Sean Barrett (Independent) | Oireachtas source

Reference was made to this before. I understand the Minister of State has indicated that people made representations to him, and Senator O'Sullivan also commented on it. The section deals with the prohibition on the transfer of a licence. The representations made to the Minister of State related to what was deemed to be a family business, if I recall correctly. I imagine the Minister of State will make his own statement on it. Senator O'Sullivan may have had something in mind as well. Section 13(1) states: "A licence, whether granted before or after the commencement of this section may not be transferred or assigned or be mortgaged or otherwise encumbered." Section 13(2) states: "The prohibition on the transfer of a licence under this section does not affect a licence lawfully transferred before the commencement of this section." I do not intend to deal with the property rights aspect that other Senators have mentioned but the economic aspects of it are most important. I believe this section is probably unenforceable as well. The advice we got outside was that ingenious lawyers will find a way around this section.

The interest of economists in the transfer of licences arises because it reflects the degree of monopolistic rent inherent in a licence and those who hold licences achieve what is termed regulatory capture over the licence-issuing body. That is occurring in this case. A disagreement arises between the parties involved. We say deregulation was a great success but those who oppose it are attempting to re-regulate the sector in several areas. It is most useful to know that taxi licences in Ireland sold for ¤100,000 at one stage, although they were simply pieces of paper with no intrinsic value save for the fact that the Government would not issue any more. That is because Governments always listen to producers and never listen to consumers. There is a mountain of literature on regulatory capture.

The aviation industry captured the Department of Transport, Tourism and Sport and turned it into a downtown office. CIE has turned the Department into a downtown office as well. The Department was found to have twice disadvantaged the Swords Express company on the issue of bus licences in a decision by Mr. Justice Bryan MacMahon in the High Court. It is a Department prone to capture by producers.

We knew the degree of incompetence and excess costs incorporated into the licensing regime precisely because people were willing to pay ¤100,000, or ¤130,000 in some cases, for a piece of paper called a licence. This market is remarkably valuable because it enables us to keep an eye on the current and future Ministers in order that they do not yield to the degree of capture that occurred in the country previously and which the courts - we keep coming back to this - addressed by abolishing quantity licences. The fact that a licence commands a premium is a useful measure and suggests that the Minister is issuing too few licences. Economists value this information and we know some cities that carried out reports on the sector sought to compare favourably with us.

We know the cities that ban new entry. In New York a licence owner can earn $1 million worth of super-normal profits. Hence, he pays for the licence. It is a huge barrier to entry. At one stage it cost ¤100,000 to get a licence here, but at that price we could have put five or six vehicles on the road. The licence price is absolutely crucial to know who is making a shambles of taxi regulation. It is valuable information that economists seek. In our case, one could have bought a taxi vehicle and a couple of books for ¤100,000 but the taxi licence was not included. Lawyers will find a way through this; that is what lawyers are for. We cannot stop people selling a business. If it has a monopolistic rent built in due to the way the Department of Transport, Tourism and Sport always caves in to producers, then those licences will have an intrinsic value. Trying to pretend the problem of excessive restraints on new entry does not exist will not solve it.