I will deal with inflation in a moment. I did not interrupt the Deputy when he spoke and I would be grateful if he would extend a similar courtesy to me.
The Opposition also claimed in their motion that the Fianna Fáil Government has not delivered on all their promises in the manifesto to date. They criticised the proposals in relation to the National Prices Commission and various other aspects of the Fianna Fáil policy at the time of the election. What they did not refer to was the report of the National Prices Commission issued in June 1973 which strongly recommended that the Coalition Government should reform the Sale of Goods Act. The reasons for that recommendation are spelled out in page 65 of this report, which was presented to the Government in June 1973. That Sale of Goods Act was not reformed during the Coalition period, but the Minister since assuming office has already put before the House a very comprehensive Sale of Goods and Supply of Services, Bill 1978 which has passed through the Second Stage in this House. The Minister has certainly delivered on the promise in relation to the protection of consumers. Before that Bill was introduced, the Minister introduced a Consumer Information Bill which was designed to ensure that the consumer would have protection from misleading descriptions about goods and services, in various ways. The two measures were seen as a consumer charter which would have a major influence on prices and on the performance of the market in relation to the consumer. There is no need to go into the detail of these Bills, but it is important to bring to the attention of the House the fact that these are accomplishments of the Minister, that we are not just talking about these desirable measures, but that we accepted the recommendations made in the report of the National Prices Commission in 1973 which should surely have been acted upon long before this Minister came to office in 1977.
Deputy O'Toole referred to inflation and I have a table on inflation here, so, happily, I can respond to his request. At mid-November 1973 inflation was at 12.6 per cent, in mid-November 1974 it was at 20 per cent, in mid-November 1975 it was at 16.8 per cent and in mid-November 1976 it was at 20.6 per cent. In 1977, the year in which we had a change of Government, there was a considerable improvement in the rate of inflation, which was down to 10.8 per cent, and in mid-November 1978, the period during which the budget was prepared, inflation was at 7.9 per cent. I am sure that Deputy O'Toole is aware that this was the position at that stage. It is quite clear that in relation to inflation, which is one of the major factors affecting the price of various commodities, and reflecting how the Government are performing in that area, they have brought it under control. The Government are committed to keeping inflation within reasonable limits.
Another aspect in relation to this is the purchasing power of the £. Referring to the Central Bank report during the period of Coalition Government from 1973 to 1977 if we take 1973 as 100p per £, 1974 was 85p, 1975 was 71p, 1976 was 60p and 1977 was 53p. It is vital, in any consideration of prices, to consider what can be purchased for a £, and at the rate at which the purchasing power of the £ was declining it is extraordinary that the Coalition representatives should come into this House and criticise Fianna Fáil on their performance since then, since the rate of inflation and loss in the purchasing power of the £ has been only a mere fraction of that recorded during their period in office. In this respect the Fianna Fáil record is good and we can be proud of it. Needless to say there is a great deal of work to be done here, and the Minister is very conscious of that.
As far as the National Prices Commission are concerned, the Minister of State indicated clearly last night that the promise of reviewing the National Prices Commission has been fulfilled and the review was reported on previously in the House. As a result of that investigation the National Prices Commission were strengthened. They are regarded as a watchdog committee and have produced excellent reports over a very long period. These reports have been very valuable and are vital to all concerned with the development of our economy, the changes in prices, in inflation, or in the operations of middle men, or various sectors of the economy.
Another item mentioned specifically in this motion is the investigation of middlemen's margins, and it implied that the Minister is not investigating these. Here, I must point to a report specifically requested by the Minister, the monthly report number 74 for June 1978. This is a comprehensive report on middlemen's margins. There is a report on retail margins, wholesalers and importers' margins, on margins in meat, in poultry, in fruit, vegetables and in fish. It is a comprehensive report which covers this whole area. On looking at the facts I find that the Minister has delivered here too, he has instituted a study of middlemen's margins and this study was made available publicly in June 1978.
The details of this would be worthy of further separate study. The commission's conclusions showed that the study on fruit and vegetables bore a close similarity to that on poultry margins published in January 1978. In both cases the consultants found that margins were not excessive in the earlier stages of distribution in smaller retail outlets. The supermarkets were the only exception. In the report of April 1978 it was indicated that the results of the price margins on fruit and vegetables for transmission to RTE suggested that the prices in major supermarkets at least in Dublin were more often than not higher than in other outlets. This pattern has continued since then. The Minister pointed out that An Foras Talúntais are engaged in a further study in this area in much greater detail. The Minister has been very active in this area. He has instituted a study, has given a report and has ensured that further studies will be carried out.
The question of oil has been mentioned repeatedly in this debate. The Minister has come to a positive and definite conclusion on this matter. He has said that as a matter of strategic policy he believes that a State oil company should be formed. He has committed himself clearly on this and has said that he is setting about to prepare legislation on the matter. Here, again, the Minister has been quite decisive and the people recognise this. All of us must admit that this is a most complex and difficult situation. I cannot agree with the suggestions in the motion put down by the Opposition in relation to the Minister's performance.
When we look broadly at the Government's approach we must bear in mind that there is a great deal more to price control and the influencing of price than publicity, argument, debate and even watchdog committees. The Minister and the Government have strengthened the National Prices Commission. They have given more publicity to price reporting. Last night the Minister of State gave us a detailed account of the work in progress in that area. Information about prices has increased and here the Minister and the Government have delivered on their promises.
However, this information does not solve the problems. On the question of prices and the stability of prices, far more important is the economic and structural measures taken to stabilise prices. The economic and structural measures cover a wide range. They include the control of inflation, the control of the power of the £ and the influencing of the power of the £. One of the major measures taken by the Government in relation to control of inflation was our membership of the EMS under which we are permitted a very limited variation in the exchange rate of the £, a limit of 2¼ per cent up or down. While this measure at first may not seem to have a direct bearing on the price of commodities, because it affects the purchasing power of the £ and inflation it has a direct bearing on prices. So long as we maintain stability in our currency, automatically we will maintain a high degree of stability in price inflation. This is one of the fundamental measures taken by the Government which is far more important than the cosmetic operations or the more minor steps that can be taken to influence prices.
Of course the Government have also taken steps in relation to social welfare recipients by giving direct increases greater than those necessary to meet the rate of inflation anticipated in the current year. Social Welfare recipients have been protected in this way at least in the short term and I am confident that if it is necessary to give them further direct protection the Government will do so.
The stabilisation of agricultural prices is an important aspect of price control and here it is clear that we will not see very high rates of increase in agricultural prices in the coming period. We can expect much greater stability in this area.
Another major structural measure the Government are taking is to encourage reorganisation of the markets. This is quite clear from statements made by Ministers and in the actions that have been taken. This measure has a fundamental effect on future price relationships. It is not the easiest one to get across to the media and to the people but it has long-term benefits for the consumer. We have talked about the middlemen's margins. We can study them and find out what is happening but if we want to influence them directly we must increase the strength, cohesion and information among the producer groups. In recent times the Government have encouraged the establishment of a number of producer groups. These will affect the structure of pricing and will ensure that where middlemen's margins are involved these people will give an efficient service or else they will not survive. They have an important part to play but too often they are inefficient and the costs incurred are greater than they need to be. By strengthening the producer groups, by increasing the information about prices on a continuous basis, and particularly by strengthening the groups who use the services of the middlemen it is possible to reduce wastage.
The approach of the Government to the co-operative movement has been one of encouragement. They have encouraged the strengthening and development of the co-ops for the same reasons. Here, again, there are the basic producers, the handlers of food materials, and if they are efficiently operated benefits will accrue to the consumers not only by way of improved and efficient pricing but also by way of higher quality, better presentation and packaging.
The Government have been putting a considerable effort into the co-operative movement in this way. Deputies will recall that economic Ministers have been urging the trade unions to look at the possibilities attached to co-operatives in Europe with a view to becoming involved in the movement here, both themselves and their members. Structural changes will take place in this area to the great benefit of consumers, here much more than in Europe.
In looking at the Government's performance we must consider the entire package. It is useless to look at one aspect without looking at the whole complex. We must look at Government measures in regard to job creation, prices, inflation and the targets which have been set in regard to increasing our standards vis-á-vis our European partners. The recent national understanding, by guaranteeing incomes against CPI increases, is a great step forward. An inflation rate of 7 per cent is assumed and for each percentage point above 7 per cent which the inflation rate actually reaches, a 1 per cent wage increase would be incorporated up to 11 per cent, and thereafter a 0.5 per cent increase in wages would apply to each 1 per cent inflation.
Therefore, the Government are bringing in, in a comprehensive way, fair and reasonable control, an assurance and a guarantee to the worker and the consumer generally that they will not again have to face higher levels of price increases such as they have had to suffer in the past few years. The Government now have these matters well under control. In the terms of the national understanding, consumers can rest assured that there will be considerable stability.
