An opposition motion to revoke two legal notices setting the new electricity and water supply tariffs was defeated yesterday by the odd vote in 69 after a 150-minute debate. Prime Minister Lawrence Gonzi maintained the current tariffs mechanism should be retained so that the country could still be able to face the challenges ahead.

Opposition Leader Joseph Muscat pointed out the tariffs were undermining families because this was the highest tariffs raise in Europe - the result of incompetence, inefficiency and squandering of public funds. He said the opposition had given the government the opportunity to change course; if it did not then the people would change the government in the next elections.

Introducing the motion, opposition spokesman on resources Joe Mizzi called on all MPs to live up to their oath of allegiance to the people. He accused the government of failing in its duty because it did not believe in accountability and in the regulating authorities.

The new tariffs showed a 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.

Concluding, Mr Mizzi said that although the government had called for more dialogue on the issue, it had already stated that the tariffs would not change.

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

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

The real question was how the country should 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Even if the new tariffs were to be repealed as the opposition was proposing, the high oil prices would still be there.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, he asked.

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 that did not unduly shock the economy or the social sector. As a result it had introduced energy benefits to the tune of €17 million to cushion the impact of the tariffs increase for almost all households. Assistance was also being given to businesses and at the same time people were being encouraged 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 brick wall as had happened in neighbouring countries.

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

The last speaker on the government side, Finance Minister Tonio Fenech, said the opposition had come up with no new proposal on how to address the challenge, only ways of sweeping it under the carpet and telling the people not to worry. The people might not appreciate it at this time, but the government had the courage to call a spade a spade.

The situation needed good government management if the burden was not to be completely shouldered by the people.

The impact of oil prices must be faced through the tariffs. In the pre-budget discussions the social partners had accepted the very difficult scenario worldwide and the government's responsibility to invest as necessary in order to safeguard jobs.

Minister Fenech said the situation was preoccupying, but it was not as bad as other countries'. Before the Budget the principle had been not to subsidise bills but to take all the necessary measures to invest in order to face the energy crisis. There had been a full-scale debate on the cost-of-living adjustment (COLA) and some had even suggested it should not be given this year, but the government had insisted that it should be given in full.

This year the government could not have been expected to advance part of the COLA as it had done the previous year. It had unilaterally decided to top the €7 million energy benefit with €10 million of the projected €14 million increase inherent in the tariffs, which would benefit 97 per cent of all families using less than 10,000 units. He called this a "generous threshold".

Mr Fenech said the principle agreed with industry had been to help economic sectors to invest because the reality of oil prices would stay. The opposition's suggestion had been to drop a capital project and use the money to foot the increases, but what would have happened the next year? Would the government have been expected to fork out €86 million annually and increase national debt?

The people were expecting a clear answer from the opposition on what needed to be done. No doubt it would promise to cut down on waste when elected to power. But if it took people for a ride it would eventually have another Greece on its hands.

The opposition had made no mention of fuel price increases. On return on capital employed the government was factoring in 8.4 per cent, which compared well with the eight per cent of Cyprus and the 12 per cent of the UK.

To have adequate energy supplies and safeguard jobs the government would have to invest more than €400 million in new powerplant, cable connectors and other projects. It was important for the people to understand the real challenges.

What had changed after GWU secretary-general Tony Zarb had said that the Budget was moderate and included many GWU proposals?

Many social partners had not joined the GħUM protest because the government had not departed from its pre-Budget agreement with them.

Rather than looking for more subsidies, they had understood it was better to invest because that was the only real solution: permanent economic growth. The opposition's policies, on the contrary, would stagnate the country.

It was understandable that for manufacturing there needed to be more attention to help factories continue to invest and grow. Several companies were investing because they knew the government was with them, knowing what they needed. EU statistics showed that unemployment in Malta had gone from 7.2 to seven per cent.

Did the opposition know that Cyprus had lost 11 per cent of its tourism when Malta had lost eight per cent? That decrease had followed another year of decrease for Cyprus, while for Malta it had followed a year of increase.

Concluding, Minister Fenech said the government was being loyal to the people.

Winding up the debate, Opposition Leader Joseph Muscat said he believed that every MP had the good of the country at heart, even if the two sides had different visions. He refuted what the Prime Minister was quoted as saying, that the opposition wanted to harm the country. The opposition had never incited foreigners not to invest in Malta, he said.

Before the elections the government had promised subsidies on energy tariffs and a budget surplus, but the reality today was that Malta had never had such high energy tariffs and the highest deficit and public borrowing in its history.

Dr Muscat said that Malta had registered the highest increase in energy tariffs in the EU. This did not include increases in the price of gas.

Between December and January gas and energy prices had increased by 29 per cent when the average increase in the EU amounted to one per cent. The government was incompetent, corruption was rife and public money was being squandered.

Dr Muscat said the Finance Minister had been quoted as saying that the price of oil was to increase to more than $110 in 2011. But last month he had sent a report to the EU saying that for 2011 the price of oil would be around $80 per barrel. The minister had to decide.

He declared his solidarity with the protesting unions, adding that they had suffered all sorts of personal insults over the past few days. He said that if the 26,000 families which the government claimed were getting subsidies surpassed the ceiling by €1, they would not benefit from the subsidies announced in the Budget. The government was also introducing a tax on sewage. It was also telling thousands of families that they did not deserve any benefit because they were wasting energy.

NSO statistics for January showed that unemployment had increased by 790 over the same month last year. The utility tariffs and the government itself were the greatest threat to employment, with statistics showing that unemployment would continue to increase.

Dr Muscat said the government had ignored the opposition's proposal before the 2009 and 2010 budgets. The proposal on the return for capital employed would have meant €15 million less in tariffs. The government was also ignoring that people were paying five per cent VAT on tariffs. These would increase with larger amounts paid.

The government was so inefficient that it had set up ARMS Ltd for issuing of bills, creating jobs for the boys.

Instead of increasing tariffs, the government could have sold the Drydocks at a much higher price, and not for just €1.75 million per year.

It had also lost Lm42 million on two ships. The Nationalist government had also lost Lm120 million on Air Malta's RJ 70 aircraft, was giving €4 million in commissions and €58 million to buy back its electoral promise to bus owners.

It had also spent €21 million for Dar Malta and lost €200 million in the VAT corruption case. Another €16 million had been projected to be spent for the withdrawn co-cathedral project, and €126,000 in celebrations to inaugurate St George's Square.

That was the real pantomime, added Dr Muscat.

Concluding, he said the opposition had given the government an opportunity to change its course.

If it did not, then the people would change the government in the next general elections.

The opposition motion was rejected by 35 votes against and 34 in favour.

Also taking part in the debate were Labour MPs Anġlu Farrugia, Gavin Gulia, Carmelo Abela, Marlene Pullicino, Silvio Parnis, Marie Louise Coleiro Preca, Leo Brincat, Charles Mangion and Gino Cauchi, as well as Ministers George Pullicino and Austin Gatt. Their contributions will be carried tomorrow.