A popular protest by nature is a political statement. Whether it is a “partisan” statement or not is a different issue. Most people do not take lightly to the streets. Demonstrations occur because people feel their voice, or interest, is being ignored. Demonstrations are a legitimate expression of democracy, which is more than going to vote every five years.
Last Friday, the Labour Party led a national protest about the ever-rising prices of energy products. The people sent a clear message to the government: You are in power so we expect you to look after our needs. We realise the international prices of oil are up but you should do more, and better, to buffer their impact on our society. There was a time when the Nationalist government removed hedging arrangements on grounds that these tended to be speculative. Now the government tells us it has hedged the procurement of fuel oil (used by the power station) but not of other fuels. Why not?
Hedging is no magic formula for low prices but then neither is it sheer speculation. Professionals closely monitoring the oil and currency markets should be able to indicate the right time to buy. Gas is a different matter as procurement now is with the private sector. The government (or is it the Malta Resources Authority?) still has a responsibility to ensure this is taking place in a cost-effective way. The price of commodities depends in a big way on the ability to buy significant quantities at the right time. There are ancillary costs, such as freight and insurance costs, with exchange rates impacting significantly on the final price.
In a small island economy, privatisation and liberalisation will not necessarily result in lower prices if procurement is fragmented. The government needs to assess its policies so as to ensure the consumer does not end up burdened with high prices due to increased inefficiencies along the supply chain.
The government has removed all energy-related cross-subsidisation in the belief that market forces will reduce wastage. While there is some truth in this, the government never mentions that energy prices are pushed up by excise taxes as well as VAT. Incredibly, the only winner from rising energy prices is the government. Also, there is little scope in taking a “still-shot” of prices across the EU. Each country has its own story and that is why prices tend to differ so much. There will always be a country which has a lower or high price for some energy product or other. What is obvious is that the age of cheap fossil energy is gone. Malta is doing too little, too late to foster the use of alternative energy. This too is the result of political decisions and the government should assume responsibility for it.
The energy prices we consumers have to pay today are also the result of lack of foresight, unwarranted vested interests and other misjudged political decisions. Imposing more taxes on fuels in Budget 2011 must have either been a “knee-jerk” decision or consumers are being taken for a ride. Granting, or not granting, an energy voucher too is a political decision. But now citizens and consumers are being told not to expect any “panic” decisions and that the energy issue should not be politicised. Humbug.
It is unfortunate the government seems to have assumed a life of its own, obsessed with its own well-being. There is always somebody, or something, else to blame. Thank God for such a considerate and efficient government. And in the meantime, our society is ever more divided. The PN government has long lost its social conscience but this fact is now troubling the party’s genuine supporters. They too want responsible and accountable politicians. They too are bothered by politicians who are just after personal gain. They want politicians who empathise with the people. This is what they believed when they were told that “il-finanzi fis-sod”.
The government has become a victim of its neo-liberal policies. The socio-democratic principles upon which modern Malta has been built are being severely tarnished. The Malta Council for Economic and Social Development is discussing some form of compensation for hard-hit families. Coming so soon after Budget 2011, this makes a mockery of social dialogue. Procrastination does not help solve problems. The way the retail price index is calculated does give due consideration to the plight of disadvantaged households. Data from the 2008 Household Budgetary Survey can be speedily updated to estimate the impact of increased energy prices on the middle and lower classes.
The key issue is not whether there should be compensation but rather how will it be financed? This is a political decision with significant economic implications. Government finances are already over-stretched and there is a real risk of incurring EU penalties if the fiscal deficit targets are not met. Employers say they are in no position to carry any more costs. There is no easy way out. The cow is fast drying up. A one-off compensation will offer some relief to those families most in need.
Luckily, some of us may afford to pay higher fuel prices. What we cannot afford, and we do not want, is mismanagement and a growing socio-economic divide. This is why last week’s national protest had such broad support.
fms18@onvol.net