Time to realign actions with words

On Budget Day next week, the government ought to explain the extent to which its actions are consistent with its political programme read during Parliament’s inauguration by the President in 2008.

It would be pertinent to remember that the President had then stated: “The government’s plans and actions are to be underpinned by the notion of sustainable development of the economy, of society and of the environment. When making decisions today, serious consideration will be given to the generations of tomorrow.” Sustainable development, the President had informed Parliament, was a main goal of this government.

Well, since then, and for a number of months before that too, the National Commission for Sustainable Development has not met. It has been dormant for three years. Not a good sign for a government that considers it should direct itself onto the sustainability path. In addition, targets and objectives of the National Sustainable Development Strategy have been ignored.

Alternattiva Demokratika considers that next week’s Budget could be the opportunity for the government to realign its actions with its declarations.

Cabinet approved a national strategy for sustainable development towards the end of 2007 after extensive consultations with civil society carried out by the NCSD. This strategy laid down a number of specific actions for government ministries to follow. These have been honoured in the breach.

The selected method for implementation of the strategy is through action plans drawn up by ministries. Within 18 months from the strategy’s adoption, that is by mid-2009, ministries were required to prepare their action plans to implement the strategy. They are already 12 months late.

This has occurred because, at least to date, the government has considered the NCSD as a formality.

The mere fact that the Prime Minister, who ex-ufficio is chairman of the NCSD, hardly ever attended commission meetings since 2004 is, in itself, the clearest indication of the mismatch between declarations and actions, the end result being the prevailing state of affairs.

The NSDS identified 20 priority areas: environment (eight areas), economy (three areas), society (four areas), cross-cutting issues (three areas) and implementation (two areas).

Priority area 19, for example, established that, by 2008, that is 24 months ago, a permanent structure properly staffed and funded had to be in place to monitor and review the strategy’s implementation. A role for major stakeholders was also envisaged in order to “critically evaluate progress relating to the strategy”.

Priority area 17 identified the year 2008 as the target for the drawing up of a strategy “to enhance the use of economic instruments such as charges, taxes, subsidies, deposit refund schemes and trading schemes” in order to apply the polluter-pays principle and to promote sustainable development in Malta. Instead of drawing up this strategy, the government drew up a national environment policy issues paper and queried whether and to what extent the public considers it advisable “to move towards a taxation system that penalises pollution rather than jobs”.

To add further to the indecision, the pre-Budget document published in July declared the government was considering introducing a carbon tax. It further advocates a tax shifting mechanism whereby the taxes collected through this carbon tax are offset by the reduction of taxes that “penalise jobs”. Has a study analysing the impacts of this proposal been carried out? While reducing carbon emissions would be positive, what analysis has been made of the economic and the social impacts of such a measure?

On behalf of AD I have sought an answer to this question. In terms of the Freedom of Access to Information on the Environment Regulations 2005 I requested the release of studies commissioned by the Ministry of Finance.

The reply I received last Monday is another proof of the amateurism prevalent at policy formation level. The reply drew my attention to a number of academic journals dealing with tax shifting. I was further informed that the issue (of tax shifting) is being discussed in the Green Economy Working Group, which is expected to present its initial findings to the government by the end of 2010. These findings, it was stated, will be subject to public consultation in early 2011.

While consultation is always to be viewed positively, my point is that the announcement in the pre-Budget document that carbon taxation and tax shifting are being considered was premature in view of the fact that no studies have been concluded to date. Not even preliminary ones.

It seems the government has not yet learned its lessons from the introduction of eco contribution.

Serious policy formation and announcements have to be accompanied by studies detailing impacts of the proposals. Premature policy declarations serve no purpose except to mislead.

Ending all this by realigning actions with words would be a good first step. Our future depends on it.

Published in The Times, October 23, 2010

Advertisements

Reflections on an Environment Policy

The current debate on what should form part of a National Environment Policy is a healthy exercise. It is focusing not only on the different aspirations of each citizen but also on the role of each one of the towns and villages which together constitute this country.

The environmental issues we face are the result of the manner we organise our lives both individually and as a community. In fact it can be safely stated that the manner in which economic activity has been organised throughout time has created different environmental and social impacts.

The exercise at this point in time is hence the clear identification of these impacts and subsequently seeking the best manner in which they can be tackled. This is done on two fronts: firstly through the formulation of an environment policy and secondly by integrating this environment policy with economic and social policy within the National Strategy for Sustainable Development (NSSD).

The NSSD has already been formulated and approved by Cabinet almost three years ago after a long process of consultation. It established targets and objectives which have unfortunately been ignored by the same Government which has approved them. This necessarily leads to the conclusion that these exercises can be a waste of time as their only purpose seems to be an exercise to prove that the new hands on deck can do things in a better way than those they have replaced. 

The National Environment Policy Issues Paper identifies a number of areas which are to be tackled but excludes a number of important ones. What is in my view objectionable and bordering on the insulting is the ignoring by the Issues Paper of the NSSD. It also ignores matters which have been tackled by the NSSD as well as the specific targets identified. This the NSSD did after extensive consultation with civil society, which the Issues Paper promises to go through again.

 

Eco-taxation

One such case refers to the use of economic instruments to attain environmental objectives. The Issues Paper queries whether and to what extent there is agreement  with the use of such instruments to further environmental objectives. Simultaneously with the publication of the Issues Paper, Finance Minister Tonio Fenech through the pre-budget document was lauding the idea of introducing a carbon tax and the possible utilisation of the proceeds to affect a tax shift. This is in the spirit of the former EU Commission President  (French Socialist) Jacques Delors’ 1993 EU White Paper entitled “On growth, competitiveness and employment. The challenges and ways forward into the 21st century”.

So whilst the Environment Ministry is requesting our opinion on the use of eco-taxation (and other instruments) it seems that the Finance Ministry is dead-set to proceed.  Do these two Ministries form part of the same government? 

Both the Environment Ministry and the Finance Ministry would do well to go back in time to the debate on the introduction of the eco-contribution (2003-05) where they could identify a number of issues raised by civil society.

Should fiscal objectives be the purpose of environmental taxation or would it rather be environmental improvement? All over the globe governments declare that their aim in applying eco-taxation is environmental improvement. Yet they resist transferring political responsibility for environmental taxation from the Finance Ministry to the Environment Ministry. Such a move would lend credence to statements on the environmental objectives of eco-taxation and would ensure that the design of specific measures is more in line with encouraging changes in behaviour. Retaining political responsibility for environmental taxation at the Finance Ministry on the other hand signifies that the objective is to tax behaviour but not  to change it. This reluctance is generally reflected in the manner  in which eco-taxes are designed. Fiscal policy makers pay attention to the fact that changing behaviour would mean drying up a source of revenue. Hence eco-taxes designed for fiscal objectives are intended not to affect the elasticity of demand. This is done by selecting items in respect of which there are no alternatives and thus irrespective of tax added to the price there is no alternative to purchasing the product or service. The eco-contribution exercise clearly illustrates this argument.

 

Environmental nuisance 

The Issues Paper has failed to project an understanding that environmental issues can be most effectively tackled at a micro-level. In fact the Issues Paper adopts an exclusively macro approach and does not give any weight to the real life issues. Issues of environmental nuisance are the ones which the man in the street feels strongly about. These include primarily noise, air quality and odour nuisance caused by neighbours in residential areas. They could range from an air conditioner fixed below your bedroom window to a neighbour’s fireplace chimney spewing smoke right into your living room or a bakery belching black smoke onto your washing line. Or the newly opened restaurant or snack bar in a transformed ground floor flat whose operator wouldn’t care less about where the odours from his kitchen end up.    

Information

Access to environmental information is an important aspect of environment policy. Yet the drafters of the Issues Paper ignored it. The environmental information aspects of the Åarhus Convention have been incorporated into Maltese legislation as a direct result of Malta’s EU accession. This legislation provides a mechanism through which the citizen requests the release of information which up till then would be withheld by the authorities. This is a very primitive form of governance. The state should release information without having its hand forced to do it. This is the minimum required in an age of transparency and accountability. 

Policy proposals and other initiatives must be buttressed by studies which not only justify the proposal or initiative but which also identify the resulting impacts and the manner in which these can be addressed. Studies must be published at an early stage and not in the final stages of a discussion. Otherwise the public debate cannot be fruitful.

Transparency and accountability

Transparency and accountability are not only duties of the state. They are also a responsibility of private enterprise.  Corporate Social Responsibility (CSR) reporting is one way in which private enterprise informs the public on its activities. It is a function as important as financial reporting. Financial reporting having been accepted by society for quite a long time as a reporting requirement.

In Malta currently two companies publish a CSR report. Vodafone (Malta) and Bank of Valletta (BOV) have already published two editions of their CSR report. There has been considerable improvement in the information made available by Vodafone (Malta) in its second report, but BOV’s reporting  can be substantially improved.

The environment policy should identify the type of organisations that should have the duty to report publicly and on a regular basis on their environmental and other impacts. By organisations I understand not just industry and business but also public corporations, government departments and local authorities. A reasonable first step would be for companies quoted on the stock exchange to take the lead followed by public bodies such as Enemalta, Water Services Corporation, Heritage Malta and Air Malta.

CSR reporting should be guided by international standards such as the Global Reporting Initiative G3 guidelines and should be subject to auditing in order to verify that the statements made reflect what the organisation is really up to. 

Alternattiva Demokratika, AD, the Green Party in Malta has earlier this month published a document in reply to the National Environment Policy Issues Paper which lists and discusses the areas missed out by the said Issues Paper.  In addition to focusing on the urgent need to implement the NSSD, environment information, environmental nuisance and environment information it also points out the need to tackle the uptake of environmental management systems such as ISO 14001 and the Eco-Management and Audit Scheme (EMAS) Regulations of the European Union, light pollution, contaminated land, environmental and sustainability planning at a locality level better known as Local Agenda 21,  the role of civil society and environmental NGOs in environment policy and environment  research.  

We hope that when the environment policy is drafted it will include the widest possible list of issues and will tackle them in an holistic manner keeping in mind the parameters established in the National Sustainable Development Strategy.                 

Alternattiva Demokratika considers that environment policy is one of several instruments through which improvement in the quality of life can be attained. Protecting the environment signifies that we better our quality of life. It also signifies that each one of us acts in a responsible manner. However primarily it must be government which leading the way should act in an appropriate manner in order that it leads by example.

 published in

The Independent on Sunday, October 17, 2010, Environment Supplement

AD on Government’s Environment Policy

During a press conference in Valletta, Michael Briguglio, AD Chairperson, said: ‘Alternattiva Demokratika is presenting its reactions to Government’s proposed environment policy. In a nutshell we believe that it would have been wiser if Government implemented the recommendations of the National Commission for Sustainable Development, which have been ignored by Government for over two years. A holistic and effective environment policy should be based on the concept of sustainable development through which environmental, social and economic considerations are given due importance in order to improve the quality of life of people and to protect species. This is precisely what is being proposed in our policy paper, which covers various areas’.
 
Carmel Cacopardo, AD Spokesman on Sustainable Development and Local Government said that AD’s detailed reaction to the National Environment Policy Issues Paper was presented to Parliamentary Secretary Mario de Marco yesterday during a cordial meeting.
 
AD, said Cacopardo, is of the opinion that environment policy and environment measures have to be buttressed by studies which analyse the economic, social and environmental impacts of the proposals. Environmental research is absent from the list of issues dealt with by the document government published for public discussion. This is not a surprise for AD as acting without analysing impacts a priori is this government’s preferred method of action as has already happened when the eco-contribution legislation was introduced.
 
Government has just announced that it is toying with the idea of introducing tax shifting by reducing taxes on labour and introducing a carbon tax. This proposal communicated in the pre-budget document is scant on details such that it is not at all clear what Government is considering. In addition no studies indicating targets, methods and impacts has been published. Nor is it known whether in fact any studies have been carried out. It is for this reason that AD has 15 days ago requested the release of studies on the “carbon tax” proposal in terms of the provisions of LN 116 of 2005 (Freedom of Access to Information on the Environment Regulations).
 
The use of economic instruments for environmental improvement should be the responsibility of the Ministry of the Environment and not of the Ministry of Finance. This would ensure that environmental objectives and not fiscal ones are the primary objectives when such instruments are used
 
The Issues Paper added Cacopardo does not consider a number of important areas of action such as : Light Pollution, Environmental Impacts of Organisations, CSR, environmental nuisance, land contamination, the role of civil society and eNGOs in environment policy formulation, access to environment information and environment research.
            
AD considers that in view of the large number of vacant properties a moratorium on large scale residential development is long overdue. The regulating of funding of political parties would also ease the pressure of the building development lobby on politicians.  
 
Press here to download full AD paper

Lejn politika tal-ambjent

 

Dalgħodu ħadt sehem fil-Workshop dwar il-Pjan Nazzjonali għall-Ambjent. Dawn huma uħud r-riflessjonijiet tiegħi.

Li nitkellmu dwar il-politika ambjentali hu pass tajjeb. Id-diskussjoni iżda biex tkun ta’ kontribut posittiv trid tkun waħda onesta. Trid tirrispetta lil kull min ta’ ħinu u saħħtu fis-snin passati f’ħidma favur l-ambjent.

Tajjeb li neżaminaw l–analiżi dwar il-Public Attitudes Survey 2008 li d-ditta Ernest & Young (2010) ħejjiet fuq inkarigu tal-MEPA. Minn dan jirriżulta illi  69% ta’ dawk li wieġbu huma tal-fehma li l-ambjent huwa importanti daqs l-ekonomija filwaqt li 23% jidhrilhom illi l-ambjent huwa iktar imporanti mill-ekonomija.  8% biss għadhom tal-fehma tas-supremazija tal-ekonomija fuq l-ambjent.

Huwa b’sodisazzjoni li nosserva din l-attitudni ġdida. Attitudni li ilha tinħass tiżviluppa bil-mod il-mod. Hi riżultat tal-ħidma ta’ dawk kollha illi għal snin sħaħ ħadmu kontra l-kurrent b’bosta minnhom ikunu deskritti bħala eko-fundamentalisti.

Fid-dawl ta’ dan huwa iktar importanti li d-diskussjoni tal-lum tkun ċara u onesta. L-Issues Paper li għandna quddiemna tistaqsi ħafna mistoqsijiet. Imma sfortunatament għażlet illi tinjora l-fatt li ħafna mit-tweġibiet diġa ngħataw. Dawn qegħdin fl-Istrateġija Nazzjonali dwar l-Iżvilupp Sostenibbli approvata mill-Kabinett tal-Ministri lejn tmiem l-2007 wara proċess twil ta’ diskussjoni mas-soċjeta’ ċivili.

Mhux ser nidħol fid-dettal għax il-ħin ma jippermettix.  Ser nillimita ruħi għal eżempju wieħed: dwar it-tassazzjoni ambjentali.

L-Issues Paper  f’paġna 12 tistaqsina dwar x’naħsbu fuq sistema li tintaxxa t-tniġġiz flok ix-xogħol. Kumbinazzjoni fid-dokument ta’ qabel il-budget imniedi mill-Ministru tal-Finanzi  fl-istess jum tal-Issues Paper qed jiġi propost (f’paġna 136) ezerċizzju ta’ “tax shifting”. Jgħid li qed jikkonsidra d-dħul ta’ “carbon tax” u li hi l-intenzjoni li din tissostitwixxi taxxi oħra konnessi max-xogħol.

La l-Issues Paper u l-anqas id-dokument dwar il-budget ma jagħmlu l-iċken referenza għall-istrateġija nazzjonali dwar l-iżvilupp sostenibbli li diġa bil-kunsens tas-soċjeta’ ċivili u tal-Kabinett stabiliet fil-proposta 17 tagħha illi sal-2008 kellha titfassal strateġija dettaljata dwar l-użu ta’ strumenti ekonomiċi biex jippromwovu l-iżvilupp sostenibli f’Malta. L-2008 ilu li ġie u mar u flok strateġija dettaljata għandna iktar mistoqijiet. Din mhux serjeta’. Flok iktar mistoqsijiet kellu jkollna analiżi tat-taxxi ambjentali li ġja għandna fil-pajjiż u jekk dawn laħqux l-iskop li għalih saru. X’tgħallimna mill-eżerċizzju tal-eko-kontribuzzjoni?    Tgħallimna li  :

l-ewwel :          li taxxi ambjentali għandhom jintużaw għal skopijiet ambjentali u mhux għal skopijiet fiskali,

it-tieni :             ir-responsabbilta’ politika għal sistema ta’  tassazzjoni   ambjentali għandha tkun fdata f’idejn il-Ministeru għall-Ambjent u mhux f’idejn dak tal-Finanzi, biex b’hekk ikun iktar possibli li  t-titjib fil-qasam ambjentali jkun l-oġġettiv ewlieni tagħhom,

it-tielet :            li filwaqt li hemm bosta setturi li jistgħu jkunu soġġetti għal tassazzjoni ambjentali l-għażla tagħhom għandha issir bir-reqqa u wara studju tal-impatti kemm ambjentali kif ukoll soċjali.

F’dan il-kuntest irrid ngħid li mhux aċċettabbli li l-Gvern iħabbar illi qed jikkonsidra “carbon tax” mingħajr ma jinfurma lill-pubbliku dwar xi studji għamel mhux biss fuq kemm jista’ jdaħħal iżda ukoll dwar kif din ser teffettwa kemm il-kwalita’ tal-ħajja kif ukoll il-livell tal-għajxien tal-faxex differenti tas-soċjeta. Dan l-istudju, jekk sar, s’issa għadu ma rax id-dawl tax-xemx. Fil-fatt dalghodu jiena għamilt talba formali taħt il-provedimenti tal-Konvenzjoni ta’ Åarhus biex jekk jeżistu jiġu rilaxxjati l-istudji relattivi. Dawn huma l-affarijiet li jmissna niddiskutu.

M’huwiex iktar żmien li nlabalbu. Huwa żmien li dak li ġie imfassal jitwettaq. Wara li l-proċess ta’ diskussjoni li beda madwar 5 snin ilu kien wassal għal konkluzjoni fl-forma ta’ strateġija li tintegra l-ħidma ekonomika ma dik soċjali u ambjentali dan il-proċess ta’ diskussjoni tal-lum ser iwassal għal duplikazzjoni. F’pajjiż li kontinwament ġustament nilmentaw li la għandna riżorsi u l-anqas biżżejjed nies imħarrġa, l-inqas li konna nistennew huwa li naħlu l-ħin u riżorsi billi flok jitwettaq dak li ġie deċiz nerġgħu niftħu d-diskussjoni.

Nikkonkludi billi nħeġġiġkom biex tifhmu li l-aħjar triq il-quddiem hi illi nkunu kapaċi nintegraw l-isforzi tagħna. Dan hu dak li ppruvat tagħmel l-istrateġija nazzjonali dwar l-iżvilupp sostenibbli. Għandna nfittxu li nimxu f’dik it-triq billi nimplimentaw ir-rakkomandazzjonjiet tagħha. Forsi l-ewwel pass ikun li kif tistabilixxi l-istess Strateġija kull Ministeru jfassal pjan t’Azzjoni (avolja sentejn tard) biex iqiegħed fil-prattika dak li tipproponi l-istrateġja. B’hekk forsi tieqaf darba għal dejjem id-drawwa li żviluppat f’dan il-pajjiż illi r-rapporti u l-istrateġji iservu biss biex jitnisslu  rapporti oħra. Nittama biss li mid-diskussjoni tal-lum nagħrfu nibnu fuq dak li sar mhux biss b’rispett lejn min iddedika ħinu għall-pajjiż iżda fuq kollox biex nużaw il-ftit riżorsi li għandna l-aħjar mod.

Imma l-Kummissjoni Nazzjonali dwar l-Iżvilupp Sostenibbli jeħtieġ li tibda tiltaqa’ : ilha tlett snin wieqfa. Xhieda tal-impenn tal-Gvern favur l-Iżvilupp Sostenibbli.

Environment Policy and the Budget

The National Environment Policy Issues Paper, launched by the Parliamentary Secretary for the Environment, Mario de Marco, on July 27 requested the views of the public on a move towards a taxation system that “penalises pollution rather than jobs”.

When launching the 2011 pre-Budget document on the same day, Finance Minister Tonio Fenech was more clear as to the government’s intentions. Under the heading Tax Shifting, he proposed the shifting of taxes from economic goods to economic bads. The pre-Budget document goes on to say: “In order to incentivise the creation of work by making labour less costly we are proposing the lowering of government-induced employee costs as well as corporate and income taxation.” The pre-Budget document then praises the merits of a carbon tax as a fiscal tool.

It seems that both the minister and the parliamentary secretary have forgotten that taxation does not penalise jobs. It is an instrument for the attainment of social solidarity. That is what the post-1977 Nationalist Party I remember was in favour of. It seems that time has changed the PN. It cannot be anymore described as being “un partito di centro che guarda a sinistra” (a party of the centre that looks to the left), as the old guard, quoting Alcide de Gasperi, justifiably boasted.

The drafters of the documents launched could have consulted the Cabinet-approved National Sustainable Development Strategy for the Maltese Islands (page 59), which established 2008 for the conclusion of a strategy on environmental taxation. The year 2008 is 32 months away and the strategy on the use of economic instruments to regulate environmental impacts is still not in place. Instead of asking for views of the public they should have drafted the strategy that has been promised but not delivered. It could be a useful guide for the finance minister.

At issue in this debate on tax shifting are points already emphasised during the eco-contribution legislation debate in 2004/05. Which ministry will be in the driving seat of environment taxation policy: Finance or the environment? Will the primary objectives of environment taxation be environmental or fiscal?

The strategy to be adopted and, thus, the specific proposals to be brought forward will depend on whether fiscal policy is used to regulate and reduce environmental impacts or whether the environment will be used to compensate for shortfalls in tax revenue.

After 17 years, the government has woken up to the proposals of a Jacques Delors EU White Paper in 1993 on growth, competitiveness and employment [COM (93) 700 final] who had the argued in favour of taxing environmental impacts and resource use.

In its 2008 electoral manifesto, the PN promised it will reduce income tax in the higher bands. It is now seeking ways to deliver without subjecting the Exchequer to further problems. It is very unfortunate that an inappropriate tool was selected. As a result of the tax shifting proposal, a tax, which is socially progressive (income tax) will be partially substituted with a carbon tax that, viewed on its own, can be socially regressive. The proposal aims to reduce taxation from a band which is paid mostly by companies and those who have a substantial income. To compensate for the resulting shortfall, it will spread the tax-load on everyone without discrimination, irrespective of their means.

Once the government decided on the reduction of the higher band income tax, I understand that it did not have much of a choice. In order to ensure a regular flow of income, which would have to substitute a reduction of the forfeited income tax, it had to select a subject in respect of which (at least, in the short term) demand is largely inelastic to tax-induced price changes.

It would be interesting if any studies on the impacts of the pre-Budget tax-shifting proposal are available. Such studies should clearly demonstrate the two basic flaws of the proposal: first it’s being socially regressive and, secondly, it’s exploiting of the environment as a tax revenue generator without ensuring environmental improvement as a primary objective.

If environmental improvement was a primary objective, the projected tax revenues would not be generated as they would be reduced gradually, in line with environmental improvement.

A carbon tax would force business and industry to address their environmental impacts. However, the impacts of a carbon tax on SMEs and households have to be assessed more carefully before policy declarations are made in view of the limited size of the former and the lack of resources of both. Given that most of Malta’s business is in the SME sector, matters should first be studied in their proper perspective before declarations are made or decisions taken.

There are various alternatives to the government’s proposals. Each one of them must however be tested through studies to ensure that the social and environmental impacts of fiscal policy are either positive or else substantially mitigated.

Studies made must be available at this stage. Otherwise, the discussions on both the National Environment Policy and the pre-Budget document would be just kite flying exercises.

 

published in The Times Saturday, September 4, 2010