Enemalta: one cannot solve permanent problems with temporary solutions - Dalli

Nationalist MP John Dalli yesterday called for permanent solutions for Enemalta's permanent problems.

Speaking in parliament, he said that were he to be critical, he would say with regard to Enemalta that not enough was done when the government imposed the power surcharge of 17 per cent.

The report prepared by PricewaterhouseCoopers showed that Enemalta was heavily subsidising electricity and water. Even if the price of fuel oil imported by the corporation had not gone up compared to last year and the year before, there were several factors highlighted in the report which underlined the need for correction.

Among them was the fact that Enemalta was still absorbing value added tax, at a cost of Lm3 million; and that the corporation was spending more on the importation of more environmentally friendly fuel.

Were he to be in a position to advise Enemalta, he would say that one should not try to solve permanent problems with temporary solutions. He would seek a solution based on having Enemalta transfer Vat to the consumer in a measure which would not affect economic operators since their Vat was refunded.

He also felt that the consumer should shoulder the burden of the cleaner fuel since the importation of that fuel was only meant to improve the environment and the people's health. The people had to get used to paying more for a better service.

Earlier in his short speech Mr Dalli said the opposition, in saying that reforms were not necessary, did not seem to realise that Malta's competitors were overtaking the country. Unless it brought on changes, Malta would not make a success in the future.

Malta had to change its practices because what was good for yesterday may not be good for today and would not be good for tomorrow. Indeed, tomorrow's circumstances would be different from those of today, and Malta had to prepare for them now.

The reforms Malta was going through for a better tomorrow should find everyone's support, Mr Dalli said.

Public Investments Minister Austin Gatt, who spoke later, said the people had to understand that one could not have a better quality of life without paying for it. One could not, for example, polish tap water, or treat sewage, and not pay for it.

He agreed with Mr Dalli, and indeed would shoulder part of the blame for the fact that power tariffs were not raised when Enemalta started buying low sulphur fuel. The tariffs should have been raised at that time because one could not invest millions without the consumers paying anything.

It was foolish for anyone to include alternative sources of energy in this argument, because all alternative sources of energy were more expensive than energy produced from fossil fuels.

Dr Gatt insisted that documents which the opposition itself had tabled, including those from the website of the International Energy Agency, showed how the spot prices of oil used by Enemalta had gone up from August to November. The price of fuel oil with one per cent sulphur had risen from $26 per barrel to $35, and that of gas oil from $50 to $62. Such figures gave the lie to those who claimed that prices had not gone up.

As for the current power tariffs, Dr Gatt said only three countries had lower tariffs, despite a perception to the contrary. Nationalist MP Mario de Marco, who spoke earlier, underlined how the worldwide economic scenario was changing and said Malta was not isolated from such changes.

The world was now a global village where China, within a generation, was expected to rival the US as the biggest economy, India was producing three million graduates a year, low wage Eastern European countries were now in the EU and by 2010 there would be a free trade area in the Euro-Mediterranean region.

Low wage countries were now even managing to attract high value-added manufacturing from developed countries. It was within this context that Malta had to compete.

Dr de Marco noted that between January and September 2004, manufacturing industry had seen a drop in local sales compensated for by a marginal increase in exports.

Significantly, manufacturing industry was being restructured and capital investment had increased by 10 per cent between January and September to a total investment of Lm40 million.

The productivity index increased by eight per cent in 2002 when compared to the year 2000 and by 600 in 2003. On the other hand, there was a drop of one per cent in 2004.

Value added at factor cost per capita for the whole manufacturing industry increased by 11 per cent between 2000 and 2003.

He said Malta Enterprise (ME) since its setting up had started providing a one stop shop for local and foreign entities considering investment in Malta.

In its first year, it approved 19 projects, five of them Maltese. Most were German. It also approved 37 expansion projects. It identified and focused on a number of sectors, such as the pharmaceutical, healthcare, ICT, maritime and aviation as well as the film industry, as sectors where Malta could be an attractive investment destination.

ME also launched four schemes to assist local enterprises. Two were financed by the government and two by the EU.

Dr de Marco said entrepreneurship needed to be better promoted among the young. At the same time, every effort should be made to reduce bureaucracy for industry.

Workers, he said, could not expect to have a job for life but employability for life. The importance of training could not be underestimated, and there should be closer collaboration between the government, the unions, the ETC, MCAST and the university. Malta also needed to strengthen its research and development since the only efficient way to respond to globalisation was to have a knowledge based economy.

There also needed to be greater cooperation between customs, port workers and ME. In this context, port reform was an essential part of the country's efforts to improve competitiveness.

It was also essential to continue building new factories. Mepa should be more flexible and there should be clearer zoning and more efficient permit processing. It was unacceptable for Mepa to take months to process development applications which involved job creating investment.

More cooperation was also needed between Malta's embassies, and Malta Enterprise.

One should not forget that the EU remained Malta's biggest export market. It was therefore important that Malta was present in all European fora and fairs.

It was also essential that Malta Enterprise was part of the Forum for Europe that the government would set up, one of whose aims would be to tap funding and assistance opportunities from the EU.

Nationalist MP Robert Arrigo referred to the water and electricity surcharge saying that the fact that the cost of petrol and gas had not changed reflecting the government's social conscience.

And it was better to reduce leave by four days in order to protect jobs, that have workers with 365 days of leave each year. The unions, he said, should show maturity.

Mr Arrigo referred to Air Malta, and said that although sales had increased there were still 100,000 empty seats this year. There should be some form of system, he said, which would fill up these seats rather than keep them empty.

As for Enemalta, he said the situation was such that those who were paying their bills on time were subsidising those who were stealing.

He said that reforms at PBS, Gozo Channel and the shipyards had saved the country millions and the government had shown the way forward for industry and investment.

It had been important for the government for a social pact to be reached before the budget and it was unfortunate that there were those who did not want an agreement.