Every prime minister in the EU is confronting the formidable energy crisis. Some are working hard to minimise the burden on households and businesses while not pretending to have suddenly found the magic money tree. Others pander to populist aspirations and pretend that spiralling inflation and fiscal rectitude no longer matter.
Prime Minister Robert Abela has again resorted to political doublespeak – language that appears to be earnest and meaningful but is a mixture of sense and nonsense. He argues: “To reduce waste is desirable but it doesn’t work in such an easy way as saying you want to only help the lowest tranche of society, those that have the least.”
This defeatist attitude of the prime minister will lead to substantial fiscal problems in the coming years. A socially equitable solution may hurt some who feel entitled to consume as much subsidised energy as they want. However, this approach is not only possible but appropriate in the present difficult circumstances.
Malta’s per capita annual electricity consumption in 2021, according to the research website Statista, was 6,140 kilowatt hours. While this is one of the lowest in Europe, it is a good indicator of the benchmark that Enemalta should use to determine a reasonable limit for subsidised electricity to households. Subsidising those who consume more-than-prudent benchmark limits is socially regressive and fiscally irresponsible.
Promising investment in public services and helping with energy bills, while promising not to increase taxation and funding subsidies through higher borrowing, is no more than a populist tactic that will penalise present and future generations of taxpayers.
The Labour administration dislikes hard choices even when such decisions are inevitable.
Promising investment in public services and helping with energy bills, while promising not to increase taxation and funding subsidies through higher borrowing, is no more than a populist tactic that will penalise present and future generations of taxpayers.
The prime minister has often argued that the country can afford such fiscal largesse because the economy is doing well. He fails to mention that the economic success of the last two years is mainly due to buoyant public and private consumption.
Depending excessively on these economic motors is dangerous as consumers’ moods may change abruptly if inflation continues to erode their disposable income.
Frugality in the use of energy is not only desirable but should be mandatory in these difficult times. The prime minister should lead from the front in this unprecedented crisis.
Arguing that there is no practical way to help the more vulnerable in society betrays poor political skills and an excess of guile.
This administration appears to have no time for inconvenient facts or for any sensible energy-saving strategy other than resorting to symbolic gestures on how to save energy. Unfortunately, the parliamentary opposition is not arguing the case well enough on a more enlightened management of the energy crisis to allay the risks that the spiralling inflation poses to households and businesses.
While the cost-of-living crisis is mainly driven by external factors on which the country has little or no control, much more can be done to create a sense of urgency in the public’s understanding of the risks of failing to control waste. It is a substantial fiscal fallacy to pretend to have the cake and eat it.
Every administration has a political and moral obligation to use taxpayers’ money in a way that does not burden present and future generations with excessive debt.
This obligation can only be fulfilled with solid leadership and not by adopting a defeatist mindset in the management of a crisis.