Attorney General rules special purpose vehicle resolution as ‘money bill’

Finance Minister Tonio Fenech this evening informed the House that the Attorney General had advised that the motion for the transfer of property to the special purpose vehicle, Malita Investments plc, was in fact a money bill which required the message of the President.

Had the AG not advised on the matter, the absence of the President's message would have led to the nullification of the resolution.

Asked to clarify why it was being considered as a money bill only now - just 24 hours before a vote is to be taken on the matter - Fenech explained that since the resolution included the permanent appropriation of state funds and the permanent expropriation of leased land, it therefore affected government spending which made it a money bill.

As part of the financing of the Malita Investments special purpose vehicle, government will transfer the leases for the land and buildings of the Malta International Airport and Valletta Cruise Port (Viset) terminals, to the SPV that will sell shares to the public.

The company will receive the annual rents from MIA and Viset and will also invest in local and foreign stocks and shares as well as issue bonds to the public, raising money for the City Gate project as well as running the project.

After the Speaker read out the President's message, the finance minister went on to make his winding-up speech on the resolution and reiterated that mechanisms such as the special purpose vehicle were the way forward for the sustainability of finances.

Fenech, who reacted harshly to the criticism raised by the Opposition on the matter, said government continued to invest in capital projects to create jobs, instead of resorting to austerity measures like other countries did.

"What does a Labour government intend to do with the first problem it should encounter? Resort to austerity measures like it did in 1996 when it cut the students' stipends? This type of politics, where everyone promises everything without providing concrete proposals, must end," Fenech said.

He said that contrary to what the Opposition was saying, government issued no guarantees to the European Investment Bank to be able to receive a reduced interest of 3.4% on the loan. "Malita Investments is commercially viable and will not be a burden," Fenech said, adding that the government-owned company will support government investments to see economic growth.

He added that this was a "forward-looking mechanism" which was moving away from "anarchic systems" where capital  expenditure is not viewed as debt but as an investment through which the Maltese would be participating and benefitting.

Fenech went on to describe the SPV as a "sovereign wealth fund".

"We are not hiding any debts," Fenech reiterated. "The SPV will help the country in its commitment to reduce its debt. This company will not be used only for the City Gate project but will be used for other projects."

The finance minister also suggested that in the future, Malita Investments could be turned into an investment bank.

Fenech insisted that the SPV was needed following more stringent EU rules which two years ago did not exist. "Financial sustainability is a priority where the focus is on reducing debt. The reality is that without an SPV, investment will follow. If we truly want to help the private sector, capital projects are the answer," he said, adding that the company will not be solely dependent on government.

He also said that government will be tied with a 70% shareholding capacity for the coming 25 years. Once the 25 years are up and government would want to reduce its shareholding, a parliamentary resolution would need to be first approved. But before the 25 years elapse, government would not be able to reduce its shareholding.

On the possible future selling of the expropriated land by shareholders, Fenech said that the sale would only be carried out with the authorisation of the parliament.