Billy Kelleher (Cork North Central, Fianna Fail)

I will come to the good news later. The Central Statistics Office inflation figures highlight this continuing downward trend. The category of costs which includes electricity, gas and other fuels has declined by almost 14% in the past 12 months. The energy regulator, responding to Government concerns about costs for large energy users, is maintaining the current reductions in network charges for large energy users until September 2010. The regulator is now committed to factoring competitiveness considerations into its regulatory decisions.

Over the longer term, the Government is investing in energy infrastructure that will ensure lower costs from new grid infrastructure through Grid25, to the 500 MW Interconnector between Ireland and Wales. The single electricity market, in operation on the island of Ireland since 2007, has also helped drive down costs through competition and economies of scale.

It is the Government's view that controlling pay costs, in the public and private sector, is a key element in restoring competitiveness. The Central Bank recently highlighted how our deterioration in international wage competitiveness threatens a quick return to economic growth. Although it will be a painful adjustment, a reduction in unit labour costs will strengthen our longer-term competitiveness. For most exporting firms, labour costs account for more than half their input costs. The NCB Manufacturing and Services Purchasing Managers' Indices have shown a sustained and deep period of declining input costs for businesses in Ireland driven, in part, by lower wage costs. This is matched by a decline in Irish inflation that reached -6.5% in the year to September 2009, the sharpest fall in Ireland since the 1920s. This deflation also cushions against the effects of any nominal wage declines. These indicators emphasise how we are meeting the challenge of restoring competitiveness through the primary means at our disposal - strict control over costs by all key players in Ireland's economy. With the OECD predicting mild deflation in Ireland for the next two years, the prospects are good for maintaining the current downward pressure on wages and prices.

On the question of local authority charges, the Tánaiste met twice this year with representatives of the City and County Managers Association to impress upon them the importance of providing a supportive environment for business and ensuring that all local charges and levies are applied in a transparent, fair and proportionate manner. The Minister for the Environment, Heritage and Local Government, Deputy John Gormley, also wrote to the local authorities earlier this year outlining a number of measures that local authorities should consider to further support economic activity. Local authorities are aware of these needs and have already reorganised to provide one-stop shops, or equivalent services, for local small and medium-sized businesses.

The Government recognises that further work needs to be done in this area and, in this regard, it welcomes the recent report of the Commission on Taxation, which recommends certain reforms that would broaden the tax base and provide additional revenue streams for local authorities. In addition, the renewed programme for Government agreed earlier this month contains commitments around local authority reform which my colleague, the Minister of State, Deputy Michael Finneran, will address.

I assure Members that the Government is committed to tackling costs for businesses and is taking a number of steps to this end. I would like to highlight three areas in particular where the Department of Enterprise, Trade and Employment has been working on behalf of the business sector. The Competition Authority, as the agency responsible for enforcing competition law in Ireland, has tended to focus its efforts, in particular its advocacy efforts, on promoting competition in the non-traded sectors of the economy. The authority has issued a number of reports in the past few years on non-traded and professional sectors. The Government has already agreed to accelerate implementation of the Competition Authority's recommendations to see how best they can contribute to achieving greater cost competitiveness. A prioritised list of recommendations, based on their impact on competitiveness, was recently drawn up by the Department of Enterprise, Trade and Employment. It is the Tánaiste's intention to submit a report to Government before the end of the year outlining the progress achieved on the implementation of these priority recommendations.

Better regulation, as referred to by Deputy Bannon, is a central part of our efforts to sustain and improve the competitiveness of the Irish economy. It is particularly important to reduce business costs at this time when all sources of efficiency are in focus and when jobs are at stake in all sectors of the economy. The Government is also conscious that the administrative burden of regulations falls most heavily on smaller businesses. We have set a 25% target for reducing the administrative burden by 2012. I believe that what gets measured gets done and that this target will drive improvements and reduce costs for business and the public sector. My colleague, the Tánaiste, has responsibility for driving this process and is committed to delivering simplifications and savings for small and medium-sized businesses.

The high level group on business regulation, chaired by the Department of Enterprise, Trade and Employment, was set up to take on board business suggestions for cutting red tape. The group welcomes any concrete, workable ideas from the business community that can be used to reduce red tape costs for business. The group's first report published last year identified more than €20 million of administrative cost savings for business. I urge businesses, in particular in the small and medium-sized sector, to continue to submit practical suggestions where they feel the current burden is excessive. I believe that the systematic approach we have adopted here will continue to deliver cost savings for business between now and the 2012 deadline and beyond.

I wish also to highlight the prominence we have given to the ongoing process of reforming public procurement. We fully recognise the importance of the public sector market for SMEs, particularly now that demand from the private sector has slowed. Government purchasing, whether by the HSE, local authorities, agencies or government Departments, can play an important part in driving SME growth.

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