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OPINION | Wednesday, 22 August 2007

Fred’s grand summer sale – 50% off!

Edward Fenech

Do you recall Labour’s promise just before the 2003 election, to grant a two-month tax holiday; a tax-cut that would have benefited those who earn most, whilst leaving those on low incomes with nothing? It was one of Labour’s worst ever proposals, not because some people did not like it, but because it was politically rash and economically irresponsible. The Maltese electorate could always smell a rat.
Now Labour is trying to pull a fast one on the electricity surcharge – the wholesale promise of slashing it by 50%, irrespective of what the surcharge is at the time Labour are in government. Why not 60%, Fred, for that matter? Why not 72.3564%? I cannot accuse Dr Sant of not being clever. The political climate in which such a promise is being made is ideal because the surcharge is understandably the measure that has most affected people’s livelihood. However, attractive as it may seem, this policy is wrong, because of two reasons: one financial, the other environmental.
Let’s look at the financial flaw in Labour’s policy. Slashing the electricity surcharge by 50% is going to cost Dr Sant about Lm25 million. This is not a one-time cost, but one that will have to be met every year in the next legislature and way beyond that. Since Dr Sant now cannot leak this expenditure into deficit spending, he will have to cough up that money in two ways; either a spending cut or a tax rise – the laws of economics are inescapable Fred, even for you! He is saying that he will have this money available because he will not, unlike the present administration, squander money away on public projects. Haven’t we heard it all before; how the next government will be really, really careful with our money? Who is going to believe that anyone will be capable of reducing our capital expenditure budget of some Lm100 million per annum, by 25%? Isn’t this the Labour party that decided in a short 22 months, to turn a small research hospital into a fully blown general hospital, a decision that more than doubled the original estimated cost of the original San Raffaele hospital? Does anybody really believe that if Mintoff hadn’t played his mean trick on Sant in 1998, Mater Dei (or whatever Dr Sant would have chosen to call it) would have cost a cent less than the Lm250 million this government has got away with? If anyone believes any of this, then I strongly suggest you stop reading, now!
Should Labour decide to slash the surcharge by 50%, then the money will have to come from somewhere. Since no government in this country, has ever been or will ever be, in a position to trim recurrent expenditure that money will ultimately come from two pockets; yours and mine. However if this is what Dr Sant wants to deliver, then so be it. The electorate would have made a democratic choice. However I suspect this promise will end up much in the same fashion as the promise to eliminate VAT. Remember how that ended up?
Apart from the financial flaw, then there is the environmental irresponsibility of the proposal. Dr Sant may have yet to realise that Malta is situated on Earth, the planet that is suffering from potentially cataclysmic climate change. Like all other countries in the EU, Malta has commitments to reduce carbon emissions, so much so, that even government is already engaged in battle with the EU on our quota for carbon emissions – a battle government will most likely lose. Now how is Dr Sant’s surcharge proposal going to contribute towards meeting our reduction in carbon emissions? How is an energy policy that attempts to create the impression that oil is physically limitless, environmentally harmless and costs USD30 per barrel, going to contribute towards fighting climate change? What message is he conveying to the people by promising to subsidise the surcharge in this manner, apart from one that we can enjoy the status quo for ever? What fib is Dr Sant going to tell his European shabna socjalisti (socialist friends) this time, apart from the fact that he desperately needs to win the election?
So, is that all the Greens have to say about the matter? No, there is more to be said. In fact, in our submissions to government for the pre-budget consultation, we made a very specific proposal regarding the electricity surcharge. We proposed that government should change the surcharge mechanism, so that there will be different rates of surcharge rather than just one. By applying only one rate of surcharge government is not discriminating between those households that are making an effort to be energy efficient and those that are not.
Austin Gatt’s flat surcharge rate is “calculator politics”, designed to fill a financial gap, Alfred Sant’s is “virtual reality politics”, designed to pretend that the gap does not even exist. Our proposal is one that would apply a lower rate of surcharge on households consuming less, whilst imposing a higher rate of surcharge on those consuming more, naturally on a per capita basis. This proposal is a refinement of the ‘polluter pays principle’, in this case ‘the heavy polluter pays more’. This is what is needed to bring about a culture change in energy efficiency. Even those who can afford higher energy bills should become efficient. Climate change, will after all, affect us all.
Of course you can vote for those who want to slash the surcharge by 50%, and “to hell” with the consequences. Dr Sant’s summer sale may be attractive. However you all know what happens to prices after the sale is over; don’t you?

Edward Fenech is spokesperson for finance and the economy of Alternattiva Demokratika – The Green Party



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