Utility tariffs: Important for Malta to achieve emission reduction targets - PM

Prime Minister Lawrence Gonzi said this evening that the utility tariffs would be reviewed according to a fair, independent and objective mechanism based on market prices, but there would be no return to a system which did not encourage people to reduce consumption.

Dr Gonzi told Parliament that an Opposition motion calling on the government to annul the new tariffs system went against the national interest.

Not only did the Opposition proposal not encourage energy savings, but it undermined Malta’s efforts to reduce energy consumption and carbon emissions and increase the proportion of energy produced from clean sources. Failure to achieve these targets by 2015, in line with international commitments, would be costly to the country, undermining its competitiveness to the detriment of the workers.

In an hour-long speech, Dr Gonzi also hit out at trade unions whose proposals, he said, amounted to a one-size fits all formula which ignored the demands of social justice where needy people, including large households, were given specific assistance. This, he said, was a brand of socialism not seen for 20 years.

Dr Gonzi said the old tariffs system had not encouraged savings of power and water. Nor had it encouraged industry to invest in energy saving measures which brought about sustainability.

The government had therefore initially introduced the surcharge as a means how bills could reflect the fluctuation of oil prices, as was already the case of prices at the pump.

That system was then replaced by the current system, which encouraged savings and the use of clean energy.

Dr Gonzi insisted that the introduction of the new tariffs had nothing to do with the fact that the general elections were past. In July, oil prices spiked to record levels and experts had projected a price of $200 per barrel. So did anybody expect the government to stay idle? The government could have done nothing, and the surcharge would have risen from 95% to some 190% while the system would have continued to encourage waste.

Instead, the government replaced the surcharge with new tariffs that led the people to be rewarded, through eco-reductions, when they saved energy.

But the Opposition in its motion said the new tariffs should be annulled. This contradicted what the opposition said about climate change, reducing emissions, and saving energy.

Dr Gonzi said that after his talks with the trade unions, the only outstanding issue was the level of the eco-reduction. The unions were insisting on an equal rate to everyone. What social justice was this? What about the needs of large families?

The government, Dr Gonzi pointed out, was also giving an energy benefit for those who depended on social benefits. Did anyone want this to be removed too?

The new system was based on three principles: that consumers should pay for what they consumed; that the government should not subsidise consumption but should directly subsidise consumers who merited assistance; and that the government should introduce incentives for the adoption of alternative energy sources.

This was a vastly different model than the old one size fits all system.

Dr Gonzi pointed out that the government last year spent €69 million to cushion the impact of the high energy prices.

He spoke at length on the improvements to the new system brought about after his talks with the trade unions in November and insisted there would not be a return to a system which encouraged waste.

The tariffs, he said, would be reviewed in a fair, independent and objective mechanism based on market prices and including the principles of social justice.

His appeal to the Opposition, Dr Gonzi said, was for it to recognise how important it was for Malta to achieve the 2015 emissions reduction targets, on which thousands of jobs would depend.

Speaking later, Resources Minister George Pullicino said that if Malta exceeded its emissions target by 0.05% in 2015, it would be liable for a penalty of €45 million.