An Opposition motion to repeal the new utility tariffs was defeated in the House of Representatives this evening, with all 35 government MPs voting against it and the 34 Opposition MPs voting in favour.

The motion was moved by opposition utilities spokesman Joe Mizzi. The debate was held after two protests in Valletta by the Ghaqda Unions Maltin. Representatives of the trade unions were in the Chamber for the debate.(see separate story).

In comments after the sitting, GWU General Secretary Tony Zarb criticised the government MPs and said this had been a betrayal of the people and evidence that the government was insensitive to the plight of the people.

The following are points from the parliamentary debate as it unfolded:

JOE MIZZI - Resources Authority was disloyal to country and people

In his introduction when moving the motion for debate, Mr Mizzi said that at the time when the economy needed a stimulus because of the recession, the country was instead being burdened with new utility tariffs which were undermining competitiveness.

Such tariffs were endangering jobs and making it difficult for many households to make ends meet.

Furthermore the new tariffs were the result of inefficiency and mistaken decisions by Enemalta.

He said the tariffs had been introduced without consultation with the social partners, and the new rates were now among the highest in Europe.

Furthermore, the new tariffs structure also introduced a new sewage tax.

He said that in terms of the motion, the House was therefore being asked to revoke the new tariffs.

Mr Mizzi said the way the new tariffs were introduced showed that the government did not believe in transparency and accountability.

Furthermore, the new tariffs showed the failure of the Malta Resources Authority to act independently as a regulator to protect the people's interests. It appeared to be more interested in defending the government and Enemalta. It was clear there was interference in the way the authority operated.

Mr Mizzi said the new tariffs were higher than those introduced in October 2008, even though the oil price had dropped.

PRIME MINISTER - The increase in oil prices is inescapable, how to deal with it is the issue

Prime Minister Lawrence Gonzi said the crude oil price six months ago was $40. Now it was $80 and the Opposition wanted to ignore all this. Whatever one said about inefficiencies, the fact that the oil price had doubled in six months could neither be denied, nor hidden.

When the oil price dropped, Malta had reduced the tariffs according to the established mechanism. Nobody complained about the mechanism then.

The real question was, how should the country react when oil prices, over which it had no control, rose. One way or another, the increased costs had to be met.

Even if the new tariffs were to be repealed as the Opposition was proposing, the high oil prices would still be there. How was the country to respond?

The medicine was bitter, but it had to be taken. The government felt Malta should have a system which fluctuated with oil prices in a flexible manner which did not shock the economy or the social sector unduly. As a result it had introduced the energy benefits scheme to cushion the impact of the tariffs increase for almost all households. Assistance was also being given to businesses. At the same time people were being encourage to use energy saving equipment.

Dr Gonzi said he agreed that the people should not pay for inefficiencies at Enemalta, and they were not. That burden was being shouldered by the government.

The government was also working to be able to decommission the Marsa power station, but that would not be possible if this Opposition motion was approved. If the tariffs were repealed, the full weight would have to be borne by the government, and government finances would be driven into a wall as had happened in neighbouring countries.

The current tariffs mechanism should be retained so that the country could still be able to face the challenges ahead, Dr Gonzi said.

ANGLU FARRUGIA - People paying for sins of PN administrations

Labour MP Anglu Farrugia underlined the impact of the tariffs on businesses and said it was symptomatic that unemployment was continuing to increase. Electricity prices in Malta were 35 per cent higher than in Cyprus while salaries here were lower.

The people were clearly paying for the sins of Nationalist administrations.

GAVIN GULIA - All social partners disagree with the government

Gavin Gulia (PL) said no trade union or employer association was agreeing with the government, but the prime minister was continuing to persist in his error. The self-employed were among the worst affected sectors - they would face higher business bills as well as higher bills at home. Private sector organisations such as the GRTU had warned that the tariffs could mean hundreds of job losses. It was time for the government to heed the warnings.

CARMELO ABELA - Government assistance should be in a manner which makes sense

Labour MP Carmelo Abela noted that Helga Ellul, president of the Chamber of Commerce and Industry had also warned about the consequences of the tariffs and the lack of consultation before their introduction. These tariffs would further harm the manufacturing sector because they were higher than in competing countries. Government assistance, he said, should be in a manner which made sense.

RESOURCES MINISTER GEORGE PULLICINO - Unions refused consultations with MRA

Resources Minister George Pullicino said that in February last year , the Malta Resources Authority launched a process to establish the principles and the formula on which tariff adjustments were to be considered. The GWU and the other unions did not make any submissions. Last November, the Ghaqda Unions Maltin was given another chance to send its comments on the principles by November 30. Again there were no submissions. The unions therefore had refused to participate in this public consultation.

The principles were that the corporations could not make a loss; that the tariffs would enable the corporations to be sustainable; that the tariffs would not discriminate among various groups of consumers; and that the process of revision would be transparent to enable consumers to understand how the tariffs were worked out.

When the tariffs were announced, the government published all relevant documents and social and industrial impact assessments, which the Opposition, the GWU and some other unions did not appear to know about.

The minister pointed out that the MRA had reduced Enemalta's original tariffs request by €8 million. Therefore, the Authority was far from being the rubber stamp which Mr Mizzi had made it out to be.

The minister also pointed to government initiatives to help the people reduce their electricity consumption, including free energy saving bulbs, subsidies on solar water heaters and photovoltaic units and other assistance for families to buy more efficient white goods.

He announced that a new scheme for the installation of photovoltaic panels would be announced soon in view of the success achieved in another scheme last week.

MARLENE PULLICINO - Tariffs reform came at the wrong time

Labour MP Marlene Pullicino said the crucial point was that the tariffs structure was changed at the wrong time. At a time when other countries were seeing how they could put money in the pockets of the people and businesses, in Malta, the opposite had happened.

Ms Pullicino said the Opposition agreed with the measures for the people to use energy saving equipment, but it was too little, too late.

Furthermore, the government was making wrong choices in the equipment for the extension of the Delimara power station.

In 20 years, the government had been unable to come up with a proper energy plan, and the country was now seeing the consequences.

SILVIO PARNIS - Government compensation not enough

Labour MP Silvio Parnis said the compensation being given by the government was not enough to cover the increased costs. The people were going through hard times and they had a right to make their voice heard. Mr Parnis said he therefore wanted to thank the trade unions which were taking up the people's pleas.

MARIE-LOUISE COLEIRO PRECA - No tourism stimulus package

Marie Louise Coleiro Preca said the fact that the government was ignoring the people went against democracy. The Labour MP said the government had still to reach final agreement with the private sector organisations with which talks were being held. The MHRA had warned that the tariffs would put the tourism industry in an uncompetitive position, at a time when competition was cutthroat. A quarter of Malta's GDP came from tourism, yet Malta did not feature in a WTO survey of tourism stimulus packages.

LEO BRINCAT - Government failed to take timely action on renewable energy

Leo Brincat (PL) said the government still needed to convince its own people about how oil purchases were being made. He hit out at the government for having failed to take action on renewable energy when it should have. As a result, Malta was reliant almost completely on oil purchases. There was still no energy strategy and current decisions were being taken in a vacuum. Malta was now paying a bitter price for using old technology to produce its energy. The Labour MP also criticised the imposition of 6% interest on late payment of electricity rates.

INFRASTRUCTURE MINISTER AUSTIN GATT - No opposition proposals

Minister Austin Gatt said seven Opposition MPs had spoken, but no one had proposed how Malta should face the high oil prices. Over the year, Enemalta would spend $207 million on oil purchases, 73 per cent of its total costs. The tariffs, he insisted, were based solely on the international oil price. They did not include inefficiencies over which the corporation had no control.

Dr Gatt said that oil and gas prices had risen steeply since April and there was hardly anything Enemalta could do on its own to cushion such an increase. While the tariffs had gone up, it was also a fact that the government would fork out €41 million in subsidies and other assistance. If the tariffs increases were to be repealed, the government would have to find another €84 million. How? By reducing funding for education, health or other sectors? The government's economic management had helped Malta avert situations such as that of Greece, and it would continue to take such decisions, however initially unpopular, to ensure that the economy could remain sustainable.

The government should not subsidise consumption and those who were not careful in the way they used electricity. Government should only subsidise those in need, Dr Gatt said. And it was about time that the opposition became serious rather than assuming positions only aimed at making itself popular without saying how costs would be met.

CHARLES MANGION - No explanations on how oil purchases made

Dr Charles Mangion (PL) demanded explanations on how oil purchases were made and insisted that the tariffs did include Enemalta inefficiencies and other costs. The sorry fact was that the various sectors of the economy did not know which way the government was going.

GINO CAUCHI - No sense of social dialogue

Labour MP Gino Cauchi said this was an arrogant government which ignored the MCESD before announcing the tariffs. It started talks afterward, on condition that the tariffs were not reduced. Was there need for further proof that the government had lost every sense of social dialogue? Mr Cauchi praised the Ghaqda Unions Maltin for their report on the impact of the new tariffs and said the government was ignoring the impact of the tariffs on the economy.

FINANCE MINISTER TONIO FENECH - People asking what PL would do

Minister Tonio Fenech said he too marvelled at how no one from the Opposition had made any proposal on how this issue should be tackled. They acted like the oil prices were not rising and could be ignored.

In the pre-Budget talks, the focus of the talks with the MCESD was to ensure that the country could weather the economic storm and protect jobs, rather than introduce subsidies which did not do the economy any good. Some forgot, however, that the Budget included a cost of living increase which was given despite opposition from some quarters, and the direct assistance given to households to cushion the impact of the tariffs.

The government also agreed with the social partners that it would help the various productive sectors to invest, because that was the best way to cope with oil prices which were expected to continue to rise. The tourism sector, for example, benefited from measures to bring more tourists to Malta, not higher subsidies.

Mr Fenech said the government had kept to the commitments it made in the Budget, which was why the private sector organisations and the CMTU unions had not called the people to the streets. The talks with the private sector organisations were continuing. They were not calling for subsidies, but assistance to invest, because that was what the economic agenda demanded.

Had the government instead decided to increase subsidies because of the oil prices, it would have caused the national debt to rise by €86m year after year. And Malta would have ended up like Greece.

The people's question to the opposition was: What would you do?

OPPOSITION LEADER JOSEPH MUSCAT -

Winding up the debate, Opposition leader Joseph Muscat said government decisions were undermining families and jobs. Before the election the government promised subsidies and a budget surplus, but the opposite was happening.

The government had said it had reached agreement with the MHRA on the tariffs. Where was it?

The people were suffering the steepest increase in electricity tariffs in Europe, an increase of 29 per cent in January over December, while the new increase in gas prices was being kept under wraps.

Bills now were higher than when the oil price was in excess of $100. This was the result of corruption and incompetence by the government. The finance minister had said yesterday that he expected oil prices to continue to rise, to up to $130. Yet in a report to the EU, the Maltese finance ministry had said that the oil price in 2011 would be $80. Which was the correct figure?

The PM had said that subsidies were needed for a social purpose. Yet he was introducing the sewage tax. The government was saying that those people who were not being helped, did not need to be helped.

The new tariffs were a danger to jobs, as much as the government was a danger to jobs, Dr Muscat said. In a year, unemployment had risen by 770.

The Opposition had, months ago, made proposals to tackle the tariffs, but they were ignored. Just one proposal, on the calculation of the return on capital employed, would reduce costs by €15m.

The government had now set up a new company ARMS, which constituted jobs for the boys, but bills had not been issued.

Dr Muscat said the government was saying it had no money for oil purchases, but it found money for other purposes. It was selling the dockyard for a song. It had eaten up €120 million in Air Malta reserves on AzzurAir and the RJ70 aircraft; €2.5 million on the bridge to nowhere at the Grand Harbour breakwater; €4m in commissions for the new power station, €58 million to buy back the promise to the bus owners, €21 million for Dar Malta, €200 million in VAT corruption, €160,000 on festivities for the inauguration of Palace Square, €16 million for the planned quarry in front of St John's and €80 million for city gate and a theatre where one would need an umbrella.

The government, Dr Muscat said, needed to change direction, or the people would change the government at the general election, he concluded.

The sitting was then suspended for 20 minutes before the vote is taken.

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