Comment | Wednesday, 04 November 2009

A Maltese anomaly

Nobody can blame the Government for the rise in international oil prices past. present or future. At most the Government can be criticised for not anticipating the long term likelihood of such price hikes, for not being able to soften the impact of a sudden hike when it happened; for not having in place the measures, the policy, even the culture it takes to deflect the worst of such blows.
Now that we are all aboard the inflation/recession rollercoaster, it may be a little late to worry whether we could have avoided taking the ride. Here we are: as the global recession fades and economies recover, the price of oil is already on the rise. Either we have unemployment because our markets shrivel and die or we have industrial strife because workers cannot make ends meet in a situation of imported inflation.
Those of us who have kept our jobs through the turmoil of 2008/2009 can easily predict another drop in living standards as oil prices climb past the $70 mark. Our COLA mechanism adjusting to a loss in purchasing power due to inflation comes into play with a year’s delay. It allows us to recover our standing at the start of the previous year. The year of loss itself is always a lost cause.
As it stands, the mechanism is criticised by employers as a contributor to domestic inflation and because it appears to be a rise in costs and wages without a corresponding rise in productivity/competitiveness. In fact it is simply an acknowledgement of the devaluation of the currency leaving employees exactly where they stood before the devaluation took place, with a bite taken out of salaries for the year in which the change took place.
Decades late and only because Malta has been unable to escape a commitment to reduce CO2, we are now hearing about strenuous attempts by the Government to reduce the consumption of energy, to increase the efficiency of its production and to recoup what it can of the available energy from renewable resources. There is something very seriously wrong with our decision-making systems if we have been unable to see the necessity of such a strategy all along.
Even now the Government proposes to make up the shortfall in CO2 reduction by investing first in solar energy by installing photovoltaic panels on the acres of rooftops left idle over Government properties. In fact it proposes to avoid any public investment but will be seeking to secure private investment to cover its rooftops.
Once more we have evidence of a quick fix, last minute resort to big money when a long term strategy engaging with the public would have had significant additional benefits. Ineffective subsidies (characterised as such in the Auditor General’s report on the matter) limited by number and in the absence of a rewarding feed-in tarrif means that the Government is apprehensive of any sudden or significant rush into the solar age. In some ways it is reminiscent of the resistance to colour television by the Labour Government in the 1980s without the scams and rackets spawned by that Luddite prohibition.
Encouraging everybody who has access to a rooftop to invest in solar energy alleviating the national burden while reducing the bite out of private budgets, would be a major blow against the threat posed by rising oil prices. Without forking out a cent, the Government could underwrite the private financing of a nationwide boom in renewables. Why have we not done this yet?
The promised revolution in public transport is definitely a step in the right direction. Whether the system is privatised, nationalised or monopolised doesn’t matter at all. What does matter is that it is cheap and efficient; in fact, efficient enough to compete with private transport. Importing pretty buses to appear civilised or to abide by EU regulations in part aiding an ailing motor vehicle industry, is not the point. If the new system remains unable to wean us off our cars, it will be a failure. Commuters must be able to get to work on time and cheaply reducing their private transport costs without giving them significant pain.
Laissez faire in retail has meant that we have an amazing variety of goods on offer, almost all of them at exorbitant prices. Fragmentation of importation has left importers with no leverage in suppliers and with a multiplication of distribution systems which are an unnecessary cost and themselves a major contributor to traffic inefficiency.
The alternative should not mean a return to bulk buying days when everything was imported by Government ending consumer options and provoking cyclical gluts and shortages.
Empowering consumers and exposing service providers to competition is the way to go. Unfortunately consumer power has been a casualty of the bulk-buying era when profit was characterised as theft and consumer associations became little more than a tool for persecuting businesspeople. Changing that culture is just the sort of thing this Government finds hard to do. It is bound hand and foot by a go-with-the-flow ideology in such matters and appears unable to conceive of driving change.
Management by crisis seems to be the one factor which has been a recurring theme no matter whose hand lay on the tiller of government. Now we have a whopping great crisis to manage. It may force us to change our system once and for all.


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04 November 2009


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