A price hike too far

Admittedly, economic 'safety-nets' have traditionally always been provided to cater for the very lowest strata of society. But the same cannot really be said for the much larger category of people who are now hovering only slightly above the poverty line. The ones who are struggling to make ends meet, while at the same time not falling into the classic definitions of poverty or penury.

This category tends to be overlooked in the general issuing of energy-vouchers and other such schemes designed for the benefit of the under-privileged. And yet for various reasons the same category also forms the main motor behind the inevitable knock-on effect that any hike in the price of fuel - or gas, or water, or electricity: all of which have sky-rocketed in recent years - will invariably have on the economy as a whole.

Of all people, Dr Gonzi should know this better than most - having briefly assumed the finance portfolio in 2004, before handing it over to present incumbent Tonio Fenech. Surely, the Prime Minister must therefore realise that Malta's economy is shored up mainly by micro-businesses: i.e., companies and organisations whose competitiveness depends on keeping prices reasonable by controlling their own cost-base.

Such micro-businesses are by definition the hardest-hit by any increase to utility prices. Apart from increasing daily management expenses for such companies, increases in the cost of gas and fuel tend to also induce cumulative inflation across a wide spectrum of other, ostensibly unrelated products and services.

Suddenly, the costs involved in basic door-to-door deliveries - to name but one standard operational expense, among countless others - will have to be upwardly revised to compensate for increased expenditure on fuel... which in turn affects the price of the product being delivered... which will invariably impact public purchasing power, which will erode competitiveness vis-à-vis imported products, which will ultimately lessen profits and lower the standards of service: all of which entail inescapable consequences for the financial state of health of the company concerned, and ultimately of the economy as a whole.

For these and other reasons, any fluctuations in the price of such utilities are never taken lightly by governments; and on paper, Malta is no exception.

But it seems that something is inevitably lost in the translation between paper and practice... and the recent LPG price revision is a classic case in point.

In the space of just four years the price of a 12kg gas cylinder has trebled: from €5.40 in April 2008, to the current price of  €19.70. This translates into a 264.8% increase in just four years.

To be fair, the distribution of bottled gas has been privatised in Malta, which theoretically means that such changes to the prevailing scenario are outside the direct control of government. But again, the reality on the ground is slightly different.

In fact, there is a form of control in place: according to law, any revision of the price of gas must be approved (and also explained) by the relevant regulator, which in this case is the Malta Resources Authority.

And with particular reference to any proposed revision in the price of gas, an MRA document clearly stipulates (among other provisos) that: "The entire price review should be transparent. Consumers are to be provided with sufficient information to enable them to secure an acceptable understanding of how: i. The proposed prices were computed by Liquigasl; ii. The Malta Resources Authority's review and approval process."

So much for theory. In practice, however, attempts to discover exactly why the price has shot up so drastically have proved futile. In fact, it has been impossible even to ascertain where Liquigas buys its LPG from. Indeed, the entire process turns out upon scrutiny to be about as non-transparent as possible.

All that can be fully understood - albeit without explanation - is that gas is fast becoming too expensive a commodity to actually afford... with potentially crippling consequences for the most crucial sectors of the economy.

Bearing all this in mind: it has been almost uncanny to watch and listen the remarkably cavalier way in which Dr Gonzi himself, and many - though not all - of his Cabinet colleagues openly dismissing popular complaints about the cost of living as though they were the stuff of science fiction.

From this perspective, it is not at all surprising that Dr Gonzi's recent (and rather ill-judged) remark about the 'importance of going into people's kitchens' has been met with so much derision.

Leaving aside the obvious propensity for humour, the very fact that the Prime Minister would suggest such a thing is itself indicative of how very far removed he and his government have been from ordinary mortals over the past few years.

That he should do so only now, when polls place his party at an all-time low, less than a year away from an election - and not at any point since 2008, when utility prices started to skyrocket - is plainly to add insult to injury.