Simon panders to business. At what cost?

Simon Busuttil was all too quick to jump on the bandwagon of a business lobby (GRTU) demanding a further 30% reduction in energy bills after the government had already reduced their electricity bills by 25%.  The GRTU wants bills reduced to reflect present oil prices, raising the question whether the same business bodies would be willing to pay more when the international price of energy rises again.

By pandering to these demands Busuttil shows keenness in restoring his party’s credentials as a pro-business party in view of Muscat’s inroads among this sector. 

But perception-wise, Busuttil’s demands immediately evoke a contrast with his own predecessor’s insistence that higher bills were justified.  Not only, according to Lawrence Gonzi, were such bills necessary to eliminate subsidies to Enemalta, arguing that such case could be better spent on health and education; but the higher rates were in themselves incentives for reducing waste, energy conservation and the shift to renewable energy.

Of course, there is an argument in favour of a transparent mechanism showing how the bills paid by the consumer reflect the prices of energy in the international market and from the Malta-Sicily interconnector.  The consumer has a right for a breakdown of the bill they pay, how much of it is derived from oil or the interconnector, and at what cost. And this makes even greater sense in view of the partial privatisation of the energy sector which sees a Chinese company acquiring 33% of Enemalta and the latter entering into an 18 year-long power purchase agreement with a private energy consortium.  

A step forward would be creating an independent authority accountable to parliament, which would prepare a quarterly report on the pricing of energy paid by the consumer.

Busuttil would be right in calling for transparency in pricing. That is why he should propose the setting up of a parliamentary committee responsible for the energy sector, which should be chaired by the Opposition.  This is even more urgent in view of Enemalta’s partial privatisation and the appalling lack of transparency on energy.

The consumer has a right to know what Enemalta’s cut is when selling electricity and other costs towards addressing the financial situation of Enemalta and outstanding loans. 

But even so, it is debatable whether any profits to Enemalta should automatically translated into reductions for businesses. Energy prices are a deterrent against waste and an incentive for energy conservation and the use of renewables. Under Gonzi’s watch, energy prices crippled business activity, but the present government has reduced bills substantially.  So it makes no sense to endanger Enemalta’s financial situation through further reductions, which may reflect present market realities but not future scenarios.

So what if the consumer is being over-charged? A fair redistribution model would be to tax Enemalta on the cut it makes to use this money to finance health, education, environmental protection and essential public services. It may be unfair for Enemalta to profit off the consumer, but it makes even more sense for that surplus to fund society’s needs rather than fuelling energy use, which itself carries an environmental cost not accounted for in our bills.

Take the 5% reduction in water bills: a responsible Opposition should have committed itself to repeal such a nonsensical reduction in a country where water is underpriced and is extracted, even illegally, at an enormous environmental cost.

Politically, Busuttil is making some wrong assumptions about his own electorate. He apes Muscat’s pre-2013 populism when voters expect him to be a voice for sobriety and responsibility. On migration he resists that temptation, in the process facilitating Muscat’s conversion to a more humanitarian approach, but Busuttil now seems desperate to appease short-term business interests.

It’s a confusion on whether to confront Muscat from the left or from the right, and only ends up sending mixed messages, confusing his electorate.