How long can energy subsidies last?

The truth is, moreover, that it is this increase in Malta’s debt that is leading to Malta’s economic well-being

File photo
File photo

The European Commission has called on Malta to gradually eliminate energy subsidies and take measures to ease traffic congestion and increase renewable energy.

The recommendation came in a formal warning the European Union issued to Malta and seven other nations over their excessive budget deficits. The other countries are Belgium, France, Italy, Hungary, Poland and Slovakia.

The last time Malta faced an excessive deficit procedure was in 2012 when the PN government was forced to make spending cuts to the tune of 0.59% of GDP to meet deficit projections.

The Commission intends to propose to the Council to open excessive deficit procedures for these Member States next month. EU Commissioner Valdis Dombrovskis said in a statement: “We look forward to receiving national fiscal structural plans from Member States that bring down debt and deficit and reflect today’s recommendations.”

The Commission called on Malta to submit the medium-term fiscal-structural plan in a timely manner and to keep the general government debt at a prudent level over the medium term in line with EU treaties.

The Commission wants Malta to ‘wind down’ the emergency energy support measures by next winter and given the country's dependence on imported energy any measures should be targeted towards supporting vulnerable families and companies.

The Maltese government reacted by issuing a statement, saying it has taken note of the draft Country Specific recommendations and Country Report, issued by the European Commission, which ‘highlight the achievements obtained together with the remaining and emerging challenges’.

It is particularly positive that the European Commission, the government said, has noted that Malta’s economy will continue to outperform other member states in 2024 and 2025. This growth is expected to be driven by net exports and private consumption. Another strong economic indicator confirmed in the report is that Malta’s labour market is performing well with an employment growth rate that is exceeding the EU average.

Similarly, the fact that the rate of inflation is projected to be halved by 2025 confirms that the Government’s policies to promote price stability when it comes to basic necessities are bearing the desired results.

This part of the statement was also reported in l-orizzont last Thursday. The government flaunted its achievments while making no reference to the issue of energy subsidies.

The govermment has always refused to consider the idea that the subsidies that keep energy and fuel prices stable should be removed or decreased. How long can this stance hold?

The Nationalist Party reacted by saying that government has nothing to show for its exaggerated and wasteful spending which led to the country being warned over excessive deficit.

It appealed for government to stop squandering the people's money recklessly and to ensure that its expenditure is sustainable. According to the PN, ‘in four years, Prime Minister Robert Abela has created more debt than the Nationalist and Labour governments combined since 1964.’

The government’s argument is that the rate of increase of our national debt is less than the rate of increase in the GDP - so everything is fine! This ignores the fact that for Malta to keep increasing the GDP at such a comparatively high rate, we must keep importing workers, with all the consequences of this phenomenon.

The truth is, moreover, that it is this increase in Malta’s debt that is leading to Malta’s economic well-being.

Clearly the policy of subsidising fuel prices across the board while continually increasing Malta’s debt cannot be sustained in the long run.

The European Commission in May last year had advised the government to wind down the subsidies and instead focus on reducing its spending deficit. But the government ignored this advice and the Finance Minister, Clyde Caruana, in his Budget speech last October had announced that subsidies on energy and fuel were set to continue, at a cost of €320 million. Without these energy subsidies, the average family would be paying double what they are paying now for electricity and fuel.

With its policy of sustaining energy prices at a relatively low level through subsidies given across the board, the government has avoided serious negative effects on the cost of living. But these subsidies also encourage waste. Can Abela stick to this policy in the next three years through to the next general election?

A masterplan for a square

Gozo minister Clint Camilleri has promised action on the commercial takeover of Rabat’s St George’s Square, after NGOs and cultural organisations protested the issue last Saturday.

Replying to a Parliamentary Question last Wednesday, Camilleri admitted that the amount of commercial establishments in the square has doubled over the years, leading to confusion over which outlets are subject to the area’s masterplan.

The Minister even said that: ‘We must respect the needs of the parish and of the public in general. It is unacceptable that weddings, funerals, the festa and other church activities are becoming difficult to organise because of this situation.’

Camilleri said that he spoke to his counterparts responsible for lands and tourism, as well as the new Rabat mayor Brian Azzopardi and the Archpriest of St George parish, with an aim to changing the masterplan for the area.

Last Saturday, Soċjetà Filarmonika La Stella and il-Ħaġar museum joined forces with activists from NGOs Moviment Graffitti, Għawdix, Din l-Art Ħelwa - Għawdex and Flimkien għal Ambjent Aħjar to denounce what they said was a ‘land grab’ in the square that ended with all four entrances blocked, making access to the square ‘increasingly’ difficult.

St George’s Basilica’s archpriest Can. Joseph Curmi said in a press conference that the square had been turned into a maze of tables, chairs, tents and other structures placed outside by the many restaurants in the area.

Various attempts to engage in dialogue with the responsible authorities, amongst them the Lands Authority, the Malta Tourism Authority, and the Planning Authority, had led to nowhere. Can. Curmi accused the authorities of ‘shrugging off their responsibilities’ and described enforcement as ‘virtually non-existent.’

Every square in Malta needs a masterplan, I suppose, so that all tables and chairs are placed in a way that respects the locality. This would have to be revised every time a new shop opens, or an old one closes.

We probably need the setting up of a Tables Authority to deal with this problem both in Malta and Gozo. The Prime Minsiter might even be tempted to nominate two Ministers - one for Malta and one for Gozo to tackle this problem - while the Local Councils just keep saying: Prosit Ministru!