Bernard Durkan (Kildare North, Fine Gael)
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Question 48: To ask the Minister for Enterprise, Trade and Employment if his attention has been drawn to the aspects of the economy, which are vulnerable due to high costs or lack of competitiveness; his proposals to address the issue; and if he will make a statement on the matter. [6225/05]

Bernard Durkan (Kildare North, Fine Gael)
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Question 123: To ask the Minister for Enterprise, Trade and Employment the cost factors most prominent in undermining the competitiveness of the economy; and if he will make a statement on the matter. [6456/05]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 48 and 123 together.

The National Competitiveness Council's Statement on Prices and Costs 2004 highlights the key areas that contribute to Ireland's cost base and which affect our competitiveness. The statement also provided the statistical analysis for the NCC's Annual Competitiveness Report 2004, which was published in October together with the council's competitiveness challenge 2004. The challenge offers detailed recommendations designed to address weaknesses in Ireland's competitiveness performance across a range of areas.

Both the NCC's Statement on Prices and Costs 2004 and Annual Competitiveness Report 2004 found that by 2003 Ireland was on a par with Finland as the most expensive country within the euro zone for goods and services. However, the statement also found that Ireland is the cheapest country in the euro zone for both clothing and footwear. With regard to business costs, the statement found that Ireland is the second most expensive country for electricity costs for industrial users. Ireland's cost competitiveness needs to be improved and this will continue to be a priority for the Government.

The Government has already taken several steps to address the issue of prices and costs in Ireland. The Government avoided inflation fuelling increases in indirect taxes for the second year running in budget 2005, thus minimising the Government's contribution to inflation. The most recent consumer price index figures from the CSO show that inflation fell to 2.3% in January compared with 2.6% in December.

Last year, the Government established the consumer strategy group to advise and make recommendations for the development of a national consumer policy. In the performance of this role the group has carried out a range of activities, including studies that investigate issues of special concern. Price trends in other parts of Europe have been examined and some prices have been the subject of additional investigation, including those of fruit and vegetables, alcoholic beverages and pharmaceuticals.

High insurance premiums have adversely affected all business operating in Ireland for the past few years. However, the NCC acknowledged that the cost of insurance for many businesses and consumers has reduced over the last year as a result of determined Government actions including the establishment of the Motor Insurance Advisory Board and the Personal Injuries Assessment Board, PIAB. The Government is, furthermore, committed to increasing competition in all sectors of the economy. The Government recognises that the key to reducing prices and maintaining them at optimal levels in the long term is to ensure that vibrant competition is present in all sectors of the Irish economy. That is why we have strengthened the powers and resources of the Competition Authority, which is charged with combating anti-competitive practice in the economy.

With regard to the high cost of electricity in Ireland, the Minister for Communications, Marine and Natural Resources recently announced plans for a review of the electricity sector. This review will examine the institutional arrangements and market structures and assess their appropriateness. The impetus for this review stems from the perceived difficulties relating to ESB's dominance and the need to attract new entrants and develop competition in the sector. On Monday, 21 February, the Minister formally invited tenders from European and Irish consultancy firms to carry out this review.