A cuckoo’s nest

The Malta Developers Association was set up over a year ago and its first annual general meeting will be held within a few days. As president, I dedicate some of my time to the association because I feel that my input could be valuable at this juncture. I do not have any income from this responsibility and have no intention to keep at it for a long number of years. I will, in fact, withdraw from this post - without any golden handshakes - as soon as it is up and running and its teething problems are over.

When it was set up at the end of September last year, it was felt that MDA had first to find its feet and draw up a vision of its mission before it starts lobbying for certain measures that would be useful both for the economy in general and for developers. With this in mind, we refrained from making any proposals for last year's budget as budget day that year was too soon for us to be able to come out with innovative proposals and to persuade government to take them up.

This year, the situation was different. We started lobbying earlier, explaining why we thought certain measures should be put into effect. Our suggestions were first made in an informal way during a meeting with the Prime Minister on 29 April and then formally through a letter to the Minister of Finance in June, which was followed by a meeting with the minister when these suggestions were discussed with him. We were assured that most of our suggestions merited consideration, albeit no assurance about their adoption could be given. The scheme announced in the budget for the granting of several fiscal incentives in the case of the restoration and rehabilitation of properties sited within urban centres was, in fact, one of several suggestions made the MDA.

The government has also partially adopted a suggestion it made on the rental market in the case of taxation of rents received from tenants who qualify for subsidies in their rent. MDA had asked government to introduce a system of withholding tax for all income from rents with a less onerous consideration in the case of rents subsidised by the State for social reasons.

So it was quite a surprise to see that on the eve of the budget, the GRTU announced that it felt that government should think of granting tax incentives for home owners and young families to be able to move into vacant properties and for first time buyers, as well as for vacant properties to be used as offices or tourist accommodation. This was a hotchpotch of what had already been indicated by government in the pre-budget document and in MDA's suggestions to government that were spelled out publicly in a breakfast meeting held on 11 October by MDA and three other entities whose members are involved in the construction and property sector.

The mind boggles. The GRTU couched their 'demands' as in the interest of small businesses or young people, no doubt because the GRTU today has hardly more than four paying members with a direct interest in the property market. If I am wrong on this one, the GRTU could always publish the names of its paying members on its website as the MDA does. The GRTU made other suggestions to government that do not concern the property market, but the fact that at the last minute it added suggestions related to the property market is intriguing.

It is obvious that the GRTU tried to take a free ride on what was going to be announced in the budget as a result of MDA's consistent lobbying. Following the budget speech, GRTU director Vince Farrugia implied that government had partially accepted his organisation's demands, as this excerpt from his official reaction published in The Times last Tuesday shows: "[The GRTU] made a number of proposals to incentivise the use of vacant property in Malta and Mr Farrugia regretted these were not all taken up. However, it was pleased the government was giving an extra push to property owners to put it on the market, to rent out or to put it up for sale through fiscal incentives."

Mr Farrugia did not follow up the recent leader in the GRTU's electronic newsletter that had claimed that the government is subservient to the political clout of developers, but instead depicted the developers' suggestions to government as his own, even though there is no record of the GRTU having lobbied for these measures... except, of course, three days before Budget Day, a full month after MDA's suggestions had been made public and when there was an inkling on what was going to be adopted by government.

This silly manoeuvre is petty and puerile and exposes the shameless posturing behind the way that the GRTU works. Indeed, the best description of the GRTU today is probably 'a cuckoo's nest'. The cuckoo has no nest, of course, but takes over other birds' nests and makes them its own.

Insiders know that the GRTU's real paying membership figures have dwindled dramatically over the years and in fact the number is much less than the vaunted 7,000/8,000 members. However, its income was boosted as a result of the distributed monies from the reserves of the Malta Trade Fair Corporation, of which the GRTU is a shareholder; and now comes also from government handouts under some guise or another; and its commercial venture Green MT Ltd, through which it competes with potential members!

These money sources are a veritable flood of funds when compared with the GRTU's previous level of income, mainly from membership fees. Inevitably, a supply of money leads to the need to spend. At one point, questions were being asked but no answers were given. Many of those who made questions - including the Treasurer himself - were voted out when eventually a block vote was organised in the annual elections. The show became more of a one-man show after the system of the election of the GRTU Council members was radically changed. Many feel that the GRTU has now practically lost much of what had been built over the years - all for the pride of one man.

Incidentally, Green MT Ltd is owned by the GRTU but has the Director-General's son  - who is also one of the GRTU's legal advisors - as company secretary with quite a good hold on its judicial and legal representation powers.

In other circumstances, this would be called nepotism but then, charity begins at home - as any cuckoo would say!