Timely intervention to cap electricity costs, minimum wage and equal opportunity

By Alexander Rheeney, 10 June 2019

The intervention by the Parliamentary Finance and Expenditure Committee, through an appeal to the Office of the Regulator to put a cap on the cost of electricity, could not have come at a better time.

The story on the intervention was published with the headline “Parliamentary Committee asks for ceiling on electricity rate” in the Monday, June 10, 2019 edition of the Samoa Observer.

With the rise in the cost of living in Samoa and staff salaries that have remained static over the years — aided in part by the country’s $2.30 tala minimum wage — any move by statutory organisations to increase the costs of basic utilities such as power and water will always hit the low-income-families the hardest.

The Parliamentary Committee had expressed concerns with both electricity and internet costs in Samoa, and urged the Regulator to formulate what it described as a “price ceiling” for electricity rates. The major factor behind the recommendation to work on a price ceiling, is the installation of various renewable energy options in Samoa, which the Parliamentary Committee says should be reducing and not increasing electricity costs for Samoan citizens.

“To develop a price ceiling policy for electricity, noting that there has been a consistent increase in electricity rates yet renewable energy device which sole purpose was to reduce electricity costs in the first instance, continue to be installed,” the Committee stated. 

Okay for now let's put the minimum wage issue to the side for now, and discuss the “big picture” implications of the Parliamentary Committee’s appeal to the Regulator.

While the Parliamentary Committee’s concerns alerts the Regulator to the impact that rising electricity costs will have on less-well-to-do-families, its appeal in essence raises questions about the benefits of the Government’s investment in sustainable energy thus far.

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The Parliamentary Committee appears to be of the view that the benefits of the various Government-led initiatives promoting sustainable energy are yet to be felt by ordinary citizens — therefore it is unfair to expect them to pay more for power — when they were promised in the first place that electricity costs will drop with Samoa’s gradual shift to sustainable energy sources.

It is obvious that the Parliamentary Committee did its homework, before it made the recommendations to the Regulator. Now we look forward to hearing from the Office of the Regulator, on the course of action the organisation will take, in response to the concerns raised by the Parliamentary Committee.

And going back to Samoa’s $2.30 tala minimum wage — which the International Monetary Fund (I.M.F.) recently said is the lowest in the Pacific Islands and should be increased — any further increases in utility rates (water and electricity) should be tied in with the ability of families living on minimum-wage to meet the increasing cost.

The debate on minimum wage and the push to increase it has been raging in recent years, with unions continuing to push for increased wages for their members, and the I.M.F. only recently warning that the issue should be revisited due to the increasing levels of unemployment in Samoa.

“Considering the low level of the current minimum wage with comparable countries but also the high level of unemployment, particularly for youth and low-skilled worker, and the large number of informal workers, increasing the minimum wage in the private sector to a level close to 3 Samoan tala per hour could be appropriate,” the international financial organisation said in a report, which it released following Article IV Consultations with representatives from the Samoa Government in February and March this year. 

The I.M.F. has been in the region long enough to see how failure by Pacific governments — to empower their citizens to capitalise on long-term employment opportunities and to generate incomes to sustain their livelihoods — can gradually lead to their marginalisation, and when stricken down by poverty, can have long-term implications for the security and prosperity of any nation.

So going back to the recommendations put to the Regulator, which includes putting a ceiling on electricity costs due to concerns over the impact it will have on families living on minimum wage, we can see the Parliamentary Committee has joined the dots and done its own analysis of the Big Picture Implications. 

Samoa only recently celebrated its 57th independence anniversary, and the onus is now on the Government and those mandated to lead this nation to ensure no one gets left behind, and everyone is given equal opportunity to share in the country’s blessings. 

Have a wonderful Tuesday Samoa and God bless.

By Alexander Rheeney, 10 June 2019

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