Gas price increase will fuel pay demands - Muscat

Labour leader Joseph Muscat slammed the gas price increase today, saying it would fuel demands for pay rises.

Speaking at a political conference in Lija, he said that gas prices had in a year increased by 250%.

"This is an essential commodity, something which the people cannot do without," Dr Muscat said.

The situation was made worse because following the hike in electricity prices, many people had converted their heating to gas, he said. Many people would therefore face far higher costs when winter came.

Dr Muscat said the raising of the energy benefit was the minimum that the government could have done, and it was not enough.

The increased energy benefit would cost the state some €750,000 but the price increase would cost the people €4 million. A

s usual, Dr Muscat said it would be the middle class which would be worst off.

This would also harm businesses, for whom there was no compensation. A 30% increase in costs was no joke. It was useless of the government to claim it was working for a better business environment, when costs were then allowed to costs.

The gas price increase was especially harmful to tourism - this was the peak season for restaurants while hoteliers had already committed themselves for next year, he said.

The bottom line in all this would be higher prices which would push demands for higher wages.

Soon, Dr Muscat said, employers and unions would start to argue on who should shoulder the burden. But the argument, really, should not be over who should shoulder this burdens, but who was causing them in the first place.

The opposition had insisted during the privatisation of the gas division that consumers should be safeguarded. Malta now had a private monopoly instead of a state monopoly and prices had gone up steeply, even though international gas prices were down.

Last year the increased gas prices were justified by the governemnt on the basis that state subsidies had been removed. So why had prices now gone up by 32% when the eurozone price increase average was 1%?

Dr Muscat said the regulator - the Malta Resources Authority - needed to be independent of the government. But the fact that the government came out with its energy benefit adjustments just minutes after the new gas prices were announced showed that the governemnt knew what would happen beforehand.

The MRA needed to publish all the workings which led to the latest increase. This was not an issue of confidentiality. EU rules should apply to Malta too, Dr Muscat said.

MEDICINE PRICES REVIEW

Referring to the review of some medicine prices, Dr Muscat asked why the process took so long and said the prices of more medicines - including several in very popular use - needed to be brought down.

Regarding the suspension of EU funds for education programmes, Dr Muscat insisted that the minister should, and must, have known what was going on, particularly as the matter was in her ministerial hand-over document.

Indeed, the minister was now changing her tune - instead of saying she did not know about the matter, she was now saying she was not told about its seriousness.

He also questioned how the government was considering buying Dr Frank Portelli's hospital (St Philip's) when it had three vacant hospital buildings.