Local enforcement companies play down Muscat's 'big fish' claims

Muscat wrote in an opinion piece in l-orizzont that he would stand up to the “subsidised racket” in the local enforcement system where “the bulk of the cash received by councils is going... to two companies.”

He did not specify which companies or what sort of reform he would introduce, but he sounded an ominous note when he said that “the days of big fish taking up everything are over.”

But the chief executives of one of the warden companies, and the IT company that processes all the contraventions issued, say the system is actually not making as much cash as once thought.

A report by the Office of the Prime Minister’s management efficient unit spells out the way the money has been divided so far.

Between 2003 and 2008, wardens and speed cameras issued a total of 1.6 million tickets with a value of €56 million. But this figure in itself is misleading, because the actual number of tickets paid was much lower, with only €39 million being received by local councils – leaving well over 25% of unpaid tickets as potential bad debts.

During these five years, the system cost some €23 million to run. Of this total, €19 million represented the costs for warden services and Datatrak’s IT services. The warden firms, mainly Guard & Warden and Sterling Security (but another firm, Aurelia Asset Protection also provided services for two council regions) took 53%. Datatrak took 31%. The rest went to other direct costs.

The CEO of Guard & Warden, Kenneth De Martino, says the warden companies are each likely to take the lowest percentage from the total. “Additionally, I have high labour costs to cover since I employ a lot of wardens, so the profits are not abnormally high. Speed cameras do not make money any more, because motorists are used to the system.”

Datatrak CEO Joe Fenech Conti also confirms revenues from speed camera fines are so small, they provide “a fraction of the cost of the actual service.”

“We’re part of a competitive tendering process. We tender like all other companies do and the contracts we win are based on the value for money provided. It is a public process… we win only because we have a good price,” Fenech Conti says in disputing the impression given by the Labour leader that a handful of companies are benefiting from the system.

Money-making machine

There is no doubt that the devolution of police duties to the local enforcement system in 1999 developed into a money-generating mechanism for local councils.

One of the main concerns with the system was that local councils, which contract the wardens and determine their rosters as well as make requests to install speed cameras in busy roads, were making demands on the new ‘local police’ to keep a keen eye out for any minor offence that could result in a fine. Councils geographically located on busy thoroughfares, like Sliema and St Julian’s, stood to make even greater revenues through the speed cameras located on Regional Road.

Local wardens may have freed up precious police and court time for the latter to attend to more serious matters, but the system still generates millions. In another set of updated figures seen by MaltaToday, the data shows that between 2006 and June 2011, a total of 854,000 tickets returned a total of €25.8 million in paid fines. After the private contractors were paid for their services, the surplus should have been taken by the councils, or put into educational and traffic awareness campaigns.

But as Kenneth De Martino says, the local enforcement system has become so ingrained with motorists that it has actually led to less tickets and fines being issued. In fact, he emphatically refutes the line that the LES is intended to create cash for councils.

“It was never intended as a system to generate revenues for councils. The speed cameras are not making any money at all, because motorists have got used to the system. Which is why people are mistaken if they think we are making profits over and above the norm.”

In fact, as the statistical data shows, the decline in speeding offences and other contraventions with the resultant effect on revenue, is an irrefutable reality. Wardens’ tickets have decreased by 17% since 2006 across all Malta and Gozo, corresponding to a decline in annual revenue from €5 million in 2006, to €4.2 million in 2010.

This article appeared in MaltaToday's Sunday edition