Is there a parallel between Alfred Sant’s promise to abolish VAT in 1996 and the current promise being made by Joseph Muscat to decrease the electricity tariffs? The answer is both a Yes and a No – probably more no than yes.
The Government has been taking the wrong advice from people who should know better- Michael Falzon
In the 1996 electoral campaign, Sant not only promised to do away with VAT but also to do so within six months of being elected. Many decided to give it a try; probably following the axiom, nothing ventured, nothing gained. In practice this promise proved to be Alfred Sant’s undoing: he flopped hopelessly trying to deliver and many never forgot or forgave him that cheap electoral gimmick with which he tricked them.
After his 1996 electoral victory, it was obvious that Sant never had a plan on how to go about abolishing VAT. He extended his six-month limit to practically a year and then came out with a botched-up system that made VAT look better than it ever was.
I do not think that Muscat has not learnt this lesson and it does seem that behind his promise there is more of the beef that was sorely lacking behind Alfred Sant’s promise. First of all, in repeating his promise during some party event the last weekend, Muscat did not set a time limit on the delivery of his promise. If I understood it correctly, the promise is that he would do it during the five-year term of his administration – not in the first few months.
This could eventually present him with a problem, as Lino Spiteri rightly commented in The Times on Monday: in the aftermath of a Labour victory “there would be a likelihood that thousands of households would stop paying utility bills, waiting for the tariffs reduction”.
This is undoubtedly a great danger. This happened in 1996 when Labour promised to abolish VAT and in 1998 when the PN promised to reduce the high water and electricity tariffs established by the Sant government. This is all about managing expectations, and if Joseph Muscat is serious and wants to be credible about his promise, he would do well to warn the electorate beforehand that it will not be delivered overnight. Otherwise, Enemalta will face massive cash flow problems that will make matters worse, problems for which only Muscat’s vague promise would be to blame.
Even so, how Muscat thinks he can pull it off is still not very clear. There was an inkling in the interview of Labour candidate Konrad Mizzi carried in this newspaper last Sunday. Not enough to convince people, but enough to show that there is an attempt at serious thinking behind the promise.
Mizzi insisted that “the current tariffs structure is a consequence of choices and decisions taken by Gonzi Administration” which ended up with no control on the main cost of electricity production: the cost of fuel.
He points out that in 2006, the Government was advised to go for gas but this advice was ignored when it opted for heavy fuel oil in the Delimara Power Station extension. In fact, the policy that Malta should opt for gas was officially adopted by the Cabinet, only to be suspended temporarily just for that particular contract.
I have consistently criticised the power station extension award and I am sure this will eventually go down as one of the biggest mistakes of the current Administration. In reaction to my criticism at the time, a spokesman from Enemalta Corporation simply rubbished me, while minister Austin Gatt believed that all objections to the award were in the service of a losing bidder, a frame of mind that hindered him from weighing up the issue objectively.
The news that the project has now been nominated for a global energy award for innovation confirms that it was not based on proven technology.
Mizzi insists that the Government does not have an energy policy and it is going round in circles. I think the better explanation is that the Government has been taking the wrong advice from people who should know better. Whether ulterior motives are leading to the proposal of solutions that depend on the regular purchasing of oil is simply a matter of speculation.
Mizzi thinks that the solution is to switch to gas. This is no easy matter, even though the Government has now decided to switch the new extension to gas, incredibly before it has been commissioned.
The minister currently responsible for Enemalta, Tonio Fenech, equated using gas with the installation of a gas pipeline on the seabed coming from abroad. This is, as the minister pointed out, a long term project; but surely this is not the only way how to get gas to the power station. Again, somebody is giving the wrong technical advice to the minister.
Muscat may think that he has a vote catching electoral winner in promising to reduce electricity tariffs. His failure to be clear on this promise, and to deliver it if he is elected, might eventually leadto an early end to his budding political career.
micfal@maltanet.net