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Tackling capital spending inefficiencies

The promise to ‘turn manure into gold’ is still missing Midas’s touch as a project announced in 2007 to relocate cattle farms to Siġġiewi and turn farm waste into fertiliser has still not materialised seven years after it was announced.

The promise to ‘turn manure into gold’ is still missing Midas’s touch as a project announced in 2007 to relocate cattle farms to Siġġiewi and turn farm waste into fertiliser has still not materialised seven years after it was announced.

Public spending is a hard act to carry out, especially on the capital side. Such discretionary capital spend­ing has an important macro-economic role through its impact on the performance of the economy.

Public investment is also of key importance through its effect on economic growth. For both reasons it is to be apportioned wisely, and to be implemented as efficiently as could be.

That is not always the case. Wisdom sometimes gives way to a desire for political impact, which not infrequently breeds white elephants. The new House of Representatives building at the Valletta entrance is a strident case in point.

It is lacking in terms of utility and a failure in terms of efficiency. Much had been made of the fact that former Minister Austin Gatt was in charge of the project. He was a doer and grimly undertook to deliver the project in time and within budget.

The promise failed on both counts. The cost of the project overrun its budget and it has not been completed on time. As the Auditor General has remarked more than once, that is the bane of public sector projects. They overrun both in completion time and in relation to their budget.

This is a grave shortcoming that needs to be remedied, one which the current administration has to learn from. It implies excessive spending and slower return than forecast. In its Monday issue (April 28) this newspaper gave details of another project which is frightening as well as disgusting. In 2007, the government came out with a well-intended project which, had it materialised successfully, would have made strong contributions on several fronts, in particular the environment. The plan was to relocate 17 cattle farms which were located in an improper environment, in urban and historical sites in an area known as Tal-Kaboċċi in Siġġiewi.

The idea was to relocate the farms through an expenditure of €11.6 million to be put up by the government, with the help of EU funds, and a contribution by the farmers themselves.

A manure treatment facility was also to be developed to cater for the disposal, storage and treatment of manure from the same farms. The plant was to serve as a central depot for farm waste to be used to develop fertiliser and bio mass energy. The political catchphrase at the time was turning manure into gold. It was also expected that the project would generate enough energy to supply 370 households.

The project did not get off the ground as planned – or at all in fact. Though it was announced in 2007, three years later it was reported to be in the “initial” stages.

Wisdom sometimes gives way to desire for political impact, which not infrequently breeds white elephants

The project was dogged by negatives all the way, both in terms of its alternative location as well as in terms of its feasibility. It turned out that the government had spoken without having proper details of what it was saying in that pre-election year.

Three different international consultants, the Times of Malta report said, expressed concerns about risks involved within the treatment facilities chosen by the former administration due to the fact that the technology was untested.

More concerns were raised regarding the lack of a proper feasibility study, risk assessment and the availability of reference projects related to proposed processes.

Furthermore the experts felt that operating costs would exceed the government’s estimates.

It also materialised that no environmental impact assessment had been made, given doubts over the site to be chosen. Seven years on, the project remains on paper.

The current administration says it is keeping its options open. But I rather suspect that it will not step into the political manure spread out by the previous administration.

Meanwhile lack of facilities for farm waste treatment remain. Waste either gets dumped into the sewage network, leading to messy overflows, or is used to “water” agricultural areas to boost yields, irrespective of the effect on consumers of the tainted farm products.

I doubt that there are many examples similar to this wasteful waste project. But its black and smelly history is enough to spur further action by the government.

Every project should have a serious timeline, to be monitored by a professional unit housed at the National Audit Office.

Project leaders should be held accountable. They should be rewarded if projects are completed properly and on time. They should be “punished” if they do not deliver, such as by being taken off such work – though they must not be transferredbefore they receive proper retraining. Otherwise they would simply deploy their inefficiencies elsewhere.

Public capital spending has to be reviewed. Enough professional resources should be made available to the Ministry of Finance and to the National Audit Office to ensure that efficient planning and execution become the order of the day, rather than just an exception.

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