Lethal electric shocks

One thing that our families and businesses do not need at the moment is a shock that disrupts the already steadily deteriorating quality of life. The increased tariffs in electricity bills have shocked the stability of our economy at a time when external shocks caused by the lingering world recession have already shaken the basis on most of our businesses.

The massive increases in family and business water and electricity bills as from January 2010 have become necessary not so much because of uncontrollable movements in the price of crude oil, but because the government has so badly mismanaged the both the provision of energy services and public finances in general.

There is almost unanimous agreement that the price of services provided by government should reflect the cost producing these services. It is a fact that crude and fuel oil fluctuations have become a reality that we need to manage constantly. But it is an equally important reality that there are important factors that determine the final price of energy services. We continue to be sceptical about the way Enemalta is managing these other costs.

The way Enemalta procures its oil supplies is still far from being transparent. So far we have not seen an independent management audit that confirms that our energy corporation is in fact procuring oil at the most advantageous prices. The link between crude oil prices and the prices of energy services depending on fuel is flimsy at best and outright unconvincing at worst.

Equally unconvincing and unacceptable is the fact hat Enemalta is trying to make good for past and present management inefficiencies by passing on the cost of such inefficiencies to the consumer. Year of neglect in investment have brought the corporation in a state where it now has to invest massively just to guarantee the supply of electricity to households and businesses. The Water Services Corporation is similarly engaging in crisis management at high cost for consumers.

The withdrawal of government subsidies from Enemalta and the Water Services Corporation was done at the worst possible time – at the peak of a recession that has already depressed the disposable income of households and businesses alike. Rather than stimulate a recovery by increasing the purchasing power of families the Gonzi administration has resorted to austerity measures that are proving to be lethal shocks to economic stability. At the same time that the government has withdrawn subsidies, Enemalta  has also sold of its only lucrative arm namely the petrolium division. The latter had  always registered a profit which normally would go to  alleviate the losses suffered by the electricity division .

The mismanagement of public finances in the last several years have meant that now that we are going through one of the worst recession in the last three decades the government has lost its ability to manoeuvre its way out of this tight corner. When the going was relatively good for our economy the government squandered taxpayers money by overspending (well in excess of budgeted costs) on big ticket projects like the Mater day hospital.

We have now entered a vicious circle where our cost of financing the national debt, that has now reached almost €4 billion, is eating away a large chunk of the government’s income. When interest rates go up, as they will have to do sooner or later, the problem of financing the national debt will become even more serious.

As if the increases in the tariffs of water and electricity were not shocking enough, the price of bottled gas has also gone through the roof. The fact that the gas provision service has been privatised does not exonerate government from the responsibility for the damage that these unreasonable increases are causing to our families.

The Labour Opposition did and will continue to do its duty inside and outside Parliament to shake the government out of its arrogance and insensitivity for the pain that some many are suffering. We will continue to support anyone who takes any initiative to bring the suffering of various sectors of our society on the national political agenda.

What our economy needs at present is a stimulus package to promote growth and job creation and not lethal shocks that stun economic growth and depresses the already downbeat mood of our people. This is why we will continue to act as a loyal Opposition to protect the interests of the many against the arrogance and insensitivity of the few.

Dr Charles Mangion

Shadow minister Finance .

Economy, Family, Social