I move that the Bill be now read a Second Time. Deputies are aware that the Supplies and Services Act will expire on December 31st. That Act had its origin in the emergency legislation which was enacted on the outbreak of the war and which gave the Government wide powers of control over the supply, distribution and prices of goods, to be exercised over the whole period of the war and its aftermath. Some time after the war ended, however, the scope of that emergency legislation was very considerably reduced, but through the Supplies and Services Act, the powers which were given to the Government on the outbreak of war, regarding control of prices, were continued. It was in accordance with these powers that various price control Orders were made from time to time since then. That temporary Act which was initially passed by the Dáil for one year only has been continued by annual continuation Acts every year since. It is now finally coming to an end and, with its passage, we have to consider the extent and the form of the legislation relating to prices and control of prices which should have a permanent place on the Statute Book.
There is a pre-war Act, the Control of Prices Act, 1937, still on the Statute Book. That Act which was to be permanent was, of course, passed by the Dáil in conditions entirely different from those which operated during the war and post-war years. To some extent, it could be described as a product of the political conditions prevailing at that time. It is, however, still on the Statute Book, and, as an alternative to enacting new legislation, it could be brought back into operation again. That course was considered by the Government, but we decided against it.
The 1937 Act provided for a permanent Prices Commission with independent powers of investigating prices, and provided also for the making by the Minister for Industry and Commerce of maximum price Orders, relating to either goods or services, on receiving from the commission a report which justified the making of them. It provided also for a controller of prices who was empowered to make investigations of individual complaints. His powers related not to the general survey of prices charged everywhere for particular goods which the commission might investigate, but to prices charged for particular products in a particular locality, or even to prices charged in an individual transaction to a single customer. He was empowered to issue certificates relating to such transactions, even certificates relating to individual transactions, requiring in some instances a refund of any overcharge which he thought had taken place.
It is our view that the machinery of the 1937 Act is too cumbersome. It proved to be so in operation in the pre-war years. The principle of that Act was to maintain machinery capable of carrying out the continuous investigation of prices charged for all commodities, even as I said in the case of individual transactions and irrespective of the general trading conditions applying to any class of goods or in any area. In our view, that type of price control legislation would be unsuited to our present circumstances. To some extent, when it was in operation, it did operate to discourage the development of industry. It did so not to any great extent — certainly not to the extent that the continuation of the war-time powers, long after the war had passed, had operated to discourage industrial development.
When one comes to consider the desirability of relying upon the 1937 Act, one cannot leave out of account what has happened since. We think it would be undesirable to provide for continuous investigation of prices through organisations or individuals empowered by Statute to act independently in that regard. We think that legislation, if relied upon now, would have the effect which we think the emergency legislation has had in recent years, of discouraging people from engaging in industrial and other forms of production in the hope of making a reasonable profit on their investment. It is proposed, therefore, in this Bill, which contains our proposals for permanent price control legislation, to repeal finally that 1937 Act. Deputies will, of course, have gathered from my remarks that that Act has been out of operation since the beginning of the war and there is now in existence none of the machinery for which it provided.
The Government considered whether it was desirable to have price control legislation at all. We could have allowed the Supplies and Services Act to lapse at the end of this year without taking action to bring the 1937 Act back into force and have left the situation such that no powers of price control would be available to the Government, although we might have to have in mind the need to deal with an emergency situation. In the absence of a permanent Act we would have to deal with an emergency situation if it occurred by ad hoc legislation brought to the Dáil in the light of that emergency and justified because of its requirements.
We decided against that course although it has certain attractions. We think that, taking the conditions prevailing in this country at present and likely to prevail for many years to come, it is desirable that the Government should have available to it powers which it can use when it thinks it necessary to use them to carry out an investigation of prices in particular instances and to take action regarding those prices when investigation shows it to be desirable or necessary.
When the Control of Prices Act of 1937 was being debated here before the war it was in an atmosphere in which it was generally contended that all price increases which occurred were due to one cause and one cause only, namely, excess profit taking. Deputies who were active in politics in those days will recollect that the contention that price rises were all attributable to that one cause was common, and the belief was spread amongst the people, a belief which has not been completely demolished yet, that preventing prices from rising was merely a matter of controlling the profit margins taken by producers or distributors.
We have had 20 years' experience of continuous inflation since then, 20 years during which the various, Governments that held office have not merely had available to them the powers regarded as necessary in 1937 but the far wider and far more drastic powers conferred by the legislation passed when the war began. The experience of those 20 years, the record of continuously rising prices due to inflationary forces which no system of Government regulation, investigation or control was able to check has, I hope, helped to educate public opinion in regard to the forces that affect prices.
It is now certainly more generally realised if not universally realised, that profits, whether the profits taken by manufacturers, importers or wholesale and retail distributors, are a very small part of prices and that systems of controlling profits have very little effect against powerful inflationary forces. Deputies will be aware that I have been trying to get my view regarding the ineffectiveness of price controls in inflationary conditions understood generally and have been trying to destroy any lingering illusion that may be left that any system of control can prevent prices going up when costs are going up. As I have now to come to the Dáil to recommend the enactment of this Prices Bill I want to make it clear that I have no desire, by advocating it to the House, to help in keeping alive any illusion that it is possible to devise a system of control which will prevent prices rising when costs are rising.
I have for less desire to revive the campaign against profits when all our experience is that the profit margins in industry are in many instances too low to permit of a rate of expansion in industry such as we would desire to see. The advice which we have got from outside experts who were from time to time brought here to advise upon Irish economic development is that profits in industry are inadequate to encourage investment in industry. In the light of that advice it would be clearly unwise to enact legislation or take any other measure which would help to spread the mistaken notion that there is a desire to limit profits further or to prevent those who may be induced to invest in Irish industrial expansion getting a reasonable and adequate return for their enterprise. Neither have we any desire to suggest that profits in distribution where competition is effective require any special supervision. Where there is genuine competition for trade between suppliers, profits are limited by a far more effective method than anything that can be given by legislation.
It is the view of the Government, which I have had to reiterate upon many occasions in public speeches recently, that the most effective price regulator is competition and, therefore, I want to make it clear beyond all possible doubt or misunderstanding that the Government does not contemplate utilising the powers which will be conferred on it under this Bill where competition is active. If competition is active, there will be no need for either investigation or regulation. There are, however — and this is the justification for the Bill—circumstances which may limit competition and in certain instances these circumstances are more likely to arise in this country than in other countries. Because of that, we think we need legislation here which other countries have not seen the need for or have long since discarded.
The circumstances which may operate to limit competition are of three kinds. First of all, there is the possibility of agreements, covenants, between suppliers of any class of goods to restrict competition amongst themselves. We have, of course, passed the Restrictive Trade Practices Act and set up the Fair Trade Commission to deal with restrictive agreements of that kind, and where recourse to that Act can restore competition in any trade, then there will be no need to use the powers to be conferred under this Bill; but where the Fair Trade Commission has to report that it is unable completely to eradicate restrictive arrangements of that kind in any trade, where, notwithstanding any Orders we may make here or any fair trading rules they may publish, competition is being limited by these agreements amongst suppliers, then we can have recourse to the powers of this Bill to fix prices on consideration of a report from the Fair Trade Commission to that effect.
Because of the smallness of the Irish market it is, of course, to be expected that something akin to monopoly conditions may apply to some commodities, not because of any undesirable restrictions or agreements, but because the limited size of the home market makes it economic for only one supplier to operate. In all cases of that kind which exist at the moment, I think we can have confidence in the desire of those who are responsible for the direction of those industries not to exploit their position to the public detriment, but in some such cases, existing now or in the future, the need for regulation by price Orders may arise, and in such cases the power to make them will exist under this Bill.
The second case which may require action under the Bill is where there are unnecessarily high costs prevailing in any industry from causes which are within the control of those in the industry, causes which could be eradicated, if action was taken by those engaged in the industry. If there is an undue exploitation of a tariff by the retention of obsolete techniques or by reason of restrictive practices of any kind which push up costs, then, following an inquiry by the committee acting under this Bill, action to control prices may also be taken.
The third circumstance under which that action might arise is where the Government decides that there are emergency conditions in existence, or likely to arise, which may have the effect of restricting supplies. The most recent example of the type of emergency we have in mind in that regard arose last year with the Suez Canal development. In these cases, and in these cases only, subject to certain qualifications which I will mention later, the Government can control prices, but it can do so only after an investigation by the Fair Trade Commission has brought out the fact that there is an artificial restriction of competition or monopoly conditions arising from any cause, or investigation by a committee under the Bill has shown that these unduly high costs, capable of being remedied and not remedied, still exist, or where the Government decides that there is an emergency situation which requires special action.
It will, however, be understood by Deputies that the remedy for unduly high prices arising because of a restriction of competition or inefficient production or obsolete production methods may not be price control. There are many commodities in respect of which price control is not practicable at all, commodities which are sold in such a wide number of varieties that no common price could be fixed and in many cases with such little difference between one variety or quality and another that only the expert could judge between them.
Tea is, perhaps, the outstanding example in that regard. When we did exercise control over the price of tea, we had to have a standard tea, only one quality, on sale and when it was decided to restore the pre-war freedom in relation to varieties of tea, then, of course, price control had to go as well.
If, therefore, a situation should arise where, either because of the prevalence of monopoly conditions, or restrictive practices, or because of unduly high cost, action has to be taken, that action need not necessarily be the making of price control Orders. Where price control Orders are not suitable, a remedy will have to be sought by other means. It may be thought necessary to reduce protection in some cases, but the intention would be that where a problem exists, where price control is not the answer to the problem, ad hoc measures will be taken to deal with the situation.
It is, of course, considered that because of the limited size of the Irish market and the limited number of producing units in industry, the policy of protection obliges the Government to take powers of investigating what is happening and to check on undesirable developments. That was the main justification for the pre-war Prices Act. It was argued in justification of that Act that when the Government had, in the interests of national economic development, limited or prevented competition from imports, there was an obligation on them to keep under constant examination what was happening in the protected industries so that any undesirable development resulting from protection could be checked in the interests of the consumers of the products.
The Bill, therefore, gives power to control prices generally only on three conditions: first, where investigation has revealed that a monopoly situation, arising either out of the circumstances of a particular trade or contrived by agreements among those engaged in the trade, is leading to unduly high prices and where no other method can be found to rectify the position; secondly, where investigation has shown the prevalence of unduly high costs in a protected industry from causes which are capable of being remedied and where no other suitable method is available: and thirdly, in temporary conditions, such as the Suez crisis, on decisions by the Government.
We think that a permanent and costly investigating body is not necessary. What is proposed in the Bill is that a committee should be set up, whenever it is thought necessary to undertake an investigation, drawn from a panel of persons who have already agreed to be available to act for that purpose when required. That committee, of course, will have all the powers which are usually regarded as necessary to carry out a thorough investigation. I have mentioned, however, only the general powers of control which the Bill will confer. It is considered desirable to retain power to control the prices of a limited number of essential commodities even without a prior investigation. These commodities are bread, butter, sugar and milk. These are commodities which are capable of being subject to price control Orders and in regard to them the danger of developments requiring action taking place must always be deemed to be there and a protracted investigation might be undesirable and, indeed, in some cases unnecessary.
We have, therefore, decided to keep in this Bill power to make price control Orders without prior investigation in regard to bread, sugar, milk and butter. In the case of milk and butter the Minister for Industry and Commerce is required to act in consultation with the Minister for Agriculture. There are, it is true, other Acts upon the Statute Book under which the price of bread and milk could be controlled, and we did consider whether it was desirable to rely on these earlier Acts or to make provision in this Act on the lines I have indicated. We think it is just as well to have one Prices Act to which people can refer when they want to ascertain the Government's power, and a uniform procedure for all price-regulation activities.
It is, of course, appreciated by Deputies that the prices of bread and butter are not at present controlled. The retail price of sugar is at present controlled although there may be some question as to the necessity for retaining control and the price of milk is controlled only in certain limited areas.
I have now mentioned the general provisions of the Bill giving power to exercise control in the case of any goods or services after investigation, and where investigation has shown the need for it arising out of some factors operating to limit competition, and these more specific powers of control in relation to a very limited number of commodities. It is, of course, intended to exclude from the scope of the Bill certain commodities in regard to which Ministers other than the Minister for Industry and Commerce have primary responsibility, or for which there is already statutory machinery for maintaining any controls that are considered necessary. Therefore, the power exercisable under this Bill will not apply to prices paid to producers for agricultural produce. That is, of course, a central aspect of agricultural policy and is the concern of the Minister for Agriculture.
The Bill does not apply to prices paid to producers of fish who are the concern of the Minister for Fisheries. It does not apply to professional services which it would be impossible to control by price regulation, anyway. Nor does it apply to prices controlled under any existing legislation administered by any other Department than the Department of Industry and Commerce or by any local authority.
I do not want to present this Bill to the Dáil as a measure of major importance. I do not regard it as such. I think we have now got a situation where we can hope that the free play of competition will be effective in dealing with the prices of most commodities and it will certainly be the general aim of Government policy to promote competition so that the need for any other type of regulation or control will disappear. Nevertheless, we think it would be undesirable to let the Supplies and Services Act lapse at the end of the year without putting something in its stead in the shape of a Prices Act, and it was because of the feeling that circumstances could arise which would justify investigation and perhaps action that this Bill was framed, and it is solely in circumstances in which competition is not fully effective that it is intended to use it.