Dáil Éireann debate -
Wednesday, 14 May 1975

Vol. 280 No. 11

Private Members' Business. - CIE Fares and ESB Charges: Motion (Resumed).

The following motion was moved by Deputy Barrett on Tuesday, 13th May, 1975:

That Dáil Éireann condemns the further huge increases in CIE fares and ESB charges sanctioned by the Government, and calls on the Government to take immediate steps to counteract the hardship and damage to the economy caused thereby.

To this the following amendment was moved by the Minister for Transport and Power:

To delete all words after "Dáil Éireann" and substitute the following:

"recognises the role of the National Prices Commission; and recognises that if the Government were to refuse to sanction increases in CIE fares and ESB charges the result would be either subsidisation by the taxpayer or lowering of services and unemployment in these bodies."

To the above amendment the following amendment was moved by Deputy O'Connell:

To add the words

"and, further, recommends that consideration should now be given to the question of setting up a parliamentary committee to monitor the affairs of CIE and the ESB to ensure full public accountability."

Debate resumed on the motion and amendments.

Mr. O'Malley

Last night I referred to the fact that it was made clear in the February report of the National Prices Commission relating to CIE that the 16th round wage increase was not taken into account in computing the increases for CIE although the ESB included it in their application. The 16th round is the highest wage increase ever given in the history of the State and it is conservatively estimated that over a period of 12 months it will work out at 25 per cent. Without that CIE still achieve an increase of 33? per cent. The Minister for Transport and Power informed the House that the proportion of CIE's costs which goes in wages is 66 per cent and on the basis that the increase will be 25 per cent it means an increase across the board of 16? per cent in costs for wages alone for that company.

To this must be added the higher cost CIE will incur for electricity, vehicles and replacement of locomotives and the inevitable decline in business which must arise as a result of these savage increases. Those increases will put those who have any option about travelling by CIE off travelling by that system. They will find some other method of travelling. Adding a couple of percentage points to the 16? per cent one can conservatively estimate that, in addition to the increase already approved, about the middle of the coming wages year —about the end of October—there will be a further increase across the board in CIE rates, charges and fares of 18 or 19 per cent. With the way inflation is going it may make 20 per cent.

The ESB have given notice that they will be applying for a further increase from 1st September. We have no way of estimating, from the information they gave the National Prices Commission, what that increase will be. The Minister for Transport and Power tried to side step the problem posed by this motion. He announced the setting up of a parliamentary committee to look into the affairs of semi-State bodies, not just CIE and the ESB but the 30 or so other bodies for whom that Minister is responsible. In its own way this is a commendable move from the point of view of trying to get some accountability from semi-State bodies which, in many instances, have grown rather arrogant in their approach in recent times.

It is no harm that there will be some kind of public accountability but it will be public accountability for certain types of expenditure long after it is expended. That may be of some value but it is of no value at all in so far as the problems our people are facing, the vicious increases that have taken place and the prospect, in the case of CIE, of another 18 or 20 per cent before the end of the year, are concerned.

Setting up a committee of this House, on much the same basis as the Committee of Public Accounts which looks into the expenditure incurred by Departments, can do nothing to reduce the increases imposed on the people now or the increases that will be imposed before the end of the year by CIE and the ESB. From the Minister's point of view it has the beneficial effect of diverting attention. In some way it gets the Government out of the firing line and spreads the load. When there is an all-party committee questioning, for instance, the chairman of CIE or the chief executive of the ESB, in some vague way in the public mind the responsibility of the Government in relation to those bodies will become a little clouded. It will be looked on in a vague way by the public that Dáil Éireann is the overlord of these semi-State bodies. Dáil Éireann or the committee of it dealing with these matters will have no say about policy; expenditure will be looked into in the same way as the Committee of Public Accounts looks into the expenditure of Departments. Of course that committee has no control whatever over departmental policy. They can only look back on departmental expenditure, one, two or three years after it has taken place.

It is worth noting that the Minister for Transport and Power never mentioned a word about the hardship being inflicted by these increases, particularly on the poorer members of our community who have to have daily resort to CIE. For a worker, his wife or any member of his family to travel from a Limerick corporation housing estate, Southill, which is a mile and three-quarters from the city, by CIE will now cost 12p or 2s. 5d. in old money. How are the less well off people supposed to be able to put up with that? They now have to pay 12p for less than two miles. In Dublin some of the top rates are now 24p, almost 5s. in old money, for an internal bus ride in the city. A couple of years ago one could have got a taxi for that amount. We did not hear a word of concern from the Minister for those people even though our motion called on the Government to take steps to counteract the hardship and damage to the economy caused by the increases.

We did not hear a word from the Minister about the damage to the economy which is self-evident. The Government arranged a strange amendment to an amendment on the part of Deputy O'Connell in order to give them the opportunity of making this announcement and so that attention would be diverted from the actual increases that are the subject of this debate. The establishment of the committee is something we support but it has nothing to do with the problem of people who are now spending 3s. or 4s. on each bus journey they undertake between their home and place of business. Is it any wonder that the workers look for huge increases in wages when this is being inflicted on them by the Government? The Government, in their amendment, try to argue that they have no option but to sanction whatever increases are sought on the grounds that to refuse to do so would result either in subsidisation or lowering of service. I gave four examples of where the Government did not accept the recommendations. In some cases they gave greater increases than recommended and in other cases they gave less.

Surely those factors if valid then are valid now. The Government are contradictory in this matter. If they slavishly have to grant every increase now why did they not give them on previous occasions? Surely the same principles apply. I should like to refer to The Irish Independent of Saturday, 3rd May and to an article by the Business Editor, Mr. Colm Rapple, in which he points out that the increases in CIE fares and freight rates will add £70 million to industries wages bill. An economist calculated that the increases in the ESB granted by the Government will add £20 million. That is £90 million extra in wages in one year because of this. Do the Government realise the serious consequence of what they are doing? Mr. Rapple pointed out:

The postponement for a week of the fare increases highlights a Government ineptness in even recognising the problem. If they were put off for two days further their impact would be transferred into the May-August index rise.

The charges were announced last Monday. Had they been announced tomorrow one-quarter of that £90 million would have been saved in inflation. That saving would have been effected if the Government had their eyes open. I realise my time is up but there is a great deal more I should like to say about this matter and I hope that I will have an opportunity to do so on a future occasion.

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Bruton)

The bald fact is that the costs of CIE and the ESB have increased very significantly since the last increases were granted to them. The Government had to face that situation and they had to decide what to do in the circumstances. Perhaps I could illustrate the extent of the increased costs by referring to the ESB. Since the last price increase was granted to them, their payroll costs increased by 40 per cent. The costs of materials and other expenses increased by 24 per cent while interest and loan amortization costs increased by 20 per cent. Those three elements of cost amount to £16 million.

The Government had three options which they could follow. First, they could refuse the price increase and also refuse to grant an extra subsidy. In the case of CIE this would have led to very substantial redundancies. It has been estimated about 4,000 employees would have had to be laid off, with substantial cuts in services, in order to effect the kind of saving that would be necessary if CIE were to break even and yet not increase their fares.

The second option was to refuse the price increases and grant an extra subsidy to make up the difference. On an annual basis that would have meant giving an extra subsidy of £11 million to CIE and an extra subsidy of £16 million to the ESB, a total extra subsidy on an annual basis of £27 million, in order to keep prices and fares at their present level. That extra £27 million would have had to be raised by the taxpayers and it has been estimated that it would involve an increase in the basic rate of income tax of almost 3p in the £ to maintain the situation in the face of the increases in cost that have taken place.

I do not believe either of those two options were acceptable. The option chosen by the Government was a courageous one, and in reality, it was the only one that could be taken. They decided to allow increases in prices for the ESB and increases in fares for CIE. There is an important economic merit in this choice in so far as it involves the consumer paying something approximating to the real cost of his electricity supply and the real cost of his bus ride. This means a rational choice can be made in relation to a decision to use electricity to a greater or a lesser extent or to use a bus service to a greater or a lesser extent. Subsidisation can lead to distortion in consumption and, in the long run, it can be bad economically for the country.

The option put forward on behalf of the Opposition by Deputy Barrett was expressed as clearly as one could get any option expressed from the Opposition benches. When he was concluding his speech he said there should be a full inquiry regarding the cause of these massive increases instead of just a report from the National Prices Commission. He said the increases should be suspended until such an inquiry was completed. Most of us here accept that the inquiries carried out by the National Prices Commission have been extremely exhaustive and we do not accept his case for a further inquiry. However, I should like to take the opportunity of telling him the cost of adopting his suggestion. If we were to suspend the increases until such an inquiry took place, it has been estimated the cost of postponing the ESB increase would be £308,000 per week while the cost of postponing the CIE increase would be £250,000 per week. That money would have to be found by the bodies concerned or by the Exchequer, all in order to get a further inquiry that would tell us something we know already from reading the NPC reports. I do not think the option put forward by the Opposition was a viable one. In fact, I consider it the worst of the four options.

Yesterday Deputy O'Malley seemed to suggest that the NPC did not have a very important role to play in scrutinising the increases in prices of goods or services produced by semi-State bodies. I do not consider this to be the case. In reading through the NPC reports on semi-State bodies in the last few months, I have noted a degree of rigour in the scrutiny with which they examined the bodies to an extent that even surprised me. It is obviously beneficial that there is a body such as the NPC who will keep an eye on semi-State bodies, who have the power to hire consultants to examine their work and to produce independent criticism, whether of CIE or ESB policies or of the policies of any semi-State bodies.

The view of Deputy O'Malley that the NPC have not a role in relation to semi-State bodies was not correct. In fact, the Government's initiative in setting up a parliamentary committee to scrutinise these bodies complements the existing work of the NPC. The commission will be producing detailed statistical analyses of various semi-State bodies in respect of their price increases and this will be of considerable benefit to the new committee. As a result of the work of the NPC and of the new committee, we will have a degree of scrutiny of semi-State bodies, from the point of view of price increases and of their general operations, which we did not have four or five years ago. This is something of which all parties here can be proud.

I should like to point out that the Government have accepted that there is an obvious need for improving the efficiency and productivity of the ESB. A recent comparison carried out by the NPC between the ESB and two Scottish electricity boards is not flattering to the ESB. In fact, in view of the room for improvement shown in that report, the Government decided, on the recommendation of the NPC, that the further 3½ per cent increase necessary to recover the ESB accumulated deficit of £9 million over three years should not be granted.

That decision, in itself, indicates the serious view the Government take of the statements made by the NPC in relation to that matter. We all greatly regret the increase in electricity prices which have taken place but we must recognise they are taking place in other countries as well. In fact, even taking the present increases into account, electricity prices are still 7 per cent lower in Southern Ireland than they are in Northern Ireland; again I stress that that is taking the most recent increases into account.

We must recognise also that CIE operates at a grave disadvantage in comparison with many public transport authorities in other countries. That is because in Ireland, for some reason, people have a preference for using their own cars rather than public transport. Therefore, CIE does not have the volume of business to achieve economies on the scale which would have the effect of bringing down the price of transport as in other countries. A survey published in table 9 of the NPC report demonstrates this very graphically, where it is shown that of a very large number of countries—Austria, Denmark, Finland, France, West Germany, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, USA and Ireland—Ireland has the highest number of cars owned by individuals expressed as a percentage of its gross national product. In other words, even though the Irishman may not be as well off as his counterpart in any of the other countries, he is more likely to spend money on buying his own car than is a citizen of any of the others mentioned. If people here have money invested in cars, they are less likely to use CIE. That means that CIE's operations will not be as economic as competing public transport bodies in other countries. Those are the facts that must be borne in mind.

It is fair to say that we did not hear from the Opposition any real alternative to the decision the Government had to take in relation to the proposed increases for CIE and the ESB. Therefore, we can only conclude that the Opposition themselves tacitly admit that the Government took the right decision, but in fact they are going through the motions of criticising the Government in order to justify their existence.

Mr. Dowling

I wish to add my voice to that of others on this side of the House:

"That Dáil Éireann condemns the further huge increases in CIE fares and ESB charges sanctioned by the Government, and calls on the Government to take immediate steps to counteract the hardship and damage to the economy caused thereby."

Deputy Barrett and Deputy O'Malley, in great depth and detail, have indicated to the Government, in no uncertain terms, the disgust of this party and suggested positive measures that should be taken. They have dealt with the effect on the economy, and on the ordinary people of the country.

Having listened to Deputy Bruton tell us that the number of cars here was higher per head of population than in a number of other countries, I want to say that we have had that type of geography lesson from every Minister in relation to every aspect of national life. Some country, or some group of countries, is always quoted; now it is motor cars; some time ago it was inflation, or unemployment; some country is quoted so that the Government can hang their hat on some peg.

Let us take a look at the situation as the increases affect the people of this country and indeed of this city. I shall take the average family living in my constituency, husband, wife and three or four children. Let us investigate how they will be affected by the increases in ESB charges and bus fares. I shall take the example of the average family living in, say, Ballyfermot. The husband, if lucky enough to be working, commutes to the city daily and he will be charged now an additional 50p per week. The increases in bus fares from Ballyfermot or Tallaght mean that the fares involved have risen from 15p to 20p. If there are two members of that family lucky enough to be working they too will have to pay an additional 50p. If there is a school-going child—allowing for the fact that that child may not be using free school transport—there is an additional 20p charge, together with the expense of the wife shopping twice weekly. The total amount, taking into account also another member of the family who may be travelling to a hospital, dispensary, labour exchange or somewhere else, comes to £2.10.

Then if we consider lighting and heating charges in respect of a centrally heated house, there is another weekly charge of £1.30. This means that the average increase for the normal household in, say, Tallaght or Ballyfermot amounts to approximately £3.40 weekly which is a fairly substantial one. But it does not end there. The price of foodstuffs is bound to rise because of the increase in freight rates which will be off-loaded by CIE onto producers, wholesalers, industrialists, which, in turn, means the necessities of life must increase. As a result additional applications will be made to the National Prices Commission for sanction for increases on the basis of transportation and other costs having risen. We can readily see the impact that both of these vicious increases will have on the ordinary family in the perimeter areas of the city. I am merely taking as examples the areas around Dublin. There are other workers who have to commute a considerably greater distance to the centre of the city and whose costs will be increased so much more. Indeed, the increase for people who will be commuting from the constituency of the Minister for Industry and Commerce to the city centre will be far in excess of the amount quoted here.

The Minister must be aware that, with the housing situation in Tallaght and such places there is the necessity to utilise the services provided there. In a considerable portion of that area a lack of gas supply means there is no alternative source to that provided by the ESB. Indeed, in other areas they are totally dependent on the ESB.

There is no doubt that the farmers who utilise the services of CIE for the transportation of their farm produce from source to the market must offload the increased costs, as indeed must the other groups I have mentioned. Therefore, at a glance, one can see that there is developing a serious situation in relation to the upward spiral in living costs. The Minister or members of the Government may try to indicate that the increases will not be as outlined by me. I have checked out with a family in Ballyfermot as to what increases they will face as a result of the increases in bus fares. I have checked with a family in Tallaght and found out what the increased charges in electricity will cost them in a week.

The situation is a serious one. When the Prices Commission meets again to consider further applications for increases I wonder how responsive the Minister for Industry and Commerce will be to these demands. No doubt he will do the same again and permit the ESB to increase the price of electricity to the consumer and CIE to increase fares and freight rates.

The Minister in his contribution to the debate talked about overstaffing in CIE and in the ESB. Was there a suggestion that these workers should not get the increase in their wages freely negotiated with the trade union? There was a suggestion about sacking a proportion of the 10,000 or 11,000 workers in the ESB and a proportion of the 20,000 in CIE. Will these workers be sacked? Will they get the recommended wage increase? There we have an indication of the lines along which the Minister is thinking. He has sown doubts in the minds of the workers in both the ESB and CIE. Many will fear redundancy. This kind of parrot repetition by the Minister does nobody any good. No one in Opposition has any desire to deprive any man of that to which he is justly entitled or to cut across any wage agreement. No one in Opposition wants to see people become redundant or see people being laid off. What we are concerned about is ensuring a future for those in employment.

Was this a message, I wonder, to the boards of these bodies to curtail pay increases? What does the Minister mean by the repetition about people being laid off and pay increases? We will insist that wage agreements are fully honoured. Deputy Barry has departed from the traditional line.

An Ceann Comhairle

The Minister for Transport and Power.

Mr. Dowling

The Minister for Transport and Power has departed from the traditional line. He says he saw the chairman of CIE last week and they are operating on a phased basis; they will reduce staff over a number of years, but not drastically. The already overcrowded employment exchanges will be more overcrowded still. I hope CIE will become more efficient and more effective. The Minister told us he is not wholly satisfied with the efficiency of CIE. I am quite certain that the workers who will be phased out could be utilised effectively and efficiently and thereby contribute to the national effort. We have 10 to 20 per cent now uncertain of their future in the ESB. The Minister says the National Prices Commission stated there was overstaffing to the extent of 20 per cent in the ESB and that is the message that has gone out to the workers from the Minister for Transport and Power.

These increased fares will affect everybody. They will affect the housewife commuting to the shops and her basket will be all the lighter. They will affect the unemployed going to the unemployment exchanges. They will affect the infirm visiting dispensaries and hospitals. Will the Minister make free transport available for these people? I would appeal to him to do so. It is the weaker sections of the community who will be affected by these increased fares. Is this what socialism is all about? Is the burden to be placed on the weaker sections? Should we not take from the strong and give to the weak?

I would appeal to the Minister to do something to reduce fares for people commuting to employment, for people visiting dispensaries and hospitals and for the unemployed. They should be given special concessions to relieve the impact of the vicious increases that have been imposed. If one questions any young man on the perimeter of the city about how the increased charges will affect him one finds that they will amount to a substantial amount every week. He has to commute to work, his children have to go to school, his wife has to purchase the necessities of life and sometimes some of the children have to be taken to the dispensary. Are people to switch off electricity if they have electric fires or central heating? Are they to remain cold during the winter? Are they to remain hungry because of the reduction in the size of the bread basket?

This is the dismal situation which faces many of the people in my constituency and also in the one the Minister will represent in the future. I have my doubts about him representing any constituency because as soon as the people get their hands on him they will make an example of him. It is well known that the Minister is not a socialist.

An Ceann Comhairle

I fail to see the relevance of all this to the motion.

Mr. Dowling

It was the Minister for Industry and Commerce who sanctioned those increases although we were told it was the Government who sanctioned them. I suppose it is fair to attack all the Ministers in this area of collective responsibility. The people will be able to deal with them in a very effective way when they get the opportunity. The sooner they get it the better so that we can get the nation out of the mess it is in. I hope, while the Minister is still in office, that he will visit some of the Dublin constituencies, meet the housewives and discuss their difficulties with them so that he will have an idea of the impact of the increases he has granted.

Were those increases forced by the right or the left of the Government ranks, the socialists or conservatives? They strike basically at the workers who are travelling to and from work. Perhaps it was, as the Parliamentary Secretary pointed out, that we have so many cars in the country that the increase will not affect workers. The bulk of the workers have no motorcars and commute to and from their places of employment by public transport. Rural workers have no other means of transport but CIE. It is the few people who are still working who are carrying the burden of the increases but as time goes on fewer people will find work so fewer people will use public transport.

This could be an effort by the Government to divert from CIE the industrialists who use their transport, render the service completely ineffective and give them the opportunity to abolish one of the company's services. The substantial increase of 25 per cent in freight rates could be an effort by the Government to ensure that wholesalers, retailers, industrialists and the other people who use the freight service will turn away from that company and utilise some other service. This would give the Government the opportunity to close down the freight section. If they want to close down the freight section or the road section of CIE they should tell us they intend to do so, why they are doing it and what the alternative is. Those vicious increases are an effort to crack the CIE system. If it is necessary to restructure the system, to have this watchdog committee, to have efficiency experts to perfect the system, then so much the better. Let us have their reports and see how we can perfect the system if it has defects. An effort by the Government to destroy the system in an underhand manner is something which must be watched very carefully.

We also have to consider the effect which the increased ESB charges will have on industry, which will find it difficult to be competitive in world markets. It is likely there will have to be a cut down in staff.

An Ceann Comhairle

I intervene to advise the Deputy that he has five minutes left.

Mr. Dowling

This will create more unemployment. If industry is utilising CIE at the moment they will not be as competitive in the international market in the future because of the increased charges. The only way they can remain competitive is to cut back in some other area. The most vulnerable area is that containing the few people who are still at work. This is a very serious matter because the Government have given no indication that they have a policy to provide jobs for the thousands of people who are still unemployed.

The increased CIE charges will have a bad effect on tourism. The cost of bus tours will be substantially increased and prices in hotels will also increase so tourism is likely to be taxed out of the market. People have endeavoured to survive during the past few years in the hotel business and the bus tour business but we can see the day approaching when they will have to close their doors.

Some months ago, when the Government asked for a substantial subsidy for CIE to maintain the service and ensure continuity of employment, we thought they were planning for the future and there would be no further increases for some time. Apparently the Government's projections are week to week, even day to day. We have had within a few months additional subsidies, now the fare increases and in the Minister's speech the indication or threat that they are substantially overstaffed and that the same applies to the ESB.

The Minister must take into consideration workers living in perimeter areas. Will any concessions be given to them? They have to commute, not because of their desire to live at a distance from their work but because of the housing programme which to some degree forces them to live in these areas and because of the need for housing. There is an increase in the fare from Tallaght to the centre of the city of 5p. That involves an increase of 10p for the return fare. The same applies in the case of the fare from Ballyfermot to the centre of the city and from Whitechurch and other districts. Rural workers will be affected to an even greater extent than city workers by the increased fares. This arises, not because of their desire to work in a particular area but because of the location of industrial estates and the zoning by local authorities or by direction of the Government, which means that they have to commute.

I would ask the Minister seriously to consider a reduction in fares for housewives, for persons attending hospitals, persons in need of medical services and for persons commuting for the purposes of their work.

An Ceann Comhairle

Will the Deputy now make his concluding remarks?

Mr. Dowling

The Minister may say that in some cases weekly or monthly tickets are available. He must consider the case of shift workers or people whose work is irregular.

An Ceann Comhairle

I must now call on the Minister.

Mr. Dowling

In these cases the weekly or monthly ticket may not be economical for the workers. Their work may involve attending at various places.

An Ceann Comhairle

I must now call on the Minister for Industry and Commerce.

Minister for Industry and Commerce (Mr. Keating)

I want to say first that although I was not present yesterday I have read carefully the whole of yesterday's one-and-a-half-hours' debate and I have been present since the beginning today, so that I am familiar with the whole debate. I say that because, although I will indicate that I am disappointed with the contribution from the Opposition, nonetheless I think this is an extremely serious subject.

I want, first of all, to say for myself and for my colleagues in Government that there is no lack of awareness of the effects of these increases on ordinary people. It seems to Opposition Deputies that we are insulated in some way from the currents of ordinary life and the feelings of our constituents. I can assure the Deputies that we are not so insulated, that we remain exactly the same sort of human beings we were when we were in Opposition and are intensely aware of the effects and, indeed, that we are intensely concerned at the result of these increases. We do not yield to anyone in that concern.

I want to talk about another aspect which, so far as I know, was only touched on by Deputy Dowling and then very briefly. It is an aspect that particularly concerns me because I want, first of all, before talking about policy and about the methods to surmount the present difficulties in our economy to tease out a little the difficulty that we are currently in in regard to these prices and in regard to their effect on the areas of my own responsibility.

If one takes the increase in the ESB charges, there is the direct input of energy into the final cost of a product that is made for sale. That is a direct contribution to the price of that product and with a more and more open economy and with free trade moving inexorably towards us we are in circumstances where our competitiveness is under threat. It is important that from where I sit and from the access to information that I have I should put that on the record of the House: our competitiveness is currently in danger in a number of ways but the biggest contribution to that now it seems to me is the rate of wage increase, but I will come to tease that out later on.

If one turns to the matter of CIE, there is the effect on people themselves that Deputy Dowling has talked about but there is, of course, the direct input into the cost of an industrial product due to transport as well as the indirect effect due to the resulting increase in wage demands because transport prices have gone up for the workers.

This, I think, is the first time that I have had occasion in the House to refer to the effect of inflation on our industrial competitiveness and on the level of industrial investment. We are being rescued a little in industrial competitiveness by the continued down-flow of the £ but that is a terrible way to be rescued because it makes all our imports dearer and it sharpens inflation. It is a contributor, in fact, this down-flow to the £. Even if it makes our exports a little cheaper, it is importing inflation.

We are also finding only very recently that the level of inquiries and new commitments industrially as reported to me by the IDA have held up extraordinarily well, better than one would have hoped in a world recession of this kind, but our rate of inflation is now becoming very much a preoccupation with people who find Ireland attractive in every other way as a location for industry, who like our incentive package and who like our physical location but who are worried by what our rate of inflation does to the necessary forward calculations that their economists and accountants have to make.

The point of saying this is that we are now in a wage-led inflation. I was affirming last year in debates similar to this one that the great bulk of our inflation was imported and that was then the case but it is necessary to put on the record of the House, to indicate to the people of the country, that that is not now the case. Now, the great determinant to our inflation rate is the level of wage increases. One could have an argument about whether the wage increases come first and put up the cost of products where labour is a very important content of the cost of that product or whether the increases like the CIE or ESB increases come first and put wages up. One could have that argument but, in fact, it is a vicious circle. Each chases the other and it is impossible to separate cause and effect. Each is a cause and each is an effect.

I wanted at the outset to indicate that this is a sombre position and that wage-led inflation is now extremely serious, in my view. When other places were inflating simultaneously with us we retained our competitive position and we could do very little to control inflation because it was caused by the price of imports. That is not now the circumstances. We are now seeing a differential between us and other countries of a very serious kind.

I then want to turn to the content of the debate because, as I say, this is a serious subject. I do not want to poke my finger in people's eyes or that we should slag each other across the floor but I am bound to say that it is another example of the concept of Opposition which I believe to be inadequate. I emphasised that I have read or heard every word of this debate so far. I am bound to notice the absolute lack of suggestions from the Opposition. The only useful suggestion that I can think of came from Deputy Barrett when he said that there should be a full-scale inquiry and that the increases should be held up pending the outcome of it. That is the only one I can think of. It is said, of course, that the task of an Opposition is to oppose but I have said on occasions similar to this that that opposition can take many forms and that the way, in fact, that you would genuinely contribute to the common weal, the well-being of the country, and the way you would simultaneously take the leadership of the country away from us would be by having better suggestions than we have to offer. When they describe the situation I can see a great deal of truth in it and I can sense the difficulty of the people who are described. That is true, but let us come to the effects of exaggeration also. Since I believe that wage-led inflation is now the great danger, exaggerating the situation is itself a contributing factor in generating further explosive wage demands. It seems to me that electricity charges illustrate this because we have been offered the thought, with many extremely exaggerated and sharp phrases, that something quite extraordinary and remarkable has happened to the price of electricity.

Let us go back to 1963 and compare the increase in electricity charges with the increase in the general cost of living, with the consumer price index. The figures I have are March, 1963 to March, 1973. They do not include the latest round but neither do they include other price increases. It is a 12-year period. In that time the consumer price index went up by 158 per cent and the price of electricity went up by 107 per cent. Electricity, even with the latest increases, has not caught up with the consumer price index. I set out sombrely to accept that the scale of these increases is very serious indeed. I am not suggesting it is trivial. I am trying to put it in context because it is important in relation to people's expectations and to future wage settlements that these prices should be seen in context. The populace should not be driven mad with expectation or with the sense that they are continuously losing out on their incomes, because what we are seeing is that prices and incomes are both rising very rapidly—much too rapidly—but that real incomes are not declining. Yet if you go and talk to people, and I assure Deputy Dowling that I do, everybody believes they are getting poorer. The figures do not show that but everybody believes it to be the case, and if they believe it to be the case and if we contribute to that belief by what we say we are generating further explosive wage demands which will twist the cycle even further.

I want to place on the record the mechanism of the operation of the NPC and Government decisions.

First, the decisions are collective Government decisions. There is a long-standing Department of Finance instruction which antedates this Government, which says that where there is a price rise for a State company it is treated differently from price rises in private industry. In private industry the recommendation is made to me by the NPC. I approve it or I turn it down and I inform the Government prior to laying the report before the Houses of the Oireachtas. In the case of State companies there is actually a memorandum for the Government from the Department in question and it is a collective decision. That is a result of the Act of 1972 made by our predecessors which brought the State companies under the umbrella of price control.

I want to dispose of an argument of Deputy O'Malley's which seemed to me an unworthy one. I do not mean that in the sense of being improper but just not being sensible enough to emanate from him. He suggested that there is an inconsistency in our price behaviour because when these recommendations come to the Government we accept some, we reject others, and we increase some. This was presented as being inconsistent, but if we were simply to rubberstamp them why bring them to the Government at all? Surely it is the role of Government to deliberate on them and to pass an opinion on them in the light of their global responsibility for the whole of the economy? The fact that different applications are treated in different ways is advanced as an example of inconsistency seems an extraordinarily weak argument.

There is a real dilemma in the NPC, this I affirm, in regard to the control of prices in a semi-State company. In the case of CIE there is a subsidy which is decided by Government and, therefore, the ordinary law of the market-place is influenced by the size of the subsidy. In that sense the ordinary guidelines of price determination do not apply to CIE because the level of the subsidy is decided by Government and the price has to make up the difference. In the case of electricity, under the 1927 Act they have to break even within the 12 months. That is a constraint they work under but it does not indicate to me that we should not have the constraint of surveillance from an outside body placed on CIE or the ESB. That surveillance was placed on them by our predecessors. I think they did a good thing, even though there is a bit of an anomaly because price determination in State companies, where public policy has an important influence on the final price, is different from price determination in the market-place. When that is said it seems to me extremely important that that surveillance of the ESB and of CIE and the other companies should go on from an outside body which is fairly independent and fairly tough.

I would like to rebut the strictures implied and stated on the NPC. Its composition is as it was established by our predecessors. Its independence is widely accepted. It is difficult for people representing different outlooks, including the housewives and trade unionists, to serve and to accept this awful imperative; if the arguments all say the price should go up it is hard for them to put that recommendation forward to me and I respect their courage. It would be easy for various people to back out and say they did not want to do it. They are doing a good service to the public. I think it is right that they should have surveillance. It is right that they should employ very tough standards of examination and bring in the experts. It is right that they should utter the criticism they do. They are serving a useful purpose and I want to defend their activities and their role publicly. They deserve it. They are courageous, they get through an extraordinary amount of work and they are uninfluenced by anybody, myself included. That is the way it ought to be.

Let us talk about the price of electricity and transport, the determinance of these things and the correct policy towards them. One of the great cures for everything, but specifically for these price increases, is growth of the economy, because when electricity consumption declines you have to carry the staff with the rising wages, you have to carry the new investment, you have to carry the existing plant, on a smaller total consumption of electricity. The same applies to road transport. The more the economy grows, the more people want to move around, the more goods there are to be moved around, the lower your unit costs are. One half of the nutcracker which is now oppressing our whole economy, and specifically individuals and sectors of our economy, which is making life very difficult either way for CIE, the ESB or other agencies, is stable or contracting demand. Growth is the great way that unit costs come down. Growth is what we currently have not got, and growth is the core of the Government's policy of deficit budgeting through a number of budgets on an unprecedented scale which was correct and which, though it is not controlling unemployment enough, is nonetheless controlling it to some extent. It was the correct thing to do and it is being pursued to the limit of the possible.

An Ceann Comhairle

May I intervene to advise the Minister that he has five minutes left?

Mr. Keating

The other way to influence general growth policy or even policy which, if it does not produce growth, stops the contraction of an economy is by way of a valuable contribution to controlling unit costs whether for electricity or transport.

There is not all that much quarrel between the two sides of the House. Let us look at the figures for CIE subsidies. In 1971/72 it was £7.11 million and £8.88 million in 1972/73. These subsidies were paid by our predecessors. The level of subvention is a matter of budgeting, a matter, ultimately, of a collective decision in this House. In 1973/74 the subsidy was increased to £10.75 million. That was in our time and it is estimated that the figure for 1975 will be £17 million. Do the people opposite argue that there should not be any subsidy? I do not think so because they also subsidised the company. Do they argue that the level of subsidy is too low? If it is too low, the answer should be to give more, but this would result in increasing taxes at a time when we are almost near the limit regarding revenue raising. Is the subsidy too high? If the Opposition think so, would they say that fares should be increased? One is entitled to ask for opinions on these points. We have subsidised the company at reasonably comparable levels, even if at slightly higher levels than those of our predecessors. Should the subsidy be higher, meaning more taxation, or should it be lower, meaning higher prices?

The question of efficiency has been raised by the NPC consultants and also in speeches here. There is inefficiency in both these companies but one must ask whether, in the event of over-manning, one wishes that there be a reduction in the labour force at this time. I do not think the Opposition want that because if there is any reduction in the manning level, extra charges are being put on the social payments because of the additional people out of work. If one situation is balanced against the other it can be seen that it is cheaper to maintain people in employment in these circumstances. While there is room for improvement in regard to efficiency, there is not room for a tightening that would increase the number of unemployed.

The other way to greater efficiency is greater investment and this comes from retaining profits but it means higher prices. Is that what the Opposition want? Do they want more borrowing? We are nearing the limit, too, in so far as borrowing is concerned. There are a series of options but at a time like this one finds that, in effect, the options are very few. I do not think that the Opposition want a reduction in services.

Mr. Crowley

If we had less of the clap-trap from the Government we would not have this problem.

An Ceann Comhairle

The Minister must be allowed the minute or two he has left.

Mr. Keating

We are in an area with the UK where there is a down float of the pound, where we have desperate uncertainties regarding the UK which pose enormous difficulties for us. There is a huge crisis regarding confidence in the UK but if one looks a little further, one finds in the last three weekly indices that the US, the German and the Japanese economies are on the up and these are the three biggest economies in the world. The UK is in much trouble, but there is evidence from further afield that there is an upturn in the recession situation. One gets a ritual opposition at a difficult time, an opposition which pretends that people are worse off than they are, an opposition which arouses the sort of fury that causes some sectors to use their industrial clout in order to get very large wage increases. It is an opposition which fuels the inflationary process at a time when inflation is being caused by explosive wage demands. The appropriate policy is one of stimulant budgeting, of raising social welfare payments and an effort to moderate wage claims through a national partnership. The demand to lose our calm and do something unspecified is very dangerous. The task is to come through the next six months, to control explosive wage demands, to control the elements that are causing inflation. We must avoid the social furies that put immense pressure on our economy. When Deputy Dowling says that the object of price increases is an effort to wreck the system he is indulging in the sort of destructive criticism which contributes to the difficulty rather than helping to solve the problems.

Mr. Barrett

My colleague, Deputy Cunningham, has asked me to refer to a matter which is directly the responsibility of the Minister for Transport and Power. It is a matter which the Deputy attempted to raise today but in respect of which he was ruled out of order. It concerns CIE's operations in Donegal where the Lough Swilly Transport Company act as agents for CIE for freight in respect of about half of the county of Donegal. It appears that CIE have refused any increases for this company.

An Ceann Comhairle

I called the Deputy to reply to the motion in his name on the Order Paper. He may not introduce extraneous matters and, certainly, may not refer to something that has been ruled out of order by the Chair.

Mr. Barrett

All I wish to say is that the Minister for Transport and Power——

An Ceann Comhairle

The Deputy must come to the motion before the House.

Mr. Barrett

——last year saw fit to make £50,000 available by way of subsidy to this company but while that seemed right then, apparently it is wrong now.

An Ceann Comhairle

The motion, please.

Mr. Barrett

Having heard the Ministers for Industry and Commerce and Local Government there are a few points I should like to raise. Last evening the Minister for Transport and Power accused me of having no suggestions to offer during my contribution. Today the Minister for Industry and Commerce spent 30 minutes telling us what was wrong. The accusation of the Minister for Transport and Power was a complete misrepresentation of what went on. There has not been a positive suggestion either from him or from the Minister for Industry and Commerce as to how we might remedy the situation that has befallen us. For the past two years the Government have proved themselves to be totally incapable of as much as realising the need for urgency in applying themselves to the major problems confronting this country.

Promises were made from time to time, mainly in response to pressure from the Opposition. Promises to examine what can be done in the future are a further example of the lack of realisation of the urgency for dealing with these problems. The only expression we have not heard is the one about on-going studies. There is no positive approach by the Government or by either of the two Ministers who are directly involved in what we are talking about.

The Government's lack of control over our economy has brought us to the point where only State employees can be sure of getting the wage increases which have been negotiated for the current year, together with a small proportion of employees in the private sector. The money to pay these increases will come from the pockets of the workers who cannot get the increases themselves because their employers in industry will not be able to maintain the existing levels of employment and pay increased wages. It is not the Opposition's problem to take steps to deal with this. It is the problem of the people who were elected to govern. It is of little use for Ministers to ask us what suggestions have we to make.

It is not true to say that we have made no suggestions. During the course of the debate we dealt at length on the effect of the £200 million oil bill on inflation, on the ESB and CIE. We pointed out that the Government must get to the root of the problem. We must have an energy policy. We have not got any semblance of an energy policy at the moment. We fail to see one, as do the people of the country. We have emphasised the necessity to be self-sufficient in oil refining. This £200 millions which oil is costing us must be a major factor in inflation. We have said what should be done. Is that a suggestion? Is that a positive approach? We hear from the two Ministers that nothing has been forthcoming from this side of the House. This has been forthcoming for a year-and-a-half and we are still in the same position as we were in in October, 1973. We have acknowledged that it would take three years from the time it was started and that it should be regarded as a long-term solution.

We are positive that the Government, if they so wish, can go out and buy crude oil far cheaper than we are buying it from the multi-national oil companies, or the Russian brokers, or whoever is responsible for supplying oil to the ESB. You can even be paid to charter tankers because they are so plentiful. We could have this oil refined on the continent under contract and brought back to the ESB and to our industries at a much cheaper cost. If the Government are not convinced of this we will produce the figures, and if they do not know where to get the crude oil refined at refineries which are operating below full capacity, we will make the necessary arrangements for them. This is a very positive approach and a very possible solution to one major contributory factor to inflation. The oil crisis is causing serious trouble for industry, for CIE, for the ESB, for all our semi-State bodies and the whole economy.

Whether they like it or not the Government must face their responsibilities in regard to CIE, the ESB, the whole energy situation and the inflationary situation we are now experiencing. The time for the exhortations which we have heard for the past two years is long gone. We saw where they landed the ESB consumers. We saw £ notes burning on television and heard people being exhorted to cut down on their energy consumption. Then they were asked to pay more for using less energy. This is the type of policy which has been put forward by the Government with the result that the Minister now has to tell us that we are now no longer importing inflation; we are creating it ourselves. That is their problem and their responsibility.

We would be prepared to deal with it and to take the necessary decisions if we were in government. When such situations threatened this country in the past when this party were in government they were not afraid to do right by the country and deal with the problems. Now we see the incapacity and the lack of will on the part of the Government to deal with the problems facing the nation.

We moved this resolution because the Government are permitting CIE and the ESB to impose these increases. The net result will be national bankruptcy. What greater authority can you ask for than the Taoiseach and the Minister for Finance? They said that if we continued to pay ourselves, disregarding all other considerations, we are forging the weapon of economic disaster. The CIE and ESB increases which are now being permitted by the Government will trigger the whole nation into new areas of inflation and further wage claims, as Deputy O'Malley and other speakers from this side of the House pointed out in a very positive and definite manner. Most productive industries will be faced with cost increase which will further limit their competitiveness. This is a key factor.

No matter what Ministers may say industry must be competitive. CIE and the ESB are not subject to the same discipline as industry. They are monopolies and they are not subject to the discipline of exterior or commercial influences. It is just a question of their customers or passengers paying up or lumping it. This has been happening and the Government are permitting it to continue. Then they come in here and accuse the Opposition of not producing a policy to rectify the ills which are besetting our economy and which are a threat to the life of the nation.

The Minister for Industry and Commerce spent a long time telling us what was happening all around us. We had no positive approach, no new departure by the Government in an effort to rectify these ills. The same cannot be said of these benches. We have put forward positive proposals and positive suggestions. We will go on repeating them. I agree that the oil situation has been a major factor but the Government have reminded us time and again that the oil crisis was the major cause of this problem. This has been going on for 18 months and the Government are still incapable of attacking the problem. We are not incapable of dealing with the matter, we are not barren of suggestions or policies. For the good of this nation we hope that in the not too distant future we will be returned to power to rectify what has occurred in the last two years.

Amendment to the amendment put and agreed to.

Question proposed: "That the amended amendment to the motion be made."

The Dáil divided: Tá, 65; Níl, 61.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Coughlan, Stephen.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Donegan, Patrick S.
• Donnellan, John.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Keating, Justin.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Connell, John.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, Hugh.
• Haughey, Charles.
• Healy, Augustine A.
• Hussey, Thomas.
• Kitt, Michael P.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• Loughnane, William.
• Lynch, Celia.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

Motion, as amended, agreed to.