Our View: Prices should be determined by the market and not by populist parties

One of the measures that passes as social policy in Cyprus is the practice of political parties passing laws that impose lower prices for so-called vulnerable groups. This socially-motivated price discrimination was forced upon the Electricity Authority of Cyprus (EAC) some years ago, the parties believing that household electricity rates were too high for low-income families. So now, lower electricity rates for certain members of the population are a given.

It is one of these economically irrational ideas that Akel comes up with occasionally to show that it protects low-income groups. On Wednesday, the chairman of the House environment committee and Akel deputy, Giorgos Loucaides proudly announced that his party brought the same philosophy to the government’s pay-as-you-throw bill. During the committee’s discussion of the bill, Akel proposed an amendment imposing discounted rates for vulnerable groups.

It is as foolish an idea as the discounted electricity rates. Is the cost of electricity that is used by the house of the supposedly vulnerable families lower or will collecting the household rubbish from these houses be cheaper? Of course not, and if anything, the lower price will encourage these houses to use more electricity and produce more rubbish, when the objective of society is the exact opposite.

Then there is the issue of which families qualify as ‘vulnerable’ and eligible for the lower rates? Is the EAC or the organisation that will collect household waste entities that can means-test their customers in order to charge lower rates? There could be many so-called vulnerable families that are nothing of the sort, but are prepared to give inaccurate information in order to secure the lower rates, which are subsidised by the rest of the customers paying higher rates.

Is it the responsibility of other customers to subsidise the ‘vulnerable’ by paying higher rates? Welfare and income support is the responsibility of the state and not of utility organisations. If some families cannot afford to pay their electricity bills, they should apply to the welfare service to help them. The EAC is not a social policy body and neither will be the organisation that will collect household waste. Nor are the non-vulnerable customers obliged to pay higher rates to fund Akel’s populist ideas.

Social policy and social welfare are the responsibility of the state. It is not for the parties to decide the pricing policy of independent organisations, even if these are under the control of the state. Prices should be determined by the market and not by populist parties whose only concern is votes.