Malta needs more construction, foreign workers and tourists if it intends to sustain economic prosperity, according to the developers’ association boss.

“One in every five new apartments you see goes to the government in taxes,” Michael Stivala tells Times of Malta in an interview.

But unnecessary government red tape is driving property prices up needlessly, he claims, warning that construction will slow down and inflate prices even higher. The mega-developer sat for the interview a year after taking the helm of the controversial developers’ lobby.

Stivala says he has no qualms in engaging Joseph Muscat as a consultant, denying that it is payback for favourable treatment he got during the former prime minister’s tenure. He argued that political parties should be state financed and donations from businesses should be banned.

The MDA is also pushing for an update to the 2006 local plans, suggesting that those who live in pristine villages should be stripped of their right to add more storeys to their houses but given the right to sell the air to other developers who are able to add those floors to their own projects.

The full interview:

'Let business people develop more, not less'

There is a perception that developers generally do as they please in an unregulated industry. But Michael Stivala insists this is further from the truth: he claims apartments would be €10,000 and maybe even €20,000 cheaper if it were not for the complex and unnecessary government red tape.

A young couple who bought an apartment for €250,000 could have probably bought it for €230,000 and the developer would have still make enough money to be happy, the MDA boss says. But unnecessary bureaucracy in construction has swollen to a point where it is now driving property prices up needlessly.

“There are necessary checks and balances that should stay to ensure an equitable and fair level playing field, and we want to keep those,” he says.

“But developers are finding themselves going around in circles from one entity to another in a series of unnecessary and often dead-end bureaucratic processes that are forcing us to engage more professionals to help us complete our projects. It’s driving up our costs substantially and it’s demoralising us.”

Stivala warns that the situation has become so dire that developers will soon give up on construction and quit the industry, and that would seriously hurt the economy, reduce housing supply and drive property prices through the roof.

The construction mogul and hotelier was officially elected MDA president a year ago, taking the baton from Sandro Chetcuti.

One in every five apartments built ‘goes  to taxes’

During the interview with Times of Malta last week, he fended off criticism that Malta has too much construction and too many people. On the contrary, he insists more development and investment is needed and the country must welcome more tourists and import even more foreign workers, given that there is a long-term vision and a sustainable upgrade of the island’s infrastructure.

“When we criticise business people for trying to make money we must remember that it is thanks to them that the country is prospering,” he said.

“The economy grows mainly due to business development and investment. That is where the government gets the money to sustain health and education, infrastructure and all the other social schemes. The economy grows when employment increases and business people are the biggest employers.

“Where did you think the government gets its money? One in every five apartments we build goes to the government in taxes. That is how much the government makes from construction.”

Business people should, therefore, be allowed and encouraged to continue growing their ventures, he said, because that is the only way the country can prosper.

‘We need more foreign workers, tourists’

Stivala also argues that the country can take even more foreign workers and, quite frankly, needs them. The birth rate among the Maltese is going down, people are living longer and the economy is growing. So naturally, we need more foreign workers to fill jobs needed to run the economy and to generate enough tax revenue to sustain pensions in the long run.

The islands can and must also welcome more tourists, he insists. A study commissioned by the Malta Hotels and Restaurants Association last year found that Malta needs to welcome some 4.7 million tourists per year if hotel accommodation occupancy is to reach 80 per cent throughout the whole year.

The study had raised eyebrows, causing many people to question why the Planning Authority was approving the development of new and higher hotels given that the country probably cannot sustain five million tourists.

Stivala disagrees. The country can welcome five million tourists every year and possibly even more, but the government needs to invest heavily in better transport and infrastructure.

“The problem is not that we have too many people, but that we have no clear plan. We think we cannot take more people because there are too many cars on the road, inadequate infrastructure and inefficient public transport.

“Fixing those with a long-term vision will enable us to attract more high-quality tourists and workers. But we can’t expect a hotelier to develop a high-end hotel to attract higher quality tourism when the pavement and the street outside the hotel are broken.”

The MDA wants developers to be able to buy airspace from residents.

The MDA is also pushing for an update to the 2006 local plans in a bid to stop development in picturesque villages.

The association is suggesting that the government earmarks streets that it wants to preserve and prohibit development in them. This would mean that entire streets of two-floor terraced houses will be preserved.

“But these people currently have the right to develop up to four floors or more if they wish. This government decision would not allow them to do that but would allow them to transfer those floors to someone who can,” Stivala explains.

“A new policy would allow them to sell the airspace of the floors they cannot develop to a developer who can add them to their buildings or towers elsewhere, where towers and higher buildings are permitted.

The company performed the necessary due diligence checks on Joseph Muscat and found no reason why he shouldn’t be employed as a consultant

“That way, everybody’s happy. The developer gets two more floors, the homeowner gets the money anyway, the economy continues to grow, and the street is preserved in its pristine condition.”

Stivala says this policy could also work with land within the development zone that is still untouched.

“A developer could agree with the government to buy a piece of land within development zone on condition that it will never be developed and is opened to the public. In return, the developer gets a couple or more floors added to their development somewhere else,” he says.

Politicians and wealthy people

Stivala also weighs in on an open secret: politicians’ relationships with wealthy people. He says donations to political parties from business people should be eradicated once and for all and parties should become state-financed, he said. And the prime minister and cabinet should get hefty salary increases as well.

“It is ridiculous to have the prime minister or a minister earn less than their subordinates,” he says.

“And parliament should be full-time and be much smaller. We don’t need that many MPs.”

Stivala says developers need to do more to ensure health and safety.

Stivala said he never went to a politician to ask for something he was not entitled to. He insists business people only seek politicians’ help because they are unfairly stuck in the discouraging, never-ending bureaucratic rabbit hole.

“That is why Sandro Chetcuti and Michael Falzon set up the MDA in the first place – to have all developers agree on and lobby for common policies that benefit everyone, and avoid single, rogue developers meeting privately with politicians. And that is what we have been doing since.”

Asked whether he is currently employing any employee with a consultancy contract similar to the one Rosianne Cutajar got from ITS, Stivala said he is not, but would have no problem doing it if the MP is qualified for the job. MPs must work as well, they cannot live just on parliament’s meagre salary.

Muscat goes to work two to three times a week

Stivala also defends Joseph Muscat’s consultancy contract with his company.

Stivala, whose group owns a vast, multimillion-euro hotel and property venture, put the former prime minister on his payroll the same year Muscat stepped down amid a murder and corruption scandal.

The payments were transferred to Muscat as part of a “consultancy” agreement with Stivala’s group.

Stivala and his companies were on the winning end of numerous controversial decisions by Muscat’s government.

But the developer insists there was nothing wrong with Muscat working as an economist after he stepped down from his role as prime minister. All prime ministers and ministers before him did it and he cannot see why Muscat is being treated differently.

He says his company also performed the necessary due diligence checks on Muscat and found no reason why he should not be employed as a consultant.

Stivala denied that Muscat’s employment is in any way a form of repayment for some favourable treatment he got during his premiership. Stivala’s companies are considering investing further and they needed sound economic advice on how to do it, he says.

In fact, Muscat goes to work in Stivala’s office in Gżira two to three times a week, he says. And they spend hours discussing the company’s vision and planning a way forward.

Mobile phones and heavy drinking at construction sites

Asked about construction deaths and injuries, Stivala says developers need to do more to ensure health and safety, but stresses there are other problems plaguing the industry, among them increased mobile phone use and excessive drinking during working hours.

“It is a problem on many construction sites. Workers have a habit of using their phones while operating heavy machinery or while working at heights, and they sometimes drink excessively during break times, and return to the site under the influence of alcohol.

“It is a problem many developers are facing, and we need to solve it.”

One of the tragic construction site deaths happened on one of Stivala’s construction sites last year. A 49-year-old man from Sliema died after falling around three storeys while working at a construction site in Ta’ Xbiex.

Stivala would not comment on it, saying there was an ongoing investigation and that the group was trying all it could to avoid workplace accidents, but admitted no amount of measures will ever guarantee a stop to all tragedies.

Money ‘underpinning’ NGOs

Stivala also claims that business people who want to harm their competitors are going to NGOs and funding court cases and entire campaigns to harm other businesses. And NGOs are accepting the money and doing it happily.

He said “almost all NGOs” do it “almost all the time” but would not mention names because he does not have enough proof.