Vol. 522 No. 2
17 Mr. Deenihan asked the Minister for Finance if he will comment on the recent statement by Mr. Wim Duisenberg, President of the European Central Bank, that Irish inflation is worrisome; and if he will make a statement on the matter. [18193/00]
62 Ms O'Sullivan asked the Minister for Finance if his attention has been drawn to the views recently expressed by the President of the European Central Bank, Wim Duisenberg, that if inflation continued to accelerate, Irish industry would price itself out of the market and first-time buyers would find themselves increasingly excluded from the housing market; his response to the views expressed; and if he will make a statement on the matter. [18167/00]
197 Mr. Durkan asked the Minister for Finance if he has received any indications from European institutions expressing concern at Irish inflation rates; and if he will make a statement on the matter. [18447/00]
I propose to answer Questions Nos. 17, 62 and 197 together.
The statement to which the Deputies refer was made by the President of the European Central Bank to the European Parliament's Economic and Monetary Affairs Committee. He said that the Irish inflation situation was "worrisome". These comments reflect the concerns already expressed in the annual ECOFIN Council Opinion on Ireland's stability programme and, second, in the country specific recommendations contained in the annual broad economic policy guidelines.
As I stated previously, the Government is disappointed by the recent increase in inflation. We are concerned and, in that respect, we share the concerns expressed by others including the social partners. The Government is taking steps to reduce inflation. As the House is aware, the Government recently approved a further package of measures in relation to the housing market. These measures seek to increase the supply of housing and to make it more affordable for first-time buyers. In particular, the Government sought to strengthen the position of first-time buyers in the market and to curb speculative demand for housing.
As I stated previously, promoting competition is essential in order to tackle inflation. Significant resources have also been committed to the Competition Authority to enable it to tackle anti-competitive activity and profiteering in sheltered sectors of the economy. Other measures are being prepared and will be announced shortly. Deputies will be aware that the European Central Bank President also praised our economic performance in his recent comments. He noted the recent economic transformation of the Irish economy and, in particular, the fact that we have moved from a country of net emigration to one of net immigration.
Does the Minister agree with the President's conclusion that it is up to the Government to deal with inflation and that the European Central Bank can do very little to assist it?
If the Deputy reads the comments of the President he will see he was very complimentary regarding the Irish economic performance in recent years. He said:
There is nothing the ECB can do about it except try to convince the national authorities in Ireland that these developments which are indeed somewhat worrisome are their piece of cake. Ireland does not have a balance of payments any more. Europe has a balance of payments, so the policeman you could say is on vacation. It is a very difficult situation to handle but on the other hand I am always struck by the developments Ireland has gone
through. Through centuries Ireland was a country with net emigration, now it has net immigration which is an achievement of historic proportions not to be underestimated.
As President Duisenberg has summed it up on a number of occasions, there are matters both inside and outside our control. It is important, as more rational comment in the last week or so has emphasised, to address those matters within our control we can do something about, while those outside our control we can do nothing about. We can do nothing about the price of oil or the strength of the euro, but we should do something about internal matters. As I have said in previous replies, the best way to combat inflation is through competition and most rational commentators agree with that.
Mr. Duisenberg specifically mentioned that the Government should consider reducing indirect taxes. Can we take it from what the Minister said earlier that he has rejected any possibility of reducing excise duty or the rate of VAT?
The Deputy will see that as a result of the meeting with the social partners these matters were considered and he will also be aware of comments I have made in this regard. These matters will be considered further before the budget. The Deputy will agree that there are upsides and downsides to tinkering with certain measures, though there is no universal agreement on that. If one had four economists in this room one would get four different opinions on the matter referred to by the Deputy.
I do not doubt that, but the Minister informed us earlier that there would be no taxation changes for which he would be clearly responsible.
Not now.
Can I take it from that there will be no reduction in indirect taxes, VAT or excise duty?
The Deputy can take it that as of now there are no proposals for change in that regard. As I have said on previous occasions and in interviews, all taxation matters are considered coming up to each budget – matters related to VAT, excise and direct taxation – and that will be the situation this year also. As I have also said, there is considerable disagreement among all experts in these areas.
Is the Minister signalling a third Finance Bill for the autumn or is he telling us that issues such as reductions in excise duty or the standard rate of VAT will be contemplated for next year's budget?
I have made these comments on changes in taxation on many occasions. They will be considered before this year's budget.
But the Minister is not going with a separate Finance Bill in the autumn?
I have no intention of introducing a separate Finance Bill in the autumn, but having said that, I did not intend to bring in a second Finance Bill, 2000, in June either. Circumstances arose which make a second Finance Bill today imperative.
The way things are going it could be the Minister's last.
One would not want to be too previous in this regard.
The Bermuda Triangle.
I have said on many occasions that these matters are considered before each budget.
