Report on Local Democracy Malta - CPL (9) 7 Part II

Rapporteur: Mr René PAAS (The Netherlands)

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EXPLANATORY MEMORANDUM

I INTRODUCTION

1. Since 1994, the Congress has been conducting a systematic program of investigations into the state of local democracy in member states of the Council of Europe. So far, 29 countries have been investigated.1 In all cases, the investigation is conducted by a team led by a rapporteur appointed by the Institutional Committee of the Congress or of a Chamber. The report of the investigation is placed before a Congress Plenary Session or a Chamber and on this basis a Recommendation to the national authorities concerned is adopted. The investigation is conducted and the report and recommendation are formulated in the light of the principles and standards established by the European Charter of Local Self-Government of 1985.

2. On 2 October 2001, the Institutional Committee appointed Mr. Toomas Välimäe (Chamber of Local Authorities, Estonia) as the Congress rapporteur to conduct an investigation and to prepare a report on local democracy in Malta. Later in the spring of 2002, however, Mr. Välimäe was not confirmed as a member of the Estonian delegation to the Congress. Mr. René Paas (Chamber of Local Authorities, Netherlands) was appointed as Rapporteur on local democracy in Malta instead of him.

3. In order to fulfil his task, the rapporteur has been assisted by Prof. Eivind Smith (Norway, Member of the Group of Independent Experts on the European Charter of Local Self-Government), Expert, and by Mr. Riccardo Priore (Council of Europe Secretariat).

4. On 1–2 March 2002, a Council of Europe-CLRAE Delegation formed by the rapporteur, the expert and the representative of the Council of Europe Secretariat visited Malta. The programme of this visit is presented in Appendix 1.

5. Further to the visit, the Expert prepared a preliminary text on the situation of local democracy in co-operation with the Secretariat. The text was based on official legal documents provided by the Maltese authorities and also reflects the discussions held during the first visit.

6. Under the responsibility of the Rapporteur, the preliminary text was submitted to the Maltese authorities to be discussed during the second official visit of the Council of Europe-CLRAE Delegation to Malta on 1-2 July 2002, a visit in which Mr. Paas, Prof. Smith and Mr. Priore took part. The program of this visit is presented in Appendix 2.


7. Further to the second visit the rapporteur, assisted by the expert and the Secretariat, prepared a draft Report and a preliminary draft recommendation. These texts were submitted to the Institutional committee of the Chamber of Local Authorities for approval on 30 September 2002. On this basis, on 14 November 2002 (Mini-Session) the Congress was invited to adopt a Recommendation and address it to the Maltese Authorities as well as to the Committee of Ministers and the Parliamentary Assembly of the Council of Europe. Copies of these texts were forwarded to the competent European Union Authorities.

II BACKGROND INFORMATION: TERRITORIAL ORGANISATION

After more than 150 years of British colonial rule including a short period of elected local administration under British sovereignty, Malta achieved its independence under the Constitution of 1964. Ten years later (1974), the present Republic of Malta was established. Maltese and English are the official languages of Malta and the Administration may for all official purposes use either of these languages (Article 5 (2) of the Constitution).

9. The territory of the Republic is 316 square kilometres. It consists mainly of the islands of Malta and Gozo, the former being by far the most populated. The number of inhabitants is 395.000. 91 % of the population belongs to the Roman Catholic apostolic faith, which is the official religion of Malta (Article 2 of the Constitution). The purchasing power parity in the year 2000 is estimated at $14,300.

10. By the size of its territory and the number of inhabitants, the Republic of Malta counts among the smallest member states of the Council of Europe. It is however the most densely populated country in Europe (1211 persons per sq. kilometre). These facts are important for understanding the situation of local and regional democracy in Malta.

11. According to the Constitution, Malta is a unitary state where no federal structure has been established. Moreover, there is no system of self-government at regional level. The only element of self-government below the level of the Republic itself is the system of local councils.

12. Until 1993, no local councils were established in Malta. Following the adoption of the Local Councils Act that year, 67 local councils were established. The number later increased to the present level (68) by the creation of a new Council (Mtarfa). The average population of a Maltese locality is less than 6.000, the biggest having some 20.000 inhabitants, the smallest some 400 inhabitants.

Some Councils have one or more hamlets distinct from the main town or village itself. Councils with listed hamlets are under obligation to set up specific committees, allocate specific funds and hold annual locality meetings for each hamlet.

13. In 2002, local councils have still been operating for less than 10 years. Together with the unitary character and the size of the Republic of Malta (see above), the relatively young age of the system of local government in Malta is fundamental for understanding the state of the system. The present situation should best be understood as the result of a deliberate move towards the establishment of local councils as a permanent part of the governmental structure of Malta.

III THE LEGAL BASIS OF LOCAL SELF-GOVERNMENT IN MALTA

14. The Local Councils Act was adopted in 1993. Subsequent to its adoption, the present system of local councils was set up under the Second Schedule of the Act. The Local Councils Act is still in force, but has been amended on three occasions up to 2002. The Act is by far the most important legal document regarding the situation of local self-government in Malta and offers the single most important basis for further remarks on Malta's compliance with the principles and standards established by the European Charter of Local Self-Government.

15. By virtue of a constitutional amendment in 2001 adding a new Chapter XA to the Constitution, the system of local councils is now entrenched in the Constitution in the following way (Article 115A):

“The State shall adopt a system of local government whereby the territory of Malta shall be divided into such number of localities as may by law from time to time determined, each locality to be administered by a Local Council elected by the residents of the locality and established and operating in term of such law as may from time to time be in force.”

16. Following the adoption of the Local Councils Act, the Cabinet, on 12 July 1993, decided to sign and later ratify the Charter of Local Self-Government of 1985. The signature took place on 13 July 1993 and the Charter was ratified on 6 September of the same year.

17. According to the deposed instruments, Malta declared itself to be bound by Article 2, Article 3, paragraphs 1-2, Article 4, paragraphs 1-6, Article 5, Article 6, paragraphs 1-2, Article 7, paragraphs 1 and 3, Article 8, paragraphs 1-3, Article 9, paragraphs 1, 2, 7 and 8, Article 10, paragraphs 1-3 and Article 11 of the Charter of Local Self-Government (see Article 12 of the Charter). From a strictly legal point of view the monitoring process should be limited to the compliance or not of these parts of the Charter.

At the same time, however, the rapporteur is asked to study the state of local democracy seen in the light not only of particular provisions of the European Charter of Local Self-Government, but also of the more general principles and standards established by the Charter. This task is not only of a legal but also of a more open, political character. By consequence, the present report will take the entirety of the provisions of the Charter into account as far as needed for carrying out the task of comprehensively monitoring local democracy in Malta.

IV ON THE COMPLIANCE WITH THE EUROPEAN CHARTER OF LOCAL SELF-GOVERNMENT

18. Neither the text of the Constitution nor that of the Maltese Local Councils Act explicitly recognise the principle of local self-government as laid down by Article 3 of the Charter in the way required by Article 2 of the Charter. Article 115A of the Constitution simply states that there shall be a system of local government in which each locality is administered by a Local Council elected by the residents of the locality. The Local Councils Act is not more explicit at this point.

It has been explained, however, that under the historical context of the Republic of Malta the term “self-government” is easily read as a reference to “home rule” under the British Empire. Moreover, the Constitution explicitly states that each locality shall be "administered by a Local Council elected by the residents of the locality", and it clearly provides that local councils shall operate “in terms of such laws as may from time to time be in force”. The first of these elements is likely to be understood as a reference to "local self-government" through elected representatives, whereas the second is well in accordance with the principle laid down in Articles 3 (1) and 4 of the Charter according to which the powers with which local authorities are endowed are exercised within the limits laid down by law.

Altogether there are hardly grounds to assert that Article 2 of the Charter is violated by the present state of Maltese law.

19. Under Article 3 (1) of the Charter, local authorities shall have the right and ability to regulate and manage, within the limits of the law (see above), a substantial share of public affairs. According to the Explanatory report, the “intention of the Charter is that local authorities should have a broad range of responsibilities which are capable of being carried out at local level”. But the term “substantial” is not further defined in the text of the Charter.

The Explanatory report further refers to the “definition of these responsibilities” in Article 4 of the Charter. By consequent we will revert to these questions below.

20. Under Article 3 (2) of the Charter the right of local authorities shall be exercised by councils freely elected by secret ballot on the basis of direct, equal and universal suffrage. According to Article 115A of the Constitution, each locality shall be “administered by a Local Council elected by the residents of the locality”. Norms on the constitution of Councils are laid down in Part II of the Local Councils Act, supplemented by the Regulations on elections enshrined in the Third Schedule under the Act.

As far as is known to the Council of Europe-CLRAE Delegation, it has not been argued that the criterion “freely elected by secret ballot on the basis of direct, equal, universal suffrage” is not met by the electoral system established in this way. More importantly, we see no reason to believe that this system is insufficient in this respect.

21. According to Article 3 (2) of the Charter, local councils may possess executive organs responsible to them. Under Part III of the Local Councils Act, the Mayor may be considered the prime “executive organ” of the relevant local council (see namely Articles 26 and 27 of the Act). The Mayor and the Deputy Mayor are both elected by the Council among its own members (Article 25 of the Act). The Mayor and the Deputy Mayor shall cease to hold their office upon a vote of no confidence delivered by an absolute majority of the Councillors in office (Article 29 of the Act). As a consequence, there is no doubt that the responsibility criterion is satisfied.

The office of Executive Secretary of a local council might require further scrutiny as to its compliance with the latter requirement. But this office is probably better understood as a part of the administrative structures of local councils addressed by Article 6 of the Charter, see below.

22. Under Article 4 (1) of the Charter, the basic powers and responsibilities of local authorities shall be prescribed by constitution or by statute. Whereas the Constitution of Malta does not address this issue, the Local Councils Act contains quite detailed provisions on the powers and responsibilities of local councils. As a matter of fact, Article 33 of the Act provides a complete list of the functions of local councils, the original list having been amended in 1999 in order to extend the competencies of the councils. These provisions correspond well with the part of Article 4 (1) of the Charter that states that “the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law” is not excluded.

23. As a point of departure, the functions devolved to local councils are the same for every council. Article 33 (a)-(l) of the Local Councils Act are shaped accordingly. At the same time due attention should be paid to the fact that the localities are different in size and corresponding administrative resources (a pattern that, of course, is not peculiar for Malta). For that reason, complete equality between localities when it comes to tasks to be accomplished may create problems if the functions endowed are too big or complicated for the smallest ones.

24. According to this observation, Article 33 (m) and (n) of the Act opens up for a diversified approach to the definition of the functions of each local council. Each of them have a different and specific purpose.

The power of each council under Article 33 (m) to enter into agreement with any public body or government department for the delegation to the council of any of the functions of that body or department, subject to the publication of the relevant ministerial order in the official Gazette, is used for ‘ad hoc’ purposes, i.e. for a specific case (locality). Examples include Legal Notice 61 of 2000 on the delegation of the administration of the Council of Europe Gardens Gzira to the Local Council of Gzira.

25. Article 33 (n) of the Local Councils Act authorises the Government through a Minister to delegate powers to a council by means of orders published in the official Gazette. Article 33 (n) is used by general application to all Local Councils and can, as a matter of principle, be used unilaterally without the consent of the relevant council. In practice, it seems as if orders under this provision are issued solely according to previous agreement between the Local Councils Association and the relevant Authority and that the individual council has undisputed freedom not to join. For instance, six Councils have still decided not to take upon them the tasks of local enforcement introduced in 2000.

Even if the practice seems to be in compliance with the Charter, it might be worthwhile considering amending the law in order explicitly to codify the system of consultation or agreement before unilateral orders are issued that are already followed (see also below on Article 4 (6) of the Charter).

26. Under Article 4 (2) of the Charter, local authorities shall have full discretion, within the limits of the law, to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority. Article 33 (o) of the Local Councils Act explicitly states that it is within the functions of each local council to provide for all such other works, things, matters and services [than those dealt with in Article 33 (a)-(n)] which are not excluded from a Council's competence by any law for the time being in force nor assigned to any other authority. This provision fully complies with the requirement of the Charter.

27. Article 4 (3) of the Charter lays down the principle according to which public responsibilities shall generally be exercised, in preference, by those authorities, which are closest to the citizen (the so-called subsidiarity principle). The question of knowing whether this requirement is met by the present system of local councils in Malta should be approached in connection with the requirement under Article 3 (1) of the Charter that local authorities have the right to regulate and manage a “substantial share of public affairs” (see above).

So far, the local councils have been endowed with functions in a progressive but quite cautious manner. Many of the steps are rather small. Even put together, they are hardly impressive neither in number nor in importance when compared to the state of local self-government in a number of other states members of the Charter.

The method followed at this point must be understood in the light of the young age of the system of local self-government in Malta (see above). In itself, the method could not be criticised. On the contrary, the path followed so far seems to fit well into a deliberate strategy of a step-by-step development of the system.

However, in order to fully comply with the European Charter of Local Self-Government in the future, it is important that the progressive development be steadily continued towards a situation where the functions of local councils as part of the total public administration is more important than it is today.

28. Another way of measuring the relative importance of the part of public affairs regulated and managed by the local councils, is to recur to financial terms, in other words: to Local Council spending as compared to Central Government spending in Malta.

Data provided by the relevant Maltese Ministry are extracted from the Local Councils Audit Report as well as from the Annual Administrative Report, both of which are open to public viewing. They show the following percentages of Local Council spending as compared to Central Government spending: 1995: 2.2, 1996: 2.2, 1997: 1.8, 1998: 1.7, 1999: 1.7, 2000: 2.3. These figures make it evident that this part remains small in comparison with the part spent by local self-government in most of the other member states of the Charter. They also highlight the fact that no evident tendency of improvement has manifested itself during the period upon which data have been available.

In this way, the point of concern as to the qualitative aspect of the share of public spending that has already been expressed, is confirmed or even reinforced. By consequence, it is open to serious doubt whether the present system of local self-government in Malta complies with the requirement under Article 3 (1) of the Charter that local authorities have the right to regulate and manage a “substantial share of public affairs”.

29. Under Article 4 (4) of the Charter, powers given to local authorities shall normally be full and exclusive and powers given to other authorities to limit that freedom must be provided by law. As far as is known to the Council of Europe-CLRAE Delegation, the legislation in force at the moment could at no point be said to infringe upon this requirement.

30. Under Article 4 (5) of the Charter, local authorities shall, insofar as possible, be allowed discretion in adapting the exercise of delegated powers to local conditions. At this point as well, the Council of Europe-CLRAE Delegation sees no reason to believe that the present law of Malta violates the Charter‘s requirement.

31. Under Article 4 (6) local authorities shall be consulted in the planning and decision-making processes for all matters which concern them directly. Besides, other pieces of principal and subsidiary legislation establishes particular systems of co-decision and/or consultation. Some directly concern each relevant Council, others are indirect in the sense of giving the Local Councils Association a privileged position as representative of Local Councils in a number of ad hoc administrative and operational Committees or as the principal interlocutor of central government Authorities regarding questions of general interest for the sector. The relevant Ministry has provided information about rules and mechanisms in existence in Malta in this field. The list is impressive.

Nevertheless, a number of critical observations as to the attitude of some central agencies towards Local Councils on matters by which they are directly concerned were expressed during the second visit of the Council of Europe-CLRAE Delegation. Detailed scrutiny of examples submitted falls outside the scope of the Monitoring Report. The delegation is left, however, with the clear impression that there may be need for further improving the system and practices of consultation and co-operation between central and local Authorities in Malta.

At some points, improvements should probably be sought through legal means, including legislative amendments in order to codify existing practices, introduce new mechanisms for consultations ex ante or clarify which forms of "consultation", "co-decision" etc. are actually envisaged. But improvements should perhaps be sought first of all by favouring an even better understanding of the particular role as interlocutors and citizen's representatives that Local Councils should play in the overall running of the public sector.

32. Under Article 5 of the Charter, changes in the boundaries of local councils shall not be made without prior consultation of the communities concerned. In Malta, the law provides that changes in the boundaries of localities shall be made only in exceptional circumstances and only by the Electoral Commission. The right of Local Councils to be consulted prior to any changes in the boundaries is explicitly provided for by Article 3 (3) of the Local Councils Act.

33. Under Article 6 (1) of the Charter, local authorities shall be able to determine their own internal administrative structure in order to adapt them to local needs and ensure effective management, without prejudice to more general statutory provisions. In the context of Malta, this provision gives rise to two series of questions. One concerns the office of Executive Secretary (see also above on Article 3 (1) of the Charter), another the present regulations on the size of the administrative staff of each council.

34. As to the Executive Secretaries, it should first be mentioned that Article 49 (1) of the Local Councils Act makes it an obligation for each Council to appoint an Executive Secretary. Such an obligation is not in itself in breach of the Charter, which clearly states that more general statutory provisions may apply. As a matter of fact, comparable provisions are not uncommon in other member states, aiming among other things to ensure some permanency in the running of the local council and to maintain some distinction between "political" functions (to be carried out by the Council and the Mayor) and "administrative" functions (meant primarily to be carried out by the Executive Secretary).

The obligation of local councils under Article 49 (1) of the Local Councils Act to consult the relevant Minister before an Executive Secretary is appointed might give rise to more concern. This consultation process should never be understood as approval by the Minister concerned. With this in mind, provided that the Local Council is not legally bound by the advice given by the Minister, this obligation is unlikely to constitute a violation of the Charter. But the appreciation at this point might of course be different should the practice appear to differ substantially from the law at the latter point.

Even Article 53 (3) of the Local Councils Act may give rise to some concern insofar as it submits the removal, suspension etc. of an Executive Secretary and of holders of some other municipal offices to approval by the Minister. But the scope of this provision is very limited quite simply because in no way hampering the right of the Council not to renew the appointment of its Executive Secretary once the three year contract has come to an end. Moreover, the evaluation should take into account the link between this provision and the requirements regarding the recruitment of high-quality staff laid down by Article 6 (2) of the Charter (see further below).

35. The second series of questions to which in accordance with disposition of Maltese law with the requirements of Article 6 (1) of the Charter gives rise concerns the limitation on the number of municipal employees. Under Article 53 (1) of the Local Councils Act a Council may not employ more than one person per two thousand five hundred residents. However reasonable such limitations may be under financial and other perspectives, they give grounds for concern when seen in combination with the right of local councils to undertake activities not prescribed by law (Article 4 (2) of the Charter) and their right to adapt the exercise of functions to local conditions (Article 4 (5) of the Charter).

This appreciation must be tempered, however, by the right of Local Councils to have recourse to services of any appropriate (including clerical) character by contract. It seems as if the possibility of contracting in services including "employees" by ordinary contract is the most often used by a number of Local Councils.

Even if par capita limitations on the right of Local Councils to have municipal employees limits their right under Article 6 (1) of the Charter to determine their own internal administrative structure, their global possibility of adapting the total work-force to local needs do not seem to be seriously hampered.

36. Under Article 6 (2) of the Charter, the conditions of service of local government employees shall meet with certain standards including the need of recruiting high quality staff and adequate career opportunities.

The young age of the system of local self-government in Malta and the very small size of many localities may offer some grounds for concern in such respects. This is probably why provisions like those in Article 53 (3) of the Local Councils Act on the need of ministerial approval for removal from office in the course of the three years contract, etc. of certain municipal employees (see above) could be found compatible with the requirements of the Charter, at least when seen as an intermediate arrangement for facilitating the establishment of a system of well-staffed local councils in Malta under the step-by-step approach followed so far.

On the other hand, training opportunities for (prospective) members of Local Council staffs seem to be provided for by Central Government only to a most limited degree, a situation that differs precisely from what we could expect due to the young age of the system and the small size of many localities (see above). The needs at this point seems to merit further attention from the relevant Maltese authorities.

Concern has also been expressed by the Local Councils Executive Secretaries Association as to the possibility of Local Councils to recruit Executive Secretaries (see above) on the grounds that their conditions of service are inadequate for the recruitment of high-quality staff. As previously indicated, Executive Secretary is employed on the basis of a three-year contract. The relevant Local Council is not bound to give grounds for non-renewal, and most of the acting Executive Secretaries have no retreat position in the National Civil Service. In a given context, this makes their employment conditions vulnerable in a system where alternative career opportunities in the Local Councils sector are most limited. It may therefore be advisable in permanence to consider if the task of ensuring recruitment of qualified persons to positions as Executive Secretary of Local Councils is best served with the present balance between the more or less complete freedom of Councils not to renew the relatively short-term contracts of employment and the wish of making such positions sufficiently attractive.

37. According to Article 7 (1) of the Charter, the conditions of office of local elected representatives shall provide for free exercise of their functions. A first series of questions that has been raised by reference to this provision concerns the position of the Mayor and the Council as a whole towards other local authorities like the village priest. In this respect, the Local Councils Association considered that although it seems as if no legal barrier exists for the free exercise of functions by local elected representatives, the national protocol policy fails to include mayors and thus ensuring a more prominent position for the mayor as the representative of the local community. The Council of Europe-CLRAE Delegation has no sufficient grounds to bring judgment on such issues.

The second series of questions concerns material conditions for local representatives like financial compensation for work. According to Article 32 (1) of the Local Councils Act, the Council has a duty to pay the Mayor (or persons acting in that office) such allowance as the Council considers reasonable, but not more than 33 per cent of the honorarium payable to National MPs. (In 2002, the approximate maximum allowance for a Mayor is Lm 2080.) Under Article 32 (2) of the Local Councils Act, local councillors serve on a voluntary basis only and shall be afforded all such assistance by their employers to allow them to carry out their functions. It has been argued by the Local Councils Association that such assistance is only given in the public sector or companies where the government has a majority stake. Moreover, even in such instances the procedure appears to be too bureaucratic in its application and thus mayors claim that this system is a financial burden to them.

The legal limits for the right of Local Councils to pay allowances to the Mayor and to other members of the Council are rather strict and clearly may limit the practical possibility of the person concerned to devote him or herself fully to the accomplishment of municipal tasks. But they are not in themselves likely to reduce the free exercise of elective function at local level.

Moreover, it has been argued that the voluntary basis for local elective offices must be understood in the light of the working conditions for Maltese elected representatives as a whole (with a few exceptions like Cabinet members); for instance, even membership of the Parliament of Malta is conceived as a part-time function and paid in correspondence. The system should also be seen in the light of the seemingly prevalent idea of maintaining some distinction between "political" functions to be carried out by the Council and the Mayor and "administrative" functions meant primarily to be carried out by the Executive Secretary (see also above on Article 6 (1) of the Charter). According to this line of reasoning, substantially increased allowances to (in particular) Mayors might lead to the frustration of this distinction by opening up for a much more active role in the day-to-day running of the council than was envisaged when the system was established.

According to Article 32 (2) of the Local Councils Act, employers of local councillors shall afford to them all such assistance as is reasonable to allow them to carry out their functions within the Council. To a certain extent, this provision has been reinforced by Government statements and circulars. The overall impression is nevertheless that Maltese law does not occupy itself much with the possibility for local elected representatives to exercise their functions freely from third parties such as employers by providing them with reasonable rights to accomplish Council charges during ordinary work-time, and so on. But few if any explicit complaints as to the practical consequences of the state of this law were expressed during the second visit of the Council of Europe-CLRAE Delegation to Malta.

38. According to Article 7 (2) of the Charter, the conditions of office of local elected representatives shall allow for financial compensation for expenses, lost earnings, etc. The Local Councils (Financial) Regulations (Regulation 27) as well as the (Financial) Procedures, 1996, Section P1.12, Expense Claims, provide for compensation for expenses like "travelling, subsistence, accommodation and other costs incurred which are of a non-routine nature" for Councillors. On the other hand, nothing is foreseen as to compensation of lost earnings. At this point, it is at least doubtful that Malta fully complies with the Charter.

39. Under Article 7 (3) of the Charter, any functions deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles. The provisions enshrined in Articles 18-20 of the Local Councils Act seems to take very good care of this concern.

40. Under Article 8 of the Charter, administrative supervision of local authorities may only be exercised according to provisions in the Constitution or in statutory law, shall normally aim only at ensuring the compliance with the law and be exercised in a way in which the intervention of the controlling authority is kept in proportion to the interests protected.

Under Maltese law, accounting control is mainly carried out under the responsibility of the Auditor General, an officer of the House of Representatives acting independently from the executive branch of government under Article 108 of the Constitution. Under Article 65 of the Local Councils Act, the Auditor General appoints a local government auditor to audit the accounts of each Local Council. The report on each financial year is submitted to the Auditor General, who forwards copies to the relevant Minister, the Minister of finance and the respective Council.

As a matter of principle, the auditing process is limited to the compliance of Local Councils with the financial regulations existing from time to time. The same goes for the report presented to Parliament. Neither by law nor in practice, the system seems to give rise to concern when it comes to the compliance with Article 8 of the Charter.

Even the Parliament‘s Public Accounts Committee receives copies through the relevant Minister. The Auditor General‘s main report is discussed in this Committee, which is free to hear representatives of Local Councils and to adopt recommendations as to future measures to be taken.

41. From time to time, the Auditor General presents observations on the accounts of certain Local Councils to the relevant Minister, who also monitors the Councils in other ways, i.e. by receiving the minutes of Council meetings for scrutiny. When the Minister finds sufficient grounds to do so, he sends observations to the relevant Council as to alleged violations of the law and other forms of malpractice, trying to convince the Council to follow his advice. Under amendments to Article 55 of the Local Councils Act (2002), he is empowered to sanction at Local Council by retaining sums not exceeding 1 % of the financial allocation to that Council for the relevant year. Sanctions may only apply against violations of a few, precisely defined provisions in the Act, and if the relevant Council disagrees, it is free to appeal against the sanction in Court (see below).

The general impression is that the system for administrative monitoring (including accounting control) of Local Council system is relatively tight in Malta. But the system seems to focus on the compliance with legal prescriptions, not on more global value for money or expediency issues. It does not seem that any of the procedures foreseen violates the provisions laid down by Article 8 of the Charter.

42. Under Article 9 (1) of the Charter, local authorities shall be entitled to adequate financial resources of their own, which they may dispose of freely within the framework of their powers. According to the Explanatory report, the provision seeks to ensure that local authorities are not deprived of their freedom to determine expenditure priorities.

Allocations to Local Councils are given as a lump sum, thus giving them a certain freedom to prioritise between their different responsibilities. In practice, each Local Council prepares a yearly 3-year Business Plan as well as an annual Budget by and in which they prioritise their recurrent and capital expenditure. The fact that the responsibilities of the councils under Article 33 (a)-(n) of the Local Councils Act are indicated in a rather detailed manner does not seem to limit this freedom in any real sense.

Problems regarding the appropriateness of offices and other facilities put at the disposal of some local councils seem to exist. But the situation seems to gradually improve, and the Council of Europe-CLRAE Delegation sees no sufficient reason to occupy itself further with this part of the material situation of Local Councils in Malta.

43. Under Article 9 (2) of the Charter, the financial resources of local councils shall be equal to their responsibilities. This is a crucial point in discussions of the relationship between National law and the Charter in most of the member states.

In Malta, by far the most important part of the resources of Local Councils come from central government allocations under Article 55 and the more detailed provisions laid down in the tenth Schedule of the Local Councils Act. Originally the formula for allocating funds to Councils was based on a locality’s population and surface area. However, in 1999, a new funding formula was introduced in order to better reflect the financial needs of each locality. This is based on the cost of all the individual services contracts, falling under the responsibility of Local Councils and the administration costs of each Council. In short, the present mechanism is built upon work measurement studies for every particular task included in the specific function and yearly inventories of each Council’s assets.

The Council of Europe-CLRAE Delegation has no possibility of objectively verifying whether the affirmed aim of the funding system, i.e. ensuring that Councils are fully funded and in a position to effectively discharge all the responsibilities transferred to them from central government, is effectively achieved. In particular – and in the absence of available data at this point – the Delegation has no possibility to, independently of the parties, establish whether the funding system gives reasonable freedom for Local Councils to take up tasks other than those delegated to them or being mandatory by law. As a matter of fact, Article 9 (2) of the Charter must be read in connection with Article 9 (1) (see above). This paragraph of the Charter requires that not only resources sufficient for covering mandatory expenses are allocated to Local Councils but even expenses arising from use of the freedom of Local Councils to provide for other works, matters and services. (see under Article 33 (o) of the Local Councils Act and also Article 4 (2) of the Charter).

In this respect, it is interesting to note however, that during its second visit to Malta possible problems at this point were not among those previously highlighted by the representatives of Local Councils. At the same time, at least some of the Mayors provided interesting examples of Local Councils that have been able to undertake quite important supplementary activities. Altogether, the Council of Europe-CLRAE Delegation sees no solid grounds for concern at this point as the system actually operates.

44. Article 9 (3) of the Charter requires that at least part of the financial resources of local authorities derives from local taxes or charges of which they have some power to determine the rate. In Malta, no power of taxation is enjoyed by Local Councils and a strikingly broad consensus seems to exist that there should be no such thing as "local taxation". Consequently, it seems clear that this part of Article 9 (3) of the Charter is not observed by the present state of Maltese law.

On the other hand, Local Councils have the power to propose and to benefit from fines under Article 36 of the Local Councils Act. Moreover, the majority of local councils enjoy delegated power to enforce byelaws and to collect penalties by agreement under Article 33 (n) of the Local Councils Act. Also other sources independent of funds allocated by Central Government exist including fees for some licences.

The Local Councils financial year ended 31 March 2001 the level of income from such sources amounted to Lm 1.9 million, i.e. 20% of the Government‘s allocation through the funding formula. This is certainly not to be neglected. Even if some of this income seems to be derived from sponsoring and other sources that could hardly be qualified as "charges", it thus seems as if the part of Article 9 (3) of the Charter that is dealing with “local charges” is actually satisfied by Maltese law.

45. In the Maltese context, the requirement under Article 9 (4) of the Charter that the resources of local councils keep pace with the real evolution of costs seems to be best dealt with in relation with the requirements under Article 9 (1) and (2) of the Charter (see above).

46. In principle, the opening up for a regime of equalisation and redistribution under Article 9 (5) of the Charter may be supposed to be satisfied by the system of central government allocations under Article 55 and the tenth Schedule of the Local Councils Act (see above), a system under which the distribution formula are frequently adjusted following reports, propositions and discussions between Central Government and (representatives of) Local Councils.

47. According to Article 9 (7) of the Charter, grants to local authorities shall not be earmarked for the financing of specific projects. Under the general allocations scheme under Article 55 and the tenth Schedule of the Local Councils Act, this requirement does not seem to give rise to any difficulties, central allocations being given as lump sums (see above).

48. Under Article 9 (8) of the Charter, local authorities shall have access to borrowing for capital investments within the limits of the law. Moreover, Article 61 of the Local Councils Act outlaws any works with a cost which exceeds the annual provision allotted for each financial year unless explicitly authorised by the relevant Minister acting in concurrence with the Minister of finance. In practice, however, Councils are from time to time permitted to make loans for different purposes including capital investments exceeding the annual budget (town halls, etc.). According to the relevant Ministry, no requests for a loan has ever been refused by central government so far.

49. According to Article 10 (1) of the Charter, local authorities shall be entitled to co-operate and to form consortia with other local authorities in order to carry out tasks of common interest. Under Article 31 (1) of the Local Councils Act, two or more local councils may discharge any of their functions jointly and they may also arrange for the discharge of these functions by a joint committee of theirs or by an officer of one of them. Supplementary provisions are given in Article 31 (2) of the Act. Such possibilities have been used quite extensively by a number of Local Councils in the recently devolved fields of local enforcement, street lightning and so on. Consequently, the Charter‘s requirement at this point seems not to give rise for concern.

50. Under Article 10 (2) of the Charter, local authorities shall have the right to belong to an association for the protection and promotion of their common interests. They shall also have the right to belong to an international association. Both requirements are met by the provisions enshrined in Article 37 (3) of the Local Councils Act. It even seems that the Local Councils Association plays quite an active role in the Maltese context through representation in various ad hoc Committees and Boards and in a number of other ways.

51. According to Article 10 (3) of the Charter, local authorities shall have the right to co-operate with their counterparts in other States. According to Article 79 of the Local Councils Act, Local Councils have the right to make twinning arrangements with any city, town, village or other locality in any country, subject however to the approval by the Minister after having sought the opinion of the Local Councils Association. At present (July 2002), some 30 twinning agreements have been entered into.

52. According to Article 11 of the Charter, local authorities shall have the right of recourse to judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.

In Malta, local councils are explicitly granted such a right (see Article 38 of the Local Councils Act). It is true that this right is limited to the free exercise of powers granted by the Local Councils Act itself. Insofar as the relevant provisions are concentrated in this Act however, and even more to the extent that the principles of the Charter are introduced in Maltese law by this Act, this limitation gives no particular grounds for concern. The Charter does not require that the Charter itself be incorporated in the Domestic law of the Member States in a way making it directly applicable before the National Judiciary.

V CONCLUSIONS AS TO THE COMPLIANCE WITH THE CHARTER

53. Conclusions will have to be drawn up in three successive movements. The first regards Malta's compliance with the parts of the European Charter of Local Self-Government that the country has declared itself to be bound by (see above, § 16). More detailed scrutiny is carried out in part IV of the report. In the present part, only major observations will be highlighted.

54. No further comment is needed as to Malta's compliance with the following provisions by which it has declared itself to be bound: Article 2, Article 3 (2), Article 4 (1-2 and 4-6), Articles 5-8, Article 9 (1, 2, 7 and 8), Article 10 (1-3) and Article 11. Even if improvements can still be made at a number of points (see further in the relevant paragraphs of part IV), it is evident that local self-government in Malta has made considerable steps forward during the some 10 years since the present system of Local Councils was introduced in 1993.

55. Further comments seem justified as to the compliance with Article 3 (1) and Article 4 (3), read in conjunction. According to Article 3 (1), a "substantial share of public affairs" shall be devoted to Local Councils. Article 4 (3) concentrates on the so-called subsidiarity principle. At this point, a less positive appreciation will have to be made.

For reasons already explained, Local Councils in Malta have been endowed with functions in a progressive but quite cautious manner. Many of the steps are small, and even put together, they are hardly impressive neither in number nor importance when compared to the state of local self-government in a number of other members states of the Charter.

These observations correspond with the fact that Local Councils' spending remains very small in comparison with the part of total public spending by local self-government in most of other member states of the Charter. Moreover, no evident tendency of improvement can be seen during the period covered by available statistics (1995-2002).

On this background, it is open to serious doubt whether the requirements according to Articles 3 (1) and 4 (3) of the Charter by which Malta is legally bound, are actually observed. In any case, these observations should provide a stepping-stone for continued and strengthened efforts in favour of an enlarged role for Local Councils in Malta.

56. Regardless of the parts of the Charter to which Malta is legally bound, the rapporteur is asked to study the state of local democracy seen in the light not only of particular provisions of the European Charter of Local Self-Government, but also of the more general principles and standards established by the Charter. This part of the task gives rise to a few supplementary observations of general interest.

No further comment is needed as to Malta's compliance with the following provisions by which Maltese authorities do not consider themselves bound: Articles 7 (2) and 9 (4-6). Consequently, Malta might wish to consider submitting itself even to these parts of the Charter.

57. The sole provision inviting some concluding comments thus becomes Article 9 (3) requiring that part at least of the financial resources of local authorities derives from local taxes or charges of which they have some power to determine the rate. Whereas some charges are actually levied, no power of taxation is enjoyed by Local Councils in Malta.

Consequently, it seems clear that the part of Article 9 (3) of the Charter that concerns local taxation is not observed by the present state of Maltese law. As already stated, this situation does not represent a violation of Malta's obligations under the Charter, and historical arguments as well as considerations regarding the size of Malta has been presented in defence of the present situation, that corresponds to a seemingly broad consensus that no such thing as "local taxation" should be introduced in Malta.

The importance of local taxation for the development of responsible local self-government as well as other arguments, however, strongly recommend that Maltese authorities further consider the possibility of introducing a system of local taxes. Even here a step-by-step approach similar to the one so successfully used for introducing the present system of local self-government itself should be considered. A first step might perhaps be the simple transfer of a portion of state taxes to a scheme of local taxes without increasing the overall fiscal burden of residents in Malta, in order to accustom the public to what might later become a full-fledged system of local taxation in conformity with Article 9 (3) of the Charter of Local Self-Government.

VI POLITICAL APPRECIATIONS AND PROSPECTS FOR REFORM

58. Even when it comes to the more openly political appreciations on the present situation and on prospects for development and reform that are parts of the Rapporteur's task, the impressive ‘tour de force’ needed to begin local democracy almost from scratch in 1993 should be highly valued. Since then, several adjustments to the legal and financial framework have been made, each of them after having being discussed with representatives of Local Councils.

59. Moreover, serious constraints for the Republic as a whole should be taken into account when evaluating the state of local democracy in Malta. As a matter of fact, many European municipalities have at least the same population as the Republic of Malta itself, and nevertheless often works with one mayor, one city council and one administration. This fact makes it far from evident that one of the most densely populated states of Europe should have something like “local self-government”. And even if this question has been answered in the affirmative, like in Malta, the ingredients that can be expected to flow from this choice (broad range of responsibilities, substantial part of public spending, local taxes) are less than evident, independently of the question to know whether the choices made at each particular point would legally create a violation of the Charter.

Extra-legal constraints are linked to the fact that the system of local self-government in Malta is still relatively young and by a number of other political and cultural factors that will not be further developed here.

60. On the other hand, constraints like the above-mentioned do not suffice in themselves for defending the present state of local self-government in Malta. The deliberate strategy of a step-by-step development of local self-government has already been pointed out and should be greeted as a success to a certain point. At the same time, however, the main picture remains less than impressive. As a matter of fact, most of the steps are quite limited, as is the sum of the development so far. As an overall impression, it could perhaps be said that local self-government in Malta is a story about limited tasks, limited budgets, a limited number of employees, limited working space, limited financial reward for mayors, no financial reward at all for other councillors, no possibility of local taxation and an extensive control system.

An eloquent expression of the present situation is provided by the very limited part of the overall public spending (some 2 %) devolved to Local Councils. This is far below what most of us would be willing to qualify as “substantial” (Article 3 of the Charter).

61. An element in the overall picture drawn up by many of our talks is what appears to be a certain level of distrust on the side of central government. Regardless whether respondents talk about a ‘Sicilian mentality’, about ‘field offices of central government’ or of the necessity to strengthen the central control on legality and efficiency, the overall picture is that local government cannot always be trusted with money. Though the possibilities of intervention by the minister are far from excessive, not every agent of Central Government seems to realise that local governments are chosen by the same electorate and therefore have the same democratic legitimisation that central government has.

62. When it comes to the prospect of development and reform, following its meetings in Malta, the delegation expressed the wish that, over the next five to ten years, a substantial shift of tasks, taxes and personnel from central to local authorities be implemented. One can hope that the unwillingness of central government to hand over task, money and personnel or the hesitation of city councils to accept them will not unduly hamper this process.

63. In the scope of the Charter of Local Self-Government and the values on which it is based, the only way out is to proceed further on the path of progressively attributing or delegating more tasks to Local Councils. Quite a few seem to think that important possibilities exist in fields like education, housing or local planning. At least when the possibility for Local Councils to co-operate in carrying out tasks, a possibility that has already been significantly exploited, it is difficult to see why further development could not take place in this way.

Whether such a process would end up with Local Councils enjoying the right and ability to regulate and manage, within the limits of the law, a substantial share of public affairs (Article 3 (1) of the Charter) remains to be seen.

APPENDIX I
Draft programme of the official visit to Malta

by the Congress Delegation responsible

for the preparation of a Monitoring Report on the Situation of Local Democracy in Malta

(La Valetta, 1 to 2 March 2002)

Arrival of the members of the delegation:

Riccardo PRIORE 27/02/02 from Frankfurt 11h55

Eivind SMITH 28/02/02 from Frankfurt 11h55

Toomas VÄLIMÄE 27/02/02 from Vienna 12h50

Departure of the members of the Delegation:

Riccardo PRIORE 03/03/02 to Frankfurt 12h50

Eivind SMITH 02/03/02 to Frankfurt 12h50

Toomas VÄLIMÄE 03/03/02 to Vienna 14h40

APPENDIX II

Ministeru tal-Íustizzja u Gvern Lokali Ministry of Justice and Local Government

MALTA

Dipartiment tal-Kunsilli Lokali Local Councils Department


PROGRAMME

COUNCIL OF EUROPE DELEGATION

Delegates: Mr René Paas, Rapporteur

Mr Eivind Smith, Expert

Mr Riccardo Priore, Council of Europe Secretariat

 

1 Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Malta, Moldova, "the Former Yugoslav Republic of Macedonia", Poland, Romania, Russian Federation, Slovakia, Slovenia, Spain, Turkey, Ukraine, United Kingdom, Federal Republic of Yugoslavia (list in progress).



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