Speech by MHRA President Kevin De Cesare at an Extraordinary General Conference held yesterday
I will get straight to the point.
As all of you know last week we were shocked to be told by government, during an MCESD meeting, that the Electricity tariff system will be changed with effect from 1 October. This message was delivered during the meeting without any prior notice or consultation. In fact, government always led us to understand that the capping system will remain in place due to the importance of maintaining our competitiveness and employment levels. Additionally no information about this change was put into the budget consultation document, which was published precisely for reasons of consultation. The MHRA maintains that if any measure should have been put into this document this should have been done due to the importance of the effect of such a measure on the overall economic landscape of our country. After all, the reason that the capping was introduced for hotels and industry is more relevant now than it ever was.
Our first serious bone of contention is precisely this fact. Together with the FOI, MEA, Chamber of Commerce and also the main unions on the MCESD, we have unanimously agreed about the lack of electricity tariffs. Additionally we have all complained very vociferously about the total lack of consultation on a matter, which affects businesses in a very substantial way.
Secondly the MHRA is very concerned that at a time when the International economic situation is going through its most turbulent time and we are all collectively concerned about the effect this will have on our Island, the government lands us with shock treatment of the highest degree. It is ironic that while Internationally all governments are using mechanisms to cushion economic shocks, our government, in its wisdom, decides to do the exact opposite and send industry into a frenzy presenting such serious changes in an unprofessional way.
What happened to the promises of consultation? What happened to the promises of working together? We worked very well with government locally to ensure the smooth implementation of levies. We worked very well with government and its agencies to ensure the smooth implementation of the Euro. Why could we not work in the same way with government to address the challenges facing industry due to the problems that are being faced by Enemalta?
In addition to this the government stated that there is no need to carry out a socio economic impact report of these changes. The MHRA was shocked to hear such a statement. During the various meeting held with our counterparts that sit around the MCESD table everyone agreed that the effects on employment and the economy in general could be very substantial and everyone was extremely surprised at the way government understated the importance of this issue. The MHRA will be insisting with government that before any decision is taken on the matter a proper socio economic impact study is drawn up, discussed and a way forward agreed upon by the social partners. It is only then that we can discuss a long-term solution that makes sense. We simply cannot accept a quick fix that has not been thought through properly as this could lead to serious loss of employment and problems within the industry.
Apart from the direct impact of the cost of increased tariffs, which will be different for members depending on the size of their operation and electricity consumption, our members will also experience an increase in costs due to the increasing price of supplies purchased from local manufacturers who will have to pass on their increase in cost in some way. Additionally the increase in domestic tariffs will also find itself on our labour cost base due to the way the cost of living calculation works. Hence the bottom line is that we get hit three times over – once due to the tariffs, secondly due to the increase in cost of supplies and thirdly due to the increase in cost of wages.
And none of you here need to be told how impossible it is to recover such costs through increasing rates. The reality is that in the current market scenario we are already struggling badly to fill our rooms. One only needs to look at the advance figures for tourist arrivals for November and December, which are currently showing significant drops, when this is compounded by the shorter length of stay this will translate to even larger percentage drops in room nights.
The reality is that not only has government taken a bad decision and used a non-transparent process to implement such changes but it has also chosen the worst possible time to do it.
Our message to government is clear. These costs are unsustainable for our industry. Hotels will have to claw back the expenses from other areas and the biggest area of expense is our wage bills. Does government really want to see more hotel closures and loss of jobs from an industry, which it claims it wants to reach a level of excellence by 2015? This is hardly a way to encourage tourism industry to reach a level of excellence. On the contrary it is one way to Demoralized an industry which has invested no less that €1.2 billion over the years and puts millions a year back into the economy in wages and direct tax payments.
Government is asking us to approve on of five choices. The GWU described this process as one similar to choosing whether one wants to die by shooting him or diving off a bridge. Well the GWU are not too far off the mark!
The MHRA is willing to sit down with government and work out a long-term solution, which avoids shocks to the system.
The MHRA is willing, as always, to be reasonable and responsible in its approach to such challenges and it assures everyone that it will rise to the occasion this time around as well.
However the MHRA is not going to accept to be pushed around by government and not given the space it needs to discuss a professional way forward.
The MHRA is upset about what was done but equally by the way it was done. The way this . matter was handled shows a great deal of disrespect for industry, industry that employs thousands of people and generates millions in economic activity annually. We insist that the decisions on this matter are discussed properly and any solution implemented professionally and in a way that is socially and economically viable for all concerned.
The last thing that we would like to see our members do is close down, reduce employees or reduce standards. All three of these consequences will damage the industry in the medium and long term.
We therefore appeal to government to be reasonable and meet ourselves, together with the social partners, to discuss, without impositions, in a professional and reasonable way, the best way to face up to these challenges. We expect this to have happened in the first place and trust that our appeal will now be heard.
We are working closely with the other employer bodies and unions on this matter and will be tackling the matter in a united front with government. Ultimately this problem affects us all, across all industries and the biggest losers will be our employees whose employment will no longer be sustainable.
I once again urge government to withdraw its proposals made last week and take a professional approach based on proper consultation and discussion with the social partners in order to arrive at the best way to solve the challenges at hand. It is only in this way that we can avert massive problems on our island, not only in our industry, but also across all industries.
One final point is derived from the minister’s comment last night about industry not investing in environmentally friendly measures such as double-glazing. I would like to inform the minister that many of our members have invested a great deal in this area and more (double glazing, reverse osmoses, solar heating, energy saving lamps etc).
This message was delivered during the meeting without any prior notice or consultation. In fact, government always led us to understand that the capping system will remain in place due to the importance of maintaining our competitiveness and employment levels. Additionally no information about this change was put into the budget consultation document, which was published precisely for reasons of consultation. The MHRA maintains that if any measure should have been put into this document this should have been done due to the importance of the effect of such a measure on the overall economic landscape of our country. After all, the reason that the capping was introduced for hotels and industry is more relevant now than it ever was. 
