One could say that last Monday’s Bondi+ failed. On the other hand, one could also say it succeeded.

It aimed, if I get it right, to recreate the MCESD (Malta Council for Economic and Social Development) meetings, maybe without the asperity and direct confrontation that sometimes erupts.

At the same time, it tried to make the issues underlying next Monday’s Budget Speech understandable to most people. There it failed, for people were hearing of Kola here and Kola there and no one told them who Kola was (actually it’s COLA – Cost of Living Annual increase) which many people still call the Cost of Living increase or Zieda ghall-Gholi tal-Hajja.

It was that, and also the habit of many of the speakers to use a sort of shorthand in their arguments (they have been making them so often that it has become a habit for them) that outsiders fail to follow.

And having been involved in such discussions for years, Lou Bondi was not sufficiently vigilant in ensuring that the viewers understood what was going on but skipped gaily along and ahead of the participants, flitting from argument to argument.

Perhaps, as well, the participants wanted to allow the minister, the much-beleaguered Tonio Fenech, his own hour of fame tomorrow as he announces the 2010 Budget, so they did not want to beat the gun.

But the best news about this year’s Budget is that it is a Budget brought about by consensus. Predictably now, this assertion will be shot down the day after tomorrow when the flak starts flying and Mr Fenech is left to carry the can. Yet it is all true: this is a Budget brought about by consensus. And it also explains why the atmosphere this time is far different and better than it was last year.

For the first time ever, MCESD – that is all the social partners together – set the Budget ball rolling when it came up with a working document, drawn up by the accepted experts in the sector, and presented it to the government. The government, somewhat surprisingly in view of what many perceive as a government riddled with arrogance, welcomed and accepted whole chunks of the proposals. Tomorrow they will be enshrined as key proposals of the Budget – for example, with regard to increased financing of small and medium enterprises.

But it was in the handling of the utility rates that the change from last year has been most marked. Last year saw a real shambles. One would like to go beyond the inter-personal relationships involved, but in reality even Minister Austin Gatt himself admitted it should have been handled differently. Dr Gatt has his strengths and his weaknesses, and dealing with the unions, to say nothing of the social partners, sure isn’t his forte. Besides, like Dr Sant when he attempted to tackle the deficit in 1997, there is always the cost one pays for being the first to tackle a difficult subject: one tends to get it slightly wrong and therefore to play into the hands of the Opposition of the time.

And it should also be remembered that last year Budget Day came and went and there was no mention of the utility rates. That came later and inflamed a country already upset, shocked and afraid of the coming recession tsunami. And it was also backdated to October, thus catching out not just businesses but every family, with expenditure for something they had already consumed. They felt, justly, that had they known, they would have used less electricity.

This year, the utility rates form an integral part of the Budget debate, as I will explain shortly. This year the increases will begin from 1 January. And the principle that we have to pay for what we consume has now penetrated the national psyche and people, though obviously hurt by the steep rise, have come to accept it as logical and natural.

But the big, unique novelty of this year’s Budget was mentioned last Monday and none of the participants on Bondi+ seemed to notice it, nor did Lou Bondi highlight it. For the first time, the government has come round to accept the urgings of the social partners and also of the Opposition to introduce less uncertainty in the economy by locking the utility rates for a whole year. In other words, government is, as it were, going to hedge the price of oil for a whole 12 months.

Now this is a risk. Last year, the price of oil on the international markets veered between a high of $140 a barrel and a low of $43 a barrel. If you hedge at a high rate, you end up charging people for oil at a level that is higher than the actual price. If you charge at a lower level than the actual price of oil, you (meaning Enemalta or the government) have to make up for that shortfall.

But the risk is well worth taking, as long as everyone accepts it is a risk. Businesses know what they will be paying. Families know what they will be paying.

There are (of course there would be, wouldn’t they?) a couple of imponderables.

Firstly, the government intends to hedge at between $75 and $80 a barrel or maybe some more. That means this is a higher rate than the one at which we are paying for electricity right now. We will thus be paying at the rates we were paying from October 2008 to March this year. That is steep, very steep for many families and for many industries.

Secondly, even at that level, the government is still faced with a shortfall. The press release issued by the ministry on Friday said: “e21.5 million [is] the shortfall in tariffs that will be registered since the last tariff revision in March 2009 since oil prices in the period increased by much more than was expected when the tariffs were introduced.”

Enemalta and the government have to recoup that and the last-minute discussions between the social partners and the government focus on from where these will be obtained. Will the government spend less on the hospital? Or less on the MTA for advertising? Or less in road-building?

Then there is something being introduced by stealth: a drainage tax. Remember the cries of anguish when Alfred Sant wanted to introduce this and was about to impose a tax on every door? Well, here they are, after a lapse of 10 or 11 years. There was no way the government – any government – could avoid it, not with EU rules.

From the press release again: “In line with EU Directives, all EU Member States shall take account of the principle of recovery of the costs of water services, including environmental and resource costs and in accordance with the polluter pays principle. Malta will fall in line with this EU Directive but this will not affect the consumer since the proposal will be cost neutral to the end consumer.

“If both corporations are taken together it can be seen that the increases in costs for 2010 can be divided as follows:

• e74.9 million attributable to the increased cost of oil;

• e10.7 million attributable to investment in the new sewage treatment plants, the smart meters system and a new power station in Delimara.

“Investment in sewage treatment plants was and is required for Malta to be able to comply with its environmental and public health obligations, while investment in the energy sector will improve the reliability of energy supply, enable improvements in air quality as a result of the eventual shutting down of the Marsa power station, reduce costs as a result of theft and other losses and allow families and businesses to reduce their energy costs through detailed information about their consumption behaviour. These benefits obviously have costs that need to be met.”

Expect the Opposition to erupt with well-placed barbs and the government to take it on the chin.

Other than that, barring some other goody (or negative goody) the government may think of in these final hectic hours, the extensive pre-Budget consultation has fleshed out the wider context: Malta has been relatively unscathed by the recession, though fewer tourist arrivals have started to hurt. The government faces less revenue, though even here, once stocks and inventories are exhausted, enterprises will have to import. The banks have been doing well, but the government will not impose any windfall tax. There is talk of some incoming investment and there are some quite hefty privatisation decisions coming up that will deliver some well-needed funds to a depleted Treasury. Unemployment will rise in the New Year and people will still grumble mightily. But still the ship sails on.

A week late

I made a silly mistake last Sunday. The PN general council is not meeting this weekend but next weekend.

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