Muscat's 15-point plan to ease energy burden

'Budget should be for people not the party'

Labour leader Joseph Muscat stressing a point while replying to the government's budget speech in Parliament, yesterday. Photo: Darrin Zammit Lupi.

Labour leader Joseph Muscat stressing a point while replying to the government's budget speech in Parliament, yesterday. Photo: Darrin Zammit Lupi.

Leader of the Opposition Joseph Muscat yesterday put forward 15 proposals in a bid to ease the burden of the Government's new water and electricity tariffs. Once the government had bought oil in advance, before prices fell, it should now buy fresh consignments at the current low price and average the cost for consumers. He called for traditional light bulbs to be banned outright to accelerate the switch to energy-saving ones.

He urged the government to withdraw the new tariffs, saying that now that oil prices were back to 2007 levels, the hefty increases which had been announced were not needed.

Key performance indicators should be set up for Enemalta to identify and drastically reduce inefficiencies which were the main reason for the increased water and electricity bills. If such an exercise had already been carried out, it should be published.

Dr Muscat proposed the introduction of a cheaper night rate for electricity in a bid to equalise demand throughout the day since this increased power station efficiency and reduced waste.

With such a rate, families would be encouraged to use certain appliances on timer during the night instead of during the day. The same system could be introduced at least for part of industry and for businesses.

Similarly, the Water Services Corporation should start operating at night those reverse osmosis plants which were not in residential areas. Water production used a lot of energy and such a measure would increase efficiency at the power stations.

Dr Muscat pointed out that the country threw away into the sea some 20,000 million litres of treated water each year. So it was imperative to invest in a system through which this could be reduced and saved. This would lead to lower production needs and lower energy costs.

An effective system to store water needed to be invested in. He called for the introduction of legislation which would make it compulsory for new buildings to have alternative energy equipment. Big projects, Dr Muscat said, should be made to produce at least 10 per cent of their energy from alternative sources. The Labour leader called for effective measures to reduce electricity theft which was costing honest taxpayers €50 million a year.

He proposed a new bill format explaining consumption and listing measures one could take to cut down on consumption.

Dr Muscat said that transparency could be achieved through an online system such as that used in Cyprus, through which consumers could check out state monopolies.

He proposed the introduction of a realistic green band tariff which encouraged people who saved energy.

The regulator, he said, should be proactive, concretely and continuously protecting consumers. There should also be an educational campaign and to be proactive also from the opposition benches, the Labour Party had already launched its own. During last Sunday's national manifestation it distributed leaflets with practical suggestions of how one could reduce and make better use of energy. This campaign was to continue on the party's broadcasting media.

But even if the government did not take up any of his proposals, Dr Muscat said, it still did not need to increase the water and electricity rates.

A technical analysis based on government figures of how much the surcharge would have been without hedging and subsidies showed that the formula used by the government to calculate 90 per cent of the surcharge from when this was introduced depended on the price of fuel oil and gas oil in the international market.

The higher water and electricity bills were introduced in October and they were equivalent to a surcharge of 194 per cent.

Dr Muscat said that a courageous plan covering a number of years was needed. Through it, the money collected from the new tax on the traditional bulbs would be used towards the switch to energy saving bulbs prohibiting the sale of traditional bulbs over a short number of years.

The government should also take a look around its ministries and departments and ensure they only used energy saving equipment. The government had lost a golden opportunity to show its commitment to alternative energy with Mater Dei Hospital.

The Labour Party, on the other hand, commissioned an environmental audit of its headquarters and this would lead it not just to reduce energy use, but also to increase conservation and soften the environmental impact.

The House of Representatives should also lead by example.

Dr Muscat referred to the 15 per cent refund on bicycles, saying that although the intention behind the measure was positive, roads in Malta were not suitable. Some bicycle lanes stopped all of a sudden and others did not even exist in new roads.

He also spoke on the recent Mitts scandal which saw the hacking of more than 20,000 usernames and passwords. Dr Muscat said that although the minister promised that a new agency was to be created to take care of these security aspects, nothing was said in the budget. The opposition was continuing to insist on an inquiry into what had taken place at Mitts in the past years and once again he called for the resignation of the Minister for Communications Austin Gatt.

He announced that Labour MPs would start phasing out the use of their Mitts e-mail address system. Their new e-mail addresses would be announced shortly and constituents would be informed accordingly.

The budget, the Opposition leader said, did not say anything about security and illegal migration. One would have expected something concrete especially following the signing of the burden sharing agreement. The government should declare, he said, how many illegal immigrants it believed European countries would take and how those who were to remain in Malta were to be treated with more dignity.

The news that the European Commission was to propose the suspension of the Dublin II agreement was interesting news. Also interesting was the fact that the Commission was not linking development to the newly-signed pact.

Turning to Gozo, Dr Muscat said the budget was a cut and paste of previous ones. Accountability was needed at the Gozo Ministry more than anywhere else and Gozitans could be protagonists in environmental, economical and social action.

The investment of €3.5m in Gozo, promised in this year's budget, were not only retrieved by the government but with them it took another €500,000. This was happening every year.

Gozo, Dr Muscat said, lacked strategy. The government had ignored the Gozo Channel situation at a delicate time, not even giving an explanation of the direction it wanted this enterprise to take.

Dr Muscat said Labour was all for the incentives announced to encourage women to return to work. However, this measure would not have any effect on women earning the minimum wage. Together with this measure, child care centres were needed but the budget did not say anything on the Ħal Far child care centre, which had been so pompously announced, built but then abandoned.

Turning to education, Dr Muscat said that the budget was not taking any special initiatives to ensure that the primary and secondary sector progressed.

He expressed his disappointment that no one from the Cospicua school had passed the Junior Lyceum examination and said that Labour would be making its own proposals on the matter.

With an education system in which only half the children succeeded, Malta could not be a smart island and no centres of excellence could be built.

On alcohol, the Labour leader said that the alcohol problem was not just a "Paceville" problem. It had to be addressed within families, in the feasts' local organisations and even within party clubs.

The alcohol industry confirmed that Maltese youths preferred to buy alcohol and mix it themselves so the drop in price was to make alcohol more accessible.

Turning to health, Dr Muscat said that in spite of promises, Zammit Clapp Hospital had not been transformed into a Cancer Service Centre. This budget only announced the building of a specialised oncology centre, which would cost €24m, of which €4m were being allocated for it this year.

Dr Muscat said it seemed that the Zammit Clapp project had been abandoned with the oncology centre at Boffa Hospital moving to Mater Dei, through a new building which would be developed over three years on the site where there was currently the outpatients car park.

Labour, Dr Muscat said, did not question the investment but its delay and what had led to a change in plans.

Dr Muscat said that according to last year's budget a breast screening programme had to start being implemented this year. It had not and this year's budget was saying that the programme's action plan had been concluded and that for the first three years it would only cover women aged 50 to 59.

Another promise that vanished was the pharmacist of your choice.

At the start of his speech, Dr Muscat said the people wanted a new direction. The budget must be seen in the context of the new energy bills which both the Prime Minister and the Minister for Finance were ashamed to mention in the budget.

Dr Muscat said this was an irresponsible budget because the government had not reached its goals and the people were being made to pay for its mistakes.

This was an unsustainable budget because it was drafted by the same persons who tripled the deficit, from the planned €68m in 2008 to an estimated €200m in 2009. Many economists and the EU were painting a worse picture.

The budget went against the principle of solidarity with the energy bills eroding the social and competitive fabric of the country and it did not offer the economy any stimuli. It was a two-faced budget because it confirmed that the pre-election Lawrence Gonzi was not the same post-election Lawrence Gonzi.

Dr Muscat said there were certain measures which the opposition agreed with, at least in principle. This was a new style because many were tired of senseless pique.

The opposition welcomed the incentives allowing more women to work but there must be more Child Care Centres and something must be done for lower-income mothers.

The opposition was in favour of the withdrawal of the succession tax in the case of persons with disability. However, it believes that the time had come that the whole concept of the succession tax must be revised to do away with a system that taxes hard-working families.

Dr Muscat said that he agreed with environmental protection but this must not be used by the government as an excuse to collect more revenue but a genuine effort to have a better environment.

This was perhaps the first time that a Leader of the Opposition was talking positively on positive measures taken in the budget as called for by political maturity. From the opposition the government can expect assistance but not complicity.

He said that a day before the budget, Dr Gonzi said that this was one of a series of budgets which would lead to another PN victory. He was sorry to hear the Prime Minister look at the budget as a simple means of electoral convenience, as a means to bridge from one election to another. This was more of a policy of convenience than conviction.

The opposition's vision of the budget was different: it had to cater for the needs of the economy, society and the environment and not for the needs of the government. A budget should be for the people and not the party.

The 2009 budget was a poor attempt in economic planning by someone who failed in the most basic rules of economic leadership. At such a crucial time, Malta must have a clear vision of the difficulties which the country was going to face and how it was going to overcome them.

Dr Muscat then listed the number of projects, promised in last year's budget, which the government had failed to fulfil. The list confirmed an irresponsible and unsustainable government which did not know what solidarity means.

He said that there were other parts of the budget which were nothing more than a "cut-and-paste" exercise as they were copied from previous budgets. Many of the promises mentioned before were broken year-in-year-out.

But then, the government introduced the new energy tariffs which were never mentioned either in the electoral programme or in the pre-budget document.

The government had already failed in its aims before the global financial crisis or because of the rising price of oil, where Enemalta had made profits because of hedging agreements.

The government did not fail because of the shipyards' early retirement scheme because the Finance Minister had said that this had been in place since last year and they never revealed it before the election not to lose votes. On the contrary, yard workers were sent a letter to put their mind at rest.

The government failed in its goals and the deficit tripled because it spent €70m during the election campaign in billboards, propaganda and one thousand and one other things.

An analysis made by the independent press showed that in the last three months before the elections, public employment increased by 600. Between last year's budget and the general election, the number even went up to 1,000. And after the elections, some of the newly-employed had their contract suspended.

Never before did a budget show such serious doubts about the country's economy. And to crown it all the government has still not introduced the accruals accounting system to tell the people the real picture.

He said that the Finance Minister was in a state of panic when the deficit until September, before the introduction of the new energy rates, was projected to be 4.3 per cent of the GDP. At the same time, he said that the EU had projected a deficit of 3.8 per cent for the whole year and thus confirmed what the economists had been saying.

According to the National Statistics Office, until end September, the deficit was €258m. The government says that until the end of the year this would decrease to €200m. To do this, €60m more must be recouped in taxes. At the same time, the EU forecasts the deficit to be €218m. Dr Muscat said he had reason to believe that the government introduced the energy rates retro-actively to October 1 in a bid to keep the deficit at the £200 million level.

The only solution for the government was to sell the country's assets and tax the people.

The leader of the Opposition criticised the government for ignoring the issue of the cost of living which was higher than the EU average even if one excluded fuel prices.

On average, prices increased by 4.4 per cent when wages only increased by 1.8 per cent, while wages in the private sector actually decreased by 0.7 per cent in real terms. As a result, spending power had decreased.

Dr Muscat said that the budget does not address the issue of introducing a better price mechanism for medicinal products when the Price Mechanism Board had not met for months.

The budget also failed to give details on the Consumer Protection Agency which the government had promised to introduce in lieu of the National Changeover Euro Committee. He said the Labour Party insists on the setting up and on the effectiveness of this agency.

It is not surprising that the government had not indicated what strategy to adopt on VAT for medicines and foodstuffs in two years' time when the transition period by the EU ends. Economic and social impact assessments should be made before major measures such as the new utility tariffs are introduced.

Dr Muscat referred also to the government's capital investment saying that in 2007 the government invested €258m when it pledged an investment of €391m. This year the government has reduced its investment estimates from €328 to €275m. In the first three quarters of the year the government spent 60 per cent of this revised estimated investment.

Referring to the allocation of EU funds, the Labour Leader criticised the government for using €56.3m out of a 2007 allocation of €170m. During the same year Malta's contribution to the EU amounted to €53.2m meaning that the country only managed to gain €3.1m from EU funds.

The situation this year is similar with the government estimating to use €69m out of its allocated €116m. During the first nine months of the year the government had only used €19m or 16 per cent of the estimated funds. In the meantime Malta had already contributed €38m to the EU. Before the election, it had boasted that Malta had been allotted €800m from EU funds.

Turning to the infrastructure, Dr Muscat claimed that the budget failed to mention new infrastructural projects at a time when the country's economy needed to be revitalised. The government only mentioned the regeneration of the Grand Harbour and allotted the meagre sum of €600,000.

The revised utility tariffs, which were equivalent to a surcharge of 194 per cent, meant each family would have to fork out between €3.30 and €6.75 more each week. This means the cost of living compensation would only cover utility rates increases. He criticised the government for failing to inform the public that it would be collecting €42m more each year from the revised utility tariffs, this being €2m more than the €40m the government lost in revenue due to reducing income tax and increasing children's allowances before the election.

Due to this irresponsibility, argued the Labour leader, the working and middle class families would be hard hit.

Dr Fenech had told The Times in August that the surcharge increase from 50 to 95 per cent would adversely hit families and businesses and some would even risk falling below the poverty line. Dr Muscat said that this was one indication of what the consequences would be with a 194 per cent surcharge.

This government-induced crisis meant that SME's would now have to spend €30m more on utility tariffs, leading to an increase in retail prices at the expense of the consumer. This would create a vicious circle with workers' representatives demanding wage increases, making the country less competitive, companies laying off workers or adopting a shorter working week.

Dr Muscat challenged the government's assertion that 30,000 families would not pay any surcharge as the vouchers given to them would only amount to €75 annually. Pensioners and minimum wage earners would be hardly hit.

Dr Muscat referred to a Central Bank report for 2008 which shows that on average family debts had increased to 58 per cent. The new utility tariffs would put these families in an even more precarious situation.

Events over the last few weeks showed that the government had lost its political and economic credibility with the Prime Minister and Minister Austin Gatt contradicting themselves on the introduction of the utility tariffs.

The government has not only introduced the concept of retroactivity but has also introduced taxation on utility tariffs. He said these concepts undermine the government's and the country's credibility with Maltese and foreign investors.

Whenever utility rates were increased in the past, the tariffs were only introduced after a meter bulk reading exercise had been completed. This has not been the case this time and families would have to pay increased tariffs on estimated, rather than on actual, consumption.

Dr Muscat criticised the Malta Resources Authority as the regulatory body for being totally absent from the debate on the utility tariffs. No regulatory body in Europe would accept figures as those submitted by Enemalta and the Water Service Corporation and would request an impact assessment.

The government also lacked transparency when it did not announce the average price for fuel which served as basis for the original proposals and the final estimates presented. This lack of transparency was more pronounced when the government indicated that the surcharge would decrease when the price of fuel falls to under €85 per barrel and introduced rates amounting to a 194 per cent surcharge.

The government also lacked transparency when it failed to publish the Enemalta accounts for the last three years. He called on the MRA to investigate the matter.

The government had again shown a lack of courage when it ignored consumer protection when it came to privatisation of the gas bottling plant of Enemalta. The least the people deserved was information, such as whether the price of gas cylinders would increase. The Opposition voted against because they were in favour of increased transparency and increased consumer protection. With the favourable conditions it offered to the new consortium, the government could have obtained better consumer protection.

Turning to fuel prices, Dr Muscat said that Malta was doing the opposite of other countries, yet the government expected people to believe that it was still right. Unlike the British, the Maltese government introduced a new tax and even if the price of fuel did go down, people would still be paying more. To add insult to injury, the government had "forgotten" to add VAT, meaning the actual price would be even higher.

The car registration tax revision was another case that showed the government to be two-faced. People had been unlawfully made to pay VAT on second-hand cars since May 2004. If the government wanted to show that they could benefit from EU membership, they should reimburse them. If they did not, the Opposition was prepared to begin an initiative in favour of these consumers' rights.

When it came to liberalising public transport, the Opposition was in favour of having a competitive market, to better serve the public. What it was not in favour of, on the other hand, was having one or two persons monopolising the market.

The government should not treat the industry sector like some sort of Cinderella, when it was one of the major assets of the Maltese economy. An analysis of the present situation revealed alarming facts, such as total exports going down by 10 per cent, and direct foreign investment going down by almost 40 per cent, from €330m to €199m. Established industries in Malta were laying off workers and reducing hours, both on a local and international level; they were facing a bad situation. Instead of, helping, the government introduced higher water and electricity tariffs, putting many jobs in a precarious position and making many enterprises unsustainable.

The government should do something about the number of people who had become unemployed. If a Labour party were in government they would protect the unemployed and those working reduced hours, by trying to ease the burden of their mortgage. They would hold discussions with Maltese banks, to grant these people a moratorium of some months, as a show of solidarity, like the UK Labour government did.

Alternatively the Spanish system, which allowed these people to put off half their loan payments by two years, without increased interest, could be adopted. A Labour party in government would also work to broaden the mandate of the European Global Fund, to include these workers.

Speaking of tourism, Dr Muscat said that, although the number of tourists had increased, income from each individual tourist had decreased. The government increased water and electricity tariffs, imposed increased taxes per night as from 2010, did not even mention plans for Air Malta or the South of Malta and then expected the people to take them seriously.

The government said the financial services industry was a symbol of the economic success of Malta; however the Economic Survey reveals that the sector had reduced its contributions as Gross Value Added.

Another decision by the government was that of removing the worker director from the Bank of Valletta Board.

Although the government often spoke against subsidies, the word stands out when debates on agriculture take place. Many are not happy with their situation, and find the process to obtaining funds unnecessarily lengthy.

This budget was labelled a "green budget", and it was true that it had positive initiatives. However, the opposition was disappointed the budget was not more ambitious.

Mepa was not even mentioned in the budget. But the opposition had decided to set up a commission that would outline the principles that needed changing within Mepa.

The government had already unsuccessfully introduced a tax on plastic bags and the problem was that they regarded eco tax as another form of income, and more fundamentally the idea was that the tax had to go back to the people, as a direct benefit.

The government should begin a study to look into complete prohibition of plastic bags, its effect on the economy, and its compatibility with EU law.

Speaking of plastic bottles, Dr Muscat said that if plastic bags were bad, the environmental cost of bottles must be higher.

Glass bottles were one of the few systems in Malta which had been environmentally friendly, but the Nationalist government had failed to convince the EU to let Malta continue using them.

The government should also work to improve waste collection and separation, but there was nothing so far about this.

This weakens the government's claim that it is not interested in money gained from the eco tax.

The House stands adjourned till Wednesday, when the Prime Minister replies to Dr Muscat's criticism.


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