Averting the crisis
For the past 10 years or so, the price of oil has been rising constantly and at the same time the effects of global warming have been increasing steadily. A country like Norway (which ironically is also an oil producer) has been steadily investing in...
For the past 10 years or so, the price of oil has been rising constantly and at the same time the effects of global warming have been increasing steadily.
A country like Norway (which ironically is also an oil producer) has been steadily investing in alternative energy and has now become a leader in green technology. Unfortunately, we in Malta are now between a rock and a hard place situation. We have found ourselves in this very precarious situation due to lack of vision, foresight and planning! Too many times we try to manage a crisis instead of trying to avert it and obviously the result would be that we suffer casualties in the form of mass redundancies, decrease in tourist arrivals, and high government-induced costs to make up for inefficiencies or lack of investment.
It is important to point out that a very important element of any decision making is taking the decision at the right time! This certainly could not be said of either the proposed increase in the utility bills or government's indecision to invest in green energy! The proposed increase in the utility bills comes at a time when the global markets are facing a financial crisis of unprecedented proportions. It would be silly on the government's part to think that this would not affect us. Our economy, like most other economies, is not insulated from this crisis. We should all remember what effects 9/11 had on our tourism sector and how this also triggered the collapse of the Argentine economy which resulted in local investors losing millions of euros there.
The government's indecision to invest in alternative energy and in giving households and industry the incentives to invest in solar water heaters and/or photovoltaic systems means that our economy is still fully dependent on oil for the generation of electrical power. Any increases in the tariffs and/or the surcharge will increase the rate of inflation further; in August this stood at 5.4 per cent and was the second highest in the eurozone. It will also affect the purchasing power of all families and thus affect consumption. But above all it will erode further our international competitiveness which would certainly result in job losses. Furthermore, in this scenario the first thing that any entrepreneur would do would be fight for survival and postpone any new investment projects with the obvious consequences on the growth of the economy and the generation of new jobs.
At the last MCESD meeting, the government said the study for the revision of the tariffs has been going on since April of this year. The terms of reference (TOR) of this study, however, did not include a social and economic impact assessment.
This assessment should have been included as part of the TOR as it would have certainly influenced the options suggested to recover the costs for both Enemalta and Water Services Corporation. Instead the study transpired to be just a purely accounting exercise which took six whole months to complete!
Now the government is expecting the social partners to conduct their own social and economic impact assessment and come up with an alternative option/s in just 15 days! The least the government should do, bearing also in mind that oil prices fell below the $80 a barrel level, is to take a step back and give more time for an agreement to be reached round a table with all the social partners!
• Mr Carachi is president of the General Workers' Union.
vcarachi@gwu.org.mt
A country like Norway (which ironically is also an oil producer) has been steadily investing in alternative energy and has now become a leader in green technology. Unfortunately, we in Malta are now between a rock and a hard place situation. We have found ourselves in this very precarious situation due to lack of vision, foresight and planning! Too many times we try to manage a crisis instead of trying to avert it and obviously the result would be that we suffer casualties in the form of mass redundancies, decrease in tourist arrivals, and high government-induced costs to make up for inefficiencies or lack of investment.
It is important to point out that a very important element of any decision making is taking the decision at the right time! This certainly could not be said of either the proposed increase in the utility bills or government's indecision to invest in green energy! The proposed increase in the utility bills comes at a time when the global markets are facing a financial crisis of unprecedented proportions. It would be silly on the government's part to think that this would not affect us. Our economy, like most other economies, is not insulated from this crisis. We should all remember what effects 9/11 had on our tourism sector and how this also triggered the collapse of the Argentine economy which resulted in local investors losing millions of euros there.
The government's indecision to invest in alternative energy and in giving households and industry the incentives to invest in solar water heaters and/or photovoltaic systems means that our economy is still fully dependent on oil for the generation of electrical power. Any increases in the tariffs and/or the surcharge will increase the rate of inflation further; in August this stood at 5.4 per cent and was the second highest in the eurozone. It will also affect the purchasing power of all families and thus affect consumption. But above all it will erode further our international competitiveness which would certainly result in job losses. Furthermore, in this scenario the first thing that any entrepreneur would do would be fight for survival and postpone any new investment projects with the obvious consequences on the growth of the economy and the generation of new jobs.
At the last MCESD meeting, the government said the study for the revision of the tariffs has been going on since April of this year. The terms of reference (TOR) of this study, however, did not include a social and economic impact assessment.
This assessment should have been included as part of the TOR as it would have certainly influenced the options suggested to recover the costs for both Enemalta and Water Services Corporation. Instead the study transpired to be just a purely accounting exercise which took six whole months to complete!
Now the government is expecting the social partners to conduct their own social and economic impact assessment and come up with an alternative option/s in just 15 days! The least the government should do, bearing also in mind that oil prices fell below the $80 a barrel level, is to take a step back and give more time for an agreement to be reached round a table with all the social partners!
• Mr Carachi is president of the General Workers' Union.
vcarachi@gwu.org.mt