Opposition casts doubt on EU directive’s impact on utility bills

Opposition finance spokesman Charles Mangion yesterday warned that the implementation of a European Council directive on excise duty could have a direct effect on energy products. He said that the directive would harmonise excise duty between EU member states, making the market more uniform and competitive. Such products were imported, and as harmonisation was necessary this would surely have an impact on the market.

However, an analysis should have been carried out, the more so after Malta was to have an energy link with Sicily which would cost almost €150 million. One must ensure that distribution of energy would remain competitive.

Dr Mangion said the government should inform the country of any envisaged increases in utility bills, which had already reached a very high level.

Productivity in the private sector was higher than other EU countries. During the last five years Malta’s unit labour cost per hour had been one of the lowest and most competitive when compared with other EU member states. Maltese wages were 40 per cent of those in other EU countries.

Factors which led to such a situation had to be identified. Lack of competitiveness came from wrong measures adopted by the government. Such measures were not good enough in a financial crisis.

Dr Mangion recalled that in 2008 it had been predicted that the price for gas cylinders was to reach €14. At the time the government had denied such a projected price increase. What had eventually happened was that in April 2009 prices increased, with continued hikes in August up to €10.50 a cylinder and today reaching the price of €13. There had been an increase of 32 per cent between August 2009 and July 2010.

In August 2009 Minister Austin Gatt had said that the price was increasing because the last tranche of subsidies had been removed by the government. He had even forecast that the price would go down once there would be more operators on the market.

The same justification was being given today with Liquigas saying that the main reason for the latest increase was the removal of subsidies. But a contradictory reason had been given by the Malta Resources Authority this month, saying the new prices were the effect of increases of international rates and fluctuations of the euro-dollar exchange rates.

Dr Mangion said that in one year gas products had increased by 30 per cent, with the MRA blaming this on international inflation when it was supposed to safeguard consumers’ interests. This increase was 15 per cent higher than in neighbouring Cyprus and the other eurozone states. Where was the convergence with these states? he asked.

In imitating other EU states, the government had completely forgotten consumers’ interests. The explosion in gas prices directly affected families’ and pensioners’ purchasing power.

He asked what the government’s economic and social policy really was when it was advocating that workers accept lower wages while also increasing the prices of essential products.

The increase in prices of medicinal products was evidence of this, with the government taking action a year late. Consumers had still to see how effective the government measures were and whether these dealt with medicines most widely prescribed to consumers.

It was not fair that government entities increase and double fees to consumers when these were given €176 million annually for their operations. A case in point was the high increase in Mepa tariffs because its operative costs were high. Efficiency should lead to decreases in tariffs.

While the government discarded the public interest it was eager to safeguard the interests of a few. This had been evident in the BWSC case after the publication of the Auditor General’s report.

Dr Mangion called on those responsible to ensure that the terms of this contract were respected in the interests of taxpayers and consumers.

At the start of his speech, Dr Mangion accused the minister of having failed to mention that, according to the latest financial report, between 2008 and 2009 the actual income from excise and customs had decreased.

Importance had to be given to the EU directive’s impact on the Maltese economy and families. The government should have discussed in Parliament the economic and administrative affects of this directive, in the light of the fact that administrative costs in this sector were 14 per cent higher than those in other EU members. Consideration on the positive or negative impact on competition therefore had to be deeply analysed in order to see if the administrative costs would increase.

Dr Mangion said that the government should make representations to the EU not to implement the directive without any analysis or if it was in the economy’s interests to obtain an exclusion.

A question which should be considered, he said, was the affect of harmonisation in a country where the government had an increasing debt and deficit, as in Malta’s case. The country’s debt had reached €4,000 million and in the first quarter of this year the deficit had already reached the annual limit. All this was negatively affecting the government’s investment with particular impact on the social sector.

The main focus of the government should have been to assess the implications of the directive and whether this would lead to an increase in duties.