Dominic Hannigan (Labour)

I move:

Seanad Éireann notes that:

the cost of food sold by retailers in Northern Ireland is at least 20% cheaper than the same retailers charge in the Republic of Ireland;

the recent reduction of VAT in the North to 15%, whereas it is to increase to 21.5% in this State;

the cost of mobile telephone usage in Ireland is among the highest in Europe;

there is a significant disparity between the price of clothes here and in the UK; and

there are many instances where Irish consumers face large price differentials as between here and abroad.

Seanad Éireann condemns the Government for its inaction on this issue and calls on the Minister for Enterprise, Trade and Employment to establish a shoppers task force to examine and report on the reasons for these price differentials, to identify clearly to the public, where relevant, the differential cost base issues involved, to expose unacceptable profiteering by retailers where same exists, and to bring all possible pressure to bear to ensure that prices are maintained at an affordable level, and reduced where possible.

I speak on behalf of the Labour Party Senators about the price of goods for Irish shoppers. This issue affects small businesses as well as the public. Last month alone, high prices cost the Exchequer €400 million, the amount of money that should have been raised in value added tax, VAT, in November but was not. There are a number of reasons for the shortfall in VAT yield, which is €2.1 billion down on projections at the start of this year. The Government blames the situation on the global collapse of the financial markets and on currency and exchange rate fluctuations. We accept that this played a part but it is not the only reason. The result is that consumers are still paying way over the odds for goods and services, which is encouraging them to go elsewhere to shop, with potentially calamitous effects on the economy.

The Green Party Leader, the Minister, Deputy John Gormley, appears to recognise this. He declared a few days ago that something would have to be done to stem the flow of shoppers from the Republic to the North. He suggested that the response of Ireland and the UK to the international problems should be synchronised. It is almost as if the budget introduced by the Minister for Finance, Deputy Brian Lenihan, had nothing to do with the Minister, Deputy Gormley. However, he might be on to something when he says we should look to what the UK has done. One of the actions taken by the British Prime Minister, Mr. Gordon Brown, was the introduction of an economic stimulus for the economy. That stimulus package included a 2.5% reduction in the VAT rate. Our Government has increased VAT, which will make a bad situation worse. It is a shame the Minister, Deputy Gormley, did not speak up when the Minister for Finance, Deputy Brian Lenihan, framed his budget. It is a little late to come to the party now with suggestions.

The Labour Party Senators are attempting to take the initiative. The Seanad is due to hold a full day of debate on the economy next Friday but we must do more than debate the issue. The lack of consumer confidence and tight credit lines are being felt keenly throughout the retail sector. A bad Christmas and new year in this part of the economy could stimulate the type of domino effect in unemployment that we all fear. We therefore must act as urgently as possible. We must find out why prices in the South are so high.

Why are prices so high in the communications sector? I can give examples. A few weeks ago I mentioned in the Seanad that if one wishes to buy the new BlackBerry Storm, which will become part and parcel of conducting business in the future, one can get it free in Newry but in Navan it costs €110 just for the telephone. The contracts are higher too. Why is this the case and who is to blame? We must find out. The public is concerned about this. I received an e-mail this morning from somebody named Heather who is infuriated by what she calls the "vampiric" behaviour of companies in the communications sector. She seeks specific answers as to why she must pay more for her mobile telephone communications than people in other countries. Unfortunately, the Government just pays lip service when answering such questions.

I have read the Government's proposed amendment to the motion. It states: "... retailers and telecommunications providers have a duty and a responsibility to justify to their customers and the economy the reasons for charging significantly higher prices to their customers in Ireland as compared to the prices charged to customers in other jurisdictions". In other words, the Government is saying no action should be taken and we should expect those people who are probably under suspicion of over-charging to make some admission. This approach does not tally with the claim in the proposed amendment that the Minister for Enterprise, Trade and Employment is determined to ensure customers receive a fair deal. We are paying some of the highest mobile telephone charges in Europe and there is no sign that the Minister's determination is converting into action. The National Consumer Agency will not be able to address this problem because it appears across the sector and occurs in other areas as well.

I did a price comparison last month between London and Ashbourne, which is my base. A Big Mac in London costs £2.09 compared to €3.70 in Ashbourne. The cost is 50% higher in this jurisdiction. In the Subway outlet in Ashbourne the "Sub of the Day" costs €2.99 while in London it costs £1.99, a difference of approximately 25%. The prices in other stores were also higher. Prices in Tesco in the UK were approximately 20% cheaper than in Tesco in Ashbourne. Prices in the clothing store New Look and in Argos are also between 20% and 25% cheaper in the UK. That is after taking account of currency fluctuations. I commend Senator Ó Domhnaill for the example he gave this morning on the Order of Business when he mentioned the lady being charged different prices in Donegal and in the North.

These differences are not simply due to exchange rate fluctuations or currency differentials. Something else is causing them and until we find the definitive reason, we cannot address the issue. The mechanism we propose for doing that is a shoppers task force. Such a task force would examine and report on the reasons for these price differentials and identify the costs and processes involved. In the process it would, I hope, expose profiteering if it exists. The cost of living has always been bad for consumers but it is becoming particularly bad for retailers as well. Representation on the shoppers task force, therefore, should involve not just consumer groups but also retailers and relevant business representatives, service providers, economists and public representatives. It must bring together not just the knowledge but also the will to identify the dynamics at play, and this must be done urgently.

Over the next two months shoppers in many parts of Ireland will have to pay more than they should for goods. As a result, retailers will lose business to other parts of the island or other countries. We are familiar not just with the flight to Newry on the M1 but also with the Aer Lingus flights taking shoppers to New York. Serious amounts of money are at issue. Take the example of the motor industry in this country. The motor trade is waiting with bated breath for the January sales but it expects to be disappointed. Some 2,000 people in the industry have already been laid off while others are now on reduced working hours. In some cases new and second-hand cars can be bought for 30% less in the North. Dealers in Northern Ireland are linking their websites to currency converters and the Revenue Commissioners' VRT calculator. They are clearly aware of from where some of their business is coming. Sales of cars in this jurisdiction are likely to be down by more than 20% this year and the reduction for commercial vehicles is 30% for the same period. Millions of euro which should be spent here will not now be spent because consumers either cannot afford to buy goods and services here or choose to buy elsewhere.

The problem has already spread beyond the retail sector into the broader economy. There have been reports in the newspapers recently that large retailers here are now buying through the North and the UK rather than through distribution channels in this country. If they are doing so, I sincerely hope they pass on any savings to consumers and do not engage in profiteering. This matter should also be examined by the task force. There is a wide range of issues that should be addressed. Since many of these problems are induced, in part at least, by a Government malfunction in respect of the economy, it is the responsibility of the Department of Enterprise, Trade and Employment to act with urgency. The Labour Party Senators call on the Minister to create a shoppers task force to examine urgently the matter thoroughly. The economy simply cannot be sustained with existing prices in the coming year.