Sean Barrett (Independent) | Oireachtas source

I move amendment No. 5:

In page 23, between lines 20 and 21, to insert the following:“(11) (a) Any body outlined in subsection (10) and/or any arrangement shall be considered to exhibit a reasonable bias that can be considered by a reasonable person to constitute a pattern of action or inaction that contravenes the public interest and favours a regulatory body or regulatee.
(b) Where evidence is provided for “regulatory capture” this can be understood to fulfil the requirements of paragraph (a) of this subsection.”.

The Minister has taken one of my lines about regulatory capture. One must ask why there are so many lobbyists in Washington, London and Brussels. As was discussed earlier, producer groups treat government as something to be manipulated while they achieve capture over agencies. Producer groups are well-organised with professional advisers while consumers are disparate and badly organised. No one consumer spends more than a fraction of income on any one commodity, whereas for big producers all of their income comes from one commodity. Put the two together and one gets unequal competition.
In the past in Europe, we had one airline per country which got together and had their parent governments rubber-stamp their fares. When the market was opened up, fares fell by 55% on the very first day. This was a form of regulation by the then transport Department and the Civil Aviation Authority in the UK which were both out of touch with reality. A regulatory body can get documents from the producers which it accepts without saying anything. Consumers have no alternative but to grin and bear it. Alfred E. Kahn pointed this out in the United States when he abolished the Civil Aeronautics Board. If it had been left in place, the airlines would still continue to lobby to get special consideration.
There are concerns about the effects of large corporations in achieving regulatory capture. If there is evidence of this, then the new agency should intervene on behalf of the consumer. It is a worldwide concern. For instance, while the world appears to becoming more unequal, certain large corporations can get governments to do whatever they like through the powers of lobbying and regulatory capture. They get richer while the rest of society does not.

Some of the Thomas Piketty literature comes in there. I do not know if this has been addressed in Irish law before, although the Minister referred to it in his response to an earlier question. Consumers are unequal when they deal with very large corporations, and very large corporations achieve control over government agencies which, as the Minister said, even when put back on the rails to represent consumers, revert to being dominated by producers.

We previously referred to the 55% increase in the public service obligation payment, PSOP, required to be added to every electricity bill. Part of the rationale given is that due to reduced international energy prices Ireland is uncompetitive by international standards, therefore the cost of protectionism rises and the PSOP must increase. Although there are arguments that this achieves security of supply, if international prices are decreasing it is good for Ireland and we can participate in the export-led growth which the Minister supports.

ComReg's opposition to the importation of gas from the US through the Shannon Estuary on the basis that it would leave the pipeline to the UK as a stranded asset could be used as an excuse not to do anything. One could have argued that one should not have built railways because it would have left the canals as a stranded asset, or roads because it would have left the railways as a stranded asset, or that one should not build a new airport because it would leave the old airport as a stranded asset.

Sooner or later, the new CCPC, the Attorney General and the Minister for Justice and Equality will have to address this factor because it seriously distorts resource allocation in the modern economy. There is much literature on it, to which the Minister alluded. There may be a bias that can lead a reasonable person to favour producers having an undue influence on regulatory bodies. In my experience, such producers do not answer very effectively when they are brought before Oireachtas committees. If this is the case, somebody must say that it looks as if certain interest groups - the construction industry, farmers, the professions - have acquired an undue influence. After what happened in 2008 we would have to include bankers and the people who are supposed to be regulating them in the list. If these bodies do not serve the wider public interest, the broadly based body the Minister proposes must research, publicise and counteract regulatory capture. The evidence is that the problem is large and damages the wider public interest. If there is any way we can accommodate that here or elsewhere, I would be grateful for the Minister's thoughts on developing a competitive Irish economy. It is an elephant in the room which we can no longer ignore. I am sure the Minister and his OECD colleagues will have also discussed it.