Dáil Éireann debate -
Wednesday, 16 Feb 1972

Vol. 258 No. 13

Prices (Amendment) Bill, 1971: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. Lalor)

Last night I said that in replying to the debate I found it most convenient to go down through the contributions made by the various Deputies and to try to deal specifically with them. I had dealt with the contribution made by Deputy Donegan speaking on behalf of the Fine Gael Party. Deputy O'Leary opened his remarks by quoting from paragraph 4, page 7, of the first monthly report of the National Prices Commission, November, 1971, the following sentence: "In the field of price control there are no miracles." The Deputy said he agreed with this. Had he quoted the whole paragraph he would have been saying:

In the field of price control, there are no miracles. Prices must bear some relation to the costs of production. Of the main items of costs, the prices of imported materials and indirect taxes lie wholly beyond our influence as a Commission. The same is true of wages and salaries. When an application for a price increase reaches us, increases in these have already occurred and are generally a main reason for the application. To the extent that we succeed in moderating the rise in prices, we will help to moderate the rate of inflation in future.

This is a straightforward statement of fact made by this commission which I appointed, and which I appointed on the recommendation of the trade unions, of the Confederation of Irish Industry, the Federation of Trade Associations and the Irish Housewives' Association. This commission is headed by Professor Ryan as an independent chairman. That indicates the present position in relation to the effectiveness of price control. Deputy O'Connell also quoted from that paragraph and read into it something that certainly was not intended:

When an application for a price increase reaches us increases in these have already occurred.

From reading that paragraph he was under the impression that at the stage when the application was made to the Prices Commission, the commission conceded that the price increase had already taken place. Of course this is not the case when one reads the sentence in the context of the paragraph. I have to assume that Deputy O'Leary read the paragraph in its entirely and, therefore, despite being mindful of all the constituent factors involved in the submission of a recommendation from the National Prices Commission for the conceding of a price increase to a manufacturer, he went on to say at column 1464, volume 258, of the Official Report for 9th February, 1972:

There is a mystery as to why this Government and the Minister remain utterly inactive in the face of price increases which are eating up wage gains. No effort was made to stem the tide of rising prices and it would take a great deal of effort now to correct the situation and to damp down prices.

It should be remembered that the paragraph in question was subscribed to by the trade union movement itself. Further on, in paragraph 11 of that report, the National Prices Commission say:

Each notice of intention to increase prices is passed to us and we must indicate whether the increase proposed should be accepted in whole or in part, or subjected to detailed examination. Unless the increase proposed is to be subjected to detailed examination, it may be put into effect one month after the date upon which all the particulars required in the notice of intent are received by the Prices Division of the Department. In any case where we recommend an increase less than that proposed, we think it desirable that the firm concerned should have the right to ask that its case be submitted to detailed examination. If a detailed examination is made, the Commission may recommend to the Minister that a report should be published.

This indicates the rounds to which the National Prices Commission go, on the one hand, to investigate the application and, on the other hand, to endeavour to do justice to the manufacturer who is making the application. I found that before the National Prices Commission were created the Prices Section of my Department came in for a great deal of abuse from both sides, from the manufacturer who was making the application for an increase—being critical of the delay and of the detailed way in which the Prices Section of the Department entered into each application and the extremely thorough manner in which they investigated all aspects of it—and from the public for allowing the increase to take place. The same type of criticism has been levelled at this Bill in relation to the question of the Executive taking over functions and interfering too much in the application of control.

The impression all through any debate on price control is that on the one hand, spokesmen here in the House almost invariably, naturally, follow the popular line of insisting that there are not sufficient price controls and that prices are allowed to increase without sufficient justification. The blame for this is placed on the inefficiency of the Establishment, on the inefficiency of the Department of Industry and Commerce and the Minister. On the other hand, when we have speeches made by people who are endeavouring to oppose something in this Bill which proposes to give power to the Department to control service charges and professional fees, the attack is made on those bureaucrats, those faceless members of the Executive who are interfering with the lawful operation of the professional organisations. I have to suggest that this is completely unjustified criticism.

Towards the end of his contribution Deputy O'Leary summarised in a few words the purpose of the exercise from his point of view. He knows that, if one bangs away and criticises the Government and the Minister in regard to inflation, and the apparently ineffective measures to control inflation and, if one hits at it strongly enough and often enough, one can undermine confidence in the Government and in the Minister concerned. Deputy M. O'Leary gave the whole show away when he said, as reported at column 1468, volume 258 of the Official Report for Wednesday, 9th February, 1972:

...the Minister would do well to recall the last general election in Britain when a Conservative Premier won an election that was to become known as the shopping-bag election. That was the approach which proved effective for that Premier when he succeeded in beating a superior government.

It is extraordinary that Deputy M. O'Leary should be now trying to emulate the Tory Party in Britain in endeavouring to bring down a superior government by his attack on this Bill.

Mr. Donegan

What superior government?

Mr. Lalor

I have quoted his words.

Mr. Begley

An inferior government.

Mr. Lalor

It should not be necessary for me to spell out which are the superior government.

Mr. Begley

The Minister must be joking.

Mr. Donegan

The people will spell it out for the Minister and they will not make any mistake.

Mr. Lalor

Fine Gael have been saying that for a long time now.

Mr. Donegan

Things are different now.

Mr. Lalor

In fairness to him, Deputy Fitzpatrick of Cavan said he was speaking as a person with a vested interest in the legal profession. He started his contribution by saying, and again I am quoting from column 1469 of the same volume:

It is a Bill that will operate to effect justice as between one section of the community and another.

He made that straightforward statement of fact. That is what I believe the Bill will do. He said it before going on to object to one specific section of the Bill. His objection was to the power I propose to take to control charges for professional services. He said he did not believe that the legal profession in general should be at liberty to charge any fees they wished. Deputy Enright and Deputy Cooney made pretty much the same contribution to the debate as Deputy Fitzpatrick, and my remarks can be taken as covering their contributions also.

Deputy Fitzpatrick said that the changes which will be brought about if this Bill is enacted will have the effect of putting the legal profession completely in the claws of the Executive. He felt this was what this Bill proposes to do. This is a Bill which he described earlier as operating to effect justice as between one section of the community and another. He said he would prefer to see the present system operating under which the charges of the legal profession are controlled and regulated by various committees on which the Judiciary and the legal profession are represented and in respect of which the Minister for Justice has a very substantial say. He went on to say that, if this Bill were enacted, the legal profession would cease to be independent and would find themselves under the control of the Executive.

I suggest that it is far-fetched for the Deputy to imply that, because power is given to a Government Minister to control legal fees, the Government and the Minister are thereby in a position to influence the opinions or the behaviour of the legal profession. I would go so far as to say that it is a reflection on the legal profession as a whole to assume that their opinions or their behaviour could be influenced in any way by the granting or withholding of an increase in their fees. To say that they are a buffer between the Executive and the ordinary citizen seems to me to exaggerate the position, considering the large area of legal business transacted by the profession to which the State is not a party.

It may be all right for members of the legal profession such as Deputy Fitzpatrick, Deputy Cooney and Deputy Enright to make this claim and to suggest that, if the Executive endeavoured to interfere with the fees being paid, the repercussions on the general public could be most undesirable. If I were to say that by assuming control for the influencing of the rate of fees charged by the legal profession I would, therefore, be able to take control of the legal profession and dictate the manner in which they pursue their cases, the first people to rise and challenge this statement would be the Deputies who spoke the other way yesterday. I would go further and say that if I were to make that statement they would be fully justified in making such an attack on me.

Deputy Fitzpatrick said that justice will be administered in the courts with the dice loaded in favour of the Executive and against the citizen because, as he said, the Executive were going to interfere with the fees payable to members of the legal profession. We should not blame the legal profession for endeavouring to hold on to the situation of voluntary control that is at present exercised by their various committees. I understand there are as many as five different committees. There is the statutory committee under the 1881 Act which comprises the Chief Justice, the President of the High Court, a senior judge of the Supreme Court and the President of the Incorporated Law Society. They fix certain of the fees chargeable in most non-contentious matters. There are other similar groupings such as the Superior Courts Rules Committee, the Registration of Title Rules Committee, the District Courts Rules Committee and the Circuit Court Rules Committee. All of these committees are committees in respect of which the Incorporated Law Society are represented. It is a bit too farfetched to suggest that by interfering with the fixing of the charges by any or all of these committees we would interfere with the independence of the Judiciary functioning in this State.

Deputy Esmonde felt that charges by the medical profession should not be interfered with or that it might be almost impossible to interfere with the charges in the medical profession. He said he was always of the opinion that in regard to fees the solicitors have always had a much easier passage than the other professions in so far as they handle the money. I know there was an interruption at that stage from Deputy Cooney to say that was a rather sinister implication. Deputy Esmonde said that in the peculiar circumstances in which the legal profession operate there must be a great temptation on their part to overcharge. He also said that he failed to see how legislation of this nature could control professional charges.

It has been claimed by the legal profession that they were, perhaps, the first group of people to introduce voluntary restraint on their charges. I do not think the case made by any of the Deputies yesterday was sufficient to justify the exclusion of the legal profession from this Bill. The contributions made had the effect of making me more convinced that there was something here which should be looked into.

In backing up Deputy Fitzpatrick's case, Deputy Cooney criticised section 7 of the Bill, the section that gives me the power to transfer by order the function of control to other Ministers. He said that this was an arrangement which was often overlooked by the House even though the House, in fact, has the control. In this case the Deputy was referring to the possible use of this power by me as Minister for Industry and Commerce to pass over to the Minister for Justice the power of controlling legal charges. He attacked that whereas he had already defended the present situation, for which he was speaking. In fairness to him, he said there were certain aspects of the charges for transfer of house property, deeds, referred to by Deputy Tunney, where it was quite possible improvements could be effected.

Deputy Cooney criticised me for taking power under section 7 of this Bill and at the same time he defended the arrangement whereby the statutory body under the Solicitors Remuneration Act, 1881, had power to make orders for presentation to the Oireachtas in relation to the increase in legal fees, to which I have already referred. That statutory body is comprised of the Chief Justice, the President of the High Court, a senior judge of the Supreme Court and the President of the Incorporated Law Society. The Deputy defended the right of that statutory body to make an order increasing fees but, on the other hand, criticised my assumption of the right under section 7 of the Bill. The case made by spokesmen here on behalf of the legal profession certainly did not change my belief that the power that I propose to assume in this regard should be assumed.

Deputy Esmonde, having reiterated what had been said by so many other Deputies in, if you like, welcoming the Bill, went on to say that he was glad that the Government had seen fit to accept in a small way the advice that they had been getting from those benches in the last 15 years. This is merely an echo of what Deputy Donegan nearly always says about anything that I introduce, which almost invariably is good. We have this sort of statement made and reiterated on the other side of the House.

Mr. Donegan

We may not be so nice to the Minister the next time

Mr. Lalor

Despite what Deputy Donegan is saying, he must accept that I am speaking very objectively in regard to the contributions made by Deputies. I am endeavouring to deal with them as objectively as possible.

Mr. Donegan

As you see them.

Mr. Lalor

Yes, I am merely drawing attention to what has struck me as a difference of opinion expressed during the course of the debate. Deputy Esmonde did say :

I have always been of the opinion that in regard to fees, solicitors have always had a much easier passage than the other professions, in so far as they handle the money.

This is from column 1482.

Dr. Cruise-O'Brien

The Minister is repeating himself. He has made that point twice before.

Mr. Lalor

It is possible that I am repeating myself in this regard but this does happen in debate. I have found that it is not unusual that in order to emphasise a point it is repeated more than once.

Mr. Donegan

But it is never in order to do so.

Mr. Lalor

Apart from the discussion on legal fees, the main debate was on section 3 dealing with the control of prices of new houses. Over all, there was general welcome for this. This is understandable because of the opinion generally held that too much money is made in some cases from dealings in house property. Deputy Cooney made the point that he was disappointed that the Bill did not cover secondhand houses, as he described them. It is very difficult to know how to describe houses that are not newly-built houses. Deputy Cooney found fault with the Bill because it did not contain power whereby the Minister could effectively control houses other than new houses Deputy Belton, who was the last to speak before I got in last night, in his own way dealt with this matter effectively in suggesting that it would be quite impracticable to bring secondhand houses within the scope of the Prices Acts because of the vast differences from the point of view of age, size, condition, location, et cetera and because of the fact that a house could pass through a number of hands in a relatively short time. In addition, as I see it, the control of the price of secondhand houses would also interfere with the principle of sale by auction of such houses and this would be undesirable.

In order to control the price of houses it would be desirable to have some idea of what the price should be and in the case of secondhand houses there would be no base to work from to establish such a price. In relation to new houses there is a specific base to work from. It would be impossible to operate price control in relation to secondhand houses.

There were comments made in the House in relation to previous prices legislation and criticism was expressed in relation to the non-operation of previous prices legislation. I would be against introducing legislation that would prove to be non-effective. This is one of the reasons why I looked seriously at the possibility of assuming control over other than new houses in this Bill before excluding it from section 3.

Deputy O'Connell referred to the necessity where price increases are sought of publishing a notice in the press. He inferred that most manufacturing companies continuously hive off huge lumps of profit and suggested that there was no reason why the increases could not be taken out of profits. Again I quote from the January report of the National Prices Commission, paragraphs 8 and 9, in this regard because it is rather important that people should not be allowed to think that an effort has not been made in the past by the Prices Section of my Department and is not being made at present by the National Prices Commission to prevail upon manufacturers to carry increased overheads out of profits. Paragraph 8 of the report reads.

In the cases on which we have made recommendations, it was relatively seldom that cost increases were disallowed because they could not be substantiated. The proportion disallowed was generally greatest with wages and salaries, mainly because price increases could be granted only to compensate for increases in money incomes that conformed to the Government guidelines. The cost increases that were disallowed must be covered by increases in productivity or met from profits.

Deputy O'Connell never suggested that increases might be covered by productivity but he did refer to the profits aspect. The report continues:

Given the circumstances of the applicant firms, we believe that this is as much as can reasonably be expected in the year or so ahead. Cost increases which are not met from higher productivity and efficiency must be met from higher prices; it was only in a small minority of the cases that came before us that it would have been economically justifiable (or even possible) to meet these cost increases from profits.

Paragraph 9 reads:

In blunt terms, increases in money incomes that are matched by higher productivity in the firms that pay them are in a real sense earned. Higher money incomes that cannot be (or are not) matched by higher productivity mean higher prices, if the firms are to survive and if employment is to be maintained.

I want to stress that that is a report of the National Prices Commission which is made up of six people of whom two are members of the Irish Congress of Trade Unions and one is nominated by the Irish Housewives' Association. That brings out quite clearly that there are not unjustified increases in prices conceded by me as Minister following the recommendations of the National Prices Commission.

Another thing I should like to reiterate is that if one examines the three reports of the National Prices Commission that have already been issued, and all the increases that have been conceded over the past number of years, one can see that very seldom do the increases that are conceded measure up to what was originally applied for and which was seen by the manufacturer as justified at the time of application.

Deputy Tunney welcomed the effort to control house prices and dealt specifically with house prices in Dublin city and its environs. He attacked the legal charges on the sale of houses on newly developed land. He most effectively established the necessity for the introduction of this legislation. I hope the trade union movement will take cognisance of his recommendations to them in regard to what they might consider as their contribution to the house building programme. As against that it is not specifically relevant to the Bill.

Deputy Enright found something to be recommended in every section of the Bill. He made specific reference to the necessity for taking power to control charges for services rendered in connection with insurance. He was not aware at the time that power was being taken in this Bill to do so. With the exception of my taking power to control services of a professional character he found something to recommend in every section and then finished up by saying that the powers I was taking were too sweeping. I wish he had elaborated a little on what he meant by this because the only thing he criticised was the power to control professional fees and the power to transfer that, under section 7, to the appropriate Minister.

Deputy Keating said that the Bill was a window-dressing operation and that it could only be compared with the Minister using a fig-leaf to cover his nakedness. That indicated that he did not take the Bill too seriously. He gave lip service to the prevention of inflation but continued to speak encouragingly about unlimited wage demands. One of the messages that will have to be brought home, and it is brought home month after month by the National Prices Commission, is that if there are increased costs there will be increased prices. It suits some speakers to say, as Deputy O'Connell did, that we should have a price freeze for three months or six months and see whether the demands for increased wages and salaries would stay put, but this, of necessity, must be a two-way arrangement. Deputy Keating, in looking at this fig-leaf, claimed that I was not taking a number of powers which, in fact, I am taking. He claimed that some firms and importers are taking far too much profit and that I had no power under the Bill to interfere in any way with the rate of profit being taken by those people. I would refer him to section 4 (1) (a) where I am taking power to do this.

Deputy Belton welcomed the Bill on the one hand and criticised it from the point of view of handing over all the power to the Civil Service. This is not the case because in the case of prices which I control at present I am guided by the recommendations made to me by the National Prices Commission. This same commission can continue to act in this capacity for any other Minister to whom powers under this Bill, when enacted, may be transferred. So far as I am aware all the commission's recommendations have been accepted. Usually their recommendations are acceptable to me.

Deputy P. Belton asked whether I propose to control hotel prices and the additional charges made in hotels. I refer the Deputy to section 2 (1) (b) of the Bill. The Deputy also referred to insurance loans and felt that I had not power to control them. I refer the Deputy also to section 2 (1) (d). The Deputy also referred to some ideal system followed by Mussolini in Italy. I am not sure whether the Deputy was recommending that I should follow Mussolini's example in this regard. The idea does not appeal to me. The Deputy did, in effect, reply to Deputy Cooney with his observations in relation to the control of secondhand houses.

Deputy P. Belton also suggested as an alternative to price control an equalisation profit tax on businesses. He felt it would be a penal taxation which the Minister for Finance could operate. If I or the Minister for Finance endeavoured to introduce legislation for such a tax there would be opposition from both sides of the House. Such extra profit would have been extorted from the public, and while it would be an ideal way for the Minister for Finance to collect money it would not seem to be a suitable way to do so. It might prove a buffer for a bad manager who could increase prices without increasing his profits.

The Bill has been welcomed generally in this House. I recommend it as being effective. It gives the Minister for Industry and Commerce greater power to control prices. I cannot say that with the passage of this Bill there will not be further increases in prices, but the Minister for Industry and Commerce will have greater control over sectors over which he had no power previously. It is up to the Minister to endeavour to prevent further price increases. There have not been many objections from any part of the House to the powers being taken but some exception has been taken to the control of professional fees. Deputy Donegan felt that such control might even backfire and result in increased rather than decreased professional fees. I do not accept that point. It is necessary to have power to control all prices and professional fees. Methods of control will be determined in consultation with the interested parties.

I recommend the Bill to the House.

Question put and agreed to.

Committee Stage ordered for Wednesday, 1st March, 1972.