Tuesday, 7 February 2006
My policy and that of the Government is to provide that both consumer and competition law operate in such a way that the economic well-being of the consumer is maximised. The objective of consumer policy is to provide consumers with the knowledge required to make informed choices, to provide protection from unscrupulous traders and to guarantee that consumer interests are reflected in the decision making and enforcement process. Competition policy assists the consumer by providing a choice of goods and services at a range of prices.
I therefore have no plans to reintroduce price control. I recall that during the 1980s when maximum prices orders under the Prices Acts 1958 to 1972 were last in force, products covered by the orders quickly resulted in the maximum price being the minimum price. To reintroduce maximum price requirements would not only contradict the objectives of consumer and competition policy but would act against the economic interests of consumers by ensuring prices for products could not respond to competitive movements in the market. Such a policy would penalise many while it is unclear whether it would benefit those for whom it was aimed.
Along with our phenomenal economic growth in recent years there has been an accompanying rise in the cost of living. Notwithstanding this, I am pleased to note that the consumer price index fell to 2.5% in December 2005, the latest month for which figures are available. The inflation trend for 2005 was one of relative stability. When energy products are excluded from the overall consumer price index, annual inflation averaged 1.7% for the year. This highlights the impact of mainly imported energy products on our inflation. However, this should not stop us from using the policy tools we have at hand to affect prices. As regards grocery prices, one of the main provisions of the Competition (Amendment) Bill 2005, currently before the Oireachtas, is to revoke the Restrictive Practices (Groceries) Order 1987. I expect that once the groceries order is repealed we will see greater competition in the retail grocery sector and prices will reflect this increased competition in the sector.
The Consumer Strategy Group Report of May 2005 recommended the revocation of the groceries order. The principal recommendation of the group was the establishment of a new National Consumer Agency. This has been accepted by Government and I have established the agency on an interim basis. I hope to publish legislation to establish the new agency on a statutory basis later this year. The interim board of the agency has been involved in raising consumer awareness regarding their rights. The agency will have specific statutory powers and responsibilities in areas such as consumer advocacy, information, education and awareness, enforcement and research. I am certain that equipped with these powers the NCA will be able to make a positive impact and shift the balance more towards consumers as recommended by the Consumer Strategy Group. The Government will continue to use all the policy options available to ensure the interests of the consumer are protected.
The Minister has indicated it is always the Government's policy to keep prices down. I do not know where he has been living for the past number of years but he and the Government have been responsible for 41 additional taxes and stealth charges since the last general election. Such inflation, introduced and imposed by Government arising from its decisions, has been running at six times the rate of inflation for the 12 months to the end of October 2005. That is a significant contribution the Minister and the Government are making to increasing prices to the consumer across the board.
In that context, notwithstanding some of the comments the Minister has made about being pro-active in terms of the Competition Authority, I am not surprised he wants to exclude energy from the calculation of inflation. Honing in on the energy area of electricity charges and gas charges, there has been a 25% increase in gas charges in 2005 and a 61% increase in energy prices in the past four years. Would the Minister indicate his view on the policy of his Department on the role of regulators, particularly in energy, and the massive contribution such regulators are making towards the deterioration of competitiveness?
I have some difficulty with the Deputy's presentation on prices generally. The National Competitiveness Council produced a clear analysis of where we are strong and weak in terms of competitiveness. It made clear that there was a lack of intense competition in the domestic markets, that the most productive side of the economy was the foreign direct investment side, and yet when we move to do something, for example, the abolition of the groceries order, Deputy Hogan in a calculated manner does everything possible to undermine that initiative and opposes it in the House——
No, he did not. I am stating in the House that the Deputy needs to realise that producing websites is not the panacea for bringing prices down, that one must make concrete, substantive legislative change to make an impact.
The only reason I mentioned the impact of energy prices on our inflation was that if one removes the importation of energy, Irish inflation shows a good performance in the degree to which it is converging with the EU average inflation rate of 2.5%.
The Minister is obviously upset that Government-imposed sectoral prices have been contributing six times the rate of inflation to the overall prices in many sectors. The Government has been responsible for 41 additional taxes and charges since the last general election. No amount of rhetoric and palaver from the Minister today will disguise that fact.
How does he propose to stem the tide of Government-imposed prices to stop activity of the type happening in recent years, particularly in the energy sector? Government has imposed and sanctioned, through its regulatory policy, massive——
The Minister sets the policy for the regulators. There is no competition in the energy area, despite all the commitments and promises made when the regulator was established. Will the Minister outline the action proposed by the Competition Authority to open many areas to competition, including energy?
When Government establishes a regulatory regime and regulators the last thing it should do is interfere, intervene or try to undermine them. The idea behind developing a liberal and competitive market is that it should be regulated independently of Government. It is facile and over-simplistic of the Deputy to label all sectors as filtering back to Government through local authorities and regulators etc. The Deputy's party gained extra seats in the last local elections and, along with other Opposition parties, has control of local authorities.