Grech takes a leaf from the Muscat playbook: will the PN’s utilities campaign be as effective?

For the first time in a long time the Nationalist Party may have struck a chord on a ‘bread and butter’ issue with a pledge to refund €50 million to consumers who could have been paying more than was due on electricity consumption since 2013.

The campaigb has provided the PN an opportunity to ground this kind of commitment in a critique of the government’s energy policy, which is marred by suspicious deals involving Electrogas and Chinese government-owned Shanghai Electric – even if the PN still shies away from any clear commitment on what it intends doing with these deals once elected.

Now the PN can pander to those voters who prioritise bread and butter issues without alienating anti-corruption activists.

Signing up for what?

The PN’s demand is based on an extrapolation from a draft report by the Auditor General which found that consumers could have paid “extra charges” totalling €6.5 million on their electricity and water bills in the period analysed.

But on Saturday the PN went a step further by calling on people to register “an interest” by presenting their ID cards and electricity bill account number.

Hundreds answered the PN’s call in a rare event outside the party headquarters, for a cause championed by the party. In a way the party got to partly exorcise recent memories in which the Dar Centrali became associated with internal strife, contentious internal elections and gatherings in which rowdy supporters of former party leader Adrian Delia stood by their leader in the various attempts to unseat him.

Yet by calling on people to gather outside the headquarters the PN found itself drawing comparisons between its actions and a similar campaign by Labour one year after Muscat was elected party leader and in the run up to MEP elections in 2009.

But beyond the similar optics, some differences are striking.

The first difference of note is that in 2009 people were signing in for an actual class action in a court case urging the government to refund the VAT over-charged on their car registration tax. Surely Labour’s 2009 campaign smacked of opportunism. Since Malta lacks a legal tradition of US style ‘class actions’ the legal campaign itself fizzled out, with Labour using it as a prelude for an electoral commitment to refund the monies anyway, in a staggered way after it was elected in government in 2013.

But while in 2009 the crowds gathering in front of the PL headquarters were at least given a reason for signing in, those answering the PN’s call last Saturday were simply registering an “interest” in a refund scheme to be launched by a future PN government.

Since everyone who was overcharged by ARMS would be eligible for a refund, it is not clear how people will benefit by providing the PN with their own personal data, which may well be used for other reasons.

To justify the collection of data, the PN may well consider providing all those signing in to this initiative with a clear break-up on how much they have been over-charged.

But here lies another potential pitfall of the campaign. While it was easy to calculate the VAT paid on car registration, calculating the over-charging of electricity and water bills is more complicated.

Moreover a sample of electricity accounts taken by the NAO found a variance of more than €10 in 32 of the 85 accounts reviewed. The range in the difference between pro-rata and annual billing was between €10.74 and €468.90. The latter amount was said to relate to a user with heavy electricity consumption. Moreover, 46% of the analysed accounts did not reveal any significant variance between the two billing methods, with the difference between the two calculations being less than €2. So telling people the amount due to them may backfire among those eligible for a refund of small amounts.

And one major disadvantage for the PN is that despite the over-charging – which ranges from the minimal to the substantial – a large segment of voters still recall the hike in energy bills under the Gonzi administration and the substantial reduction implemented by Labour upon being elected.

While Labour’s commitment was legitimised by a statement by the European Commission that VAT should not have been charged on registration tax and confirmed by decisions of the European Court, the NAO report in this case is preliminary and conditioned by pending court cases instituted by citizens claiming being overcharged by ARMS.

Are refunds based on social justice?

Another more political question is how disbursing €50 million as promised would impact on a future government’s budgetary policy and it makes social justice sense to commit such an amount when it could be used for those who can’t afford paying their bills, rather than compensate heavy energy users and owners of second homes.

While Labour’s 2009 campaign was effective, it was never legally established whether government was legally obliged to issue the VAT refund on car tax. For what the government was legally obliged to change was the system. As was the case with Muscat’s commitment in 2009, the PN can justify its position by saying that it is simply refunding money which should have never ended up in the government’s coffers in the first place.

But the money would still be taken away from other priorities. Indeed, in 2010, then finance minister Tonio Fenech asked: “Will Labour tax everyone in order to give this refund to a few when they are not entitled to it?” And while record economic growth ensured that Labour felt no need to raise taxes to honour its commitments, it still had to stagger the refund over three budgets to avoid a negative impact on the country’s finances.

Grech renews the PN’s populist appeal

Another striking difference between Labour’s commitment in 2009 and that of the PN now was the response of the public. While 18,000 registered for Labour’s class action, the PN has not published any numbers. Although the crowd was sizeable at least by PN standards in more recent times, it looks like a far cry from Labour’s. One reason is that even back in 2009, surveys were already showing Labour making electoral inroads, which made it the probable winner of the forthcoming general elections.

In short, while 12 years ago Labour was already seen as an alternative government with a strong chance of being elected to power, the PN is still a long way from being perceived as a government in waiting. But while it is highly unlikely for the PN to win an election on the basis of such a campaign, it may well help Grech renew the party’s populist appeal.