Government ready to fine-tune Mepa tariffs

As various opposition spokesman renewed calls to the government to withdraw the “draconian” development planning fees, Parliamentary Secretary Mario de Marco declared he was ready to fine tune-the legal notice setting the new tariffs. A task force had been set up and was exploring the possibility of introducing the capping concept as well as the exemption of certain fees for local councils and philanthropic and sports organisations.

Speaking immediately after Dr de Marco, opposition spokesman on the infrastructure Leo Brincat challenged him to suspend the legal notice, go back to the drawing board, evaluate the socio-economic impact and take an informed decision without looking only at how much Mepa stood to gain from any increase.

The opposition also suggested that any new tariffs should be referred to the House Standing Committee on Development Planning chaired by the Prime Minister for evaluation because the present ones, it said, did not take into consideration any socio-economic aspect.

During a three-hour debate on a private members’ motion moved by opposition planning spokesman Roderick Galdes asking that the legal notice be rescinded, the House was told that, while the Mepa reform was being discussed in Parliament, the opposition had been given to understand that new tariffs would be socially just. It was also understood that the new fees would be introduced only after extensive study of their impact and consultation with stakeholders.

Mr Galdes said that, instead, the relevant legal notice had been subtly slipped out in mid-July, just before the House summer recess.

With Mepa existing not only to safeguard the environment but also to help with regulating planning and stimulating the national economy, one could only say that the new tariffs were exaggerated. They would impact heavily on the construction industry and end-user families. The reform was intended to offer a better service and quicker action, but Mepa was not there to be a revenue earner, hitting people hard with tariffs. These did not constitute protection of the environment.

Payment of €2,000 for a block of two flats had now soared to €8,000; change of use, €350 to €1,400; construction of block, €8,000 to €21,000; hotel expansion, €37,000 to €135,000. For the man in the street, even a simple compliance certificate for a water or electricity meter cost €60 against the former €11 – and this after installation and meter rental charges had already been raised by Enemalta and Water Services Corporations.

Mr Galdes said these sorts of tariffs would have no impact on environment protection if development was taking place in allowed zones.

No study had been made on incentives for restoration of buildings. Mepa did not use to calculate yards or circulation spaces, but these were now part of the tariffs.

The Prime Minister had said Labour had forgotten about the importance of job creation. But was this not part of job creation too? Instead of helping the creation of employment, Mepa was shooing people away from development through refusal or high costs.

The new tariffs hit development of shops, changes needed to ordinary residences, the self-employed, SMEs, restaurants, take-away kiosks, offices and others. What environmental protection or sense did it make to force a farmer to pay €135 in tariffs to put up a gate to a field?

Even Labour agreed on the principle of payment for services received, but these high tariffs were also meant to subsidise wasteful practices at Mepa. The actual cost of processing an application must be quantified and the people had a right to know where the money was going.

Mepa was set up to help national development. Its service was crucial in this sense, and should not be expected to self-finance completely. The only possible consequence of this would be a slowdown in economic activity, leading to an overall loss at the end of each year.

Mr Galdes said the economy was in no condition to be hit by exaggerated new costs like these. If constructors used to have to be chased for their services, now they were themselves chasing the bigger contractors for work. These new application costs were even more worrisome for first-time property buyers.

Mepa was now also demanding alignment files or surveys, even where there was no need for them. Even architects could not see the sense in them. Where was the government’s social conscience? It was now conveniently using the environment as a revenue earner.

No serious authority could lay claim to enhanced efficiency by simply raising tariffs without any change in the level of service. The Mepa reform had been meant to enhance its efficiency.

Concluding, Mr Galdes called on the government to withdraw the new tariffs and seriously discuss new ones with all stakeholders. The opposition was not asking for the old tariffs back, but it would contribute to an equitable outcome just as it had done with the Mepa Reform Bill.

Joe Falzon (PN) said it was true that tariffs had increased but it was false to say that all the tariffs had become more expensive. The motion was also claiming perceived social injustices and projecting Mepa as an inefficient authority.

In reality development permit fees for first-time buyers had decreased drastically. The new tariff for a one-bedroom apartment had decreased from €163 to €55.80, that for a two-bedroom apartment from €163 to €96 and the fee for a three-bedroom flat from €163 to €119.

He said that the fees incorporated not only the application’s processing fees but also the pressure impinged on the infrastructural structures.

The legal notice was covering the amount previously covered by subsidies. Moreover the amount employed by the enforcement section to do its job and fine illegal development was also being covered by these new fees.

He said that this was a concept the opposition should uphold once they agreed with the “polluter pays” principle. Previously, development permit applications cost €23.29 and the opposition failed to acknowledge that this was a ridiculous amount and one which could not sustain the technical and professional input needed by Mepa personnel to do their job properly.

Concluding, Mr Falzon asked the opposition if it preferred the developer to pay for the use of the environment, or else if it wanted to shift the burden of tariffs on the ordinary taxpayer.

Opposition spokesman on the infrastructure Charles Buhagiar said Mepa last reviewed its fees in 2000 and not in 1993.

While Mr Falzon said that Mepa switched to charging fees according to square meters, Mr Buhagiar said that it was now considering both roofed and open areas.

As an example, he said that the development permit fee for the proposed Corporate Village, which would include 130,000 square metres of offices, would cost €2.6 million without considering open areas.

Mepa was already suffering from problems of bureaucracy and these tariffs exacerbated such problems. These tariffs would hit the local councils hard and they would either ask for more government funds or incur expenses themselves at the risk of cutting down on other projects.

People who wanted to convert two washrooms into a penthouse had to pay a higher fee while paying for a new demolition fee.

Concluding, Mr Buhagiar said these tariffs would put the brakes on Maltese development. The legal notice should be suspended and any new tariffs should be referred to the House Standing Committee on Development Planning.

Parliamentary Secretary Mario de Marco said that everyone agreed that Mepa should be self sustaining.

Mepa tariffs had last been reviewed 18 years ago and did not reflect today’s reality. During these years, the average wage increased from €140 to €305 a week. During the last 10 years apartments cost 62 per cent more, maisonettes 73 per cent more and terraced houses increased by 108 per cent.

All operators in the construction industry had revised their rates. Why should this not apply to Mepa as well? he asked.

Up to 2009, the government subvention to Mepa was €71 million to cover its operational costs when this money could have been invested in national projects. Why should Mepa operations be subsidised by the common citizen?

Dr de Marco listed the different stages involved in processing a building application and also Mepa’s responsibilities. Every year it processed 5,000 applications. Up to September the number of applications increased by 700 when compared to the same period last year. Up to September 4,600 applications had been filed at Mepa. Development notification orders (DNOs) increased from 847in 2009 (first nine months) to 2065 in 2010.

The tariffs had been established as per unit. This had now been reviewed and rates would be paid according to the area of each unit. Weighting had been skewed in favour of apartments and against villas or bungalows.

The development permit fee (dpf) for an apartment of an area of 141 metres increased by only seven per cent from €163 to €172. Most apartments were of a smaller size with the fee for a 78-square-metre apartment decreasing from €163 to €96. Increases for maisonettes were marginal but the dpf for a villa increased from €2,329 to €3,360.

Low rates were still to be paid for boathouses and greenhouses. The dpf for a garage of 50 square metres increased from €139 to €297. However, an average garage had a space of 15 square metres. In this case the permit would cost €112. Alternations would now cost €150 from the previous €35.These tariffs would surely not damage the construction industry.

Dr de Marco insisted that Mepa’s non-core functions should be transferred to the relevant authorities. This included the section dealing with transport, which he said should form part of the Transport Authority. A leaner and more efficient Mepa would cost less.

Saying that the new tariffs were fair and acceptable, he declared that he was ready to fine-tune the legal notice. A task force had been set up and was exploring the introduction of the capping concept and also exemption of certain fees for philanthropic and sports organisations and local councils.

Winding up the debate, Opposition spokesman on the environment Leo Brincat said that if the government was serious it would have collected taxes from those polluters who were first fined €4.5 million for throwing construction waste into the sea and then had their fine slashed by more than 73 per cent or €3.3 million.

It did not make sense for the government to say that the increase in Mepa tariffs were justified as these had never changed since the authority’s inception in 1993. Except for a 22-month stint, there were always PN administrations and they should have made any necessary increases gradually keeping in mind the socio-economic impact.

He said the PL was not against adjusting those tariffs which did not reflect today’s realities but it objected to the majority of the increases laid down in the Legal notice, which, he said, were imposed in the most cruel and insensitive manner. It went against all social justice that the tariff for a simple alteration increased by 500 per cent.

The hefty increase of 500 per cent in the application fee was killing all incentives for restoration works. He said the 207 per cent increase in the tariff for compliance certificates would hit hard first-time buyers.

This revision of tariffs should have had good policy backing.

Mr Brincat said that, faced with this situation, the government did not have any alternative but to withdraw the legal notice, go back to the drawing board, evaluate the socio-economic impact and take an informed decision without looking only at projected increase in revenue.