Brian Lenihan Jnr (Dublin West, Fianna Fail)

Prices set in the public sector make up only about 4% of the basket of goods and services used in compiling the consumer price index. However, public sector prices make up a much smaller component than in the past. Some services such as telecoms have been privatised, and the setting of more prices has been devolved to independent regulators, particularly in the energy sector.

Prices in the public sector are generally set by Ministers or at local authority level. Due regard is given to the cost of providing the service, the length of time the price has stayed static as well as affordability. Consideration is also given to ensuring that a high level of quality is provided to the public. The regulation of ESB customer supply electricity tariffs and Bord Gáis Éireann tariffs is the statutory responsibility of the Commission for Energy Regulation under the Electricity Regulation Act 1999 and the Gas (Interim) Regulation Act 2002. The Government has no function in setting these tariffs. A key role of the CER is to oversee the transition to a more competitive market structure in line with EU and national policy. Independent suppliers are now offering significant discounts of between 10% and 14% on ESB unit rates.

An issue of concern is that Ireland has lost competitiveness in recent years and it is essential that this position be improved if we are to benefit when EU and world growth resumes. A key part of this loss of competitiveness has come about from wage costs increasing at a rate not justified by gains in productivity. Changes in prices set by the public sector can only make a very small impact in either direction. However, pursuing appropriate incomes policies is critical, particularly within a monetary union, and is essential to restoring our lost competitiveness.

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