Phil Hogan (Carlow-Kilkenny, Fine Gael)

It is an independent group that meets from time to time to assess our performance. The Taoiseach and the then Tánaiste were warned in December 2001 that Ireland was becoming a high cost location for business. The electoral cycle intervened in 2002 and the issues that were raised have not been addressed. In recent years, the solution for dealing with matters of direct and indirect cost problems in the economy was to establish a regulator. No matter where the problem was in the economy, regulators were established under the guise of enhancing competition.

Regulators have failed for one reason: no political perspective or direction has been given to them. It should have been given to them on their establishment so that they understand it is not just a matter of bringing new players into the market, but also ensuring that it does not grant increases in prices across the public utilities and local government charges on top of the existing high cost base.

We need to assess where we are going with the regulators that have been appointed and the policy remit that has been given to them. We do not need to look any further than the recent activities of the Commission For Energy Regulation. It has sanctioned 34% and 20% increases in gas and electricity prices respectively. At a time when wholesale prices on the oil markets are going down, these price increases have been suggested. The ordinary business consumer cannot understand it. The manner in which the CER makes its calculations often uses a historical cost base.

The Minister for Communications, Marine and Natural Resource, Deputy Noel Dempsey, stands idly by and sees no necessity to meet with the CER and seek to understand the rationale for approving these price increases. I ask the Minister of State to convey this view to the CER. I do not mind if he does so directly or indirectly. This House is not satisfied that the establishment of a Commission for Energy Regulation has been successful from the perspective of the consumer or the economy as a whole.

We were told that we would have to raise energy prices in order to encourage other firms to compete with the ESB in the provision of electricity generation. What kind of logic is that? At a time when small business people must be conscious of the competition they endure from eastern Europe and the Far East, our policy gives the regulator a free hand to increase costs irrespective of properly explaining the necessity for this to either the Government or the public. We require a trigger mechanism, politically as well as economically, for the Government to deal with this issue.

The Central Bank regularly preaches about the high level of personal indebtedness of our citizens. It talks of the irresponsible nature of people in taking 100% interest only loans from the associated banks and building societies. The Central Bank could do something about this in the morning if it wished. In conjunction with IFSRA, the Central Bank is the supervisory authority for dealing with the associated banks. The Central Bank and the Department of Finance set down banking policy. The Governor of the Central Bank regularly lectures on the dangers of holding high levels of personal debt. If there is, as expected, a further 1% rise in interest rates from the ECB, what impact will this have on disposable household income? If the Central Bank is so concerned about the irresponsibility of these practices, why has it not done something about it? This would ensure a soft landing if there were to be changes in the construction or property sectors.

The level of personal indebtedness is at a record high. We have moved from having a high national debt to having a high level of personal indebtedness. Citizens are still in debt, in an irresponsible way according to the Central Bank. The role and function of the Central Bank needs to be called into question if it is going to allow itself to be drawn into a debate about the fact that it has done nothing towards meeting the policy objectives regularly enunciated by the Governor.

The increase in the cost base of the economy caused by the indirect taxes and charges imposed by the Government since 2002 has been over the top. VAT was increased by 1% in the first budget after the 2002 general election. The Government also applied a 9% stamp duty rate, up from 6%, on commercial transactions in that budget. I know substantial revenue has been raised by this, but people have to trade and do business. They must now factor this into their costs. Enormous sums of money are required to keep small businesses going. In addition to those issues, the inactivity of regulators in introducing new competitors to the market and reducing costs has been striking.

I have been critical of the Competition Authority for some time. It exposed its own ineffectiveness as recently as this week when it allowed the Statoil takeover to take place by letting the time in which it had to make a submission expire. That is disgraceful action by the Competition Authority. Has the Minister called in the new chairman, Mr. Prasifka, and his team to find out the reason that happened? That action has effectively created a monopoly in petrol station outlets in this jurisdiction. There are many examples of companies being put through the rigours of the law by the Competition Authority for what appears, on the face of it, less dominance in the marketplace. What is in place now is effectively a monopoly in terms of the sale of petrol in forecourts throughout the country. The authority stands indicted on that matter and it should be deeply embarrassed about it.

In conjunction with my colleague, Deputy Lynch, I intend to invite representatives from the authority to the next meeting of the Oireachtas committee to ask them what went wrong, what they are doing about it and what resources they require, if resources are an issue, to keep up with the takeover issues mentioned, even throughout this Bill. Perhaps we should amend the legislation in that context to ensure nothing like that happens again, notwithstanding the incompetence of the Competition Authority on this occasion.

The Internal Market has enormous potential for Irish consumers. As an island nation, we are on the periphery of Europe but consumers here do not get the benefits of bulk purchasing, buying or selling available to consumers on the mainland of Europe. It is critical that the Commissioner, Mr. McCreevy, takes every opportunity, with the necessary support and impetus of the Government, to implement the trans-frontier trading and Internal Market services that can be provided much more freely than is available currently to us. If the Internal Market is brought to its logical conclusion, it will create difficulties, but it will set up consumers for a bonanza and it is up to Irish business, and the Government through its policy, to ensure we are competitive. It is a challenge, and I realise some vested countries here will not want that, but if we are serious about keeping prices down for consumers and business, we must take action in the Internal Market. Commissioner McCreevy has promoted the concept of completing the Internal Market in a number of areas as quickly as possible. He deserves the full support of this House in realising the potential for small businesses and consumers.

On the audit exemption, as the Minister of State is aware, I tabled an amendment in that regard in previous legislation and it was voted down. I am glad the Government has changed its mind and brought into line our own audit exemption thresholds with our neighbours in Northern Ireland and in the United Kingdom in particular. The Minister of State will be aware from his previous profession that there is substantial leakage of business from this jurisdiction into Northern Ireland because of the failure to implement the issue of increasing audit exemption thresholds. When I proposed such an amendment on Committee Stage of the Companies Bill, the then Tánaiste, Deputy Harney, appeared not to fully understand the leakage of business that was taking place. I am glad the Minister of State has now rectified that matter and brought it into line in terms of the competitive area in respect of those services, namely, the British and Irish markets.

The role of financial services in this jurisdiction has been enormous. I add my support and congratulations to the efforts made to make the Irish financial services sector in Dublin one of the leading such sectors in Europe and the world. The number of well-paid, good quality jobs that have been created in Dublin arose from the foresight in the late 1980s of the former Taoiseach, the late Charles Haughey, who did not get sufficient credit for it. Nevertheless, the support of the financial sector in bringing the necessary hedge fund companies into the financial services area has not only benefited financial services in Dublin, but there has been a trickle of employment into the various regions arising from the financial services dynamic created by that initiative. In my constituency and that of the Leas-Cheann Comhairle, there is an important employer, State Street International, which now employs up to 400 people in the city of Kilkenny. That is just one example of the considerable progress that has been made in bringing some modicum of financial services employment and understanding of this complex area into the regions.

We cannot be complacent about these issues, however, because there is keen competition from Belfast and Luxembourg. If foreign direct investment is coming to this jurisdiction, those companies do not see the difference between North and South of Ireland and Luxembourg or any of the countries in Europe. They see Europe as the location and we must be ever vigilant of making the necessary changes and be adaptable to ensure we have a strong financial services sector here. The Government must be conscious of that aspect.

On consumer protection, I have been critical of the Government about the lack of consumer policy in recent years. The Minister, Deputy Martin, decided belatedly that the National Consumer Agency should be established on an interim basis. He took his time about doing that because he did not appreciate the urgency of it. The previous Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, did not see the need for it.

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