While much of the exact workings of the new bank tax being proposed by the European Commission is still unknown, one thing is for certain: if the end proposal that sees the light of day is a one-size-fits-all approach to taxing banks for any sort of contingency fund, Malta should fight it with all the powers at its disposal.

The idea, pitched by EU Internal Market Commissioner Michel Barnier this week, is for EU countries to create national funds, funded by a levy on banks, to reorganise or wind up banks that are failing. The UK and France have already signalled their disapproval, with the UK having warned of a ‘moral hazard’ in that banks could see the fund as a sort of insurance premium that they could fall back on should they begin to face bottom line trouble. Others, such as Germany, have been warmer to the notion.

At any rate, the plans are to be discussed at next month’s European Council, and the Commission hopes to achieve enough consensus from EU leaders with which to push for the fund at the G20 meeting scheduled for the end of the month. Brussels intends having the fund up and running by next year.

But Malta’s position in what is increasingly becoming a heated debate is almost singular. Since the financial crisis, economic meltdown and ensuing global recession took hold in 2008, Maltese banks have, unlike several of their European counterparts, not had to resort to costly government bailouts or rescue measures.

In a recent analysis, the European Central Bank had found Malta’s banking system to be Europe’s most solvent, while the World Economic Forum had listed the country’s banking system as the world’s 10th strongest.

The prudence and conservatism employed by Maltese banks has paid off in stability and in a situation in which they were still able to lend – many times a saving grace for Maltese businesses that have been hard hit by the recession.

The International Monetary Fund forecasts the fund should amount to between two and four per cent of gross domestic product. If each country were to contribute an equally proportionate share, that would entail some €100 million to €200 million being raised from the Maltese banking sector.

Such large payouts by Maltese banks could very well impinge on their ability to keep lending as they have been and lead them to tighten the purse strings. Such a situation could very well end up unravelling the proven successful status quo of the Maltese banking sector.

If, on the other hand, contributions into the fund were to be properly weighed against risk, a viable solution that Malta could be happy with may be found.

A renewable strategy

The government’s strategy for renewable resources needs to be renewed since it currently falls short of the mark, and, along such lines, it would do well to heed a call from the Malta Energy Efficiency and Renewable Energies Association to consult the public before submitting its renewable action plan to the European Commission at the end of June.

On the one hand the authorities, this time in the form of the Malta Resources Authority, has assessed that the country would not be able to meet the Brussels-imposed target of seeing 10 per cent of the country’s energy being produced from renewable resources by 2020. It sees the country hitting the 9.2 per cent mark but also warns it would only do so under a best-case scenario.

On the other, there is a group of private individuals, many of whom are experts in the field but not directly on the government’s payroll, who profess that the country could, after all, not only meet but also actually exceed the target.

One would have thought that the government, in the interest of both an inclusive government as well as pooling the country’s best brains and ideas on the highly technical subject matter, would have already consulted with what is the leading local think tank.

Nor has it replied to call for public consultation with a wide range of society in, as it says, the interest of making the drive toward renewable energy a national project.

True, there is just over a month before the deadline but, in addition to hearing out what non-government experts have to say about the matter, if the government wants the public fully on board its renewable energy drive, it should be instilling a sense of public ownership of the drive by bringing the public on board from the inception of the grand plan.

In a roadmap document that has gone largely unnoticed by the media, the MEEREA points out how, under different scenarios, Malta could reach and exceed the target.

But let us not be led astray. This is not about merely meeting yet another Brussels-mandated target, it is about the future health and prosperity of the country, which are fundamental to the overall quality of life enjoyed in Malta. It is about cutting pollution and reducing the country’s utter dependency on imported fossil fuels, as matters currently stand, and imported energy through the upcoming energy grid linkage to Sicily.

It is about the country becoming more self-sufficient in its energy supply. Malta is not alone here; virtually every country on the planet is facing the same challenge. But here, as in many other areas, smallness means flexibility and agility, but to achieve that, the powers that be also need to become more flexible and agile themselves.

The document also points out how efforts to achieve the 10 per cent renewable threshold could, under a stronger policy scenario than the present one, create 400 jobs by 2015 and up to 600 by 2020.

It does not foster the expectation that Malta would become a manufacturing centre for renewable energy products, but rather that there is good potential that Malta could become a centre of excellence, itself a government catchphrase, for technical support and services, as well as for component assembly for other southern Mediterranean countries.

Given the country’s already excessive power station pollution levels, over which the EU is pursuing action against Malta, the outcry over the possibility of increased pollution from the Delimara power station extension, and the ever-wavering price of oil, it has to be reiterated that renewable energy is clean and, capital expenditure aside, free.

There can be no argument – the more the country integrates renewable energy into its overall energy mix, the more the country stands to benefit, and the government should be pulling out all the stops and pooling all of the country’s best resources to make it happen.