€22 million deficit at MEPA

Figures released by parliamentary secretary for planning Michael Farrugia show MEPA's accumulated deficit spiralling from €3.9 million before the 2008 general election to €22 million at the end of 2012. 

MEPA's deficit continued to grow despite the payment of  €25 million between 2008 and 2012 through annual government subventions. The largest subvention (€7 million) was paid in 2010.

In 2012 the authority's annual deficit amounted to €3.9 million down from €4.2 million the previous year but up from €2.5 million in 2008. The highest annual deficit (€6 million) was registered in 2009.

In 2012 the government's subvention to MEPA was replaced by a new system through which the government paid MEPA €3.3 million for services rendered to the government. 

The deteriorating situation at MEPA coincided with the slump in the property market which led to a drop in planning applications.

In the budget speech for 2010, finance minister Tonio Fenech announced that "a new tariff system will come in place and this will mean that the authority will no longer receive a subvention".

In January 2011, MEPA chairman Austin Walker told MaltaToday in an interview that the new tariff regime was necessary "to eliminate the €6 million paid by the taxpayer to finance MEPA... we had no choice but to increase the tariffs". 

But in 2011, then parliamentary secretary Mario de Marco announced a new system through which MEPA started charging the government for its services.

The government had 'revisited' the concept of a self-sustaining authority, distinguishing between the planning and development side of MEPA which should be self-financed through tariffs; and those other aspects of MEPA's work through which it renders a service to government and consequently is of national interest.

The services rendered by MEPA to the country include most of the work which the Environment Protection Directorate and Forward Planning unit.

Through the new system, the government paid MEPA €3.3 million in 2012. This was  the lowest amount to MEPA since 2008 - down from €4 million in 2011 and €7 million in 2010. In 2012 also saw a slight improvement in its financial situation with the annual deficit decreasing slightly despite the decrease in the government's allocation to MEPA. 

The new government has already announced a reduction in tariffs and has exempted renovation projects in village cores from paying any fees. This would result in a shortfall in revenue if the number of applications remains the same. But the government hopes to make good for this shortfall in revenue by an increase in the number of applications as developers are no longer discouraged by the prohibitive fee structure.