The ongoing divorce debate, the gaffe of the ministerial salary raise and the delusions brought about by the new transport system are providing enough food for alienation from more important issues that are affecting family life and our quality of living.

While ministers are wallowing in their own very generous salary raises, government controlled prices of very essential goods and services carry on spiralling and gnawing into families’ purchasing power, pushing up their cost of living very significantly. The Government’s fresh decision to grant compensation to a selected profile of families, not that it is sufficient, is a clear admission that families are finding it hard to make ends meet. Very soon the debate about how to deal with rising costs will again take centre-stage with many political economists, unions and employer organisations pressing for different solutions.

In as much as talk about raising the minimum wage could seem to be opportune in the current difficult financial scenario for families in the low income brackets, it is equally important to bear in mind the absolute necessity of keeping the cost of living under control at all times. No doubt the debate about an upward re-adjustment of the minimum wage has come about mainly because families are not making ends meet, with most of them feeling that their purchasing power is steadily diminishing.

The idea of raising the minimum wage is understandably not very good news for businessmen and employers. It never was when the state of the economy was better than it is today. Let alone now that it is pretty obvious that business is being saddled with increasing costs, partly due to international pressures but also because of government induced costs and bureaucracy.

The entrepreneur is always very resistant to having to raise labour costs even if it is about a mere cost of living adjustment - let alone raising the threshold of the minimum wage. Indeed in pre-budget meetings at the MCESD there is the never-ending tug-of-war between unions and employers’ associations with employers normally strongly resisting union calls for cost of living upward adjustments.

While I fully understand employers’ concerns about the negative impact of raising costs to their business operations, I find it rather odd that instead of putting pressure on the government to ease the rampant cost of living, there is instead this persistent tendency to bring into focus only labour costs.

Reducing labour costs has of course a mitigating effect on the cost of any business operation. But that will come at a cost to employees and families, and indirectly to businesses servicing the internal market too as consumers will buy less - as is the case right now. It would be a self-deceiving and self-defeating measure for business as the measure will rebound against consumption. Besides, according to the economic survey of the last budget, current salaries are lower than they were five years ago and Malta’s salaries rank among the lowest in Europe. So to me, merely discussing labour costs doesn’t make much sense.

The way forward, in my view, is a relentless check on the cost of goods and services provided by the government. There is admittedly a component in the price that is determined by international prices. There is no question about that and the PL is not denying that rises in international prices do not have an effect on the price of locally purchased goods and services. It would be foolhardy to do so.

But equally foolhardy is a selective search for the truth, one that only says a part of the story but not the whole story.

True, international prices of oil have an effect on the price of energy that we consume internally. But how do you explain that when in 2008 the price of a barrel of oil soared to a record 147 dollars, we used to pay far less for petrol, diesel and utilities than we do today when a barrel of oil costs much less - indeed 90 dollars? Now if the reason behind this paradox is that the energy corporation had hedged in 2008 before international prices soared to record highs, then why has it not hedged in 2010 before international oil prices started to rise again? On the contrary towards the end of 2010 Government imposed an increase in the excise tax on fuels. Was that not a government induced cost? Raises of excise taxes are certainly not imported. How could the government raise excise taxes on fuels when it knew that a rise in international oil prices was imminent at the start of 2011?

This is not only affecting negatively families’ purchasing power but it is fuelling costs for business. So much so that repeatedly at quarterly review seminars by the MHRA, particularly the last one relating to the first quarter of 2011, government-induced costs are cited to be the culprit behind hoteliers’ and restauranteurs’ diminishing profitability. And this at a time when tourist numbers are increasing as the impact of the 2009 international recession is receding. This is a reality check.

Had prices at the petrol pumps truly reflected fluctuations in international oil prices we would now all be paying less for petrol and there would be less indirect inflationary pressures on other goods and services.

It is a question of getting our priorities right. Let us never lose focus on the high cost of living.

Dr Gulia is the Opposition’s Main Spokesman for Tourism and Air Malta