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Charles Mangion | Sunday, 08 November 2009

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Giving our families a break

As the year approaches its end, our families are beginning to evaluate how they have fared in the past few months. The deep recession that has hit the world’s economies has not spared us. It comes as no surprise that for many, this has been one of the worst years for their financial health.
Official figures for the first six months of 2009 speak for themselves. Exports fell by 8% while imports fell by a more staggering 20% in the first half of this year. Our rate of inflation was consistently the highest in the eurozone area, with the worst performance being in the food and utilities sectors.
Our economy shrank by 3.3% in the first nine months of this year, while the GDP per capita in 2008 was 76.4% of the EU-27 average – a significant drop from the 79.5% registered in 2002 before we joined the EU. Countries like Cyprus have performed much better than us with a GDP per capita of 94.6% in 2008.
The Labour Party is in constant touch with what our families are going through during this difficult time. We have consistently made suggestions to the government on how the impact of the world recession can be somewhat neutralised by practical measures that are within the control of the administration.
Labour leader Joseph Muscat announced a number of measures that if adopted, can give Maltese families a break from the mounting pressures that are affecting their financial wellbeing.
There is no doubt that the major onslaught on our people’s quality of life during the past year has been the massive increase in the prices of water and electricity. While everyone acknowledges that crude oil prices ultimately affect the prices we pay for our fuel and its by-products, Enemalta has been less than convincing in proving the transparency that should underline its price fixing mechanism.
It is most unfair that our families should be burdened with the inefficiencies of state-run organisations like Enemalta by having to pay the unnecessary costs of bad management and incompetence. It therefore makes sense that the government should consider setting a ceiling for water and electricity tariffs for 2010. The financial management tools, including that of hedging, exist to enable Enemalta to lock the price of the raw material that it buys for most of the coming year.
Even easier to implement is another suggestion made by the PL – that of freezing tariffs for government services at their present level. The income from these tariffs is relatively small, but in the current situation every little easing of pressure on families and small businesses counts.
But the most effective measure is likely to be a genuine effort to get to the root of the scandalous inflation of food and medicine prices. While one acknowledges that in a small market the forces of competition are not always very effective, one cannot ignore the practices that are making the delivery chain of food to our families such an expensive process. The government should investigate any anti-competition practices that may exist in the pitkalija. Many still cannot understand how farmers are paid next to nothing for their products, while our families have to pay prices for vegetables that are much higher than one pays in other EU countries.
Our tourism industry has been suffering from years of benign neglect. Not only has the government cut the lifeline of productive public investment to support this industry, but even when the EU gave the green light to reductions in VAT on high added-value local services, the Gonzi administration preferred to ignore this concession. If the government makes a U-turn on this issue and gives small businesses the chance to increase their turnover, it will find the full support of the Opposition.
There are of course many other measures that can help to give our families a break. But such measures demand courage and the political will to take risks that however have a chance of pulling our economy out of recession. The PL will continue to do its duty as an Opposition loyal to the people by pointing out alternatives to the wrong policies being adopted by this tired administration.

Charles Mangion (PL) is shadow minister for finance

 


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