The article by Lino Spiteri makes extremely interesting reading because the underlying premise is that what is consumed has to be paid for by the consumer and not subsidised through our national budget.
That premise is exactly the premise that the government started with but it also seems to be an unacceptable premise for a number of parties. Put crudely, last year Enemalta received €68 million from the government towards the cost of oil - over and above the surcharge paid by consumers. The government is saying that this is unsustainable. At MCESD, we also made it very clear that the proposals we were making to reverse this were before the necessary and allowable government subsidy for costs which are to be borne by the government and the subsidy of over €5.2 million to families on social assistance.
Again, put crudely, this means that of the €73 million the government up front will definitely subsidise circa €17 million next year. This comes after Enemalta has taken on itself some €3 million in internal costs attributed to "inefficiencies". The social partners know this well but prefer not to talk about it.
I do not need to remind anyone that €68 million in subsidies in one year is a sum even in excess of what the Drydocks ever received. It is equivalent to 1.2 per cent of our GDP, has increased our deficit tremendously and cannot be sustained if we want a surplus budget by 2010 and to reduce taxes to boot. What we consume, we have to pay for. I believe that the target of a budget surplus is paramount in our economic planning - of course, if we can achieve this without shocks so much the better but this is not always possible.
If the premise that the balance needs to be paid by consumers is acceptable, then there is no real fundamental problem but only a problem of how to allocate the burden between the different consumer sectors (hotly debated between the social partners) and the problem of when and how to introduce. On both counts, I am sure there are many solutions and on both counts both Finance Minister Tonio Fenech and I have openly declared that we are more than flexible.
On one point I tend to disagree with Mr Spiteri, namely on the introduction as of October 1 and this because, unless we backdate, the surcharge should increase to 160 per cent as of October 1 (and that is based on the price of oil purchased by Enemalta between July and September at market prices minus some €10 million profit from hedges) so the shock is still there. There is also the problem of the capping mechanism which impinges on the time factor.
As a friend of mine told me recently, we are between a rock and a hard place. We have been there before and we came out of it and went on to substantial economic achievements. I am sure we can do so again.
Dr Gatt is Minister for Infrastructure, Transport and Communications