No agreement was reached yesterday in a Malta Council for Social and Economic Development meeting with government ministers on proposed energy and water tariffs, with the Chamber of Small and Medium Enterprises (GRTU) baulking at a proposal to shoulder the extra burden of large industry capping by small and medium enterprises.

No general agreement was issued, but all partners, apart from the GRTU, seemed encouraged by slight concessionary movement by the government in an effort to “spread the burden across the board”. However, the move to implement the new system retroactively to 1 October, is one condition the government has not budged on. Ministers Tonio Fenech and Austin Gatt took part in yesterday’s discussions.

Another MCESD meeting has been scheduled for tomorrow morning, with all partners saying that while the agenda was to be Budget 2009, the tariff issue would probably take centre stage again.

Reading between the lines, it seems like larger business owners have been appeased by a proposal to phase out bill capping over three years – which in turn has been shifted from general households to small businesses, placating the workers’ unions. The current proposals seem to have led to the short straw being drawn by small and medium sized enterprises, a move which has angered its leaders.

Irate and flustered, Chamber of Small and Medium Enterprises director general Vince Farrugia said that the proposal for SMEs to shoulder the burden of capping (in the region of e35 million) was tantamount to “cruel cross subsidisation”.

Mr Farrugia was speaking in reaction to the news that the current capping system for large businesses and hotels being phased out over three years and for the slack to be paid for by small and medium sized businesses. Mr Farrugia said that just as it was wrong for households to shoulder the burden of capping (as is the present state of affairs), it would be wrong to shift it onto small businesses.

“The government can say what it likes, we are issuing directives for our members to only pay their fair share. They should not be paying for the shortfall of capping, just as ordinary households should not be,” he said. Mr Farrugia said this should not be happening, especially at a time when the government was in the process of setting up a Small Businesses Act and that the EU deems such businesses to be the backbone of Europe. He said that all businesses, including small ones, have their problems and the way the government wanted to cross subsidise the capping phase out was unacceptable.

Malta Hotels and Restaurants Association president Ian Decesare was cautious in his approach. He confirmed that a proposal to phase out capping over three years had been put forward, but refused to give detailed comment. He said that the MHRA needed to study what had been put forward before taking an official stand.

Malta Employers Association President Pierre Fava used a colourful explanation to describe the overall situation. “It’s an ‘ouch’ and ‘ouch’ situation for everyone.” Mr Fava said the increases were less than originally proposed, but they were still there and would affect everyone.

He said that the government needed to find a solution that would not put further pressure on the economy which is already feeling the pinch. Answering questions from the media, Mr Fava said layoffs were already happening and that more were in the pipeline. “People’s purchasing power will be affected; however, industry will have to adapt to capping,” he said.

Union Haddiema Maghqudin secretary general Gejtu Vella continued to argue that the government should have commissioned a social assessment before pressing ahead with the proposals. He also said that the people were still owed compensation for the 95 per cent surcharge which is currently in place. He said the union wanted to study the new proposals before making its stand public.

Federation of Industry president Martin Galea was also non-committal but said that the three-year phasing out period for capping was not enough. However, he said that the time had come for the burden of utility costs to be spread out across the board and it was time for “everyone to bear the burden”.

Confederation of Malta Trade Unions President William Portelli said that it was time to share the burden across the board. He said that all parties were hopeful of agreement being reached. He, however, pointed an accusatory finger at the government, which he said should have kick started the consultation back in July when it had ample time to do so and not on the eve of the annual budget.

Stefano Mallia, from the Malta Chamber of Commerce, said that the international situation is what it is and said that the government needed to dampen the adverse effects which the higher tariffs would have on the economy. “The government is trying to spread the burden across the board but it needs to move to save jobs,” he said. He also confirmed a report carried in The Malta Independent yesterday that the government had revised its estimates for water and electricity generation total cost from e365 to e305 million in view of the price of oil being slashed to below USD$70 per barrel.

However, it is not yet clear whether this figure incorporate hedged agreements for a defined period and taking the new cheaper prices as a benchmark once that period elapses. Asked whether he concurred with the MEA’s appraisal of an ‘ouch situation’, Mr Mallia agreed and said the situation was the same for all and sundry.

General Workers’ Union secretary general Tony Zarb said the government was going to press on regardless of what social partners were saying. He also said that the government had retracted from its promise to slash the surcharge if oil went down and was instead hiking it up further. He also concurred with the UHM in that the general public was owed compensation from the government for the 95 per cent surcharge and that more is owed if the new tariffs come into effect. The union, he said, did feel that the government had moved towards the wishes of the council members.

MCESD chairman Sonny Portelli said the council had requested more information and that more will be provided by Minister Austin Gatt in the near future. He also confirmed that the MCESD will meet again tomorrow.

Mr Portelli said that certain partners had agreed to the new proposals while others had not and this meant that there was no across the board agreement. He confirmed that the government had given some ground. Mr Portelli said there was consensus that the root causes of the problems being faced were not local, but stemming from the international situation.