Sunday, 5th October 2008 - 12:25CET
Country cannot continue to subsidise industry's utility bills - PM
The country could not continue subsidising industry's water and electricity although it could help it invest in energy conservation methods, Prime Minister Lawrence Gonzi said this morning.
The water and electricity tariffs were the main topic discussed in a dialogue meeting in Victoria, which also included the participation of Infrastructure Minister Austin Gatt and Finance Minister Tonio Fenech.
Dr Gatt said that the people had been subsidising 120 enterprises and hotels for the past three years, paying 95 per cent instead of 75 per cent surcharge.
While electricity production cost Enemalta 18c per unit cost, industry was getting it at 8c per unit. Such operational subsidies could not continue. Industry could instead be assisted to invest in photo voltaic panels, night metres and power factor generation methods, for example.
Mr Fenech pointed out that because the situation turned out to be worse than predicted by the government, Enemalta had to be subsidised to the €68 million, instead of the €24 million allocated in the last budget.
He said the way forward was investment in energy conservation methods and the government was studying how it could encourage this in the forthcoming budget.
Although the government would retain its social conscience and help those families in need, no one could expect not to pay for what he was consuming.
Dr Gatt said that Enemalta last year received more subsidies that the shipyards ever did in a single year. But in spite of this and the surcharge, it still made losses and had to borrow €150 million to buy oil and pay wages. This could not continue and the problem had to be faced. Moreover, an investment of €260 million was needed at Enemalta and the government would be irresponsible not to carry it out.
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Comments
What about the energy subsidy scheme?? Is this banned by the EU too??
What about the renewable energy incentives started in Malta which were not given the full support by the Government and had to move to Germany???
It is very well established in both economic theory and practice that subsidies lead to bad allocation of resources in society and to wasted economic wealth - economists would use the term 'market distortive'. They cause the tax payer to foot the bill of the wasteful consumer, and actually reward waste (the more consumed the higher the subsidy). Those careful with their energy use still pay, through taxes, for the waste of others.
Plus: They may cause people to opt for expensive, inefficient products instead of cheaper, efficient products by distorting the price of the former so it appears cheaper at point of sale. The taxpayer wastefully still pays the full, higher, price.
My only concern remains catering for the poorer members of society. But here again, the best way to do things is direct transfer payments (which are not tied to the use of a particular product / not market distortive e.g. social security payments) as such payments allowing maximum efficiency/ best use of wealth since the price of products reflects their social cost.
The list goes on & on:
- The drydocks is one of them. And don't get me wrong I have nothing against the drydocks, but I have a lot against whoever was responsible for its failure for all these years!!!
- The immigrants - I feel sorry for them but find a solutions as I don't fancy paying more taxes to see them roam our streets.
- The Government vehicles. Change all your 3-litre BMWs and get hybrids!!! They're cheaper to buy, cheaper to run and better on the environment. Or catch the bus if you want to practice as you preach!
- Ppl evading taxes (tonnes of them)
The list can go on and on.
So instead of whining about the economic situation do some serious cost cutting and stop waste of time, money and resources. We never had any money to waste and now we can really do with saving some!!!
The country cannot continue subsidising lots of things, including:
- non-productive government employees
- people abusing of the water & electricity meters
- people abusing the welfare system (still plenty around)
- bad political decisions
- friends of friends living off the taxpayer like parasites
- double work, which even if the extra bill is footed by the contractor, the country still pays for the inconveniences caused
- injustices performed against numerous individuals, especially as regards court delays
- I guess I'd rather stop here
We still have lots of trust in you, Dr. Gonzi, but please, do put the foot down where necessary. We know that the Govt is tackling lots of these issues, but you need to speed up things without embarking on witch hunts like the TCU did.
Enemalta could be losing thousands in undeclared meters and people messing with meters. Why not establish benchmarks,investigating those that seem to consume less than the average.
As the 'prime' employer of Maltese islands, start by setting an example that all those that earn wages should be productive. We cannot keep having people paid to hang around or even carry out their businss at the workplace.
Now we have to pay higher tariffs and continue to lower our standard of living. All this is thanks to an incompetent government, whose deceit and lies are coming back to his face. Unfortunately we tax payers end up paying for all the blunders done by this government, while our salaries remain miserable.
Why the government is telling us this now and not before the elections? Where are the people? This government is rolling on everyone like a bulldozer. What a miserable state this country has ended up in!!!
Our valleys have never been cleaner and free of material as they are now.
Simple answer. God forbid that instead of one dockyard we will end up with 120 organisations following the same path to ruin and us the taxpayers footing the bill.
There are much better way to support industry which is viable in the long term than subsidise energy waste.
Better to cut off your pinkie finger than let gangrene and rot set in.
To andrew xuereb
I fully agree with you . Government should be the first to set an example and more so employees with government.
In Mintoff's time I remember how overnight all government departments had to reduce their usage by over 50 per centt
The energy savers really save electricity and till date they are pretty expensive to buy, but if the government keeps his promise and the people will start buying the price will go down and the country as a whole will benefit in less electricity consumption and each family will surely benefit from the short to the long term.
That is one simple way to save energy. It is useless promising something before a general election and not keeping your word !!
Let me try to get this straight, so inorder not to subsidise the industries bills from my tax money, I have to pay more tax/charge/tariff/contribution call it whatever you like Gatt on my utility bill. Oh yeah by the way Gatt says"Industry could instead be assisted to invest in photo voltaic panels, night meters and power factor generation methods". HELLO what about me the one with minimum wage, who will assist ME???
The title of this article should read "Country cannot continue to be governed by such inefficient,arrogant,void of ideas and sollutions, wannabe smart ministers
My questions are:-
1. Is there any government in the face of the earth (excluding Zimbabwe) who gives such a shock at once of raising electricity by 300%?!!!
2. Is the government giving any exmaple by reducing its own electricity consumption in Schools, hospitals and its departmental buildings?!!
3. In this situation where US has pledged 700 billion $s to help banks, Italy is helping Alitalia, EU helping several banks, why do we have to be better then the pope and stop our subsidies?!!!
4. Why all this is happening now, just 6 months after the election?!!
only common sense you need to understand that PN has lost its bearings.
The Government is right to eliminate subsidies. This eleminates waste and ensures that the consumer of the service pays - not others. Why should I have to pay for other people's consumption? Of course, those in need should be provided with assistance as long as such assistance is limited to their basic needs.
What of the poor people who you are referring to, who will lose their jobs if industry is made to pay too high of a price over night?!
Don't you think that these are the kind of people who are working in these industries and would suffer more if this happens?!
Government should appoint inspectors to visit hotels and industries for them to make recommendations to them on energy saving and rather than subsidies impose penalties on those companies which do not implement them.
It is also important to better identify those who truly suffer energy poverty in our society such as pensioners and parents with young children and give them allowances for their energy bills
Do these same commentators have nothing to say on Government's claims that it did not forsee the global economic turmoil in the run-up to the election?
A simple question to the PM and the 2 Ministers.
Would this investment turn out to be like the financial freak of investment as the Mater Dei, as I am sure that it would take years to accomplished?
Fot once be credible please!
Super subsidised bananas
This is a good step in the right direction,as although some industrialists have invested in energy-efficient equipment and processes,others did not have the incentive to address the problem,thanks to the subsidies cushioning their energy bill shock
Still, what this all boils down to is that instead of wasting years chasing after the dream of deep sea turbines, which is now proven to be still at the experimental stage as environmentalists have been saying all along,our government should have been taking the bull by the horns and launching real alternative energy programmes.A mix of wind turbines in areas which have been identified as suitable,even by EU Energy Commissioner Pielblags,greater subsidies for solar panels, limitation of penthouses &of increased heights of buildings that are discouraging the use of solar panels are just a few measures.
The other main measure is the implementation of the Minimum Energy Efficiency Regulations which BECAME LAW for new buildings in Jan 2007 but are still being ignored. When we have asked for them to be implemented in new major projects,the MEPA DCC Board Chairman said"We'll do so once the building is constructed" What a joke!
That's how seriously we're taking the energy crisis.
A solution might be in pitting undersea oil extractable deposits (possibly billions of euro) against the current energy debt crisis. What we need is capital funding which we can pay off over decades, notwithstanding EU restrictions on the amount to be taken on loan in proportion to economic performance.
A government-inspired, but not led, consortium of local and foreign investors could create an all encompassing Energy Holding Company having as its objective current energy utility needs, investment in the renewal of energy production, the development of alternative energy sources, water production AND the extraction of highly potential oil deposits.
The share capital could be raised by local industry and individuals by direct funding or by way of government allotment of shares to utility account holders to replace rebates, surcharges and incentive schemes. As with all shares, this share capital could be traded on the market, and I bet it would shoot up when oil starts being extracted. Besides, government would also have an incentive (incentives are not only a prerogative of account holders!) to speed up the extraction of millions of barrels laying idle under the sea in a world which is ever becoming more aware of CO2 elimination.
"power factor generation methods"?
Never heard of the beast.
Power factor correction yes, but power factor generation methods never.
Wanting to take us for another ride Austin?
The next time I go to a hotel I will ask if there's any discount, instead of being charged double on anything. What else are we subsidising without knowing?
the electricity division always was a burden for Enemalta and it was the petroleum division that had made profits - it is the petroleum division which is being privitized by the gonzigattopn. so the people is going to pay more to make good for the loss that enemalta is going to carry out with the loss of the petroleum division!!!!! so the profits will go to private pockets... can someone say who are to be these new petroleum sector owners and who is ....
"THERE IS NO OTHER WAY UNLESS SAN GEORGE SHOW US THE WAY "
simple; We did not elect and vote San George but we elected Gonzi who promised tax cuts, even though he knew perfectly well what ths situation was.
Please, show some maturity and repsect to the readers of this newspaper
"" Industry could instead be assisted to invest in photo voltaic panels, night metres and power factor generation methods, for example ""
Just like you did at MATER Dei Hospital Dr Gonzi.?
Hallina Please u warrab !!
DO I sense panic? Are we in a financial mess?
Shouldn't this be top priority for the government to get some much needed cash?