Dáil Éireann debate -
Tuesday, 28 Feb 1978

Vol. 304 No. 3

Private Members' Business. - Control of Prices: Motion.

Mr. O'Toole

I move:

That Dáil Éireann notes with concern the Government's failure to control prices of basic commodities, especially the withdrawal of subsidies on the necessities of life which hit the poorest of the community hardest.

We put down this motion in response to a demand by the consumers and the general public to have this matter of increasing prices debated in this House. Although prices are rising there is very little talk about them. Indeed, I would go so far as to say that there is a conspiracy of silence with regard to many of the increases. Price increases seem to come about through some unseen and unknown hand while the Minister is always the harbinger of good news. In short, I suggest we are looking at a fair weather Minister, and I want to contrast this with the performance of his predecessor who came our openly, faced his critics in much more difficult circumstances and explained in detail why increases were being allowed and how they came about.

Fianna Fáil came back to power eight months ago waving, we were led to believe, a magic wand which would cure the ills of every man, woman and child in the country. So brilliant were the solutions they offered that when the first budget came along the matter of increased children's allowances was not even considered.

An Leas-Cheann Comhairle

It does not arise on the motion, which deals simply with prices. There will be opportunities on the budget to debate what the Deputy is referring to.

Mr. O'Toole

I will not discuss the budget further. I have been pointing out that the people who suffer most as a result of increased prices are the people who suffered most in the budget, and I feel I should be allowed to make this point. In the budget it would seem that the less well off sections did not get what they had expected and when one considers what other people got it would seem to me that the budget was blatantly leaning towards the better off sections who are well able to absorb increased prices.

An Leas-Cheann Comhairle

This is not a budget debate and the Deputy knows it. We are dealing simply with prices and commodities.

Mr. O'Toole

The motion refers to the suffering and hardship caused to the poorest sections of the community. The position in regard to the present price increase bears some examination. When Fianna Fáil came back to power they did so triumphantly on the now well-known manifesto, on page 7 of which there is a heading "Prices". In paragraph 1 of that section it is stated:

The Prices Commission will be carefully and thoroughly examined, restructured and brought up to date.

The paragraph is a long one and I do not propose to read it. I should like to know what has been done to ensure that the National Prices Commission are being brought up to date and being restructured.

Paragraph 2 of that section of the manifesto states that Government policy must be directed towards discouraging increased costs and prices in all areas where the Government have control or influence. I should like to know the steps that have been taken by the Government to intervene where they have power and influence in these matters. Paragraph 4 of the manifesto on the question of prices deals with the dissemination at least once a week on radio and the other media of comparative prices and so on. In reply to a question put down some months ago to the Minister of State at this Department, then Parliamentary Secretary to the Minister, we were told that the reaction from radio was not what it might be. It transpired later that the approach to Radio Éireann was not by the Minister's office but by the NPC to an officer in RTE at a level at which no decision could have been taken on such matters. The only thing that was done as a result of that was to allow companies and combines to state their prices on a consumer information basis if they were prepared to pay for air time. That is all that has come about from paragraph 4 concerning the dissemination of information on prices.

Paragraph 5 promised the control by legislation in the interests of consumers of monopolies in particular and of takeovers where relevant. I cannot afford to let this pass without comment. Last week we had an enormous hike of 35 per cent and 50 per cent on insurance premiums by a company which, on the admission of the Minister of State, would be approaching a monopoly in the insurance business of this country. Paragraph 5 of the manifesto in regard to prices has not been implemented. That is to be deplored.

A further statement which would have the effect of controlling and even reducing prices is contained in paragraph 7. It promised a full investigation of why Northern Ireland prices are less than prices in the Republic for identical products from the same suppliers and the same factories. This refers to motor car parts and so on. What progress has been made in that respect? Little or none, I would hazard a guess.

They are only some of the statements made solemnly by Fianna Fáil prior to the election. They have a perfect right to make these statements but they have not got a right to say that something is being done when it is not being done. The idea of giving us a land of milk and honey, I would suggest, is nothing more than a figment of the ad-man's imagination: the milk has gone sour and the queen bee has flown.

However, the actions of this Government are more than a figment of the imagination of many old age pensioners who last October discovered that the price of their coal was to be increased by a massive £7.96 per ton. Many people approaching the winter or autumn of their years and the seasonal winter of 1977-78 were more than worried by this increase which would inevitably bring about hardship in many cases. In case this was not sufficient hardship, shortly afterwards there was the abolition of the subsidy on town gas which resulted in an increase in price of around 11 per cent. How does this approach fit into the scheme of social action motivated by a social conscience that we are led to believe is the hallmark of a good Government?

If that is the hallmark of a good Government to me and to thousands of people that appellation does not pertain to the present Government. Since last July when they came into office we have witnessed the spectacle of 182 price increases from July to the end of November 1977, which is the period for which details of price increases sanctioned by the Minister are available. These prices have been published in the reports of the National Prices Commission.

We may take it that many other increases have taken place since the end of November 1977. In case there may be any doubt about the motion and the price increases referred to, let me stress that we are talking about prices of basic commodities. I shall give the House a few examples of prices that obtain today in shops throughout the country that have not been announced. I do not know if the increases have been sanctioned: during the debate perhaps the Minister will enlighten us on this.

Let us take a commodity such as jam. There have been increases from 10 per cent to 20 per cent; in one case the price has risen from 35p to 42p per lb. Breakfast cereals have increased from 3 per cent to 25 per cent——

Mr. O'Malley

From what date? Let the Deputy give us the prices and figures.

Mr. O'Toole

The lists from which I got the information show that the former prices operated in July 1977 and the latter prices from January 1978. The latter prices now apply generally.

Mr. O'Malley

Will the Deputy give the name and address of the shops?

Mr. O'Toole

They are the prices quoted in supermarkets throughout the country.

Mr. O'Malley

Give the name of the shops?

An Ceann Comhairle

The Minister will have an opportunity to reply later.

Mr. O'Malley

The Deputy is making allegations about prices in percentage terms.

Mr. O'Toole

I will give the actual prices. In the last percentages the price is 33½p for one-and-a-half kilos of flakemeal. That was the price last July and the current price is 42½p.

Mr. O'Malley

In which shop?

Mr. O'Toole

In the Spar group of shops.

Mr. O'Malley

Where? Which shop?

Mr. O'Toole

I have checked two shops and if the Minister wishes I can give two names. One is in Charlestown and the other in Ballina. There is only one Spar shop in each town and I think the Minister should be satisfied with that answer.

Mr. O'Malley

We will check on that.

Mr. O'Toole

Although many people thought the price of tea was reduced, it has increased in the same period from 18 per cent to 24 per cent, the maximum increase being from 50p to 62p for a particular brand of tea. Coffee has increased in that period from 3 per cent to a maximum of 46 per cent for a particular brand. I am quite sure the Minister must be aware that the price of cocoa increased in that time by 113 per cent. I would add that in the case of cocoa it is an imported commodity and the Minister and this House have little control in the matter. The price increased from 23p per quarter to 49p; I understand this has happened in the past few weeks. Sugar has increased by 13½ per cent overall; it was a general increase, up to January 1978. Soups have increased from 5 per cent to 21 per cent, the 21 per cent being the maximum for a particular brand.

These are but some of the increases on basic commodities. Detergents have increased by 8 per cent overall. Bleach has increased by 28½ per cent. With regard to flour, recently there was an increase of approximately 7 per cent. In the period from July to January the increase is roughly 11 per cent; I understand there was a 4 per cent increase some time in October. I have been told that sausages will be increased by 3p per lb next Monday and that cooked meats will be increased by 4p per lb.

This information is from retailers who have been notified by their suppliers that these increases are forthcoming and imminent. As I have said, we can accept that the increases mentioned in the National Prices Commission reports going up to the end of November can be added to by possibly half the same amount again of the 182 price increases which are included in the report.

There are other increases which do not appear in the reports and which have been in operation for some time. I recall some months ago putting a question to the Minister on increases with regard to undertakers' supplies— in this context I mean coffins and furnishings therefor. That was a 20 per cent increase which is also subject to a VAT rating of 20 per cent. The net increase therefore would amount to 24 per cent. I appreciate that in this case the unfortunate victim will never know of the increase or the finer points of VAT, but the unfortunate bereaved will be very much aware of the increases which came about some months ago. At that time the Minister assured me that he would investigate this increase, and I know that inspectors of his Department did very quickly thereafter visit some establishments concerned with this industry. I have not heard what the results of the Minister's investigations were.

Having talked about so many increases one would feel like taking the easy way out and avoiding them, but now seemingly the easy way out is a very expensive way too and it may not be any better than hanging on. If the Minister is serious about what is set out in the policy statement issued by his party prior to the general election I suggest to him that he takes a close look at the VAT ratings. The policy document referred to stated that the Government policy must be directed towards discouraging increasing costs in prices in all areas where they have control. Then is added the rider: "This policy has been absent in the last four years".

The rate of VAT charged on certain commodities would seem to be out of line with Government policy as many of the items on the maximum VAT rating would be regarded by everybody as essential items. One area that comes to mind is that concerned with the manufacture and sale of detergents, soaps and so forth. The Minister's colleague, who has lately undertaken a national campaign on hygiene and disinfection—and he is to be complimented on this—must be quite annoyed at the fact that the agents of disinfection and of cleanliness are subject to a 20 per cent VAT rating. This same hygienic man, the Minister for Health, Deputy Haughey, is also promulgating the idea of moderation in habits like smoking and drinking. I understand that cigarettes are subject to a 10 per cent VAT rating. Perhaps the Minister for Industry, Commerce and Energy will consult with the Minister for Health and try to reverse the VAT rating whereby we would end up with the 10 per cent on detergents and the 20 per cent on cigarettes. I am sure that the revenue from this exchange would be very satisfactory to the Minister for Industry, Commerce and Energy, to the Minister for Finance and, indeed, to the Minister for Health.

It was the National Coalition who saw fit to abolish subsidies on food, and this was in order to cushion the hardship suffered by many people at a time of high inflation and to ensure that they would not suffer unnecessarily. At the same time subsidies were brought in to alleviate further the burden of the cost of many food items, in particular dairy products. It was to ensure that the more vulnerable sections in our community would not suffer undue hardship, and to this end the subsidies were maintained and increased. Let me say that at that time the present Minister, Deputy O'Malley, was in full agreement with the idea of subsidies on food. I will refresh his memory by quoting from a debate on price control in Private Members' Business on 18 February 1975, as reported in Volume 278, column 702 of the Official Report:

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, happily, 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.

The Minister is to be complimented on agreeing to and encouraging the introduction and the increasing of subsidies for the purposes mentioned in the extract I have read from the Minister's statement. In 1978——

Mr. O'Malley

At that time, of course there were no subsidies.

Mr. O'Toole

They were subsequently introduced by the National Coalition Government.

Mr. O'Malley

Not necessarily. Would the Deputy read the rest of that statement where I advocated they should be brought in and the National Coalition Government were saying this could never be done?

Mr. O'Toole

The fact is they were brought in.

Mr. O'Malley

Even though they said it could never be done.

Mr. O'Toole

Indeed, when the present Government took office the Minister knows quite well that subsidies on food were reaching some £70 million, a very substantial sum. Less than three years later the Minister is seen to have done what can only be described as a somersault in that he has seen fit to abolish the subsidy on cheese. I will never understand why this was done, but it was done, and the net result is the price of cheese has increased from something between 7p and 10p per lb.

One must ask at this stage if other subsidies will also go by the board as a result of Government policy. During the election campaign the Minister's colleague, the Minister for Agriculture, stated on a programme on RTE that not only would subsidies be retained but they would be increased, particularly subsidies relating to agricultural products, because he said agriculture was an expanding industry and the only way in which to expand it further was by increasing subsidies. I should say one way, not "the only way". The idea of subsidies would seem to be causing some soul searching in the Cabinet and I and my colleagues would like to know what the future holds for consumers from the point of view of the subsidisation of food, particularly dairy products.

The increase announced last week in the price of bread was to me and many others almost incomprehensible. To the many large families which felt they had been let down in the budget this was a severe blow. It is an established fact that those in the less well-off sections of our community use more bread than do those who can afford to buy alternative foods. Indeed, that is the pattern in regard to all basic foods. The less well-off use more basic foods because they have not got the wherewithal to purchase alternatives.

During the election campaign— again, the Minister's party had a perfect right to do this—we were bombarded with pictures of the then leader of the Fianna Fáil Party, Deputy Lynch, now the Taoiseach——

Mr. O'Malley

He is still the leader of the Fianna Fáil Party. In fact, Fianna Fáil are the only party that succeeded in holding on to their leader.

An Ceann Comhairle

Order.

Mr. O'Toole

As an appellation I would suggest that "Taoiseach" has a higher standing than "leader of the Fianna Fáil Party". During that campaign, he was seen talking to housewives leaving supermarkets. Invariably the microphone was put in close proximity to him while he asked some housewife what she had paid for X, Y or Z and, having been told, his reaction inevitably was: "It will be up again tomorrow unless, of course, we get back into power." This was a legitimate ploy. It would seem to have worked.

We now have the Fianna Fáil Party in Government and the fact is prices are still increasing. At the same time we are led to believe that the country is now on its feet for the first time in four-and-a-half years. We are led to believe we never had it so good. Still prices go on rising. Still the most vulnerable sections suffer because the increases are taking place in basic commodities and these basic commodities are used in greater volume by the poorer sections of the community. If those who sit behind the Minister were free to speak their minds, having read page 7 of the manifesto, I believe they could not be anything else but critical of the increases taking place all round them and feel just as sour about them as do their constituents and were they free to vote without pressure or a Whip, I believe they would carry this motion.

Minister for Industry, Commerce and Energy (Mr. O'Malley)

I should begin, I think, by quoting from the manifesto from which Deputy O'Toole quoted so liberally. On page 6, the manifesto says:

These tax cuts combined with pay rises of about 5 per cent would cut inflation in half from 15 per cent this year to 7 per cent in 1978....

My recollection is that by 1978 there we meant towards the end of 1978 and I am very glad to say that long before the end of 1978 we will in fact have achieved a figure derided at the time of the general election as totally impossible of achievement. It is very well on the way to being achieved.

Mr. O'Toole

I am delighted to hear it.

Mr. O'Malley

In the absence of some major unforeseen problem, we will achieve it and we are at present ahead of target in this respect. I sympathise with Deputy O'Toole on the predicament in which he found himself this evening endeavouring to make a speech on this topic. Of course, it was his own fault; he put down the motion and asked that it be debated this evening. Had I as little to say as had Deputy O'Toole I would have kept it to myself.

The annual inflation rate to mid-November 1977—which is the last annual period for which we have figures—was 10.8 per cent. That is the lowest recorded annual figure since mid-February 1973. That is not merely a coincidence because it will be recalled that mid-February 1973 was the last time Fianna Fáil were in office. We are now back to the pre-Coalition situation; we now have to improve that and we are well on the way to doing so. The inflation rate of 20.6 per cent recorded in the year to mid-November 1976 has already been halved in little more than one year. The highest inflation rate ever recorded in this country was 24.5 per cent in the year to May 1975. We are now in the situation of talking in terms of 7 per cent, perhaps even less, in which these banana republic figures of Coalition days are happily, for all of us, just an unhappy memory. For those reasons I was surprised that the Government who sought to justify themselves when the annual inflation rate was 24.5 per cent should, through their representation now in Opposition, come in here to seek to criticise the present prices situation. Of the numerous successes of the Government it is fair to say this has been one of the best.

I asked an official in my Department to endeavour to work out as best he could the forecasted inflation rate for each quarter, at least a quarter ahead. He is very competent at his job and, in so far as he has erred in the past, he has done so on the high side. His forecast of the annual rate of inflation for mid-February 1978—in respect of which we will have the official figure in about a fortnight—is 8.6 per cent. His forecast for the annual rate of inflation to mid-May 1978—which will be almost the first full year of this Government—on present indications, in his opinion, is likely to be 6.6 per cent. Therefore I do not talk idly when I speak of having fulfilled our objectives six months or more ahead of target. Of course, this 6.6 per cent in his calculation is dependent on the national wage agreement being accepted. I can only hope that all those who, like me, would like to see this commendable figure achieved will see fit also to encourage the acceptance of that national wage agreement. It is one of the few factors which, at this time, could militate against the achievement of this figure.

Deputy O'Toole referred to price increases on various commodities which he said took place since last July. I could not take notes about all of them or find out what is the position about them all, particularly as he did not give prices; he talked in percentages all the time.

Mr. O'Toole

I gave prices in all cases.

Mr. O'Malley

In one case on which I pressed him he gave the price of cornflakes in the Spar Food Stores in Charlestown and in Ballina, County Mayo. We can check those out to see if the figures he gave are correct and if the people are charging these prices. Otherwise he talked about percentages in regard to all of the increases I allowed and spent five or ten minutes at it. One of them to which he referred was an increase of, I think, 12 per cent or more in the price of sugar. I asked for a note in relation to that and I discover that sugar was increased on 6 August 1977 by 2 pence per lb. retail. The recommendation for the increase of that amount had been made late in April or early in May 1977 by the National Prices Commission. The then Parliamentary Secretary—my predecessor did not ever concern himself with price matters— decided that, since there was an election coming up, he would leave it over until after the election, not bother implementing it until afterwards; if he lost it, let the others implement it and, if he won, well it did not matter about implementing it. That increase about which Deputy O'Toole made so much play was one sanctioned in April-May 1977. As far as I can recall it was one of 11 fairly major commodities of that kind left on the stocks until I arrived in office. Of course there were a lot of things which were not left on stocks until I arrived in office. There were, in the week prior to 5 July 1977, about a dozen people appointed to State boards in my Department alone, and many dozens appointed to State boards in Departments generally.

Mr. O'Toole

What has this got to do with the motion?

Mr. O'Malley

The Deputy raised the matter and he is now being answered. If the Deputy wants to hang himself——

Mr. O'Toole

Not once did I mention State boards.

Mr. O'Malley

It is just too bad.

An Leas-Cheann Comhairle

The Minister on the motion.

Mr. O'Malley

We heard about price increases including fraudulent references to them, like this one about sugar. We did not hear any prices but we will have a few facts now. I can give the House a few things about which this country has not heard for the last four or five years. I can give a list of significant price reductions, things that were all fairly historical until recent months. Petroleum prices were reduced by a total of 5 pence per gallon retail over the last six months in three separate decreases.

Mr. O'Toole

Due to British decreases.

Mr. O'Malley

And I have every reason to believe that there might well be further decreases in petroleum in the not-too-distant future.

Mr. O'Toole

Due to UK prices.

Mr. O'Malley

Not at all; no, Deputy, not the slightest due to UK prices. If the Deputy knew anything about the fact he would know that UK prices of petrol retail have increased between 10 pence and 20 pence per gallon in the last month while the price of petrol in this country has been reduced by 2½ pence—plus 15 pence per gallon on average in the UK, minus 2½ pence in Ireland. So, the decrease in Ireland is due to UK prices according to the Deputy. So much for his intervention.

Mr. B. Desmond

It arises specifically out of the policy we pursued.

An Leas-Cheann Comhairle

Deputy O'Toole had his 40 minutes. I presume Deputy Desmond is waiting. The Minister without interruption, please.

Mr. O'Malley

Home heating oils were reduced by 2 pence per gallon and various other oils of interest to industrial consumers were reduced by various amounts. I would not be unhopeful that there might be other reductions in that respect. Margarine and cooking fats were reduced twice since October, a total of 3 pence a half-pound in respect of margarine and 2 pence a half-pound in respect of cooking fats. There was a reduction for the domestic consumer of on average between 2 and 3 per cent in electricity bills from October-November 1977. I am glad to be able to tell the House that as a result of my recent discussions with the chairman of the ESB I am very hopeful that we will be in a position to announce a further major decrease in electricity prices within the next couple of weeks. I have arranged for a meeting for early next week between the chairman of the ESB and the chairman of the National Prices Commission with a view to working out the details and getting the approval of the commission to a significant decrease. In talking about a significant decrease, I am thinking in terms of not less than 5 per cent, which, added to the 2½ per cent or so, introduced last November will mean a reduction of 7½ per cent in the price of electricity within a very short period. I have not heard a list like this being read out in this House for a very long time. The price of tea was reduced by 10.25p per lb with effect from January.

Some weeks ago I asked the Prices Commission to take steps with a view to a further reduction in the price of tea, and from what they tell me, it is likely that we will be able to announce shortly a further significant reduction in the price of tea on top of the large one announced last month. Coffee prices have been reduced in two steps by 45½p per four ounce jar, or by 182p per lb for instant coffee. It is possible that there will be a further decrease shortly. Various frozen vegetables, beans and so on, have been reduced also by varying amounts depending on the size of the packet.

Since I took office last July I rejected or cut back on quite a number of the recommendations of the National Prices Commission not because I thought the commission were necessarily wrong in their calculations or in their judgment but because I felt that some firms and industries had got excessive increases in the past and I was not prepared to allow, for example, a third increase in the price of one basic commodity within six months, the two previous increases having been granted in the early part of 1977.

The Deputy spoke about food and other essential subsidies and about the Government removing subsidies. The cheese subsidy removed by the Government last December and coming into effect in January, was very small, costing £2 million. The only other subsidy that was altered was not what Deputy O'Toole referred to as the abolition of the subsidy on town gas, but a slight reduction in the amount of the subsidy on town gas, amounting to £2 million in a full year. The total cost of subsidies removed on those two items was £4 million at annual rates. The additional subsidies introduced by the Government since coming to office consisted of an annual subsidy of £600,000 per annum, £0.6 million, for provincial town gas. The Deputy will recall that when a large additional subsidy was given to Dublin the day that the election was called, Dublin was regarded as being in a special category at that time because it had 13 three-seat constituencies which it was expected as a result of the manoeuvrings of some years previously would yield a ripe dividend. We thought it unfair that Dublin although it let down the Coalition, should be the only ones to benefit and we extended the town gas subsidy at a cost of £600,000 to Cork, Limerick and other towns. In addition we introduced a further subsidy on the price of milk from 11 October 1977 at a cost of £3.4 million per annum. Therefore the total additional subsidies introduced by the Government is £4 million per year, which equals the amount of the reductions. It is totally untrue to say that there has been any reduction in subsidy. Figures speak for themselves. The total amount being paid this year by the Exchequer in respect of subsidies on food and town gas amount to £69.8 million, which considerably exceeds the figure provided for last year. We have no apologies to make under this heading and the reference in this motion to the withdrawal of subsidies on the necessities of life which hit the poorest of the community hardest rings a bit hollow. The facts I have outlined make it ring all the more hollow.

The effect of the removal of the subsidy on gas on the CPI was an increase of 0.04 per cent and the effect of the very small reduction in the subsidy on town gas was an increase of 0.05 per cent. It is worth noting that the existing subsidy on town gas is extremely high even with the very small reduction that was made. In the case of Dublin, which was the chief beneficiary, it almost covers the entire cost of the raw material used in the production of town gas. It is a matter that gives rise to some concern. I can only describe that sort of situation, where the entire raw material cost is being paid for by the taxpayer, as very unsatisfactory.

On the question of dissemination of price information, exactly what was said in the manifesto has come about due to the intervention of my Minister of State to whom I am grateful. I am also grateful to RTE for acceding to her request in that respect. We had a quotation from the manifesto, which will be the most quoted book since Shakespeare, or even the Bible. Deputy O'Toole left out in chapter 11, verse 8, that:

Fianna Fáil will regard price control as an important matter and will therefore revert to the position where a member of the Government is responsible for it and for dealing with the underlying causes of inflation.

An Leas-Cheann Comhairle

For the Official Report, the Minister may give us the correct chapter and verse —the page.

Mr. O'Malley

It is page 11, paragraph 8.

I think it is fair to say that under-taking has been fulfilled for the first time in many years—not in many years, but for the first time in four-and-a-half years. A member of the Government now deals with price control. The Government regard it as an important matter and we have dealt with many of the underlying causes of inflation.

Paragraph 9 states:

The accounting procedures of the ESB will be examined and brought up to date with a view to reducing the price of electricity.

I remember when that was being discussed before the election it was regarded as a joke and it was said that none of us would live to see the day when the price of electricity would be reduced. I have already described what has been done and what is being done in respect of the price of electricity. I am glad to pay tribute to the capabilities of the ESB in this regard. One of the factors which has helped them has been the enormous upsurge in the demand for electricity in the past six months. Their sales of electricity are now way ahead of their projections. This has been a major factor in helping them to bring about the further major proposed decrease in price which I have talked about. The buoyant sales of electricity are but a symptom of the buoyant state of the country and the economy.

Paragraph 5, on page 10 of this document, which was glossed over by Deputy O'Toole, refers to the "control by legislation, in the interests of the consumer, of monopolies in particular, and of take-overs and mergers where relevant." I am glad to learn from my Minister of State that this legislation is now virtually ready and will be introduced shortly in the House and can expect to be taken immediately after Easter.

I have probably answered all the points made, such as they were, and I do not think anything further is called for from me in this respect. I should like to say in general terms that, because the vicious circle of inflation and constant non-stop price rises, with one following the other, have been broken at long last, people have begun to feel a new confidence in the economy. They have begun to feel that for the first time in several years the economy has got back on a proper footing and it is now worth investing in this country and creating employment and worth being concerned about it again. People are satisfied that once again a Government are in control and know how to run the country. In an extremely short time we have shown our ability to do so, and to bring about a very rapid change in the trends which existed before we took office, and to bring about a very rapid and profound change in the whole atmosphere so far as commercial, industrial and economic matters generally are concerned.

I am trying to find some other points made by Deputy O'Toole. He talked about the VAT ratings on cigarettes and detergents and suggested they should be reversed. Of course, Deputy O'Toole may or may not be aware that, in addition to whatever VAT is payable on cigarettes, there is a very substantial excise duty. The rate of VAT on cigarettes does not matter in the slightest, because the excise duty can be adjusted up or down to keep the price at whatever level is determined. Therefore nothing would be saved by decreasing the VAT rate.

I might mention in regard to the National Prices Commission that I have discussed new guidelines with them. I will be talking to the chairman about these shortly. I will make an announcement in relation to them and also an announcement in regard to the membership of the NPC. By that I do not mean I will be asking anybody to retire or resign. I am making arrangements about the addition to the commission of another member.

Deputy O'Toole referred to the recent increase in the price of bread which, incidentally, was less than what was recommended by the National Prices Commission and got me into all kinds of difficulty with the flour milling industry. I can appreciate their concern, but I am trying to give both the industry and the consumer a fair crack of the whip. Deputy O'Toole made the point that this increase should have been obviated by subsidies and said this was done in the past. It is worth noting that, on three occasions between July 1975 and July 1977, the level of the subsidy was not increased when there were increases in February 1976, July 1976 and January 1977 in the price of bread.

I think I have covered all that needs to be covered in what Deputy O'Toole said. It is perfectly clear from the rather limited amount he said or could say that he has not much faith in this motion. The facts I have put before the House make it very clear that this amendment should be accepted as readily as the amendment was accepted last week about the nuclear station. I see in the copy of the report I got to-day that it was agreed and, therefore, Dáil Éireann should approve of "the measures being taken by the Government to control the prices and charges for goods and services and to subsidise the prices of certain essential items" and that Dáil Éireann should note "with satisfaction the significant decrease in the rate of inflation in the past six months". I have given the facts and the facts speak for themselves.

Mr. B. Desmond

I wish to support the motion. I listened with interest to the Minister and I must confess that I never cease to marvel at the absolute certitude and the absolute personal certainty with which the Minister proclaims his political views and his work as Minister for Industry, Commerce and Energy. I only hope that, in about 15 to 18 months, he will display the same aplomb. Quite frankly, I have the gravest doubts that he will be able to do so.

Those of us who have been in public life for some years are only too well aware of the fact that the Government of the day can exert only marginal influence, by and large, over imported inflation. We are only too well aware that the Cabinet of the day and the Minister can exert very little influence over the cost of imported fuel price increases. We also know that the Minister does not exert very much influence over wage labour cost increases. We all know that a wage increase for one man means a price rise for another. What disturbs me in relation to the contribution of the Minister is the absolute and total complacency he displayed about future prospects.

Listening to the Minister one would imagine that he had some influence over the reduction of 5 per cent in petrol prices. I can recall Deputy Sylvester Barrett and Deputy O'Malley, when in Opposition, announcing that immediately after their party was returned to office they would abolish the seven day rule in respect of fuel price increases. They announced that it would be no problem to do that but, as soon as they were returned to office, they decided it would be madness to adopt that course. They now reap the benefit of the reduction of 5 per cent in petroleum prices. The manifesto had not the slightest impact on our rate of inflation. I recall the former Minister for Industry and Commerce, Senator Keating, explaining to this House painfully, at great length and with great clarity the reasons why Ireland had an inflation rate in mid-1975 of about 25 per cent. It horrifies me to face the prospect of what will happen after the next budget and the 1980 budget when we will have the inevitable swing around in the cycle in terms of fuel increases and world commodity prices. When that cycle swings back I fear for the sanity of the staff of the Department of Industry, Commerce and Energy because the poor public servants will be driven out of their minds by the Minister ranting and raving and saying that he had not been told in advance what the prospects were.

There is no doubt that we are in a valley period domestically and internationally in terms of the inflationary cycle and there is no doubt that little difficulty faces the Government in having an inflation rate of 6 to 8 per cent up to the middle of this year. I accept that projection by the Department but I question, in the light of the Government's current expenditure, their public capital programme and their borrowing, if the same view prevails in terms of Departmental forecasting by the middle of 1979 and 1980. The House should be alerted to the fact that the Minister is trying to exercise an influence on price levels which, frankly, he has little influence over. That is the sad part of the downfall which one can predict with reasonable certainty of Deputy O'Malley and the pricing strategy of the Fianna Fáil Government.

How could the Fianna Fáil Party have had the slightest impact on the price of tea? From what the Minister has stated one would imagine that the party had been in daily consultation on the international tea market and were flying to London to secure a reduction in the price of tea or coffee. The same can be said about the price of imported petrol. From my conversations with previous Ministers, and from reading many reports, I am aware that Deputy O'Malley has as much influence on the price of tea and coffee as I have on the price of imported fuel. Naturally, he claims credit for it but he has even reached the absurd stage of claiming credit for a prospective decrease in the cost of electricity. He inferred that because he had a report commissioned on the accounting procedures in the ESB we would automatically get a reduction in the price of electricity. We all know that the reasons for that reduction are totally different and have nothing to do with the fact that Deputy O'Malley instituted an examination of the accounting procedures or that any such review would bring about a reduction in the price of electricity.

The contribution of the Minister was totally irrelevant. I await, not with any great glee but with concern, the situation that will exist in 18 months' time. I expect the Minister to return to the House then and indicate that because of factors outside his control the rate of inflation has risen to 14 per cent. I expect him to disclaim all responsibility. Such is the nature of politicians that when things are going well they all claim credit for it and when things are going badly, even though they have no influence over either sets of events, they do not accept responsibility. The Minister has as much influence over the current situation as his predecessor had. The only difference is that the budgetary strategy followed by the previous Government inevitably gave rise to inflationary pressures. Inevitably, that Government had little option but to face up to those pressures.

I was interested to hear the Minister's reference to the work of the National Prices Commission. The commission has played a valuable role in general price surveillance. I have a great regard for the staff of the commission who carry out their difficult and demanding work very well. I should like to be associated with the tribute paid earlier to the retiring chairman of the commission, Mr. John Walsh. I also note that another senior member of the commission, Mr. John Friel, chief prices inspector, is retiring. Such men have made a distinguished contribution to the work of the commission. I look forward to the Minister publishing in due course the revised guidelines in relation to the work of the commission. Frankly, I am dubious about the work of the commission in that regard. In the Fianna Fáil manifesto the Minister put forward a series of propositions which by and large have not been implemented. While looking through some questions replied to by the Minister of State I noticed one where I had asked about the review of the accounting procedure in the ESB and was told that this was under examination. I am not sure as to what is happening in that regard except after all these months to learn that the chairman of the ESB and the Minister are in consultation with one another. I doubt whether the accounting procedure review has anything to do with the proposal to reduce by 5 per cent the price of electricity.

On the occasion of that other question I asked also if the Minister would indicate what were to be the proposed revised guidelines for the National Prices Commission. I was told that this information was somewhat confidential, but as we all know there is not a thought in the head of the Minister for Industry, Commerce and Energy or his colleague as to what revised guidelines should operate. Surely this item, too, was merely a manifesto cosmetic operation. There are no revised guidelines apart from the traditional and conventional ones that have operated within the commission. We have had promises from the Minister regarding comparative studies being made in respect of a whole range of commodities—motor cars, tyres, car parts, processed foods, biscuits, clothing and so on—vis-à-vis Northern Ireland and we were told that inevitably such studies would lead to price reductions here. Of course no such studies have been carried out.

In addition the Minister promised that there would be an investigation into the middleman's margin of profit in relation to, for example, the price of fish. Apart from asking the NPC to undertake such a study, there are no signs of reductions in prices in these areas.

There are a number of areas in respect of which we are justified in expressing concern. I am aware that house prices, for instance, are outside the ambit of the commission but it would be interesting to know the number of certificates of reasonable value that have been refused in recent months. I have tabled a question to the Minister for the Environment in this regard. House prices in 1978 are likely to increase substantially and this trend will have an impact.

There was no comment from the Minister in relation to the massive increases in motor vehicle insurance that he has sanctioned. I exonerate to some extent the NPC in this instance because obviously an arrangement was made between the Minister and the company concerned. The Irish Times today carries a statement from the company to the effect that motorists having comprehensive insurance constituted 8 per cent of the total insured and that for those people the average premium of £135 was being reduced to £126. But the company went on to point out—and this is significant—that third-party fire and theft policies were up on average by 18 per cent or from £76 to £90 while third-party only policies were up on average from £58.65 to £86.52 or an increase of 47 per cent. These kinds of increases cannot be referred to lightly by the Minister. Nobody here is impressed, then, when the Minister talks of decreases in the cost of petrol or electricity, areas in which he had little influence anyway.

In conclusion, I wish the Minister well in his efforts on price surveillance. The staff of the NPC will undoubtedly give the Minister every possible assistance in that regard but I trust that they will never be asked to write the kind of scripts that he will expect from them in the years ahead. I say this because I was perturbed by the attitude of the Minister here this evening in relation to the situation. We have had a downturn in inflation and this has been the trend also in Britain and in western Europe generally. There are no increases in inflation as a result of the budget and by and large we have had a plateau in relation to some aspects of labour cost increases in recent months. That situation is about to break and in that event I trust that the Minister will be able to come here with the same degree of certainty that he displayed here this evening when he claimed credit for any price reduction that has been effected. What he had to say had very little to do with reality and had as much to do with the running of the country as had the Fianna Fáil Ard-Fheis at the weekend. It is time that the Minister and both his Ministers of State acknowledged that for the most part their influence in the area of price increases is not great, although it can be substantial in just a few areas. It is silly for the Minister to claim credit for areas in which he has little interest. Such conduct in the long term is of no help to the National Prices Commission in carrying out the work for which they were set up.

The National Prices Commission can make a substantial impact in the area of prices and can stop some of the worst practices in this regard. They can act as a watchdog in so far as consumer complaints are concerned. That was the role envisaged for them but to expect miracles of the kind being proclaimed by the Minister is arrant economic nonsense. With these thoughts in mind I trust that we will be in a position to judge the Minister's record and the records of his colleagues during the next few months.

In terms of the impact of his party's policy on the inflationary situation the Minister is grossly over-confident while he is largely complacent in the prices area. I do not believe that the manifesto was responsible for altering as much as one percentage point in the Consumer Price Index and neither do I believe that many of the actions of the former Minister had a great impact either in that regard. It is a question of the rate of domestic inflation here in terms of wage levels, of imported inflation, of world commodity prices and of the efficiency with which individual enterprises are run. The latter for the most part are not directly under the control of the Government. These are the key factors and not the kind of political nonsense we have had from the Minister this evening.

Debate adjourned.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Wednesday, 1 March 1978.