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The rumpus over the price of fuel and the declarations by Minister Austin Gatt and junior finance minister Tonio Fenech cannot be left unanswered.
For years now, we have watched as the Nationalist government, the same one which Gatt and Fenech militated in, failed to address the crass mismanagement at the government owned Enemalta.
We watched as former government minister Josef Bonnici reneged on hedging agreements when fuel was at record lows and gave the word taboo status.
We watched as the government pontificated over energy conservation policies but did next to nothing about it.
We watched as Enemalta took on more staff with higher wages.
We watched as Austin Gatt and Enemalta rubbished suggestions for investment and research into alternative energy sources.
We watched as the public transport system collapsed leaving a greater dependence on private transport and hence more fuel consumption.
As an increase in refined fuel prices loomed - not unforeseen - the government did nothing other than increase the price of fuel and transfer the extra cost of producing energy onto consumers by means of a surcharge.
And yet Enemalta refused to buy oil in a prudent way, discarding completely the hedging option as if it were a mortal sin, constraining this country to purchase its oil requirements at spot prices. The figures published by the Investments Ministry do little to clear the confusion over the purchasing policy adopted by the fuel procurement committee set up late last year.
Furthermore, the decision to tag diesel and petrol prices to international movement of fuel prices ensured that the unit responsible for the sale of fuels for general consumption continued to make good profits.
Overriding Minister Gatt’s thinking process is the war on the deficit.
Since 1996 now, Malta and the Maltese have been moulded in this war on the ‘hole’ and the deficit, basing all our economic vision on this factor.
Needless to say, addressing the deficit is important. But the drive has to be balanced between raising revenue and cutting expenditure. Unfortunately, over the past few years we have seen government efficiently concentrating on the former and doing little to address the latter.
Now, Gatt and Fenech believe that if they transfer the impending high cost of fuel - a combination of world prices and countless years of incompetence at Enemalta - on to big business, small business and the consumer they will be doing the right thing.
The result will be a downturn in consumption and will further depress economic activity. The very same zeal of Gatt and Fenech not to impinge on the deficit by transferring the additional cost of fuel directly onto the consumer will inadvertently lead to a resultant drop in the collection of revenues next year when companies will see their profitability drop. Next year’s deficit target will be next to impossible to achieve without sending the whole country to the dogs. Let us not look at this year’s deficit control which is peppered with contributions from foreign funding and one time sales.
The government’s role is to serve as guardian of the economy not to be a player. It has the task, or should have the responsibility of involving itself in driving the economy not being the economy.
The stakeholder at Enemalta is the government.
Enemalta’s losses and profits have to be seen in the context of a bigger picture. If the Maltese economy is to suffer because of Enemalta’s bid to balance its books then the government should refrain from doing what it has been saying it will do.
The Prime Minister must wake up to this reality. If the increases in fuel and utility bills as announced by the minister do kick in, this will drive a stake into the sluggish economy’s heart.
Lawrence Gonzi must take a closer look at the implications of this bulldozer politics and work out solutions that address all realities; a soaring price hike, an inefficient energy company and a listless economy.
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