Eco-contribution not aimed at deficit reduction

Parliamentary Secretary Tonio Fenech yesterday denied that the purpose of the eco-contribution was to raise government revenue in order to narrow the deficit.

Had that been the case, the government would have opted for easier measures, similar to the Lm48 tax on every door imposed by the Labour government which would have yielded Lm6 million, Mr Fenech said in parliament. The eco-contribution will yield Lm4 million in a full year.

The parliamentary secretary was reacting to remarks made on Monday by Opposition finance spokesman Charles Mangion who said this was not an eco-contribution but a tax "pure and simple."

As for opposition remarks that this was a tax because a "contribution" was voluntary, Mr Fenech observed that social security payments were also described as contributions, but there was nothing voluntary about them.

He stressed that the only purpose of this bill was to partly meet the substantial investment which had to be made to improve the environment, something which everybody was calling for.

The government was taking other measures to tackle the deficit and it was so far successful in its target of a deficit of Lm95 million by the end of this year.

Everybody wanted to see the end of the Maghtab mountain. Everybody, rightly, wanted better air and sea water quality and cleaner air, but attaining such aspirations also demanded responsible action in the context of controlling the deficit, Mr Fenech said. If one did not want another Maghtab, and one did not want a bigger deficit, new sources of revenue needed to be found to improve the environment.

This bill was based on the polluter pays principle. Since everybody was a polluter in one way or another, all should contribute to improving the environment.

Dr Mangion had accused the government of squandering, and some opposition MPs had even somehow linked the eco-tax with the government's decision to buy an embassy building in Brussels and refurbish it for a total cost of some Lm9 million. But one needed to be realistic. In its convergence programme the government had given a commitment to bring down the deficit to acceptable levels. It was now Lm95 million, or 5.2 per cent of GDP. Bringing it down to under three per cent of GDP in two years meant shedding Lm30 million - a far cry from the Lm4 million revenue from the eco-contribution.

In the convergence programme the government was saying it would reduce the deficit by better control of its spending, a reform of pension and health schemes and better control on revenue streams.

The spending of every ministry was being scrutinised line by line and certain decisions, such as refurbishment of the MTA's offices, were being postponed, but spending priorities, such as an additional Lm4 million on medicines this year, could not be avoided.

Failure by the government to meet its deficit target would undermine credibility and harm investment prospects.

Referring to the Brussels embassy, Mr Fenech said the decision was taken responsibly after careful consideration.

The current embassy building was too small and inadequate for a staff which would exceed 50 as Malta sought to cover all EU activities. Unless the embassy was adequately staffed, Malta would not even know of decisions taken in the EU.

The building that had been chosen was within walking distance of the European Commission's offices, saving on recurrent transport costs.

There had been an option to rent the building rather than buy it. The rent would have been Lm600,000 for 27 years, but the government felt it was a wiser investment to buy the building, which would cost Lm14 million after 27 years. Everybody agreed that a property purchase was the wisest form of investment. The sale of the current embassy building would yield not less than Lm1 million.

It should be pointed out that the purchase of Malta House in London in 1992 cost Lm3.2 million and the building, after refurbishment, now cost Lm10 million.

Turning to details of the bill, Mr Fenech denied that the government was not discriminating between products which were environmentally friendly and those which were not.

It was not true that this bill was not aimed at bringing about a change in consumer patterns, as the opposition had claimed.

The contribution for a glass bottle used for soft drinks or beer would be a once-only 1c even though that bottle was used some 10 times. The contribution for a plastic bottle used only once, was also 1c, meaning that use of glass bottles would be more competitive.

Similarly, it would make more sense to use rechargeable batteries than the normal ones.

In deciding the rates, the government had to be careful to observe EU rules and not create barriers to the free movement of trade.

Mr Fenech pointed out that while some products were ecologically friendly during their lifetime, such as in the case of some fridges, costs for their disposal were the same as ordinary fridges.

The government had been careful to keep the rates low on essential items, such as tyres - despite the problems they caused for disposal - televisions and other white goods, while the rate was slightly higher for products such as air conditioners, which had a luxury element.

It had been decided to have flat rates instead of rates based on product value because this system was easier to operate.

Mr Fenech stressed that the bill aimed at encouraging product return and recycling. For example, contrary to what the opposition said, a producer of biodiesel who collected used oil to convert it into his product would be compensated.

On Dr Brincat's remarks about the government appointing the authority that would oversee the eco-contribution and the appeals board, Mr Fenech asked what was new in this. The government, he observed, had been nominating the judges and magistrates for decades.

Earlier in yesterday's sittings, Nationalist MP Michael Asciak said financial, social and environment issues were not mutually exclusive.

The Nationalist MP discussed the international aspect of the environment, particularly changes brought about by climate change and the implications of the Kyoto Protocol, auguring that the US would come round to signing it, even if its provisions were getting outdated. Russia, he observed, only signed up after the EU paid that country millions of euros in compensation.

This government, he said, had taken several actions to improve the environment, starting from the Environment Act, the launching of the waste separation project and the launching of a plan for the treatment of all sewage before disposal in the sea. Waste dumps were also closed.

There was a lot to be done apart from the positive measures being taken through this bill, such as improving air quality. He was pleased that Malta was arguing in international fora that ships in the Mediterranean should use cleaner fuel. Research had shown that much of air pollution in Malta was imported.

More work needed to be done on ecology, including afforestation.

Dr Asciak also spoke on hunting. The governemnt had negotiated reasonable conditions for the practice of hunting in Malta, and it was now important for hunters to observe the law. In the same way as hunters had a right to enjoy their pastime, everybody else had a right to enjoy the environment safely. Failure of law observance by the hunters could lead the EU to withhold the conditions negotiated by Malta.

Noise pollution was another area in which Malta needed to work harder, such as with regard to commercial vehicles and excessive fireworks.

A legal notice on occupational noise levels was passed in April but few people knew about it. The government should give such initiatives more promotion.

The National Statistics Office had just issued statistics on the cleanliness of Maltese seas. The situation this year was much better than before.