A financial surplus, yet an environmental deficit

As was expected, last Monday’s budget speech solemnly announced a budget surplus for the first time in many years. However, the environmental deficit was, as usual, hidden between the lines.

The budget is aptly titled Preparing for the Future (Inlestu għall-Futur). In dealing with environmental issues, the budget speech does not lay down clearly the path the government will be following. At times, it postpones matters – proposing studies and consultations on subjects that have been in the public domain for ages.

On the subject of vacant properties, the government prefers the carrot to the stick. In order to get dilapidated and empty properties in village centres back on the rental market, it is offering a €25,000 grant to renovate such properties, but then rightly insists that, once renovated these should be made available for social housing for a minimum of 10 years. In previous budgets, various other fiscal incentives have been offered to encourage such properties being placed back on the market.

After offering so many carrots, it would also make sense to use the stick by way of taxing vacant properties in situations where the owner is continuously ignoring the signals sent regarding the social, economic and environmental impacts of empty properties.

The budget speech announced improvements to rental subsidies. However, it then opted to postpone the regulation of the rental market. It announced a White Paper on the subject which, when published, will propose ways of regulating the market without in any way regulating the subject of rents. In view of the currently abnormal situation of sky-high rents, this is sheer madness.

It is fine to ensure that the duties and responsibilities of landlords and tenants are clearly spelt out. Does anyone argue with that in 2017? It should have been done years ago. Instead of a White Paper a Legal Notice defining clear-cut duties and responsibilities would suffice: there is no need to wait.

It is, however, too much to bear when a “social democrat” Finance Minister declares  that he will not even consider rent control. There are ways and means of ensuring that the market acts fairly. Other countries have done it and are still doing it, as rental greed has no preferred nationality. Ignoring this possibility is not a good omen. The market should not be glorified by the Finance Minister; it should be tamed rather than further encouraged to keep running wild with the resulting social havoc it has created.

This brings us to transport and roads. The Finance Minister sends a clear message when he stated (on page 44 of the budget speech) that no one should be under the illusion that upgrading the road infrastructure will, on its own, resolve the traffic (congestion) problem. Edward Scicluna hints on the following page of his speech that he is not too happy with the current situation. He laments that the more developed countries encourage active mobility through walking, cycling and the use of motorbikes, as well as various means of public transport, simultaneously discouraging the use of the private car. However, he does not then proceed to the logical conclusion of his statement: scrapping large-scale road infrastructural projects such as the proposed Marsa flyover or the proposed tunnels below the Santa Luċija roundabout announced recently by Minister Ian Borg.

These projects, like the Kappara flyover currently in its final stages, will only serve to increase the capacity of our roads. And this means only one thing: more cars on our roads. It is certified madness.

While the Government’s policy of increasing the capacity of existing roads through the construction of flyovers and tunnels will address congestion in the short term, it will lead to increased traffic on our roads. This moves the problem to the future, when it will be worse and more difficult to tackle. The government is acting like an overweight individual who ‘solves’ the problem of his expanding wasteline by changing his wardrobe instead of going on a painful but necessary diet.

This cancels out the positive impact of other policies announced in the budget speech such as free public transport to young people aged between 16 and 20, free (collective) transport to all schools, incentives for car-pooling, grants encouraging the purchase of bicycles, pedelec bicycles and scooters, reduction in the VAT charged when hiring bicycles as well as the introduction of bicycle lanes, as well as encouraging the purchase of electric or hybrid vehicles.

All this contributes to the current environmental deficit. And I have not even mentioned issues of land use planning once.

Published in The Malta Independent on Sunday – 15 October 2017

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Malta’s Nine Ghost Towns

The 2005 Census had revealed that 53,136 residential units in Malta were vacant. This was an increase of 17,413 units over the 35,723 vacant residential units identified during the 1995 Census. Faced with an increase of over 48 per cent in 10 years, a responsible government would have contained the development boundaries as existing supply can satisfy the demand for residential accommodation for many years to come.

In 2006, just nine months after the 2005 Census, the Nationalist Party-led Government defied common sense and, instead of applying the brakes, it further increased the possibilities for building development through three specific decisions. Through the rationalisation process, the PN-led Government extended the boundaries of development in all localities. Then it facilitated the construction of penthouses by relaxing the applicable conditions. If this were not enough, it increased the height limitations in various localities, intensifying development in existing built-up areas.

As a result of increasing the permissible heights, sunlight was blocked off low-lying residential buildings in the affected areas.

These residences were using sunlight to heat water through solar water heaters or to generate electricity through photovoltaic panels installed on their rooftops.

They can now discard their investments in alternative energy thanks to the PN-led Government’s land use policies!

The result of these myopic land use planning policies further increased the number of vacant properties, which is estimated as being in excess of 70,000 vacant residential units. (Mepa chairman Austin Walker, in an interview in June 2010, had referred to an estimated 76,000 vacant residential properties.)

The estimated total of vacant residential properties is equivalent to nine times the size of the residential area of Birkirkara, the largest locality in Malta, which, in 2005, had 7,613 residential units.

These ghost towns over the years have gobbled up resources to develop or upgrade an infrastructure that is underutilised. Spread all over the Maltese islands, these ghost towns have required new roads, extending the drainage system, extending the utility networks and street lighting as well as various other services provided by local councils.

The funds channelled to service ghost towns could have been better utilised to upgrade the infrastructure in the existing localities over the years.

The above justifies calls for an urgent revision of development boundaries through a reversal of the 2006 rationalisation exercise where land included for development in 2006 is still uncommitted.

Similarly, the relaxation of height limitations and the facilitated possibility to construct penthouses should be reversed forthwith.

All this is clearly in conflict with the efforts being made by the Government itself, assisted with EU funds, to increase the uptake of solar water heaters and photovoltaic panels.

I am aware of specific cases where decisions to install photovoltaic panels have had to be reversed as a result of the development permitted on adjacent property subsequent to the 2006 height relaxation decisions.

In its electoral manifesto for the forthcoming election, AD, the Green party, will be proposing a moratorium on large-scale development in addition to the reversal of the above policies as it is unacceptable that the construction industry keeps gobbling up land and, as a result, adding to the stock of vacant property.

The market has been unable to deal with the situation and, consequently, the matter has to be dealt by a government that is capable of taking tough decisions in the national interest.

Neither the PN nor the Labour Party are capable of taking such decisions as it has been proven time and again that both of them are hostages to the construction industry.

The slowdown of the activities of the construction industry is the appropriate time to consider the parameters of its required restructuring. It is clear that the construction industry has to be aided by the State to retrain its employees in those areas of operation where lack of skills exist.

There are three such areas: traditional building trades, road construction and maintenance as well as marine engineering.

Traditional building skills are required primarily to facilitate rehabilitation works of our village cores and to properly maintain our historical heritage. Our roads require more properly-trained personnel so that standards of road construction and maintenance are improved and works carried out in time. Our ports and coastal defences require a well-planned maintenance programme and various other adaptation works as a result of the anticipated sea-level variations caused by climate change.

The construction industry employs about 11,000 persons. It is imperative that its restructuring is taken in hand immediately.

In addition to halting more environmental damage, a long overdue restructuring will also serve to mitigate the social impacts of the slowdown on the families of its employees through retraining for alternative jobs both in the construction industry itself and elsewhere.

The so-called ‘social policy’ of the PN and the PL have neglected these families for years on end.

 

published in The Times on 29 September 2012

Its time to halt the process

 

The objective of a census is to collect data to accurately inform decision-makers. The 2005 census identified 53,136 vacant properties in the Maltese islands; 24,295 units (45.7 per cent) of these were flats and penthouses, 13,872 were terraced houses and 9,857 were maisonettes. Most were identified as being in either a good state of repair or else as requiring only minimum repairs in order to be habitable.

It also resulted that 5,724 units (10.8 per cent) of the vacant dwellings were in a shell state. Twenty per cent of the vacant dwellings were identified as summer residences, a substantial number in Gozo.

Comparing the 2005 census with that taken in 1995, one notes that the number of vacant dwellings in the 10-year period increased from 35,723 to 53,136, up 48.74 per cent. Faced with such an increase in vacant dwellings a responsible government would have applied the brakes to the construction of residential units. In particular, it would have either reduced the land available for development or, as a minimum, it would have retained the status quo.

Faced with this information the Nationalist government, a few months after the 2005 census, ignored the results and instead increased the land available for development. It did this through three specific measures.

Firstly, through the rationalisation exercise it extended the limits of development in most localities. Secondly, it increased the permissible heights for development in a number of localities. Thirdly, it changed the rules for the development of penthouses. Instead of being constructed over a four-storey high building they could now be constructed over a three-storey building.

This has resulted in a further increase in the number of vacant dwellings, which have now been estimated as being in excess of 70,000. The results of the latest census are awaited with trepidation.

The 2005 census had identified that there were a total of 192,314 residential units on the Maltese islands. This means that the 53,136 vacant dwellings then identified amounted to 27.63 per cent of the housing stock.

The number of vacant residential properties in Malta and Gozo in 2005 was equivalent to seven times the size of Birkirkara, which, then, had 7,613 residential units. The number of vacant residential properties in 2011 is estimated to be even larger: nine times the size of 2005 Birkirkara.

This means that today approximately one third of the existing dwellings in Malta are vacant. Additionally, it signifies that expenditure for the development and maintenance of part of the islands’ infrastructure (currently servicing vacant properties) could have been avoided and instead channelled to maintain the infrastructure that services utilised properties. This applies to roads, public sewers and the networks distributing/servicing electricity, water, street lighting and telecommunications.

Millions of euros have been thrown down the drain to keep the construction industry happy.

In view of the above, when the construction industry boasts of its contribution to the gross national product one is justified in being sceptical. When a contribution to the economic development of the country is manifested in such negative results (thousands of vacant dwellings) one starts to question whether the GNP is in reality an adequate means of measurement.

The present crisis facing the construction industry is a unique opportunity for the government to embark on its inevitable and long overdue restructuring. The large number of vacant dwellings is the proverbial writing on the wall that does not require any special deciphering skills. The construction industry should be cut down to size in order to avoid further environmental damage and to channel part of its labour force towards activity of tangible benefit to the economy.

Restructuring will lead to a migration of jobs, especially those that do not require any particular skill. Offering retraining now to the unskilled segment would be an appropriate policy initiative. This would ease the social impacts of restructuring and facilitate the migration from one sector o another.

Now is the time to halt the development of uncommitted land. In particular, the rationalisation exercise of 2006, the relaxation of permissible building heights and penthouse regulations require immediate reversal.

A positive signal was forthcoming from the 2012 Budget through the introduction of incentives for the rehabilitation of village cores and protected buildings.

These incentives were first mentioned when the Rent Reform White Paper was launched in the summer of 2008. Unfortunately, the gestation period of this initiative was of elephantine proportions.

The availability of incentives to encourage the rehabilitation of the historic heritage in towns and villages is not enough. It must be coupled with an increased commitment to train on a continuous basis the required tradesmen and women who need to be at the forefront of this effort. The industrialisation of the construction industry over the years has been the cause of the loss of much skilled labour. It is time to halt the process.

This is the way forward. The economy has been toxically dependent on the construction industry for far too long. I look forward to the time when all this would be history.

A Happy New Year to all.

 

originally published in The Times of Malta – December 31, 2011