Deirdre Clune (Cork South Central, Fine Gael)
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Question 96: To ask the Minister for Finance his views on the contrast between prices set or regulated in the public sector and those in the private sector; and his plans to improve the competitiveness of public sector prices. [37727/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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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.

Richard Bruton (Dublin North Central, Fine Gael)
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I welcome the Minister's acknowledgment that we have lost competitiveness, but I must express dismay at his suggestion that the Government has no function in the area of prices set by the Government. Has he considered the competitiveness report, which shows that all of the non-pay business costs in control of the Government are in the "red light" danger area? Many of the most chronic cases, such as electricity, telephones, broadband, waste disposal and health insurance, are directly controlled by the Government. How does the Minister expect ordinary workers to accept that there is a need for making cuts in their pay, when he sits on his hands and claims that the Government has no role on key public sector prices that are way out of line with all of our European competitors? Surely the Minister sees the need for a competitiveness pact led by the Government addressing these issues and others such as boardroom pay, so that we can see that if sacrifice is to be made, it is made in a way that is fair.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I did not indicate in my answer that these are matters in which the Government has no function. I indicated that the sectors to which the Deputy referred were sectors in which the prices were set by the Commission for Energy Regulation. Electricity and gas tariffs are the responsibility for the CER, and that is the statutory position. With respect, they are not the responsibility of the Government and these were the particular examples given by the Deputy.

Richard Bruton (Dublin North Central, Fine Gael)
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I did not mention gas.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No, but it is pertinent as well. The Deputy did give the example of electricity, and the regulator there is responsible-----

Richard Bruton (Dublin North Central, Fine Gael)
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I could have given health, education, communications or any one of 1,000 areas.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Yes, but the Deputy did not give an example of those areas, but an area which is of great importance and which is under the tariff control of a regulator. I have considerable sympathy for the point the Deputy has expressed. If we are to grapple with our problems, it is not enough simply to have an adjustment in the public sector or an adjustment in the competitive public sector. We also need to see what adjustments can take place in the sheltered private sector. I made that point to IBEC in the course of a recent meeting in the social partnership discussions.

Richard Bruton (Dublin North Central, Fine Gael)
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Who is going to lead if the Government does not do so?

Joan Burton (Dublin West, Labour)
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The ESB is not allowed to reduce its prices because these are being kept artificially high by the regulator in order to encourage market entrants. That is also what has happened in the telecoms sector. We have a regulatory system of a cost and structure that would be suitable for the United States of America, but is totally inappropriate for a small country like Ireland, with a relatively small market and population. What will the Minister do about the person who, having been asked to take a wage cut and taken such a cut, will continue to be asked for €60 when he or she takes his or her child to the doctor with a flu because he or she does not have a medical card? No reduction in fees will apply to people who have to purchase essential services like health services. On the contrary, they have gone up and they have never come down.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Is the Deputy suggesting - I do not criticise her if she is - that we should introduce price controls in certain areas?

Joan Burton (Dublin West, Labour)
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If the Minister is asking workers to take a big hit, he has to do something about the reductions they are not getting.

Brendan Howlin (Wexford, Labour)
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If the Minister would answer questions, rather than pose them, that would speed business along.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I appreciate that I should not, like a Kerry man, answer a question with a question. If Deputy Burton is suggesting the introduction of price controls, I will examine the matter.