Managing by crisis, whether in a commercial organisation or in government, is empirical evidence of the absence of a strategic planning culture. Minister for IT and Investments Austin Gatt’s out-of-the-blue (pardon the pun) announcement of the energy crisis to MCESD took the country by storm. In all fairness, the skyrocketing price of oil is well beyond the control of government and no amount of crying-over-spilt-milk hedging arguments is going to change the reality we all face. The best Labour can do is to ask for the head of ex-Minister Josef Bonnici (goldenly parachuted into Luxembourg) who bears responsibility for removing hedging at a time when the price of oil was at basement bargain prices compared to today’s.
That the government has had to take serious financial decisions was perhaps inevitable. However, the magnitude of the issue is now bordering on a crisis and is something that could have been avoided, at least in part. How, may one ask? Answer: if this country’s leaders over the last 30 years had been thinking more about energy policy in general and alternative energy specifically, rather than being locked into the mindset that energy = shiploads of fossil fuels. That this country is in dire (for absence of a stronger word) need of new thinking on energy is now obvious to all; especially after Gonzi’s and Sant’s successive and ground-breaking paeans to alternative energy delivered last Tuesday on TV. The Blues and Reds can be excused for ignoring the issue for so long; it is acceptable that people only react under extreme pressure. However, if they continue to ignore the issue any further, that would be unforgivable. The Malta Resources Authority has to be given a clear agenda to develop an energy strategy for Malta within the next two years. Responsibility without clear targets is no responsibility at all. No more excuses! If this task is not timely and properly executed, those responsible at the Authority, as well as the Minister, should search for employment elsewhere.
In the meantime, to deal with the immediate crisis, government has taken decisions. The measures to be introduced can be summarized as follows; electricity surcharge will go up to 84 per cent, while the cost of fuel, apart from diesel (which is the highest pollutant, may I add) will rise by 3c per litre. To cushion the immediate effect, the government has decided to allow the surcharge to kick in at 55 per cent and rise by some 1.1 per cent monthly over a period of two years. To make up for the shortfall between 55 per cent and 84 per cent, Enemalta will be taking additional loans, meaning that the corporation will be borrowing money to lose it. What is of worry to the Greens is the ability (or inability) of Enemalta to carry further loans when the corporation is already in dire financial straits. The last thing this country needs is to learn in a year or two that the national energy company is on the verge of bankruptcy.
It is fair to say that overall, the measures the government has announced have factored in the social aspect of the crisis. However we still believe that, had government properly considered and implemented some, if not all, of the six proposals we made just four days after Dr Gatt announced the crisis, the burden would have been more equitably distributed and responsibility for control and efficiency more clearly assigned. Our proposals were based on the premise that three major stakeholders, plus the super-profitable commercial banks, had to carry the weight. The stakeholders identified are consumers – whose role would have been to rationalise on the use of energy, the government – which was expected to trim its recurrent expenditure further, and Enemalta – which would be entrusted with clear targets and specific deadlines to meet cost efficiencies, as well as to clamp down with determination and force on theft and abuse. Specifically our proposals were,
A one-time increase in income tax on the record profits of commercial banks and other financial institutions from 35 per cent to 45 per cent, just for year 2006. This measure would raise Lm5 million in 2006.
A delay in the opening date of Mater Dei hospital by two years in order to spread the remaining capital expenditure over four years rather than two years. I am well aware that this proposal has raised some controversy. Parliamentary Secretary Tonio Fenech believes there are legal constraints. John Zammit of in-Nazzjon goes as far as to claim that our country will lose its credibility. I will humbly withdraw my proposal under one condition. The condition is that the government must publish the expected costs of operating this hospital as from July 2007. I am sure that if this were to happen, most of you will think a bit more than twice about the urgency of Premier Gonzi cutting that Lm250 million ribbon.
Internal cost savings by Enemalta as well as a concerted clamp-down on electricity and water theft with a target of Lm10 million in 2006, Lm12.5 million in 2007 and Lm15 million in 2008.
Government is to shoulder Lm10 million of the increased oil bill each year over the next three years. The burden of Lm10 million does not need to be financed by an increase in taxation but via a reduction in government costs. Some of the specific measures we earmarked was the introduction of a five-year plan to enact a “no replacement” employment policy in the public sector and public service that would yield Lm6 million per annum, the trimming of government expenditure on travelling, consultancy, telephony and hospitality by 15 per cent that would yield another Lm1 million, a target to reduce the budget allocation for disability benefit (where even Minister Christina has admitted there is rampant abuse) by 10 per cent that would yield another Lm1.5 million.
An increase in fuel costs of 4c per litre on fuel for 2006, rising to 5c5c in 2007 and 7c5 in 2008. An additional 1c per litre was proposed in order to subsidise the cost of fuel for buses so as not to raise fares. This measure was proposed on the assumption that government embarks on a full reform in the public bus service in order to offer a quality and affordable transport alternative to private transport. This measure would raise Lm10 million in 2006, Lm12.5 million in 2007 and Lm17.5 million in 2008.
An increase in the electricity surcharge from 17 per cent to 25 per cent in 2006 and 2007, and an increase to 30 per cent in 2008. This measure will raise Lm5 million in 2006 and 2007 and Lm7.5 million in 2008. The existing measures to exempt the poor from electricity charges as well as keep charges low for other low-income sectors are to be retained. We supported the continuation of capping on industry and hotels.
Sadly, we will never be in a position to know which set of proposals would have produced the optimum outcome. This does not prevent you from expressing your views. I welcome your comments.
Edward Fenech is spokesperson on Finance, the Economy and Tourism of Alternattiva Demokratika – The Green Party
[email protected]