Tonio Fenech’s second budget extends the polluter pays principle to taxing big polluting trucks and buses, but lacks the courage to penalise unsustainable land and water use. James Debono looks at Budget 2010 through a green lens
Quenching the thirst For the fist time ever, the government is recognising waste-water produced by water treatment plants as a valuable resource for reuse.
But the government failed to introduce tariffs on ground water extraction, which remains free of charge despite being unsustainable.
In his speech Fenech announced that the government is carrying out tests to see how we could make use of the treated water. He claims that this would “mitigate the need for its extraction from the water table”, and reduce the expenditure on reverse osmosis “which is costing the country hefty sums of money on electricity”.
Yet the proposal remains very vague, as the demand for ground water will depend on whether ground water will remain free of charge and on the price given to re-used water.
In the past, Minister Austin Gatt declared that it costs less to dispose water in the sea, than to give it free of charge to farmers. But if re-used water is offered at a cost, farmers and other users – which include manufacturers of mineral water and soft drinks – will still prefer to use ground water which is extracted for free.
Energy from the grid With Malta committed to increase to produce 10% of its energy requirements from renewable sources by 2020, the government will be spending €300,000 to commence environmental impact assessment related to wind farms.
The latest studies have indicated that the cost of wind power remains prohibitively high, when compared to oil prices, even if the latest hike in oil prices could once again make wind energy a more attractive and feasible option.
But Malta would most probably have to buy a portion of renewable energy from abroad to meet its EU targets.
Fenech himself hinted that connecting to the European grid would allow Malta to “strike a better balance between the price and the environmental impact of the energy we buy”.
The budget recognises Malta’s complete dependence on oil, but mitigates the principle that increases in energy prices should be paid by the consumer by offering a meager one off subsidy to consumers.
The decision to limit this assistance to families that do not consume more than 10,000 units of electricity makes ecological sense as hyper consumers (estimated at 3% of households) will not benefit from State aid.
But in partially offsetting the forthcoming hike in energy prices, the only distinction made among the remaining 97% is based on the number of children.
A family of three will still receive a meagre €105 compensation, irrespective of whether it uses 9,999 units or 7,000 units of energy.
Rather than giving a one-off and largely symbolic compensation, the government might well have exempted sustainable use of energy from any tariff increase – making up for any loss in revenue by passing the increase to hyper consumers.
Solar heating The government has allocated €4.2 million on a three-year programme to encourage the use of solar heaters which will benefit an estimate 2,500 families.
People buying solar panels a solar heater which currently cost between €400 and €2,350 will receive 40% on their expenditure but the aid is capped at €560.
In last years’ budget the government allocated €2 million to subsidise two-thirds of the cost of installing. The measure was capped at €460.
While last year everyone could apply for this subsidy on a first come, first served basis for as long as the funds lasted, the government has now rationalised the system.
Curiously while in the last budget the Minister claimed that 4,500 were set to benefit from this subsidy, only 2,500 are set to benefit this year despite the fact that more money is available.
While the scheme will be available to all Gozitans irrespective of income, only Maltese families earning less than €23,923 euro and first-time buyers of houses whose value is less than €120,000 will benefit.
Fenech justifies the blatant discrimination between Maltese and Gozitans as a way to promote the ‘eco island’ concept.
A further €3.8 million in subsidies for photovoltaic cells is set to benefit 400 families. This represents a notable increase over the €500,000 allocated last year.
Ironically, although the amount has been increased fourfold, the number of beneficiaries is only set to double from last year estimate of 200 beneficiaries.
The photovoltaic systems scheme will be open to everyone and eligible applicants will receive a grant of equivalent to 50% of their capital expenditure up to a maximum of €3,000.
Since the costs for installing a solar heater are not astronomical, the subsidy will make this investment more affordable for middle-class families. But despite the subsidy on photovoltaic installations, the cost of photovoltaic cells – which hovers between between €8,000 and €15,000,depending on their energy capacity – remains prohibitive for most common mortals.
The government has also opened a new avenue for investment in solar energy by announcing that it will soon be drawing up a call for tenders for those interested in installing and operating systems which generate solar energy public spaces. One of the criteria in this tender will be the price which the developer will ask for the electricity to be generated.
Best with less? The budget is spot-on, admonishing the economic and ecological costs of dependency on private cars. But instead of increasing government investment in public transport, it seeks to eliminate all subsidies.
“Economic operators stuck in traffic jams and congestions, and searching for a parking space, waste too much time and fuel, and all this will decrease productivity,” said Fenech, who also reiterated its long-term goal of dishing all public transport subsidies on public transport.
The government hopes that it can do away with the subsidy by increasing regular patrons. In fact the new tariff system announced by Transport Minister a few weeks before the budget favours regular bus while penalizing occasional users.
A two-hour ticket will cost 1.30 – more than double the cost of a single ticket at present rates. But if bought before 8am day tickets will make public transport 48 cents cheaper for anyone using the bus four times a day. Those opting for a three-month ticket costing €85 will save 62 cents if they use the bus four times a day between Monday and Friday.
But the system is less beneficial to less frequent users. Those who are currently taking two bus rides a day during working days will have to pay an extra 46 cents daily when buying an early riser day ticket; an extra €9.30 if they opt for a seven-day ticket; and practically the same amount as today, if they opt for a three-month ticket.
After announcing that the government will not be applying for EU funding for the controversial Ghadira road, the project is not even mentioned among the road projects identified in the budget.
But the budget makes a direct reference to the proposed road linking Zabbar and Smart City which could have a major impact on agricultural land and the historic landscape of the area.
Car registration
The new car registration tax regime for commercial vehicles is a clear application of the polluter pays principle. The new system will promote €5 and €4 commercial vehicles which will not pay any registration tax.
On the other hand a hefty tax will be paid on €3 and lower‐standard vehicles which will be based on weight.
While increasing the tax on commercial vehicles, the government is set to decrease registration and licensing fees on not-so environmentally friendly boats.
The government will lose €150,000, in revenue from a measure benefiting around 16,000 people will benefit.
Licenses for 150 HP boat will be slashed from €1,164 to just €50.
Land-use The only measure aimed at encouraging a more rational use of land is the direction given to MEPA to come up with proposals on how buildings in village and town cores can be used as offices or for tourist accommodation.
Tax incentives are also being considered for this aim. While this could result in urban regeneration, if not handled well such a measure could result in a construction spree in sensitive neighborhoods to the detriment of residents.
In order to encourage the restoration of historical buildings, or scheduled Grade 1 properties, a refund of 15.2% on the total expense will also be granted.
On the other hand, the budget is bereft of any carrot or stick to penalise property hoarders, or to encourage to rent vacant properties.
The government has also instructed to use its 10 million reserve of funds derived from the Commuted Parking Payment Scheme to fund new car parks.
Studies show that car parks tend to attract more cars aggravating problems of congestion and pollution. This money would be better spent on the development of park and ride schemes outside localities like Sliema, and other public transport initiatives.
A wish list for Gozo For those expecting concrete proposals on Eco Gozo, Budget 2010 is somewhat disappointed.
The document is full of wishy washy or generic proposals to “provide an efficient public transport system” and “to increase the proportion of recyclables collected in Gozo to an established target above the national targets.”
It also includes proposals which have nothing to do with ecology like “monitoring alcohol and tobacco consumption by minors.”
The only concrete target is to increase the tree cover of Gozo by 1% per year.
The document fails to refer to the development of offshore wind farms on Gozo’s north shore as proposed by a number of experts, but calls for the identification of sites for the development of small onshore wind farms.
Less stick, more carrot Five years after introducing the eco contribution the government is hinting at using the carrot instead of relying exclusively on the fiscal stick to encourage businesses to fulfill their obligations.
Government is now promising refunds, or exemptions, from eco‐contributions to businesses who are collecting their packaging waste and helping the country meet its EU obligations.
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