Sociologist from Malta

Friday, March 18, 2011

Consumer rights must be practised

Michael Briguglio

The Times 18th March 2011

Official national figures reported in The Times show that, last year, the Consumer Affairs Department re­ceived 2,632 complaints – almost three times the number of cases in 2009. Of these, 250 are still pending. At the same time, according to the Eurobarometer – a scientific survey conducted across the EU – the trust of Maltese consumers in public authorities to protect their rights increased to 69 per cent last year, seven per cent more than in 2009. Malta’s rate was seven per cent higher than the EU27 average.

In the meantime, Malta is due to have its own Competition and Consumer Affairs Authority. Parliamentary Secretary Chris Said told the House of Representatives decisions made within the authority will be independent from the government.

The setting up of this authority is surely a step in the right direction. But it has to be seen whether it will truly be independent of the government. Such an authority should put consumer rights at the forefront of its goals and not act as yet another agency led by those whose main loyalty is their minister’s short-term requirements.

Unfortunately, this government has often appointed “yes men” to run state agencies. A notable exception is the appointment of the Commissioner for Voluntary Organisations, Kenneth Wain. One hopes that in the case of the Competition and Consumer Affairs Authority, the office will be free from political interference.

The new authority surely has an important role in Maltese society. One hopes it truly acts in a way to ensure fair competition among business operators, particularly since various sectors seem to be characterised by collusion and behind-the-scenes cartels, thus resulting in excessive prices and, at times, inferior products. For example, with regard to the provision of electricity and water, Enemalta exhibits all the bad habits of monopolies: arrogance, inefficiency and obscure pricing practices. Its formulae for charging consumers remain shrouded in mystery.

One main concern of Maltese consumers is the cost of living, particularly with regard to the utilities, food and medicinal products. It may be true that inflation can in part be imported – recent natural catastrophes, the crisis in North Africa and the Middle East and the increased global demand for food and energy, especially in emerging economies, do not augur well in this regard. However, in Malta, monopoly and oligopoly pricing do not help the situation due to two main things – excessive profits in the case of private sector and inefficiencies in the case of public utilities. The newly established authority should be especially vigilant in controlling and possibly eradicating home-grown abuse.

Low income groups, those living below or slightly above the poverty line, including the elderly and the disabled, are those who suffer most in such situations. For example, the disability pension, which amounts to 55 per cent of the minimum wage, does not suffice for a decent quality of life.

Official statistics show there are about 61,000 people on the verge of poverty in Malta. Among these, 19,000 cannot afford four or more of the basic needs in their everyday life. The poverty rate in Malta is not one of the highest in the EU but it has increased in comparison with previous years and now lies at 15 per cent.

Appropriate measures are required to ensure market abuse is properly detected and corrected. It is also important to compensate those who are affected most by the inflation burdens people are experiencing. In this regard, Alternattiva Demokratika – the Green party recently approved a resolution on this issue at its annual general meeting.

In the first instance, AD is calling for a realistic evaluation of the adjustment in the increase in the cost of living to be made, such that the annual compensation given truly reflects the rise in inflation. For this reason, the method being used at present – on which cost-of-living allowance is based – should be adjusted. One need only keep in mind that the COLA awarded in Budget 2011 was of €1.16 per week, which is surely out of synch with reality.

Besides, the minimum wage in Malta needs to be increased and should cover a fair adjustment for part-timers and workers on contract. An increase in the minimum wage would improve the purchasing power of such consumers and, thus, be of benefit to the economy.

Pensions should be reformed because, otherwise, poverty among the elderly will increase. While a second pillar – through which people will save a portion of their income for their pensions – is welcome, the government, and not the private sector, should be ultimately responsible for the system, including for those who genuinely cannot afford to invest in the second pillar.

In the case of utility bills, investment in alternative energy can ease Malta’s dependency on dirty oil, the price of which is likely to keep rising due to political unrest in the Middle East and North Africa and due to market forces. While the government should penalise energy waste, and not the basic use of electricity and water, it should also step up its investment and proactive legislation which favours clean energy.

There are many other issues which are of major importance with regard to consumer welfare. These include improved consumer rights as proposed by the European Greens, improved consumer information regarding food content and hazardous products and better enforcement of corporate social and environmental responsibility. Minorities, such as persons with disability, should have improved access to goods and services on offer.

The author is chairman and spokesman for economy and finance of Alternattiva Demokratika – the Green party.

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