MCESD briefed on Budget, revised electricity tariffs

With four days to go to Budget Day, employers and unions are still sitting on opposite sides of the fence, leaving the government to take the fiscal decisions it "deems fit".

But Tonio Fenech, Parliamentary Secretary in the Finance Ministry, said that disagreement between the social partners did not necessarily mean that people should fear the worst.

The Malta Council for Economic and Social Development yesterday met for a marathon consultation meeting at the Holiday Inn in Sliema to hear the government's plans for the upcoming budget, three days after discussions on the Social Pact fell through.

Details about the budget were sparse, with Mr Fenech keeping his cards close to his chest and with the social partners telling reporters that it was difficult to quantify the impact of the proposals, which many described as "vague".

However, sources told The Sunday Times that as far as the electricity tariffs were concerned, one of the options being considered was a 10 per cent surcharge on consumption, which would roughly be reflected in an increase of about eight per cent in the final bill. The increases, however, would exclude all social cases.

The tariffs would be revised to reflect movements in the international price of oil.

Earlier in the morning, Government Investments Minister Austin Gatt gave a presentation of the proposed new electricity tariffs, which are also expected to be formally announced on Wednesday.

The social partners were later given a detailed presentation of the fiscal position and any initiatives that the government was contemplating in the budget in an attempt to kickstart the economy.

Mr Fenech made it clear that the proposals and ideas aired yesterday to the social partners were not etched in stone.

"I am prepared to continue discussing with the social partners until an hour before the budget. If this doesn't happen, then the government will have to consider all options how to address certain issues based on the discussions of the last four months," Mr Fenech said.

Asked whether this meant that people should fear the worst, Mr Fenech said this would not be the case since the government has always ultimately shouldered responsibility.

"The fact that we didn't agree on a Social Pact doesn't mean that the country is facing a disaster."

The possibility of hammering out a Social Pact was still on the cards, even if this meant eliminating certain proposals made in the chairman's report, Mr Fenech suggested.

Among other measures intended to regenerate the economy, the chairman's report proposed a reduction in vacation leave over three years and giving workers normal pay for the first four hours of overtime every week until 2007. It also proposed that the government should commit itself not to increase income tax and VAT rates.

The government was determined to reach a deficit figure of around Lm76 million for next year and in the process reduce its expenditure by 1.5 per cent to mitigate ulterior measures, Mr Fenech said.

Arthur Muscat, president of the Malta Employers' Association, was evidently unimpressed by yesterday's presentation:

"If the country wants to expand, reduce the deficit, and create more productive work, then today's proposals would not solve much," he told reporters.

The chances of reaching a compromise at MCESD level were bleak, he said, and this meant that the country's problems would persist.

"Someone has to shoulder responsibility and take the necessary decisions. Failing this, the country is not going to extract itself from this dilemma."

Mr Muscat said that unions and employers were still sticking to their guns about issues like vacation leave and overtime - if people retain this position without taking the national interest into consideration, then more troubled times beckon.

General Workers Union general secretary Tony Zarb said his union made it clear to the government that the worker cannot be burdened with any more tough measures - adding that he was pleased that the unions within MCESD agreed on this aspect.

"The government has every right to take the measures it deems fit - but it has to be careful not to take measures that people cannot afford," Mr Zarb warned.

Union Haddiema Maghqudin general secretary Gejtu Vella appealed for consensus among the constituted bodies, reiterating that his union was prepared to do its utmost for the benefit of the country.

Mr Vella made it clear that the UHM was prepared to meet with the other constituted bodies until the eve of the budget to draw up a common position.

Alfred Buhagiar, president of the Confederation of Trade Unions, said the deficit crisis should be tackled headfirst, but it was important that any burdens would be split evenly.

He said that after yesterday's meeting, the government should be prepared to make last minute alterations to the budget to avoid harming any sector in particular.

Anton Borg, president of the Federation of Industry, said that certain measures discussed yesterday and likely to be tabled in parliament on Wednesday would help the manufacturing industry, yet these needed to be offset against any measures which could prove to be detrimental.

Winston Zahra, president of the Malta Hotels and Restaurants Association, expressed satisfaction that the tourism industry would be given priority during the upcoming budget, though he refrained from giving details.

"The discussions about the Social Pact have brought to light the need for certain decisions to be taken. It's sad that we could not reach an agreement among ourselves. The ball is now in the government's court. I just hope it takes the right decisions," the outgoing president said.