Issue link: https://maltatoday.uberflip.com/i/1504886
8 maltatoday | WEDNESDAY • 2 AUGUST 2023 NEWS NEWS ANALYSIS WITH the government losing its reputation for competence amidst an electricity crisis that exposed under investment in the distribution network, the Oppo- sition had a field day. But instead of reaping the benefits and presenting itself as the cautious and responsible alternative to Labour's incom- petence, the PN botched it. The party rushed headlong into the malaise with a radical proposal to liberalise the distri- bution market – presumably, the proposal would see private companies competing with En- emalta in delivering energy to households and businesses. But while such a proposal can help in defining the Opposition as a centre-right pro-business party embracing neo-liberal EU policies, it came at a time when distrust of big business is greater than ever. Here are four reasons why this PN pro- posal can backfire. 1. Breaking the golden rule: Opposition parties should avoid turning the spotlight on themselves by coming up with proposals that generate uncer- tainty and fear of future shocks at a time when everyone is focused on the government's failures, and no one is talking about bills. The PN should have learned from experience that stabil- ity in energy pricing is one of the current government's most popular policies. The fact that people do not live in anxie- ty over the next utility bill is one main reason why Labour retains support despite grow- ing resentment and distrust. Although the long-term sus- tainability of subsidies meant to guarantee lower prices is questionable, the Opposition cannot afford to come up with proposals which end up gener- ating more uncertainty among people. People naturally fear change in a sector which may have a direct impact on their livelihoods. The promise of competition between rival providers of- fering different packages to consumers in the same way as mobile phone companies do today, hardly compensates for the loss of security such a pro- posal evokes. The PN may well have concentrated on its eight other sensible proposals rather than casually mentioning liber- alisation in a press conference, apparently unaware that this was going to attract the head- lines. And although the PN may have naively thought that people still associate liberali- sation with lower prices, it has given Labour an excellent op- portunity to lash back by point- ing out at experiences in other countries where liberalisation has increased prices. 2. Losing its magic: We are no longer living in the 1990s when people blindly believed in the magic of the free market after years of centralised economic and trade planning. On paper, liberalisation may be an effective tool in open- ing sectors dominated by en- trenched monopolies to com- petition with added benefits to the consumer. For example, the removal of the white taxi monopoly has largely benefit- ted consumers due to lower prices. But can one apply the same logic to essential servic- es like energy distribution in a sector where the private sec- tor would end up using public infrastructure paid for by tax- payers to make a profit? And while the PN in the 1980s had voiced the popular frustration at autarky associated with an overbearing state, nowadays people are more distrustful of the dominance of the market by the usual fat cats. Moreo- ver, while presently the public can hold the government to account for any shortcomings in the energy sector, private actors may be less accounta- ble to the public. Even at an international level distrust in corporate power has eroded public trust in the ability of the state to regulate markets to the extent that state intervention is once again fashionable even in right-wing circles. In this sense the PN is swimming against the current, even more in a sector which depends on a strong and stable grid capable of absorb- ing greater investment in re- newables. 3. A change in policy: Over the past decade the PN has been critical of Labour's crony capitalism, having opposed public-private partnerships in the health sector, the sale of a minority stake in Enemalta to a Chinese government company, and the sale of the BWSC pow- er station to Shanghai Electric. The latest proposal would see private companies making use of Enemata's public infrastruc- ture to make a profit. In its electoral manifesto the PN had reiterated its commit- ment to "restore sovereignty over the provision of energy," in a clear reference to the PL's policy of partly privatising Malta's energy supply. It also Energy liberalisation: How PN threw Has the opposition thrown a lifeline to the government by coming up with a controversial proposal to liberalise energy distribution while taking the focus away from government's gross failures in energy distribution? JAMES DEBONO asks While the PN in the 1980s had voiced the popular frustration at autarky associated with an overbearing state, nowadays people are more distrustful of the dominance of the market by the usual fat cats