Sean Barrett (Independent)

I welcome the Minister to the House. This is the second time he has been here this week. With the support of the IMF the Minister is tackling a deep-seated problem in the Irish economy, which is that it suffers from too much lobbying and too many cartels. The typical reaction around the Cabinet table is to ask how competition can be prevented rather than promoted. The Competition Authority must gain the powers to impose competition on Ministers who protect their sectors. There has been a rash of such incidents.

I will take the example of the Public Transport Regulation Act 2009 which substituted direct award contracts for competition. It is a public service contract without a competitive tendering procedure and this is totally anti-competitive. The former Minister, Noel Dempsey, brought the Bill before the house and the then Senator, Deputy Paschal Donohoe, opposed it very strongly. Worse than this, the Competition Authority did not speak out during the screening regulatory impact analysis and all other Departments either said nothing or were broadly in favour of the Bill. It is not good enough that individual Ministers can opt out.

We were supposed to have competition at airports. The former Minister, the late Seamus Brennan, wanted competing terminals at Dublin Airport. A total of 13 or 14 applications were received but the competition was cancelled and strangely enough the State awarded itself the monopoly contract and nobody disagreed. We used to defend the indefensible in terms of airline competition. In the 1980s, there was a parliamentary revolt against legislation that put people in jail for two years and fined them £100,000 for charging travellers less than Aer Lingus did. I am delighted that the Parliament intervened.

One wonders about the degree of what the Minister for Public Expenditure and Reform, Deputy Howlin, calls the regulatory capture of Departments, particularly by companies that are owned by those Departments. I deplore what Aer Lingus exercised in the past and what CIE and the Dublin Airport Authority, DAA, do now. I also deplore the health insurance situation. We are in breach of regulations and European court rules on competition. Even the Supreme Court decided against it. The reason is that successive health Ministers believed they needed to justify firms within their bailiwick. VHI, which has a monopolistic power and protection, is keeping people in hospital beds for 10.6 days while the Milliman report claimed that 3.7 days would be enough.

Monopolies are grossly inefficient, produce too little, charge too much and create excess rents for the people being protected. In Ireland, we are far too keen to listen to lobbyists and offer protection. This has damaged the competitiveness of the economy. Like Senator Clune, I welcome our intervention in the GP medical card list issue as well as the small measures on veterinary deregulation.

That the school bus contract was not put out to tender led to a court case. The failure of the energy regulator to examine the considerable earnings at management and worker level in the ESB reduces the economy's competitiveness. Is the regulator captured? Is the Health Insurance Authority, HIA, a captured regulator? Someone who has been refused health insurance by a competitor on the grounds that he or she is too old has never been produced as a witness, yet the policy assumes it is the case. The same situation obtains in the transport sector. Sometimes people look back nostalgically on when we had a telecommunications monopoly. The Culliton report found that, as a share of GDP, telephone charges were approximately twice what they were in the rest of Europe. They are now in or around the average. One gains from competition.

We must examine those regulators who are not delivering. If they have been captured by the producers in their respective sectors, they should be absorbed by the Competition Authority. The incumbents will always be against new entrants. We need a public service tradition in Ireland similar to that espoused by Professor Alfred Kahn in the US, where one takes on the established airlines and allows in newcomers to discipline the incumbents. Otherwise, one is charged too much and overall economic competitiveness is reduced. I have cited some examples - I will send them to the Minister via the internal mail - of companies in our construction industry that were hopelessly uncompetitive when bidding for tenders at Enniskillen Airport. According to the National Competitiveness Council, NCC, problems are posed by excessive costs. For example, our business premises are twice as expensive as those in the UK.

There is a tradition of protectionism in Ireland. For example, it used to be that one could speak with a major solicitor, he or she would approach the then Department of Industry and Commerce on one's behalf and one would immediately be given a quota and a high tariff would be placed against imports. This tradition of clientelism should have been jettisoned a long time ago. The unsheltered sectors of the economy can bear no more. The IMF is correct in advising us in that respect. There are many restrictive practices.

The first place that competition policy should be introduced in Ireland is at the Cabinet table. Ministers should put more business out for competitive tendering and open up to the markets. Ireland's bureaucratic tradition is deeply hostile to competition. In the Swords Express case, Mr. Justice Bryan McMahon stated that the company attempting to run buses between Swords and Dublin was doubly discriminated against by the Department of Transport in the exercise of its functions.

Let us open up to the markets. We will support the Minister. Increasing a fine from €3,000 to €5,000 will not deter people much. If the Minister wants a higher number than €5,000, I would support him. Let us take this matter seriously. There should be an all-of-Cabinet approach to halting restrictive practices, protectionism and regulatory capture. The IMF is right - it is an in-built feature of the economy.

For example, when there was a monopoly, there was one bus per day between Dublin and Galway. There are 45 services now. This entails 44 more bus drivers, 44 more buses full of happier customers and so on. We addressed aviation first. Ryanair will carry approximately 85 million passengers this year, which is 2.5 times more than British Airways, the largest airline in Europe. Ryanair had first mover advantage because the Houses decided not to continue the policy of protecting Aer Lingus from competition. That policy existed even before Aer Lingus was founded. A man called Crilly wanted to fly into Ireland, but he was told it was not going to be because we were going to have a national airline.

Sectors must be opened up to competition. This is how a small island economy that is trading on a world scale and into the Brazil, Russia, India and China, BRIC, countries will survive. However, the culture of lobbying is ingrained in our political system. I hope that the Government will quickly introduce its measures to control lobbying. The lobbying on 29 and 30 September 2008 on behalf of the banks was the greatest ever instance of lobbying in terms of its effect on GDP per capita, yet it did nothing for the rest of the economy. We have found out that 60% of the rescued banks current lending is to the construction industry.

The type of dynamic economy that the Minister wants to build requires an end to this kind of clientelism. I commend him on any radical measure he wishes to take in this regard. The IMF is correct in that we have been lax to date. We need a stronger competition policy and stronger Competition Authority than we have had heretofore.