Cynthia Busuttil, Matthew Xuereb
Small firms oppose burden sharing
The burden of the new electricity bills has been largely shifted from big industry to small businesses in proposals presented by the government yesterday.
The fresh proposals, presented to the social partners during a Malta Council for Economic and Social Development meeting, stagger over three years the removal of the present industry subsidy, which sees their surcharge bills capped at €50,000. But that will mean that about 36,000 SMEs will see their bills go up by €5.50 a week.
The body representing the affected class, the Chamber for Small and Medium Enterprises - GRTU, reacted strongly. "We are ready to pay tariffs on the energy we consume but not prepared to be burdened with other people's costs," its president, Paul Abela, insisted.
Households, on the other hand, will not be covering the cost to phase out the capping, estimated to cost about €35 million. However, the majority will still see their electricity bills go up by between 65c and €1.85 per person per week under the new regime.
Finance Minister Tonio Fenech excluded an upfront cost of living increase to make up for this adjustment, saying that international forecasts do not indicate inflation.
As with the original plans, which were shot down earlier this month, both unions and employers left the meeting disappointed that the government intends to forge ahead with or without their consent.
"When practically all social partners asked to meet again for our feedback, the minister (Austin Gatt) said clearly that there is nothing to comment about and that the government would implement what was presented..." the General Workers' Union's general secretary, Tony Zarb, said.
The new proposals cut the total amount Enemalta was planning to rake in by €60 million, down from €365million. The shift, Dr Gatt said, was based on "an educated guess" on future oil prices.
The tariffs will be reviewed by Enemalta and the Malta Resources Authority every six months or if oil prices fluctuate by 15 per cent.
Residential tariffs will include a two-level eco-reduction that will be compensated for with a seven per cent penalty for those who exceed the ecological benchmark of 1,500 units per person each year and 2,000 units for single-person households. More than 60 per cent of households already consume less than 1,500 units per person, according to the government.
However, this figure was questioned by leading environmentalist and physicist Edward Mallia, who says the benchmark is "unrealistic".
Despite the negative reaction of the social partners, Dr Gatt insisted that there was a consensus on a number of principles, including the need to recover the costs of Enemalta and the removal of the capping on the energy subsidy for industry and hotels, although there was no agreement on how this would be carried out.
The government is proposing the removal of the capping over the next three years, phasing it out completely by January 2012, with industry benefitting from a €12.4 million next year, €8.6 million in 2010 and €4.4 million in 2011.
Water prices have not yet been worked out, with Dr Gatt saying this will start being computed now.
"Nobody likes to announce such increases but realities are realities and we need to pay for oil," he said.
He insisted that the new proposals removed cross-subsidisation, which he described as a wrong practice. However, earlier on the GRTU made clear it was angry at the fact that its members would have to foot the cost of subsidising big industry for the next three years and expressed its intention to order small businesses not to pay bills imposed on them to appease others.
Dr Gatt said the GRTU was on its own in its criticism, which was not shared by other businesses that do not enjoy capping.
Yet, the president of the Malta Employers' Association, Pierre Fava said the new proposals will put a dent in everyone's purchasing power and are expected to bring out painful groans from everyone. People will have to change their lifestyle and industry adapt to the removal of capping.
Workers' unions are asking for compensation with the Confederation of Malta Trade Unions saying workers could not carry any more burdens, which should be distributed across the board.
Stefano Mallia, from the Chamber of Commerce and Enterprise, was the only one not to criticise the proposals in comments to the media, although he said they would hurt everyone. He said this was a move in the direction the chamber wanted with the government trying to distribute the burden among everyone.
"We need to make tough and factual decisions also in view of the international situation," he said.
At a press conference late in the afternoon, the Finance Minister said the new tariffs have to be linked with the proposals for next year's budget, with the government expected to focus on incentives for alternative energy initiatives to the tune of €20 million.
"This is the only way to solve problems. Subsidies are only a painkiller and not a medicine prescription to help improve the situation."
"We need to inject investment in the economy and not solely local consumption, which will not increase the country's productivity."
He said the government will be announcing the revised subsidies for some 30,000 families in the budget for 2009.
Dr Gatt said that until August the government had forked out €55 million more than the projected €16 million in subsidies targeted towards everyone. "We need to plug the existing hole."
The social partners meet again tomorrow to discuss the budget proposals.
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In Discussion
25 Comments
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Nigel Lawrence
Oct 26th 2008, 19:28
@ Duncan Sant
If you really think that the internal combustion engine is up to 60% efficient, you're living in fantasy island.
l Galea
Oct 24th 2008, 22:28
E Gatt
"Another possibility is to introduce a super surcharge on households that exceed the average by (say) a multiple of 3."
First the average has to be realistic not something which some idiot thought about in his/her narrow mind. Are we going to stop using fridges, washing machines, no TV, no computers etc etc etc so as not to exceed the quota?
Are we going back to kerosene lamps (oh we can't because kerosene is also very expensive) or candles?
Oh how romantic, dinner by candle light!
Pity our computers and the rest of the household equipment does not run on candle power.
Duncan Sant
Oct 24th 2008, 20:51
Dear Chris Ripard,
If you think that by buying an electric scooter (and presumably plugging it in an electric socket to charge) you are better off... think again.
Environmentally it is not worthwhile simply because an internal combustion engine is 50%-60% efficient, while our Power stations are only about 30% efficient. So environmentally it's not worth.
j.camenzuli
Oct 24th 2008, 17:23
Residential tariffs should be same for every person and not discriminate against a certain category of people. My last bill was 1300 units for 2 months (2 person household) and I am one of those who watch what I use to cut down on my water and electricity bills.
For once, I am all behind the GWU and I will support any action taken by all unions regarding this topic.
The PN knows that they have no chance of being elected next time and they want to hammer the population to achieve their wanted 2010 surplus.
Phil Press
Oct 24th 2008, 17:23
Reading these figures. I think it is goodbye to industry and hello to more hotels. Malta will need the as it seems it going to be cheaper living in a hotel, than stopping at home!!!.
A Fabri
Oct 24th 2008, 17:01
It's niece to hear the Govt. proposals than how to minimize energy consumption.......in their departments and in their homes!!!!!!!!!!!!!!!
It's not a problem that myself share the burden with all my fellow citizens........but President, Prime Minister, Ministers,Political Parties, Illegal Imigrants, The Chutch etc... are sharing the burden with us in this limbo.
Now we are paying for past mistakes.......and the culprits are relaxed and enjoying some hefty pension.
carmelo briffa
Oct 24th 2008, 16:50
Dear All lets all of us look for the candles and the kerosene lamps, sorry forget that the kerosene has triples in the last 5 years. So lets do without and we all have to immagine that we are still in 1939 war. Those times they were Black out or dark black blankets so one cannot see the candle as it was a target and criminal offence at the same time. Now we are 68 yrs.away from the war. We have jacuzzi in the bathrooms ----cannot use water is too expensive. and electicity too expensive. we have washing machine -we cannot use. we have air conditions -sorry again we cannot use. we also have diers sorry we cannot use- we pay extremely sum of money in VAT but who cares what we pay--we cannot use so lets all die we will need no electricity, no water, no more budgets just only funeral expense and our GOVERNMENT will pay. But all who represent us at the Parlament they all can afford to have what we cannot have----JUST LAUGH and everything will be OK ha ha ha ha ha ha
Louis Gialanze
Oct 24th 2008, 15:26
These utility rates are so unfair on the small firms. Paying for the excess of others - the heavyweights, is tantamount to daylight robbery. I am quite certain Brussels will not want to identify with such lack of good sense.
Back to the drawing board Austin!
E Gatt
Oct 24th 2008, 15:26
The Government should consider giving the ‘Capping companies’ preferential rates only if these pass a green test. Eg Hotels must have a minimum of 80% of their lighting as energy saving lamps and factories should undertake to install solar panels in proportion to their floor or roof area.
Another possibility is to introduce a super surcharge on households that exceed the average by (say) a multiple of 3.
l Galea
Oct 24th 2008, 14:52
From http://euobserver.com/9/26984
"In a fresh surge of economic patriotism, French president Nicolas Sarkozy - whose country currently holds the six-month rotating EU presidency - on Thursday (23 October) announced plans to create a "sovereign wealth fund" to aid French businesses in the wake of the global financial crisis....."
And our Government is doing the opposite of everything that is being made by other countries!
M. Grech
Oct 24th 2008, 14:11
You can stay within that band if you own 'maybe' a summer residence.
If you have a look at one's bills and make some simple maths,
the 1500 units per year is ridiculously low.
When are we going to get serious about matters?.The incentive...dahk fil-wicc.
Chris Ripard
Oct 24th 2008, 13:21
Nobody enjoys paying more for electricity/fuel/petrol but instead of whinging, many of us could walk more, cycle more or do as I did - buy an electric scooter. The latter is saving me 5 - 10 euro weekly already and this will undoubtedly rise when the weather gets better. Not to mention that it reduces emissions, traffic, car-service bills & c.
E. Azzopardi
Oct 24th 2008, 12:52
Just by looking at the calculations of the increase per household, one notices that in many instances those who use MORE electricity have a lesser increase. So where is this incentive? I really cannot comprehend what is happening. And to use this famous phrase of many Maltese which I hate so much, all together now ; ''Heq, mhemmx x'taghmel?
l Galea
Oct 24th 2008, 12:18
L Buhagiar
The Government got its statistics by including every registered consumer, whether it is a holiday flat, garage, boathouse or whatever.
So you see when you increase the divisor you will always get a smaller number.
Shame on the Nationalist Government for taking us back to the zmien il-lampa u l-lampik and for lowering our standard of living.
Shame on the eu petty dictators for imposing VAT on the water and electricity bills to compound our suffering.
Shame on you both.
victorvella
Oct 24th 2008, 12:12
Now please do not get me wrong here,I am against all increases in the cost of living, but we have to admit that Malta is a country on Mother Earth, the other countries on this planet are all suffering from increased costs due to the oil prices, what do we expect?I only blame previous administrations for not driling for oil when they all knew that Malta has it's own reserves, why did we stop when Gaddafi stamped his feet? are we truly free? do we still have strings tied to the dictators words and actions, are we puppets?had we drilled for oil in the 70's by now we would have oil to spare and be in a much better position
John A. Azzopardi
Oct 24th 2008, 11:54
It is a well known fact that hotels, large industrial and government establishments, leave their lights on during the night. Amongst other reasons they do this for "security purposes" sometimes putting on large comsumption floodlights etc.
Normal domestic households do exactly the opposite - generally speaking, they switch off lights when they go to bed.
I cannot honestly understand how any brilliant politician or high government official expects the middle class wage earner, who is the true taxpayer, to sit still and enjoy paying for this blantant discrepancy and injustice.
I dare any politician - whichever colour he represents - to speak up and safeguard the interests of his/her constituents, and veto this gross and grave injustice.
Or do I get it wrong? Do these "untouchables" pay the same rates that we mortals pay???
Andre Pizzuto
Oct 24th 2008, 11:45
Government's attention is focused soley on reducing energy consumption. I feel that this should be coupled by active programs for reducing the cost of production of energy which is the real problem here.
Renewable energy is not a buzz word or an environmental target, but a fundamental long-term economic solution to containing energy cost, protecting competitivity and reducing our international economic vulnerability.
A Daley
Oct 24th 2008, 11:36
Dr Gatt said that until August the government had forked out €55 million more than the projected €16 million in subsidies targeted towards everyone. "We need to plug the existing hole."
Oooo la la, so now he admits he’s got a hole to fill!
So why is Dr. Gatt now admitting that Labour was CORRECT to get rid of the subsidies in 1997 when Oil price was less then $20? Why did PN make such a big fuss to gain political advantage in 1997, when they KNEW all along, that once in the EU, ALL subsidies would have to go? The suffering should have come when Oil price was low!
You are trying to change things now, when we are entering a recession and difficult times for families.
You wasted 17 years in deceitful advertising of change and yet you left everything ticking till it collapsed, just like the Marsa Power Plant, which was supposed to have been decommissioned ages ago!
Same with the Dry-docks, bread etc!
Should we expect a weekly increase of Euro 30 ???????
Ser toqtlu n-nies bil-guh!
Hypocrisy and deceit come to mind.
I'll leave that with the 49% that swallowed the bait!
Taste the difference!
B Sant
Oct 24th 2008, 11:30
The Middle class rightly so has given this party its trust for record breaking number of years. Now the same party seems he is targeting a different class of people.I am sure this energy bill will be the end of our trust in this govt.
For all these years the state has been a spenthrift. It never made up for rainy days not even during the good old days. Now in view of the worldwide economy all govts want to protect their citizens through added gurantees and capital injections. But the govt cannot sustain this for long if things turn out for the worse. The electricity bills excuse would be a good cushion for him.
Joe Vella
Oct 24th 2008, 11:08
@ Carmel Tonna
"However, less electric consumption equates with a lower standard of living. At the extreme we should return to the kerosene lamp or better to our caves.
I submit to you that it is time for those who are cautious with thier use electricity to stop subsidizing what seems individuals like you who have all the disregard and waste as there is no end. If you want ot leave your lights on all day and nite, then be prepare to pay for it and don't excpect others to help you along in paying for it. Period
david agius
Oct 24th 2008, 10:30
what about the other oil products? I believe that some sort of cross subsidy is present at the moment to keep the fuel surcharge 'low'? so once the new rates kick in do we expect the price of petrol, diesel and kerosene to go down especially with the price of crude getting lower and lower? And the taxes we are paying for the government to subsidy Enemalta will these go down too?
P.Schembri
Oct 24th 2008, 10:28
RPPtP. Robbing Peter to Pay Paul. That's what I call politics. And who's going to pay for the burden in the long run? Of course no one else but Ganni Borg.
paul micallef
Oct 24th 2008, 10:23
How will the half yearly revision in tariffs work? What is the benchmark for the present rates? Will the revision be based again on the price Enemalta purchses its fuel oil requirements for the power stations for the previous six months? Will the losses or surpluses in Crude Oil hedging have any bearing on the revision?
carmel tonna
Oct 24th 2008, 09:27
Consuming less electricity is being presented as an eco positive step towards less pollution.
However, less electric consumption equates with a lower standard of living. At the extreme we should return to the kerosene lamp or better to our caves.
Long live the coffee mornings at the MCESD. Members should stay in their offices if they want to drink coffee.
As standard practice, Government runs circle round them members. Only Vince Farrugia seems to have the guts and brains to resist a lowering standard of living.
L Buhagiar
Oct 24th 2008, 09:26
According to the schedule it seems that the for a two person family the highest increase is in the 3001-4000 band which probably is the realistic consumption and not the 1500 units that the Government is imposing. I would like to see the statistics of the bills where he got the information that around 60% of the families fall under the 1500 upp benchmark. Probably this would be another kick in the butt to the middle class who probably are fed up with subsidising the economy.