Editorial

MUCH of the anticipation which normally builds up to Budget Day has been dissipated by Tuesday's announcement of hefty increases in water and electricity bills and a substantial increase in the price of fuel at the pump. Nevertheless, when Prime Minister Lawrence Gonzi, who doubles as his own Finance Minister, makes his Budget Speech in Parliament tomorrow, he will no doubt give us a broader vision of how the country and its economy are faring, and where we go from here.

Admittedly the fuel and energy price increases have made headlines, but they should not distract us from our fundamental objectives: greater efficiency in government spending, more value for money, less waste, maximising revenue - in short, more efficient administration of the country's finances - in order to cut the deficit, lower the national debt, create more jobs and curb inflation. The Maastricht treaty lays down precise targets covering all these desiderata, and the government has repeatedly stressed its determination to achieve them.

Government has been insisting that it is on course to meet its deficit reduction plans and employment and inflation targets, but the soaring price of oil on the international markets can easily play havoc with the best laid plans. Already in his Budget Speech last year, when he introduced a 17 per cent surcharge on water and electricity bills, Dr Gonzi warned of the "realities" of the rising price of oil and its cost to Enemalta, the state energy corporation. The price of oil on the international markets a year ago had touched $50 a barrel. This year, under the impact of natural calamities and soaring demand from China and India, the price has reached $70, and though it has now eased somewhat, the underlying trend is definitely pointing upwards.

It is obvious that in announcing the fuel and energy increases last week, the government took care to minimise their impact on the economy, but there is no denying that the higher charges, especially the increase in the water and electricity surcharge to 55 per cent (to go up by another 1.2 per cent in January, and to be revised every two months after that), will hurt. However, they should also bring about a culture of more efficient use of water and electricity by cutting waste. Higher petrol prices should also make us reconsider the wisdom of relying so much on private transport (over 250,000 cars for a population of 400,000 in an island of 315 sq km) and press for a more efficient and user-friendly public transport system.

One hopes that measures to encourage this culture will be announced in the Budget Speech tomorrow. As we argued last Sunday, Government itself should set the example not only by cutting waste in electricity and water consumption, but also in switching over to alternative forms of energy, of which the most suitable to these islands seems to be solar energy.

But, as stated earlier, the Budget will not be dealing only with the immediate problem of higher fuel and energy prices and how to pay for them. One of the priority areas which we expect Government to address tomorrow is pensions reform, especially since the White Paper published almost a year ago had been subtitled "reforms needed now to ensure adequate and sustainable pensions for future generations" (our italics). In this area too, apart from finally revealing its intentions, one expects Government to incentivise investment in private pension plans and to promote another type of culture: saving for one's retirement.

One also expects the Budget to finally address the question of a serious reform of our rent laws. It is a pity that the momentum of Alternattiva Demokratika's initiative to hold a referendum on the issue seems to have stalled, but perhaps AD is biding its time before Minister Dolores Cristina unveils her long-promised proposals to reform the rent laws. The alternative would be for a courageous (and long-suffering) "1939" property owner to take his case all the way to the European Court of Justice in the hope of shaming the Maltese government into finally doing something about our ridiculous and grossly unfair rent laws.

One also expects the Budget to fulfil the government's aims of creating more jobs, promote competitiveness and achieve economic growth. This it can do by introducing fiscal measures to spur both businesses and individuals to higher productivity and higher income, thus mitigating the harmful effects of the fuel and energy increases.

Incidentally, Enemalta, we have been told, will be absorbing some Lm30 million of its projected higher costs, which will be covered by loans. Will the consumer be required to make good for those loans through additional revenue-raising measures? Let us hope not.