Brendan Ryan (Labour)

I am suffering from the fact that I have organised myself to say too much. The Chair will forgive me. There are two ways of approaching this debate and, as usual, I will try to take both and probably get confused in the process. One way is to look at useful examples that are hard to understand. I accept everything Senator Mansergh said about insurance companies. It is worth noting that the highest inflation identified in the report was in financial services. It was higher than in expenditure on waste charges and the like. The financial services category experienced the biggest increase of 23%. It obviously includes the insurance industry.

Some of the issues connected with insurance in this country are peculiarly Irish matters. In the case of compensation for personal injuries, for example, we tend to look at the wrong end of the spectrum, the spectacular awards occasionally made to those who have been seriously injured. However, that is not the reason for high insurance costs. One reason is the declining level of competition in the market. How many competing insurance companies are there, as distinct from front organisations? There are three or four, possibly fewer. Once there is a duopoly or its equivalent, competition rapidly declines, as is evident in the banking sector.

There appears to be a trend to move towards consolidation and rationalisation. Old fashioned Marxists would say it is a move towards global monopolies, a direction in which we are moving. The number of automobile manufacturers is decreasing, as is the number of oil companies. Ultimately, in spite of all the grandiose talk about consolidation, consumers will be the victims of declining competition. That is not to say the solution to every problem is an irrational pursuit of competition. There is a statement on the Competition Authority's website which states, without qualification, that competition always produces lower prices and better services for the consumer. That is rubbish and when I get an opportunity to meet the chairman of the authority, I will tell him as much.

Competition is a useful but not necessarily always the best instrument. I am sceptical about its role in the provision of health services, for example. The nearest thing to a free market in health services is in the United States and its health service is highly expensive. Roughly $1 in $7 of gross national product in the United States is spent on health services. The equivalent figure for Ireland is $1 in $11 while the European average is about $1 in $11 or $12. Close to 15% of GNP in the United States is spent on health care. Despite this, the United States has one of the highest infant mortality rates in the developed world.