Although the Minister for Industry and Commerce is screaming about the effect that oil is having on us, he is refusing to do anything to enable oil which unquestionably we have within our jurisdiction to be obtained and brought into use for the benefit of our country. This oil would cause a reduction in oil imports and would result also in a reduction in the cost of oil. The same applies in respect of natural gas.
Of the various steps available to a Government in relation to price controls, the most fundamental is the establishment of a prices commission. This step was taken by Fianna Fáil in mid-1971 at a time when the rate of inflation was less than 8 per cent. Since then that commission have remained in existence. The scope of their work has been expanded to some extent because they now have more staff but, basically, their terms of reference remain the same as when the commission were established. If any thing, some matters which were under their control originally have now been removed from their control. The most important of these were animal feedstuffs and fertilisers which were removed from the supervision of the commission at the beginning of 1974. This step was taken by the Minister for reasons which nobody could ever be clear on although many people have certain suspicions. There were definite limitations on the powers of the NPC and these are set out in some detail in their December, 1974 report. This makes interesting reading. It is a kind of apologia pro vita sua of the commission. The commission—and this is understandable—considered it necessary to point out the limitations on what they can do and to enumerate the vast range of activities in respect of which they have no control.
I am not criticising the NPC as such. They should have been given greater powers. Frequently the argument is made to the NPC that unless certain firms are granted permission to increase prices, they will be in danger, because of their liquidity problems, either of having to close down or of having to cut back on employment. If any such firms are not subject to the commission—and a great many are not—they use this argument as an excuse to increase prices so that they may increase their turnover and cash flow.
Liquidity is dependent on their having available sufficient money to restock and to build up their capital requirements and assets. One of the ways in which many firms have been hit badly during the past 12 to 18 months in so far as liquidity is concerned is not so much that of their turnover, although their prices may be controlled, but because of their banks pressing them all the time to reduce their working capital. Firms are finding this an impossible situation but the only outlet they have in order to try to keep up their liquidity has been continuously to apply for a whole series of price rises. If the Minister were to approach the banks on the basis that they should ease off these firms, let them increase their borrowings and stop pressing them to repay what they have already borrowed, the pressure of liquidity would be eased and, correspondingly, the pressure to increase prices to make up for that would be eased.
At the moment the Central Bank have been advising the banks to lend more in certain respects to manufacturing firms. When they are approached by these firms the bank say: "We have not got the money to lend." The reason they invariably give for not having got the money to lend is that the Government have taken so much from them, through the huge deposits which have to be made to the Central Bank, that they are bled dry so far as lending capital is concerned. I do not know if this story on the part of the banks is 100 per cent right. If it is right, clearly the Government should reduce the amount which the Central Bank are being compelled to take and hold all the time from the associated banks. They should ensure that the banks lend much more generously to the manufacturing firms than they are doing.
Because of the nature of inflation, the tax demands on firms are exceptionally heavy. Not that the amounts are necessarily any heavier, but because of their liquidity position, they find it impossible to pay. A gesture was made to them in the budget in this regard, worth over £12 million to every firm in the country as a composite figure. To make any realistic impact on prices that figure should have been in the region of £50 million or £60 million. In the very same budget in which this very minimal gesture was made towards helping the liquidity of companies in difficulties in relation to the payment of tax, the interest on outstanding tax, of which there must be a fair bit at the moment, was increased to 18 per cent per annum, simple interest. When that is compounded it comes out at something over 20 per cent per annum. Of course, this is a brutal imposition on firms who already find it extremely difficult to pay the tax they owe. They are in arrears and find enormous problems arising from their liquidity position.
The Government have also open to them the whole question of the readjustment of VAT rates. In England there is a flat rate of 8 per cent across the board. Here we have three rates basically. There is a fourth rate which applies in certain circumstances. The two top rates are extremely high by any standard. By comparison with Britain they are extremely high, and by comparison with most, but not all, European countries they are also extremely high. Although they have problems of their own so far as prices are concerned, most of those countries have not problems anything like ours.
Governments elsewhere have adjusted the system of indirect taxation to take account of price rises and to take account of the difficulties created by flat rates of tax. Governments elsewhere recognise that every time there is a price rise the Exchequer benefits by it. Every time the price of any commodity which is subject to VAT goes up here, the Government get more out of it. To a great extent the Government have a vested interest in increased prices inasmuch as every time the price of something goes up they get more into their own coffers.
Perhaps the most obvious of all the various steps open to the Government to take, which they are not taking at the moment, is the question of subsidies, and in particular subsidies on food. In Britain certain commodities such as butter, milk, and so on, which are paid for, for the most part, out of EEC funds, are subsidised. The farmers throughout Europe are getting much the same prices. If there is any difference our farmers seem to be getting somewhat less, unfortunately, than the farmers in other countries. In Britain, to take one example of a commodity which is virtually in everyday use, butter costs just over 50 per cent of what it costs here. The difference in price is made up almost exclusively by subsidies which the British Government are prepared to pay in order to keep down the price of butter and many other commodities which are vitally necessary.
In the past 18 months we have had some brutal increases in prices, and particularly in food prices, so much so, that pensioners and other lower paid people find it very hard to buy ordinary day-to-day food. Instead of buying a week's supply, perhaps they buy a three or four-days' supply. It is very irritating for an Irish housewife in a Border town on our side of the Border, say, in Monaghan or Dundalk, to see butter in her shops at 41½p, 42p or 42½p per lb. and to know that five miles away in Newry or some other town just over the Border, exactly the same butter, probably manufactured here in the Republic, is on sale for 22p, 23p or 23½p per lb. We are told that we must put up with that situation. Allegedly this is one of the necessary consequences of the EEC. Allegedly it is one of the necessary consequences of the, happily, much better prices our farmers are getting as a result of our entry into the EEC which the Minister and his colleagues did so much to try to prevent.
The implementation of price control seems to be geared, in so far as it exists, towards the retailer and at no other level. Any kind of objective view of the problems which are giving rise to price rises, taken as a whole, would show that the real problem arises at the production and manufacturing level. Little or nothing is done to encourage better internal methods of production, better control of costings at that level. The whole effort is made and is seen to be made at retail level. With the huge variety of goods on offer in most retail shops, and with constant price rises, the retailer cannot be expected to be 100 per cent accurate in every price, in every week. We know only too well that the price of many commodities can vary, not just from month to month which was bad enough at one time, but nowadays from week to week.
Increases in the price to farmers for beef and milk were announced within the past week after an EEC decision. Inevitably, unless subsidies are introduced, there will be further increases, within the next couple of weeks at the outside, to the consumer in the price of all these items. Butter, milk, cheese and meat are fundamental basic necessities for everyday life. Their prices have been going up and up, and they will go up again. With all the extra money which, happly, is coming into the country as a result of our entry into the EEC, and having regard to the good prices farmers are getting for beef and milk, surely it is possible for the Government to devote some of the extra money coming into the Exchequer to the subsidisation of these essential commodities, as has been done in Britain very successfully.
One of the things the Government have constantly argued is that world commodity prices have been going up; what has to be brought in from abroad is going up and they have no control. It is well worthwhile studying the trends in world commodity prices over the past 12 months and the Minister would be well advised to do so. While they vary to some extent, the overwhelming impression one gets, looking at the trend, in nearly all world commodity prices, is that they have all dropped, some of them very substantially indeed, over the past 12 months. Most metals have dropped. So have a great many other commodities essential either at the food level or as part of the manufacturing process. One of the things people do not realise is that the world price of timber has dropped very substantially in the last nine months or so. Unfortunately, we are in the position that we are unable to avail of this drop because our suppliers here are fully stocked at prices that were ruling about a year ago and they have been unable to move the timber because of the disastrous slump in the building industry over the same period. It is no harm to emphasise the fairly continual drop in commodity prices, particularly those which affect our situation; that excuse is no longer available to the Government.
Equally, there is one sphere in which the Government cannot, as they have been trying to do, wash their hands of responsibility so far as price rises and price control are concerned. I refer to the price rises they themselves have deliberately as a matter of policy imposed on the people. I shall give five or six examples only over the past three months alone. Over the past 23 months I could find ten times as many examples. I am confining myself to the last three months because I can give quite a number of very telling examples where the increase, very often a huge increase, was deliberately imposed by the Government as a matter of policy. In the last 18 months postal charges have been deliberately increased by the Government by 75 per cent. The cost of posting an ordinary letter 18 months ago was 4 pence. It is now 7 pence, or almost 1s 6d in terms of old money. The Government cannot claim that wages or costs forced them to impose that increase because the increase in costs would actually be less than one-third of the actual increase imposed by the Government.
Television licences have been increased on average by 40 per cent. Health contributions have been increased by over 80 per cent. These charges are charges deliberately and directly imposed by the Government and by no one else. In one five minutes here at the end of November the Government by a surreptitious backdoor method increased the already very high cost of petrol by 15 pence a gallon on the spurious suggestion that, in doing so, they were doing the country a service by encouraging people to use less. It was not the Arabs who increased the price of petrol by 15 pence a gallon at the end of last November. It was this Government increased the price of petrol and the Minister and his colleagues in the Cabinet have collective responsibility for that, whether they know it or not and whether they act that way or not.
Following on the dodge at the end of November we had the health contributions budget at the beginning of December and the withdrawal of the subsidy on butter. The latter caused a further increase in the price of butter. In the middle of January of this year we had another budget—the Government actually called it a budget— which had the effect of putting up the cost-of-living index by 2 per cent to 2½ per cent, and that at a time when the Government were asking for rigid restraint in wage and salary demands, saying there is nothing they can do about prices, they are very sorry, and all the rest of it. They deliberately came in here and put a huge increase on tobacco, spirits and beer, deliberately putting up the cost-of-living index by 2 per cent to 2½ per cent. They made all sorts of glib comments to the effect that people should not be smoking and drinking. The fact is the great majority smoke or drink or do both and they will continue to do so. If they did not continue to do so the 2½ per cent rise in the cost of living would not take place. But we know now as a result of what has happened, that it is very likely that in the 12 months to November, 1975, the cost-of-living index will rise by not less than 25 per cent.
The criterion on which to judge whether or not a country had entered the Banana Republic league was whether its annual rate of inflation had reached 20 per cent. We, of course, have reached that now and we are set fair to exceed it considerably in the months ahead. In addition to that, in the last budget there was yet another major tax increase to which very few people have adverted because we have not yet got the details of how much it will be. I refer to the increase in the social welfare stamp. The worker will have to pay his share of the stamp and that is just as much a tax on him as income tax is. Its deduction from his pay packet is not made any sweeter for him by calling it a social welfare contribution rather than an income tax contribution. On the day of the budget we made several efforts to discover exactly what the increase would be. The Minister for Finance sat mute. He did not say he did not know. He did know but he refused to answer. The probability is that the cost of the stamp may be doubled. It is already pretty high. I suppose the Government think they are making a contribution there towards lowering prices. They are doing nothing other than making yet another hidden price increase as a matter of deliberate Government policy following on the pattern they set when they raised the VAT rates.
I would be the first to acknowledge that there are limitations in certain aspects to what a Government can do. Possibly one-third of price increases are beyond their control, but there is one thing any Government most assuredly can do at any time and that is refrain from deliberately driving up costs. Where State service commodities such as postage have to be increased the increase should be the absolute minimum instead of three times more than is necessary. This country is practically punch drunk from the way it has been hit since the advent of this Government in the matter of prices. The situation has got so bad that many people are almost despairing. They see the Government have given up the battle psychologically and in practice of trying to control prices. All I can say to these people is that they will have an opportunity of making their comment at the next general election. They can then pass judgment on the flagrantly cynical way in which one of the famous 14 points, that in relation to the stabilisation of prices, has been dealt with. That is the only effective opportunity those people have. I hope sincerely they will avail of it. If Dáil Éireann were to vote honestly for once and if those behind the Minister were to express in public what they freely express in private, the motion I am now proposing would certainly be passed.
