Surcharge overshadows WSC debate

Public Investments Minister Austin Gatt said in Parliament yesterday that opposition calls for the surcharge on water and electricity to be reduced to the original level of 17 per cent, or halved from last year's peak of 67 per cent in parallel with the current oil price did not make sense, because the oil price was nowhere near those levels.

Concluding the debate on the financial estimates of the Water Services Corporation, the minister said the opposition still had to explain how it would meet the costs of reducing the surcharge to the levels it was projecting.

Yesterday's sitting was opened by Marie-Louise Coleiro-Preca, opposition spokesman on social welfare, who said the surcharge on power and water was the cause of hardship for many Maltese. No one was denying that international oil prices had gone up and this issue had to be somehow addressed locally, but the government should not only look at the bottom line because it also had a social duty. Exemptions from the surcharge were being given to 17,000 families but many people did not even know that they were eligible and did not apply. The government should grant the exemptions to all those who were eligible, without waiting for applications. Furthermore the exemptions should not be limited to those in receipt of social benefit because there were other families whose income was so low that they too should have the burden of the surcharge lifted from them. Persons with disability also deserved more consideration and recommendations by the National Commission for Persons with Disability should have been heeded.

A Humanitarian Committee had been set up in the Ministry for Social Solidarity but what criteria was it basing its actions on? The situation of many vulnerable sectors of society, including of pensioners and widows, needed to be considered. The government had spent Lm7 million on consultants but only Lm660,000 to help the 13,000 families who were exempted from the surcharge last year, with the plight of many others being ignored.

Evarist Bartolo, opposition spokesman on tourism, complained that pockets in various localities, including Gzira, were complaining of poor quality tap water.

Mr Bartolo said Malta needed to redouble its efforts to conserve rainwater, scarce as it was and also protect the water table. It appeared that the government was planning a new road/tunnel at il-Bordin and Xaghra tal-Ansar going to Selmun Hill to ease traffic through Xemxija. One should warn that such a tunnel risked interrupting the flow of a natural spring which farmers used.

Mr Bartolo referred to the extensive building programmes in the Sliema area and asked if the water and sewage system could cope with this growth.

Turning to tourism, Mr Bartolo said the power and water surcharge had harmed competitiveness for hotels but, particularly in the case of restaurants which did not benefit from the capping system.

Five star hotels had seen an 11 per cent increase in costs per room in 2005. That rose to 20 per cent for four-star hotels and 53 per cent for three star hotels when compared to 2003. Malta needed to limit government-induced costs as much as possible if competitiveness was to be maintained.

Nationalist MP Robert Arrigo drew comparisons between the situation today and the years of the Labour government, when the people suffered water cuts for days.

He welcomed an improvement in coordination of works between the WSC and local councils and said the WSC was also reacting faster when leakages were reported. The installation of new services had also become more efficient. Mr Arrigo said water quality was meeting EU standards practically throughout Malta. It was significant that Malta had been recognised internationally as being an authority in leakage control systems.

Mr Arrigo asked how the opposition was arguing that the surcharge should be reduced to 17 per cent. Could they explain their workings? And it was noticeable how the opposition MPs were no longer advocating hedging oil prices. Of course, hedging could now mean losses.

Silvio Parnis (MLP) said exaggerated water and electricity bills would be a major issue in the coming elections. The burden was especially heavy for elderly people some of whom had services cut because they could not pay their bills. He even knew of a case where a mother sent her daughter to prostitution to pay the bills after the power and water supply was cut off at their home. A future Labour government would need to improve the situation of this stratum of society. There were also many factories and hotels which had fallen back on their payments, revealing the wide extent of the problem.

But it was actually the duty of all MPs was to improve the people's living standards.

Nationalist MP Michael Asciak said that water and electricity bills were so exaggerated under Labour, they were electrifying. He said that despite the surcharge, the government itself was absorbing a substantial chunk of the cost of oil purchases and many low income families were being given direct assistance.

Labour was now saying it would cut the surcharge by half. But what would it replace it with? One could easily remember how it replaced VAT when it was in government.

The Nationalist MP said the setting up of three sewage treatment plants would mean that raw sewage would no longer be dumped at sea. This was good for tourism as it would make for cleaner waters. Incidentally, EU assistance on these plants alone would be much higher than the funds Labour used to say Malta would receive upon accession.

Labour MP Roderick Galdes expressed concern about over-extraction of groundwater and said the present generation had a duty to preserve the environment for future generations. Furthermore, three-fourths of the WSC's own boreholes failed the EU nitrates test.

He recalled that it was the Labour government which set up the first reverse osmosis plant in Malta to supplement groundwater extraction and RO plants had since proved to be the island's salvation in so far as water production was concerned. Recently the WSC shelved plans for a new RO plant.

But how would demand be met some years from now, as the population and tourism increased, if groundwater extraction was not raised. Between 1980 and 2000, 19 million cubic metres of water were extracted from the water table when the sustainable amount was 14 million cubic metres. There was also strong sea water intrusion in the water table and salinity levels were reaching unacceptable rates.

Turning to the surcharge, Mr Galdes said Labour was not saying it would remove it, but it would reduce it because it did not reflect the current situation of international oil prices.

The debate was concluded by Public Investments Minister Austin Gatt. He said that opposition claims that oil prices had now dropped to the levels they were when the surcharge was introduced at 17 per cent were manifestly not true.

When the surcharge was introduced at 17 per cent the cost of oil was $203 per ton. It was now $267 per ton.

Nor was it true that the surcharge should be halved from its peak of 67 per cent (reached last year) because oil prices had dropped by the same percentage.

When the surcharge was at its peak in February last year, the oil price was $369 per ton. The current price of $267 was nowhere near half.

Of course, one could argue that the government could meet more of the cost instead of charging the surcharge, but the money still had to come from somewhere. That applied also if the government was to raise the level of assistance to low-income families. Some 17,000 families were currently exempted from the surcharge on the basis of income thresholds, but a Humanitarian Committee had been set up to consider further exemptions in the case of people who might exceed that income threshold, but their situation still justified assistance.

Turning to the remarks by Mr Galdes, Dr Gatt said 55 per cent of water production currently came through boreholes, but the capacity of reverse osmosis plants was such that they could meet all of Malta's needs, without groundwater extraction, for some years to come, although at considerable cost.

Furthermore, groundwater which was high in nitrates was not fed into the system.

Dr Gatt said he was reiterating an appeal he made last year for the Malta Resources Authority to clamp down as much as possible on unauthorised groundwater extraction.

He was reiterating an offer he had made to Labour MP Joe Mizzi to produce any tap water samples which he claimed were dangerous for testing by a person of his choice.

However, water could not be of uniform high quality all the time, and the people too should report any deterioration. In the case of a section of Gzira mentioned by Mr Bartolo, the issue stemmed from old pipes, and this was being tackled.

Dr Gatt stressed that the government has no intention to privatise the WSC or dismiss any workers. It only wanted to improve efficiency and this was being achieved.

Compared to public and private sector organisations, the corporation was doing well and producing excellent financial results. The corporation had good management and a core of good, specialised workers. In just three years it saved the country Lm4.3 million.

Now the corporation needed to continue to build on these strengths and he hoped the opposition, like the government, would back it.

The estimates were then approved, the opposition voting against.