Brendan Howlin (Wexford, Labour)

Is that agreed? Agreed.

The Bill before the House today appears to have a laudable purpose, namely, to reduce the burden of cost on consumers and industry. I wonder if there is any Deputy in this House who is not in favour of that as a general principle. However, the reality of the matter is far more complex than allowed for in the proposals presented. The Bill simply bears no relation to budgetary or economic realities, and I am opposing the Bill on this basis.

The background to today's debate is the profoundly difficult budgetary situation in which we find ourselves. These circumstances require an ongoing, credible plan of fiscal consolidation so that the amount of money spent by the State is more in line with the amount of revenues being brought in to the Exchequer. Difficult expenditure adjustments have been necessary as part of this process, and it is undoubtedly the case that further savings measures will have to be identified. The level and nature of charges applied in the Government sector is one element of this overall picture, and it is folly to state that fees and charges can be universally cut without any implications for maintaining front line public services or for protecting services to the most vulnerable. If services are to be protected, then cutting public fees and charges across the board would invariably lead to eitheran increase in direct taxation, orreductions in expenditure over and above the level of consolidation already identified.

The Government has its own plan to improve the quality and efficiency of State services, including in the regulation sector. We have put in place well-developed mechanisms to protect the most vulnerable households from any undue burden from taxes, fees or charges from the State sector. We have a plan to turn this economy around, to put our public finances back on a stable footing, and to get our banks lending again to businesses in the interests of job creation and economic growth. Those are the only real and lasting approaches to helping our citizens and our businesses.

This Bill would completely undermine the long-established and carefully developed systems of independent regulation in this country. The overall objective of economic regulation, in markets where there were traditionally natural monopolies, is to create the conditions for competition to emerge to help drive down prices. We see today that competition is now emerging in the gas and electricity markets and consumers now have a choice of service providers. Competition, more than anything else, will drive down costs for businesses and for the general public alike.

Under legislation passed by these Houses, the costs of regulators are funded from industry levies rather than central taxation. The Government is aware of the need to ensure that these levies do not present a disproportionate burden on the industry sectors that they regulate. There are already a number of legislative controls in place on the setting of levies and the Government has moved to strengthen these.

In line with the programme for Government, the performance of regulators in key economic areas such as communication, energy and transport has been carefully reviewed. The Government has already moved to strengthen the mechanisms for assessing the performance of regulators and to monitor their delivery on the strategic objectives and priorities set for them. Specifically, the Government's statement on economic regulation in October 2009 laid down the following principles. First, in the context of future revisions to the legislation governing regulators, Departments will be asked to put in place arrangements for increased scrutiny of expenditure plans and the setting of industry levies, including approval of these by relevant Ministers, with the agreement of the Minister for Finance. Second, the views of the National Consumer Agency and any industry and consumer panels or advisory councils will be sought in examining the regulator's draft estimate of income and expenditure for each financial year. This will include any levies it is intended to prescribe and any observations should be communicated to relevant Ministers before these are approved. Third, the potential for the joint collection of levies across regulators will also be pursued in line with the recommendations of the special group on public service numbers and expenditure programmes.

More generally, the question of whether the activities of individual regulators represent value for money compared to their international counterparts must be kept under review in the context of the functions which they actually perform and their impact on the wider economy. It is important to note that regulators' functions can vary widely across jurisdictions. However, in the light of current economic circumstances, it is imperative that efficiencies are realised. The issue of effectiveness and value for money will also be considered in the context of the amalgamations set out in the statement, as well as the improved performance evaluation framework. These principles have been put in place to ensure the smoother and more efficient functioning of the regulators in all areas, consistent with the current regulatory framework.

The proposed Bill takes no account whatsoever of the existing legal and administrative framework. The Bill looks like it was written for another age - the age of a command and control economy when Ministers could issue diktats to monopoly providers. Those days are thankfully long gone. EU directives and a modern, dynamic system of public administration mean that large parts of our economy are subject to regulatory frameworks, with in-built mechanisms for driving efficiency and for ensuring that consumers get the best value.

The Government is firmly committed to increasing competition as the best means of exerting downward pressure on electricity prices and is committed to ensuring diversity of energy supplies, with a particular focus on renewable energy, to reduce our exposure to volatile external fuel prices. The Government supports continued significant investment in Ireland's electricity and gas networks to underpin security and reliability of supply. Our policy is now delivering real and measurable benefits to energy consumers through increased competition and lower energy prices. All consumers now have the option of switching to alternative suppliers, offering significant discounts on regulated electricity and gas tariffs. The all-island wholesale single electricity market has been hailed as a flagship for regional markets throughout the EU. Its transparent pricing mechanisms encourage investment and ensure that falling fuel prices are passed on to consumers.

Competition is also developing in the Irish gas market. There are now eight licensed suppliers operating in the upper end of the market. The recent publication of EU price comparisons by the Sustainable Energy Authority of Ireland demonstrates that Irish electricity and gas prices are continuing to move close to and in some cases below EU averages. Prices in Ireland are falling, while they are increasing in many member states. The clear objective of energy policy and regulation in Ireland is to deliver competitive, secure and sustainable energy supplies. In this context, the Fine Gael proposal for a ministerial direction to the regulator on energy prices is unnecessary and has the potential to undermine competition, market stability and much needed investment in the electricity market.

In short, we cannot take a narrow, piecemeal approach in these matters or try to impose short-term price reductions which are unsustainable and damaging to competition in the longer term. There is no quick fix in these matters which the regulators, or anyone else, can propose. The proposed Bill would lead to ad hoc interventions in regulated areas and in the long run would undermine the regulators' key role in ensuring the lowest prices possible consistent with stable, secure and competitive energy markets.

The Government is well aware of the need to protect vulnerable households from suffering any undue burden from public fees and charges. In fact, there are widespread exemptions, subsidies and reliefs stitched right into the range of public service charging mechanisms. There are also targeted reliefs and benefits in a number of areas, including the fuel allowance, free telephone allowance and free television licence for social welfare recipients. There are about 1.3 million holders of medical cards who are protected from the burden of fees and charges in the health area.

The simple fact is that it makes no sense to look at the issue of public fees and charges in isolation from the other elements of the budgetary and economic strategy, or to present them in a populist or facile fashion. What is required is a balanced, rational and strategic approach to managing our economy, in a way that deals with the full spectrum of budgetary and economic issues. This is precisely the sort of approach that the Government has now put in place.

Central to our economic recovery plan is the major process of fiscal consolidation to restore the public finances to a sustainable position over the medium term. This process of expenditure consolidation was initiated in the 2008 budget, when an efficiency review of all administrative spending across the whole public service was announced. This included possible inefficiencies due to the multiplicity of boards and agencies, the need for better sharing of certain services, and efficiencies in management, travel and consumables in general.

The next major step was taken in July 2008, when a range of efficiency and savings measures were put into effect by the Minister for Finance, including those identified as a result of the efficiency review process. These savings included a 3% reduction in payroll costs for all Departments, State agencies and local authorities - other than front line health and education services - and a 50% reduction in expenditure on consultancies, advertising and public relations by Departments and agencies.

In the 2009 budget,the Minister for Finance announced a programme of rationalising State bodies and agencies. The Minister also announced the establishment of the special group on public service numbers and expenditure programmesin November 2008, with a remit to identify potential savings in all areas of Government expenditure, including through reducing the number of staff working in the public service.

By the start of 2009, international forecasts for the global economy had been revised sharply downwards, reflecting the effects of worldwide upheavals in the financial markets. Against this backdrop, we set out a revised multi-annual fiscal consolidation plan in January 2009, with the objective of bringing the overall deficit back within the 3% ceiling in a credible manner. That multi-annual plan remains, broadly speaking, in effect today, and our subsequent policy actions have been designed to implement and to underpin that consolidation drive.

Accordingly, further programme and payroll savings of approximately €3.5 billion were announced in the first half of 2009. The main element of the February package of measures was the introduction of the public service pension-related pay deduction. This deduction was also applied to the various regulators mentioned this evening. Additional capital and efficiency measures were also announced at that time, including a 25% reduction in the rates of the domestic travel and subsistence allowances and an 8% reduction in fees paid for professional services, many of which were referred to this evening. The supplementary budget in April 2009 continued the process begun by these earlier savings measures, consolidating the expenditure reductions through a range of programme savings. Most recently, the budget for 2010 delivered expenditure reductions of an additional €4 billion, achieved through a combination of payroll, social welfare and other programme adjustments, reflecting the sharp fall in the price levels across the economy over the course of the year.

All of these measures, difficult though many of them have been for everybody, are designed to restore our credibility and to sustain confidence among households, the domestic business sector and the international investment community. So far, we have been successful in this endeavour. The budget for 2011is the vital next step in this plan and again the Government stands ready to do what is necessary to protect our economy and our future prosperity.

We will not achieve that task on the basis of distractions and ill-thought-out proposals of the sort embodied in the Bill. On this basis the Government opposes the Bill and I call on the House to do likewise.

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