A case of bad governance

The full process leading to the agreement whereby St Philip’s Hospital is leased to the Government with the option to purchase requires careful examination. Even after Monday’s parliamentary debate, the information is substantially under wraps with only small snippets having been made available to date. The little that is known however, already points towards bad governance.

The Government opted to start negotiations with the owner of St Philip’s Hospital late in 2008, that is four years ago. Commencing negotiations relative to St Philip’s Hospital signifies that alternative sites and options were being excluded: alternative sites were ignored, considered as not being suitable, or as being less suitable than the site under consideration.

The Minister for Health said in Parliament that it would require just under €40 million to rehabilitate St Luke’s Hospital. What the minister forgot to consider was that a basic rule for comparative statements is that, for the comparison to be of any significance, one has to compare like with like. You cannot compare what is required for a 1,000 bed hospital to justify the relative smallness of the sum required relative to a 75-bed or a 110-bed hospital.

The cost to rehabilitate St Luke’s is obviously substantially higher than anything related to St Philip’s. Such comparisons are deceptive. Moreover, parts of St Luke’s are no longer available as they are being used for other purposes.

The potential use of St Luke’s was discarded when negotiations started way back in 2008. If St Luke’s was then considered as suitable, the Rehabilitation Hospital would be up and running by now, saving millions of euros and lots of time. It could have been operational at least three years ago. As a result, it would have been possible for medical personnel at Mater Dei Hospital to deal more appropriately with patients because overcrowding there would have been substantially reduced three years ago, at least.

This is one of the issues which the Auditor General should consider when he examines the process that led to the Government’s decision. I understand that detailed reports are existent. It would be appropriate if these are immediately made available for the consideration of the Public Accounts Committee and the Auditor General.

It should also be considered whether the Government acted correctly when it opted to initiate direct negotiations with one hospital operator to the exclusion of other suppliers of potentially suitable sites. The fact that the Government is not legally bound to issue a call for tenders does not signify that it is good practice to start the process without such a call or, alternatively, with a request for the submission of expressions of interest. The Government, instead, inversed the process linking itself with a call for an expression of interest issued by the owner of St Philip’s!

The tendering procedure is a basic characteristic of public sector procurement so much that even local councils are expected to issue such a call when leasing or purchasing property. Why is it that the Finance Ministry insists on good practice at a local level but then opts for bad practice at a national level? The reasons brought forward by the Government to justify direct negotiations are equally applicable at a local level, yet the ministries of finance and local government justifiably insist on the tendering procedure.

In view of the above, Franco Debono (actively supported by Jeffrey Pullicino Orlando) is insisting that the agreement reached should be shelved until such time that the Auditor General and the Public Accounts Committee of the House of Representatives have examined the whole process.

In view of the seriousness of the matter, that is the possible overriding by Parliament of the Executive’s discretion, the honourable way for the Leader of the House was to deal with the motion submitted by Debono with urgency. It should take precedence over all the Government’s business as it strikes at the most basic of uses.

When documentation is submitted for the Auditor General’s scrutiny there is one particular scrap of paper that I will look out for. This is the advice dished out by the Malta Environment and Planning Authority indicating the possibility to consider an application for the increase in beds at St Philip’s to about 280.

A quick visit to the site of St Philip’s would remove all doubts as to the suitability of the site because it is clear that there is hardly sufficient parking space for the hospital’s current size. The only remote possibility for increasing the facilities at St Philip’s in my view is to redevelop it completely, in which case, costings made have to be calculated afresh. And I have serious doubts whether this can be done.

As I see it, there is no way in which St Philip’s can function as projected. Public funds invested in this project would be monies down the drain. Hence the need for the intervention of the Public Accounts Committee and the Auditor General before the deal is concluded.

 

published in The Times of Malta, Saturday 20th October 2012

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

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 21^st 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