Austin Gatt, utility tariffs and Mickey Mouse

The omnipresent Minister Austin Gatt is claiming that the 194 per cent surcharge estimated by Labour is a myth. But in the arguments he put forward, he was unconsciously - or perhaps not - confirming the results of the Labour-commissioned studies.

According to the minister, a surcharge of 160 per cent would yield €253 million, but since he now unilaterally calculates that Enemalta needs only €223 million, this would translate into a surcharge of between 125 per cent and 135 per cent.

Thus, the minister is conveniently taking only Enemalta's fuel cost into consideration, with the sole aim of trying to artificially contradict whatever Labour says.

It seems as if the minister failed to refer back to the presentation (New Electricity Tariffs) he delivered to the Malta Council for Economic and Social Development (MCESD) on October 23. On Slide 5 one can observe that the minister stated that the original tariff structure was made to cover Enemalta's expenses, estimated at €365 million. He added that following reconsiderations, he was willing to reduce this estimated cost by €60 million to €305 million, thus allowing him to somewhat reduce the tariffs from those originally proposed.

Thus, the new tariff structure, as the minister then unequivocally indicated, was aimed at financing not only the fuel cost outlay of €223 million but the entire cost for Enemalta of €305 million. Indeed, the €67.6 million costs for Enemalta (apart from those related to fuel), together with the €25.5 million Return on Capital Employed (ROCE), estimated by the Minister at 6.61 per cent, has to be financed from somewhere. The government is clearly aiming to finance this from the new tariff structure, including the rise in meter charges.

Therefore, if according to Minister Gatt a 160 per cent surcharge yields €253 million revenue, then according to simple mathematics, this implies that to yield €305 million revenue, this would be equivalent, in surcharge terms, to a tax of 193 per cent.

This is practically the same estimate produced by the Labour-commissioned study, even though the latter used a different approach to arrive at the figure.

Dr Gatt tries to unsuccessfully write off Joseph Muscat's proposal regarding the night operations of the Reverse Osmosis plants. At present, the Reverse Osmosis plants operate at only around 50 per cent capacity, day and night. This level of production suffices to meet demand for water since in the early 1990s the government opted to invest in more capacity rather than repair and upgrade the distribution system in order to meet the increasing demand. When repairs were carried out after 2000, the government soon realised that it had considerable excess capacity and is now operating only half the Reverse Osmosis trains.

The proposal put forward by the Labour leader is to shift production patterns and operate these plants, at least those which are farthest from inhabited areas, at 100 per cent capacity at night.

Minister Gatt also claimed that a night tariff for households already exists. Dr Gatt is contradicting what the Finance Minister said later during the same day on a TV show, when he said that introducing a night tariff would need further investment.

Finally it is difficult not to comment on Dr Gatt's ego, with his claim that he has a better policy than the United Kingdom when it comes to fuel prices.

Minister Gatt said that the UK diesel prices are €0.27c higher than Maltese ones, while petrol prices are €0.13c dearer. The whole point is not who is paying the highest or lowest price but that fuel prices in the UK are coming down while our ingenious government is increasing the price itself by raising taxes on fuel.

If Minister Gatt feels so much wiser than Gordon Brown because diesel and petrol prices in the UK were respectively 22 per cent and 11 per cent higher than in Malta in October, then he should find it quite easy to come up with smart policies that would cut down the massive 193 per cent hourly wage gap, according to Eurostat, between the UK (€24.47 per hour) and Malta (€8.35 per hour).

The reality is that in the United Kingdom, one litre of petrol or diesel costs between five and six per cent of an hour's wage, whereas in Malta it costs over 14 per cent of the hourly wage rate.

Unfortunately, these are not Mickey Mouse facts but tough realities of thousands of Maltese families who have seen their living standards and quality of life drifting away from European countries who were not run by Mickey Mouse ministers focused on PR spins and strategies, but rather by people committed to deliver the goods to their citizens.