Muscat, Chamber clash over need for fresh energy price cuts

Prime Minister Joseph Muscat rejected a request by the Chamber of Commerce to further reduce electricity tariffs, insisting that he will not resort to a “boom and bust” economic model.  

At the start of a dialogue session between businesspeople and the Prime Minister, Chamber president Anton Borg said that electricity prices must reflect the plummet in the global price of oil, that has dropped drastically over the past two years and recently even dipped below $30 a barrel. 

“The current electricity tariffs are based on oil prices of over $100,” he said. "While we are fully aware of Enemalta's financial situation, we feel that further reductions are justified to protect Malta's export competitiveness position, particularly in price-sensitive sectors such as manufacturing, given that electricity represents around 12% of businesses' overhead costs."

He warned that a failure to reduce prices could prove detrimental to future foreign direct investments, given that countries’ energy costs are of high priority for investors.

However Muscat warned that the oil market is incredibly volatile, and that the price of oil might shoot up in the future just as quickly as it has recently fallen. 

"It would be very easy for us to abandon our current hedging models based on the current prices of oil and make hay while the sun shines," he said with a chuckle. 

"However, when the price of oil starts rising again, we will then face severe problems." 

He also said that Enemalta must set aside funds to repay 25 years of accumulated debt, warning businesses that a failure to do so will lead to local banks imposing fresh restrictions on credit facilities.

He argued that household electricity prices in Malta are amongst the cheapest in Europe, while energy costs for businesses fall well within the EU average. 

‘Phantom billing for public hospital patients’ 

In his speech, Borg proposed that public hospitals issue their patients a ‘phantom bill’ that indicates a breakdown of costs incurred to deliver medical treatment, so as to raise awareness of the value of ‘free healthcare’ to the public purse.

"Phantom billing will enhance people's awareness of the value of the so-called 'free' healthcare they are entitled to," he said. "While this recommendation is extremely politically sensitive, we believe that the healthcare sector in Malta must break away from the political arena and step up to higher level of responsibility and consensus." 

He also called on government to finance the medication of cancer patients who are currently relying on support from the Malta Community Chest Fund.

"The annual financial requirements catered for by the MCCF are around €5 million and it is unreasonable to think that the country cannot find this amount of money to safeguard the dignity for those in need,” he said.

"The current system has rendered people in need of life-saving treatment into beggars and we must ensure that suffering individuals are able to access the necessary support from a structured system rather than from ad-hoc charity efforts." 

While not directly touching on the Chamber's two recommendations, Muscat admitted that more “responsibility” is necessary in the national healthcare system, given that it costs "a hell of a lot of money" to maintain. 

He reiterated his belief that healthcare should remain completely free to Maltese patients and argued that it could be financially sustained by attracting medical tourists through a €200 million investment project into St Luke’s Hospital, the Gozo General Hospital and the Karin Grech Hospital.

‘Time to clamp down on importation abuse’ 

Borg reiterated his long-standing plea on the government to clamp down on illegalities in the sea-borne importation of goods to Malta, warning that lax enforcement is leading to tax evasion to the detriment of law-abiding businesspeople.

“Besides unfair competition, this situation contributes to the serious and undesirable consequences of huge tax leakages and unnecessary compromises on consumer health and safety,” he said. “We can no longer accept the serious damages being inflicted on our members while the authorities continue to promise solutions that ultimately never materialise.

“Only strong political determination will solve the problem, but this has unfortunately been lacking for more than a decade and as a result, the country has been powerless before those who choose to abuse the system.”

‘Too bureaucratic for foreigners to open bank accounts’

Borg warned that foreigners wishing to operate in Malta encounter excess bureaucracy when setting up bank accounts.

“While we are aware that these difficulties are mainly generated from heightened compliance procedures related to international money laundering regulations which our banks must adhere to, the procedures are far too bureaucratic.

“The status quo could be detrimental to our country’s aspirations to serve as a hub for international business activity, particularly in financial services.”

On his part, Muscat admitted that he is “disappointed in a particular bank, that has been on the backburner for the past six years and can play a much larger role”.