Issue link: https://maltatoday.uberflip.com/i/1076517
6 ADDRESSING supporters in Zebbug on Sunday, Muscat presented a political defence for the proposed land deal which would see Corinthia investing in a six-star hotel while being allowed to develop 100,000sq.m of apartments on space presently allocated to ho- tel development. In a nutshell Muscat's argu- ment was the following; The development of a 6-star hotel – made possible by offering 100,000sq.m of apartments on cheap public land – will attract more high-end tour- ists whose presence will boost higher paid Maltese jobs in a sector which presently only employs lowly-paid foreign- ers. His defence of the deal was based on trickle-down eco- nomics; the greater the size of the economic cake, the more crumbs will fall off the table of the rich. He argued that through this development the country could attract tourists who don't mind paying €5,000 or €6,000 a night. This would mean bet- ter salaries for Maltese people working in the sector. "If I wanted to bring the minimum wage up, I could do so tomorrow. But this would mean that those on a minimum wage would be dis- missed by their employers, who would choose to employ less people to save costs. So, it's not a matter of raising the minimum wage, but of having a bigger cake and taking the entire economy up a level." However, while Muscat once again manages to convey a coherent vision for the coun- try's future, his defence of the Corinthia land deal raises a number of questions. 1. Can't we have a stand alone 6-star hotel without subsidising it with public land? The St George's Bay peninsu- la is already leased to Corinthia for €200,000 a year. As things stand they can already develop a 6-star hotel as the only limit they have is on developing apartments on the same site. The only change with the deal offered by government is that they will be allowed to build 100,000sq.m of apartments while redeveloping the Corin- thia San Gorg as a 6-star hotel. In a presentation the Ministry for Tourism argued that the development of a luxury ho- tel requires significant invest- ment, including "the re-devel- opment of the whole area to ensure a suitable and comple- mentary environment". Alfred Pisani has excluded rebuilding the San Gorg hotel anew on the pretext of restoring visibility to the De Redin tower presently enclosed in the hotel itself as this would raise the expense planned for its redevelopment from €90 million to €130 mil- lion. "It would affect the feasibil- ity of the project. We're tread- ing on new territory here, in the sense that this is Malta's first experience in six-star luxury. If there is a priority to which we can adapt without demolishing the hotel, I don't see any reason to do that… we feel we have a project that is attractive and that even the way our architects will raise the two storeys and treat the façade, will be as spectacular as what we achieved in Lon- don." However, the question facing government and Corin- thia stands: Is a 6-star hotel investment not feasible in the absence of residential devel- opment on cheap land? 2. Could we not have secured a better price for the land while still benefiting from the trickle-down effect of the 6-star hotel? One may well see the ben- efits of having a 6-star hotel constructed and even accept the logic of offering surround- ing land for real estate. But at what price? The land, costed at some €121 million, will be priced at a premium of €17 million and another €35 mil- lion in ground rent redemp- tions, after IHI was granted €57 million in "credits" for the demolition of two of the three hotels that presently occupy the peninsula. The question facing Muscat is: Couldn't he have secured a better price for this stretch of prime land which could have used for so- cial projects like housing ac- commodation for the less well off? 3. Why should a 6-star hotel necessarily employ Maltese workers? As Muscat himself acknowl- edged the tourist sector pres- ently relies on lowly-paid for- eigners. He hints that 6-star hotels pay better than existing 4 and 5 star hotels. Since the Maltese have stopped working in this sec- tor due to low pay, Muscat assumes that the new 6-star hotel will re-attract Maltese to this sector. The agreement signed with government does not include any reference to working conditions and the nationality of the staff. Therefore, what Muscat is saying is based on an assump- tion which can only be tested in the next decades. But an Economic Impact Assessment conducted by KPMG for the nearby DB high-rise develop- ment (which also includes an emphasis on upmarket facili- ties) states that the project is expected to attract more for- eign workers to Malta, "par- ticularly EU nationals origi- nating from countries that are currently experiencing an economic slowdown. And while the project is expected to push wages for skilled and professional work upwards, it is not expected to push wages in the hospitality sector upwards. "As wages are typically sticky, an increase in unskilled labour supply may result in a stabilisation of salaries par- ticularly in the retail and hos- pitality industries." 4. Muscat talks about greater spending by foreigners. Couldn't this also result in higher prices for the Maltese? High spending tourists will probably contribute to the multiplier effect, generating more economic activity with their spending. Although this depends on how much the wealth will spread out from the confines of the resort, it is fair to as- sume that these tourists may spend more in restaurants, taxis and entertainment. Their presence could also fu- el new forms of retail catering for their tastes. Still there is also the risk that the presence of a category of residents and tourists with a high disposable income will further inflate prices in way which excludes locals. This may well contribute to the creation of enclaves where locals are simply driven out by higher prices. 5. Haven't we already done all this before with poor re- sults in terms of quality jobs and value added? There is nothing new in of- fering cheap public land for residential apartments to en- courage innovative sectors in the economy. Muscat himself compared the land valuation in St George's Bay favourably to Smart City where 60,000sq.m of residen- tial development was also part of the equation to encourage investment in IT and media offices. Smart city itself stands out as a cautionary tale on how promises of job creation tend to be displaced by the allure of more profitable gains from real estate. Other projects located on public land like Portomaso have also attracted a fair share of high spenders to Malta without revolutionising the tourism sector. While the ad- vent of a six star is a new fron- tier for the sector, it remains to be seen how far this will contribute to more Maltese jobs in the tourism sector. maltatoday | WEDNESDAY • 30 JANUARY 2019 NEWS ANALYSIS By means of a decree given by the Constitutional Court in the records of the Application in the names Angela sive Gina Balzan vs 1. The Honourable Prime Minister et, Application number 16/2015, the following publication was ordered so that the Appeal Reply and the Incidental Appeal, filed in the records of the application abovementioned, be notified to the respondents Amanda Aloisio and Marie Chantal Aloisio, by means of publication in terms of Article 187(3) et sequitur of Cap. 12. That the abovementioned Angela sive Gina Balzan (ID 97247M) by means of a deed presented in the records of the application abovementioned in the names Angela sive Gina Balzan (ID 97247M) vs 1. The Honourable Prime Minister, 2. The Honourable Minister for Home Af fairs and National Security, 3. The Attorney General and 4. Amanda and Marie Chantal Aloisio on the 23rd March 2018, respectfully pleaded: That the present deed is intended to serve both as a reply of the applicant Angela Balzan to the Appeal which was filed by the respondent Honourable Prime Minister and the Attorney General, from the judgement in names above premised of the 9th October, 2017, as well as an Incidental Appeal of the Applicant from the same judgement. …omissis… That thus the interpellant is of the humble opinion that the fifth grievance of the appellants should be rejected and this Honourable Court should reject the appellant's appeal in its entirety with all costs against the appellants. B. Incidental Appeal That the interpellant is, according to the provisions of Article 240(1) of the Code of Organisation and Civil Procedure (Cap. 12 of the Laws of Malta), availing herself of the Appeal made by the appellants from the judgement in the names above premised of the 9th October, 2017, in order to make this incidental appeal from this judgement. …omissis… That the interpellant felt aggrieved by this part of the judgement and is thus filing this humble appeal. …omissis… And instead pass on to liquidate a higher amount in compensation which is to be paid to the interpellant qua applicant for the violation of the rights suffered by her, condemn the appellants qua respondents to pay the same amount and confirm the rest of the judgement appealed in the reast and this within all costs against the appellants. Interpellant: 19/4, Triq Sir Adrian Dingli, Tas-Sliema Respondents: 1. Amanda Aloisio, 4, Belle Vue, Flat 1, Triq Mattew Pulis, Tas-Sliema and/or St Julian's Court, Block A, Flat, 3, Triq Manwel Dimech, St Julians. 2. Marie Chantal Aloisio, St. Julian's Court, Block A, Flat 3, Triq Manwel Dimech, St. Julians. Registr y of the Superior Cour t s (Constitutional Jurisdiction) today 14th December, 2018. ADV. FRANK PORTELLI, LLD For the Registrar, Civil Courts and Tribunals COURT NOTICES Five questions raised by Muscat's defence of Corinthia deal On Sunday Muscat defended the Corinthia land deal by invoking the trickle-down benefits of 6-star tourism. But for this to happen do we have to sell public land on the cheap? JAMES DEBONO looks into the matter