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Australia's Relations with Malta

Australia and Malta have a strong and co-operative relationship underpinned by past migration and many shared international perspectives. Australia has had an immigration presence in Malta since the 1950s and full diplomatic relations since 1967. Malta has a High Commission in Canberra (established in 1964) and has Consulates-General in Sydney and Melbourne, as well as consulates in Brisbane, Adelaide and Perth. There is also a vice-consulate in the Latrobe Valley in Victoria. At the international level, Australia and Malta have a number of common interests, particularly relating to their membership of the Commonwealth.

Community and Immigration Links

According to the 2001 Census of Population and Housing in Australia, 136,754 Australians claimed Maltese descent with 46,998 Australian residents having been born in Malta. Taking into account unreported Maltese ancestry, the number of people of Maltese ancestry in Australia has been estimated at 152,282. The Maltese migrant community in Australia represents the largest Maltese community outside of Malta. Since first arriving in Australia in the 1800s, the Maltese have contributed to the cultural enrichment and economic development of Australia. During the early part of the twentieth century 1,900 Maltese immigrated to Australia.

In May 1948, Australia and Malta signed an assisted-migrant-passage agreement, which extended the benefit of subsidised travel costs to over 63,000 Maltese. The peak period of migration to Australia occurred in the mid-fifties and sixties and the number of people in Australia who were born in Malta peaked in 1981. Since then the Malta-born population in Australia has been declining. It has also been ageing, such that there are now few Malta-born persons in the 0 to 24 age bracket. Most of the Malta-born population has lived in Australia for more than 15 years and over 70 per cent have taken up Australian citizenship. Victoria and New South Wales have attracted, by far, the largest numbers of Malta-born persons. 

On 1 March 2007, the Australian Citizenship Bill 2006 was passed by the Australian Parliament and is likely to take effect from 1 July 2007. The new legislation will allow resumption of Australian citizenship to Maltese citizens who renounced their Australian citizenship in order to comply with Malta’s laws which at the time did not allow dual nationality.  Both Australia and Malta have since changed their laws to allow for dual nationality. 

Major Bilateral Agreements

Bilateral agreements between Australia and Malta are in place covering immigration (1970), double taxation (1985), health services (1988), social security (1991 and revised in 2004), working holiday maker scheme (1996) and air services (1996).

High Level Visits

Reflecting the relatively large Maltese community in Australia, there have been regular high level visits to Australia by Maltese leaders. The Maltese Foreign Minister Dr Michael Frendo attended the Commonwealth Games in Melbourne and met with Foreign Minister Downer on 15 March 2006 in Canberra.  The Deputy Prime Minister of Malta and Minister for Justice and Home Affairs, Dr Tonio Borg, will visit Australia from 19-25 March 2007.  Dr Fenech Adami and Malta's then Foreign Minister, Dr Joe Borg, visited Australia in March 2002 for the Commonwealth Heads of Government meeting in Coolum, Queensland. Dr Fenech Adami again visited Australia in August 2002, accompanied by Deputy Prime Minister (now Prime Minister), Dr Lawrence Gonzi.

Prime Minister John Howard attended the Commonwealth Heads of Government Meeting (CHOGM) in Malta from 25-27 November 2005.

Trade and Investment

Trade with Malta is small, largely due to a combination of distance, the small size of the Maltese market, as well as Malta’s accession to the EU in 2004. Exports have been on a downward trend since 2001. In 2006, two-way merchandise trade was $A59.8 million and reflected the delivery of a fast ferry to Malta in early 2006 - a one-off sale that is not indicative of a longer-term upsurge in exports.  The most significant decrease in exports has been in cheese and curd which fell 85 per cent from 2001-02 values. Dairy exports now represent just 15 per cent of pre-EU accession exports. Meat exports have also dropped significantly with no exports of bovine meat recorded in the last three calendar years. Major Australian exports comprise ships and boats, margarine and dairy products (cheese and curd). Australian wine exports to Malta are increasing and have potential for significant further growth.

In contrast imports from Malta have been steadily increasing and in 2006 were $A14.9 million increasing by 29.6 per cent on previous year totals. Major Australian imports were electrical machinery, computers, medical instruments and plastic articles.

Market opportunities for Australian exporters include areas such as EU-funded infrastructure projects; telecommunications equipment; electronic parking meters; solar powered boats and other solar energy equipment..  Other potential opportunities are in waste management including Australian environmental and water resources expertise and related equipment for water and energy supply, energy reticulation and waste management. 

There are also opportunities for Australian companies to collaborate with Maltese based companies in joint ventures to access third country markets in Europe and North Africa.  In October 2006, World Aviation Systems (WAS), a joint venture between Air Malta and Cassar Aviation Services of Sydney, set up Centrecom, a EUR one million international call centre at Malta’s airport terminal to cover Air Malta’s markets in Europe.  The centre employs about fifty staff.  In 2006 the Australian company Solco, in partnership with the Maltese company Motherwell Bridge Malta Limited, opened a factory in Malta which produces a range of sustainable water and energy products including polymer-based solar hot water systems. A Perth-based oil exploration company Pancontinental Oil and Gas NL has negotiated a number of offshore oil exploration leases with the Maltese Government. The Western Australian company Austal Ships Ltd built a fast ferry for Virtu Ferries in Malta for the Malta-Sicily route and delivered it to the company in March 2006. In October 2005, the Commonwealth Bank of Australia set up “Commbank Europe Limited” in Malta to facilitate investment, lending and business development into Europe. The bank is regulated by the Malta Financial Services Authority and has the right to operate in European Union (EU) member states and make loans to EU residents. 

Business Links

The Maltese-Australian Chamber of Commerce and Culture in Malta (MACCC) and its Sydney-based counterpart, the Australian-Maltese Chamber of Commerce (AMCC), in collaboration with the Australian High Commission in Malta and the Maltese High Commission in Canberra, help to facilitate and promote greater trade and business partnerships between Australia and Malta. In October 2005, the two chambers collaborated to send a trade delegation to Malta.

Defence

The Maltese were involved in the Gallipoli campaign as part of the British armed forces. Some Australian servicemen wounded at Gallipoli were hospitalised in Malta (the "nurse of the Mediterranean"). Australian servicemen were heavily involved in the defence of Malta during World War II, for the most part as members of the British armed forces, although there was also direct participation by Australian units in transit in Malta. There are Australian war graves in Malta, and ANZAC Day is a well-recognised occasion.

Political Overview

Malta became an independent State in September 1964, having been under British rule since 1800. The Constitution of 1964 established Malta as a liberal parliamentary democracy, guaranteeing separation between the executive, judicial and legislative powers, with regular elections based on universal suffrage. Legislative power is held by the unicameral House of Representatives (65 members excluding the Speaker). Members are directly elected by universal suffrage for five years (subject to dissolution) on the basis of a single transferable vote system of proportional representation. The Cabinet exercises executive power and is responsible to the Parliament.

In 1974 the Constitution was modified to make Malta a Republic. The Head of State was henceforth the President, but his/her duties are largely ceremonial - the change of Malta's status did not create a presidential system of government. The President is elected for a five-year term by the House and appoints the Prime Minister and, on the latter's recommendation, other Ministers. Malta remains a member of the Commonwealth.

Maltese domestic politics are dominated by the two main parties - the Nationalist Party (PN) and the Malta Labour Party (MLP). The Nationalist Party defeated the opposition Malta Labour Party in national elections held on 12 April 2003. The next election in Malta is due to be held in 2008.

Former Deputy Prime Minister, Dr Lawrence Gonzi, succeeded Dr Edward Fenech Adami as Prime Minister of Malta on 23 March 2004. Dr Fenech Adami was elected by Parliament as President of Malta on 4 April 2004, following the expiration of President Guido de Marco's five-year term in office. Dr Michael Frendo was appointed Minister of Foreign Affairs on 3 July 2004.

Political Developments

Malta joined the European Union on 1 May 2004 fulfilling the ruling Nationalist Party’s (PN) top priority. Prior to EU membership, the Government's legislative program had been heavily dominated by preparations for EU accession including liberalisation of previously closed sectors, privatisation of such entities as the formerly state owned Malta International Airport, opening up to competition monopolies such as telecommunications and postal services and removal of some import barriers. The political scene in Malta will, for the foreseeable future, be dominated by administrative, economic and legal issues relating to its accession to the EU.

The Nationalist Party continues to focus on meeting the criteria for adopting the Euro in 2008.

Foreign Policy

Since EU accession Malta has devoted considerable energy and resources to developing its relations with EU institutions and developing good relations with EU member states. As a small island state in the Mediterranean, Malta's foreign policy also reflects its central geographical position and it is expected to maintain an active Mediterranean policy and to continue providing support for the Euro-Mediterranean process, in which it will seek to play a facilitating role where it can, and consolidation of relations with North African countries. Malta supports institutions promoting multilateral co-operation, notably the UN, the Commonwealth, the Council of Europe and the Organisation for Security and Co-operation in Europe. Malta is currently the Chair-in-Office of the Commonwealth and a member of the Commonwealth Ministerial Action Group until the next Commonwealth Heads of Government Meeting.

Malta’s foreign policy priorities are outlined in the Foreign Minister’s report “Strategic Objectives of Malta's foreign Policy” released in February 2006. Amongst the twenty objectives is the reaffirmation of the need for the Maltese Government to network effectively with the Maltese abroad and to promote stronger political and economic relations with the countries of Maltese migration. The paper also highlights Malta's need to work with the international community to counter terrorism and extremism.

Economic Overview

Malta has no significant natural resources (except for some limited fish resources) and is totally dependent on oil imports for its energy needs. With a population of just under 400,000, Malta has a very small internal market. Its economy is dependent on export-oriented industries (especially electronic components and clothing) and tourism which is the single largest foreign-currency earner and accounts for around 25 per cent of Malta's Gross Domestic Product (GDP). Malta's manufacturing industry accounted for 17.6 per cent of GDP in 2005 and is characterised by some 400 medium-to large-sized export-oriented firms, mostly foreign-owned and a large number of micro and small enterprises geared to the domestic market. The services sector remains the prime driver of economic growth in Malta. Financial services and telecommunications have increased in importance in recent years and there has been greater activity in the construction industry due to a boom in house prices. In recent years, incentives have been introduced to attract foreign investment and to encourage offshore business and financial houses to use Malta as a base for operations in Europe and the Mediterranean. In September 2006 the Mediterranean Bank PLC opened premises in Malta adding to Malta’s growing financial sector. An international free port operates successfully as a central Mediterranean transhipment hub, although competition from other Mediterranean free ports has been increasing in recent years.

Restoring sustainability to the public finances continues to be a major challenge for the ruling Nationalist Party government.  Although there has been some success in increasing revenue collection by cracking down on tax evasion, this still contributes to loss in government revenues. Further economic reforms are needed, especially to reduce the size of the public sector and to address rigidities that continue to reduce competitiveness. Labour costs remain high compared to the general level of productivity. While the Government recognises the need for Malta to improve labour productivity, it has been reluctant to take politically sensitive restructuring decisions. There remain high levels of consumer expectations and social security expenditure that appear unsustainable in the longer term.

Economic Developments

Malta's GDP in real terms grew by 2.7 per cent in the third quarter of 2006, the fifth consecutive quarterly increase.  This economic growth stemmed mainly from higher net exports and, to a lesser extent, higher consumption.  Investment, however, continued to decline.  Labour market indicators also point to a strengthening of the economic recovery.  The unemployment rate dropped from 7.7 per cent in the previous quarter to 6.8 per cent in the third quarter of 2006.  Inflation developments were dominated by the earlier spike in international energy prices, which resulted in higher water, electricity and fuel prices.  The CPI peaked at 3.2 per cent in the third quarter of 2006 but dropped to 2.4 per cent in February 2007. 

The fiscal consolidation programme aimed at ensuring Malta’s adoption of the Euro by 2008 has curtailed government expenditure.  The general government deficit is set to fall from 3.2 per cent of GDP in 2005 to 2.7 per cent in 2006, with further consolidation targeted for the period 2007-09. 

Successive governments have made concerted efforts to attract more tourists and to upgrade tourist facilities. A third of all employment in Malta is tourism-related. The main source countries of arrivals are the United Kingdom, Germany, Italy and France.  During 2006 there was a decrease of 4 per cent in tourist numbers compared with 2005.  Total tourist expenditure decreased by 1.2 per cent. To seek to reverse this trend, in the second half of 2006 the Maltese Government decided to allow Ryanair and other low-cost carriers to fly to Malta, despite resistance from the government-owned Air Malta and established foreign airlines. 

The value of merchandise exports increased by 12.9 per cent in 2006 while imports rose by 9.5 per cent.  The EU countries as a group remained Malta's principal trading partners.  The United States is the most important destination for Maltese exports followed by Germany, France, and the UK. As sources of imports, Italy was by far the most important source country in 2006 followed by France, the UK, and Germany.



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