools, a cancer hospital, road projects: What €46.7m can get you

Albert Galea Sunday, 3 September 2023, 08:00 Last update: about 11 months ago

€46.7 million can get you an awful long way. It is a number which may sound oddly specific, but which has taken on some significance after it was revealed that it was the amount which the government gave to the film company producing the sequel of the Oscar-winning film Gladiator.

The Times of Malta revealed in August that the rebate, paid through the Malta Film Commission, breaks the record for the biggest amount granted in State aid to cinema in the European Union.

The €46.7 million rebate is part of a cash rebate scheme which Malta offers in order to entice major film production houses to shoot their films in Malta.  In such cases, the Maltese government offers 40% cash back on expenses which include the salaries of main actors, producers and directors.

The cash back rate was adjusted to 40% in 2019, having previously been raised to 25% in 2013, and the latter stipulations were introduced last year by Film Commissioner Johann Grech.

The same Malta Film Commission has long been criticised for its spend-friendly practices, including in the hosting of events such as the Malta Film Awards – where freedom of information requests for the actual costs of the ceremony were consistently refused – and the more recent Mediterranee Film Festival – which saw visitors accommodated in the lap of luxury at the cost of the taxpayer.

Film Commissioner Grech meanwhile has responded to the latest criticism in a pre-recorded video speech by describing such criticism as an “attack” on the film industry and an “attack” on the country.

Beyond Grech’s political rhetoric though, the numbers do not lie.  An analysis by The Malta Independent on Sunday shows that the cash rebate is worth a similar amount – or more – than the budgets granted to three ministries, and the costs of a number of significant capital investments in sectors such as healthcare, education, and the environment.

Film Industry Incentives: From €11 million to €46.7 million

Every year in around October the Finance Minister of the day rises from his padded green chair in Parliament’s plenary hall to detail the government’s Budget for the forthcoming year.

The financial estimates, which are later voted on by Parliament and published by the government, show what the government’s yearly budget is for the many and various ministries, authorities, and entities which fall under its umbrella.

Chief amongst those for the benefit of this analysis is the budget for ‘film industry incentives’ – which what the tax rebate scheme which Gladiator 2 took advantage of falls under. 

The financial estimates for 2023 show that the figure allocated to this is of 11 million – a figure which is already 18 times more than the €600,000 which the government allocated to local filmmakers to take advantage of.

However, a month after the Budget speech, prospective PN MEP candidate Peter Agius then flagged that the government had told the European Commission that it was ready to pay out up to €50 million in cash rebates to the international film industry – just over four times what was initially announced in the Budget, and over 83 times what was allocated to the local film industry.

The prophecy came through as it later emerged that Gladiator 2 had been granted a cash rebate of €46.7 million by itself. 

The Times of Malta’s report further stated that the Film Commission has committed to dishing out €69 million in cash rebates this year – a figure that is set to rise to €80 million by the end of the year: obliterating both the Budget presented by the Finance Ministry and what the government told the European Commission no more than a few weeks later.

Justice, Social Accommodation and Planning Ministries all received less funding for 2023

Even in the context of public spending, the government’s financial estimates show that a figure like €46.7 million is not an insignificant one.

An analysis of the financial estimates for 2023 shows that this figure even eclipses the financial allocation which was granted to three ministries.

These are the Justice Ministry (allocated €43.2 million), the Social Accommodation Ministry (allocated €43.1 million), and the Planning Ministry (allocated €37.3 million).

In the case of the latter ministry, testimony from the public inquiry into Jean Paul Sofia has revealed that authorities regulating the construction industry and workplace safety had asked for more government funding, but weren’t given it. 

The Building & Construction Authority (BCA) for instance had sought an extra €9 million in funding in order to increase its staff, while the Occupational Health & Safety Authority (OHSA) had requested an even more comparatively paltry €2 million split across three years so that it can triple its team of inspectors.

The financial estimates reveal that the cash rebate could have easily covered other expenses. 

For example, the cash rebate is almost exactly the same amount as the Home Affairs Ministry contributes to nine agencies, commissions and authorities under its remit. 

These are the Correctional Services Agency (€28.5 million), the Agency for Welfare of Asylum Seekers (€13.1 million), International Protection Agency (€1.6 million), Residency Malta Agency (€1.33 million), Commission for the Promotion of Equality for Men and Women (€640,000), Commission on Gender-Based and Domestic Violence (€500,000), Victim Support Agency (€300,000), the Authority for the Responsible Use of Cannabis (€200,000), and the National Security Accreditation Authority (€25,000).

All of these summed together racks up to a total spend of €46.2 million – which is still €500,000 short of what was granted to Gladiator 2.

A second example can be found in the National Heritage Ministry, where the contributions to the 15 government entities under its wing stack up to a total of €32.5 million – around €14 million less than what was granted to the hopeful blockbuster.

These entities include Heritage Malta (€8.7 million), Malta Libraries (€3.75 million), the National Philharmonic Orchestra (€2.87 million), Festivals Malta (€2.6 million), the Arts Council Malta (€2.5 million), the Superintendence of Cultural Heritage (€1.7 million), and the National Archives (€1 million).

Besides the above, there are then a number of other significant capital investments the costs of which go toe-to-toe with what the government paid out to Gladiator 2.

Health: SAMOC, Paola Health Centre, and 13 MRI machines

No sector has a greater budget than the health sector when it comes to public spending, but there have still been some capital investments which are comparable to Gladiator 2’s tax rebate.

Foremost amongst this is the design and construction of the Sir Anthony Mamo Oncology Centre – abbreviated more commonly as SAMOC (above).  Construction began in 2010 and was completed in 2016, and a National Audit Office report published in 2020 showed that the project’s overall design and construction costs came in at 32.9 million – although it would have then cost a fair chunk more to furnish with the necessary equipment.

More recently, the government is on the verge of completing a new health centre in Paola – named after former minister and doctor Vincent Moran – which will aim to reduce waiting times at Mater Dei Hospital and will also provide mental health facilities and dentistry services.

Health Minister Chris Fearne said back in 2019 when works on the project began that it would cost €25 million to build and another €15 million to equip and open up to patients, meaning that the project would cost a total of €40 million. Construction on the project entered its final phase last summer.

On a smaller scale in the health sector, the last time that the government purchased a new MRI machine was in November 2020. 

The new machine cost €3.5 million – meaning that you can buy 13 MRI machines and still have €1.2 million from your €46.7 million left in spare change – and permitted Mater Dei Hospital to increase its capacity to carry out MRIs up to 800 procedures a day, with appointments running through the night and into the early hours of the morning in order to try and reach as many people as possible.

Despite those best efforts though, the waiting list is still long: as of June 2023, there were 8,791 people waiting for an MRI appointment.

Energy: Shore-to-Ship and oil storage rehabilitation

One of the sectors we can also look at is the energy sector.  While projects like Malta’s first and soon to be built second interconnector cost significantly more – with the bill coming in at €182 million and €170 million respectively – a different but long-awaited project has a similar bill to the Gladiator tax rebate amount.

This is the shore-to-ship project in Valletta’s Grand Harbour.  Described by previous Transport Minister Ian Borg as “one of the largest environmental projects the country has seen,” the project sees the development of the electricity infrastructure for cruise liners and Ro-Ro cargo ships to switch off their gasoil- or heavy-fuel-oil-fired engines and plug in to shoreside electricity to power their onboard systems, whilst they are berthed at port.

A total of 17,000 families will benefit as 90% of current emissions from these vessels will be cut.  The project will cost around €50 million, €21.9 million of which is covered from EU funds.

A second shore-to-ship project at the Malta Freeport meanwhile, which has the same aim, will be costing the government €13 million.

Not strictly related to the energy sector is the regeneration of the San Lucjan oil storage in Birzebbuga (above) – a major project designed by famous Italian design house Pininfarina.

The plant, which was used for storing oil, will be known as 'is-Siċċa,' and will offer 18,000 square metres of recreational space as well as see investment in new niches. Is-Siċċa will serve as a unique hub in the middle of the Mediterranean for research and innovation with regards to aquaculture, the blue economy, and the circular economy industries.

That project was launched on the eve of the 2022 general election – and Energy Minister Miriam Dalli said that it would cost €40 million.

Infrastructure: Central Link and Msida Creek

Infrastructural investment has been one of the cornerstones of the Labour Party’s administration, with a number of major projects being constructed in the last decade or so.

Even in this sector, €46.7 million would go a long way: analysis by The Malta Independent on Sunday shows that this figure would have been enough to cover the expenses of two such major projects – one of which has already been built, and one which is about to be built.

The Central Link project (above) – one of the most controversial from an environmental perspective, but most expansive in terms of area – was completed in January 2022, and a spokesperson for Infrastructure Malta had told The Malta Independent that the final cost was of around €25 million.  An extra €6 million was then spent on the building of the Mriehel underpass – a later addition to the plans – opposite the offices of the MFSA – taking the total costs of roadworks in the area up to €31 million.

Perhaps the government’s biggest upcoming infrastructural project is the revamp of the Msida Creek Junction. That project includes the building of a new flyover to remove the traffic lights at the much-used junction, and also create a new open public space in front of the Msida parish church.  A new cycling and walking track and a seawater canal to prevent flooding are also part of the project.

The project is envisaged by Infrastructure Malta to cost 18 million – meaning that the two projects together have a combined cost of 49 million, not far over the tax rebate paid out to the upcoming Hollywood movie.

There is space to move away from cars as well in this sector: the government’s plan to build and modernise a 50 to 60 kilometre cycling network would cost €35 million split across five years, while the government’s yearly budget dedicated to keeping public transport free is of €40 million.

Environment: Regional Road and Community Greening

After infrastructure was the Labour government’s focus for the first two of its legislatures, the focus has now turned to the environment.  Prime Minister Robert Abela pledged 700 million split across 7 years, which includes some major greening projects and some community greening projects as well.

The costings for almost all of these greening projects are yet to be published, but we do know the estimated costs of one of them.

The idea to roof over the part of Regional Road which splits Santa Venera (rendering of the plan in picture avove) was first mooted by then Environment Minister Jose Herrera in 2018, and the project was one of a number of major urban greening projects included in the Labour Party’s manifesto for the last general election.

The project was initially slated to cost around €20 million, but Environment Minister Miriam Dalli last year told Parliament that the project cost would be more like €35 million.

Throw in the first community greening grant announced by Project Green – the new entity established to lead the charge on the PL’s environmental initiatives – which saw 16 urban greening projects spread across Malta and Gozo awarded a total of €10 million in capital funds, and you will reach a figure of €45 million, which is very close – if a bit less – than the figure granted to Gladiator 2.

Education: Three new primary schools

The Labour government has also earmarked funds for capital investment in the education sector, both through the modernisation of current schools but also through the construction of new schools.

The construction of new schools has been particularly under the microscope due to long delays, but the costs – which are what matters for the benefit of this comparison – are still comparable to the tax rebate given to Gladiator 2.

Let us take, for example, the new Gozo Primary School.  Promised in 2015 and delayed by four years, the school cost €21 million, and is set to welcome students for the first time in the upcoming scholastic year.

The new Msida primary school meanwhile, which was first announced in 2017 and slated to be opened in 2019 but which only had its foundation stone laid in in 2020, was initially budgeted to cost €10 million.  However, shoddy works led to part of the school having to be demolished and rebuilt, and the costs have since spiralled up to €20 million.

Had the project stuck to its budget, the total costs for the two schools would have worked out to €31 million – leaving space to consider a third new school which the government constructed in recent years.

This is the Qawra primary school, which welcomed its first students in October 2020 after a three-year delay in construction and which cost the government €13 million.

This means that pending each project sticking roughly to its budget, the €46.7 million granted to Gladiator 2 would have been enough to construct three brand new primary schools – and still then leave €2.8 million to spare.

 

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