That Dáil Éireann condemns the Government's failure to control the price of electricity and, in view of the serious hardship the high cost of electricity is causing countless families and the loss of jobs in industry resulting from lack of competitiveness, calls upon the Government to withdraw its approval for the recent price increase pending the publication and a full debate on the report of the inquiry into the high cost of electricity in Ireland.
There is agreement among the Whips that the time be divided between myself and Deputy Fitzgerald. The recent increases are inconsistent with an enlightened industrial development policy. Job losses are inevitable and damage will be done to our industrial base. Liquidations and closures will continue unchecked and the revenue gained from the increases will not compensate for the resultant unemployment and redundancy payments and loss of personal taxation.
The recent excessive price increase, unjustified in the present economic climate, will have a very big impact on our competitiveness in two essential areas. Firstly, the exports that will be lost because of this price increase and secondly the penetration by imports into key sectors of our domestic markets. This is an area which has accelerated in the past five years to alarming proportions at present. Economic growth depends on our ability to export and proportionately Ireland is the third largest exporter in the EC after Belgium and the Netherlands with our exports accounting for some 60 per cent of our national output. Our technological industries now account for one-fifth of manufacturing employment. These industries are critically dependent on cost competitiveness and one of the main essential services, electricity, has increased in price much faster than in the countries of our competitors. It is making markets of exporting firms very vulnerable. Imports in the food sector and building materials have doubled in the past five years and have now reached the alarming sum of £1 billion. Had Irish electricity costs been contained thousands of jobs could have been saved and many closures avoided.
We have to bear in mind that in 1983 there were 700 liquidations and business closures with the resulting loss of 11,000 jobs in manufacturing industry and perhaps half that much again in other areas. This was reflected upon in this House in recent weeks in support of our claim that the national plan is based on dubious statistics. There is no doubt but that if the factory closure dilemma is allowed to continue we will have a totally fragmented industrial base. If our high technological industries become part, as is now threatened, of these closures it will be a devastating blow to our balance of payments and export positions. There is no doubt but that it can be clearly established that electricity costs have played a big role in the factory and business closures which have taken place in the last few years.
The excess burden by way of additional costs which has to be made up by Irish industry is estimated at £50 million which is the equivalent of 5,000 manufacturing jobs. When one considers that each manufacturing job also accounts for one in the service sector it is obvious that this extra burden placed on the economy is reducing the possible number of extra jobs by some 10,000 and this is in that one field alone.
High ESB charges have damaged the productive process of our island economy. We have to export to survive. Without export growth no recovery or job creation programme can succeed. If the Government are serious about their commitment to job creation as outlined in the White Paper on Industrial Policy, chapter 4, under the heading Creating a Competitive Economy, now is the time for their industrial costs monitoring group to show its effectiveness in assessing the effects of charges, costs and prices on industry. These costs and the effect they have on industry have been tabulated by the CII and economists in all fields of industrial endeavour and still no recognition is given to this dilemma by the planners of industrial policy. Every national and international commentator agrees on the critical effect that essential service costs have on maintaining market share through competitiveness. Now is the time to translate sentiment into tangible cost policies. I put it to the Minister that 10,000 jobs are more necessary than 10 million excuses for inaction by the Government.
We listened to a plethora of assumptions outlined in the national plan and, as yet, no positive, realistic step has been outlined by the Government about which way they will deal with the jobs crisis which exists. Our industrial electricity prices must be brought into line with the average of our competitors and trading partners in the EC. At present our electricity costs are 25 per cent higher that the rated average of our trading competitors. The greatest gap with the greatest cost penalty exists with the large energy-intensive users where industry pays between 40 per cent and 80 per cent more than their competitors. In other countries users over £2 million of electricity per annum obtain special discounts per unit of about 50 per cent. In Ireland it is about 20 per cent. Consequently large users of electricity in other jurisdictions pay considerably less than our industries. The differential is 30 per cent more in Ireland than in Germany. It is 40 per cent more than our UK competitors and 80 per cent more than our French competitors. There is a huge electricity demand in industries such as Alumina, Irish Cement and Irish Steel and the cost of the electricity works out at more than the total wages bill in these types of industries.
In the pharmaceutical and chemical industries, the cost of electricity is almost half the total payroll of the industry. Small industries are also penalised and are charged at higher rates than the domestic rate. This is not the practice in other EC countries and we must get in line with out international competitors. If we fail to do this, large companies will reduce their operations here, expand their operations abroad and will install their own generating capacity which will result in ESB sales falling still further. The worst effect of all will be that no new electricity-intensive industries will set up here.
To reduce electricity costs here would not only help our industries to stay competitive and create additional jobs in industries and the service sector, it would also result in extra electricity being used and would effectively help the ESB's balance sheet by increasing their revenue. On the domestic consumer front, this new increase in the price of electricity is a further blow to the household budget and will cause widespread hardship to all consumers, particularly the old and those living on small incomes. The ESB bill is a major family worry and, because of the essential nature of the service and the lack of alternatives available to the consumers, families have to suffer diet deficiency in order to keep the light on. There has always been a stigma attached to families who had their supply of electricity cut off often due to no fault of theirs and families will endure enormous hardship to avoid having their light cut off.
It is nonsense to have promotional campaigns urging greater use of electricity when almost 200,000 families are living on the poverty line at present and are unable to meet existing costs of electricity charges. Is the Minister conscious of the hardship being endured and the extent of the decline in living standards of ordinary people? It is not enough for the Minister's amendment to say that the Government are keeping the increase in line with inflation. Does the Minister realise what has been happening to disposable income in so far as ordinary workers are concerned? Does he realise the increases that ordinary people have to suffer over and above that now being implemented as far as electricity is concerned?
Is he aware that there is talk of a further increase of 10 per cent in the cost of telephones? Is he aware of the impact which service charges have on disposable incomes and that one-third of the people are unable to pay that charge to local authorities? Is he aware of what the Minister for Health and Social Welfare has been doing to the health services by increasing hospital charges? There are also increases in fees for education and in costs for school transport. Is he aware of the increase in food prices, a staggering 14 per cent, in the past 12 months? His amendment says it will be below the rate of inflation but all these go together in the impact that the prices have on a family budget, and adding insult to injury by putting an extra 7 per cent on electricity charges is nothing short of scandalous from a socialist or Labour Minister.
How can the Government reasonably expect the trade unions to exercise pay restraint when price increases in essential services and food are reducing the living standards of families every single month? Pay restraint requires price restraint and the Government control prices. There is an urgent need to review the fuel voucher scheme in urban and rural areas. There is discrimination against old age pensioners in provincial areas as against those in the cities. This anomaly must be rectified and it should not take a High Court action and decision on fuel vouchers to show a Labour Minister the proper action to take. The need was there, the Minister knows that need and he has not made a satisfactory response. It was bordering on very dubious politics to allow a case to go to the High Court which was going to cause such great hardship to so many people.
The causes for the high cost of electricity are overmanning in the ESB, stagnating demand, the high cost of peat, the hydrocarbon tax on fuel oils, rates charges, the price of natural gas and the lack of coal fired stations. The Government are involved in decisions concerning many of these areas so they have a major responsibility with regard to the price of electricity. It will take Government action to bring about a reduction in the cost. The mix of primary fuels in the generation of electricity has changed over the years, especially since the availability of natural gas became a prime fuel for generation. The percentage of electricity generated by oil has declined from 73 per cent in 1979 to 40 per cent in 1982. The percentage generated by gas has increased from 7 per cent in 1979 to 36 per cent in 1982. The percentage generated from peat has declined from 19 per cent to 14 per cent. As an interim measure, natural gas sources should be used to stabilise prices and it must make more sense to ease electricity prices, protect jobs and create new ones than to use the vast profits from Bord Gáis to pay unemployment benefit to workers who have lost their jobs because of high energy costs.
I understand that the new plant at Moneypoint will come on stream in April 1985. It is estimated that the cost of generation will be only half that of existing plants. We would like to hear a commitment from the Minister and an acknowledgment that it is proper that the consumer should benefit from the cheaper cost of generation. That would be one way of dealing with the high price of electricity. If the price of peat through the ESB is greater than its equivalent energy value, it should be priced in direct ratio to that of competing fuel. It is an indigenous energy source and, to use an unfavourable pricing mechanism to close down Bord na Móna bogs and peat generating stations, throwing thousands out of work, is shortsighted and not in the national interest. It is also nationally wasteful.
We are tired of hearing arguments in support of huge national expenditure for so-called strategic reasons in maintaining shipping, steel and transport interests. Surely protecting a home generating capacity with indigenous fuels is more important than assisting the balance of payments accounts of other countries by purchasing oil and coal abroad? We should maintain a level of generating capacity within our shores using our own fuels. If there was ever a national emergency and we found that they had all been disposed of we would be subjected to the ire of the general public. There is substantial excess electricity generating capacity here at present but this should be viewed as a national asset and utilised as a growth generator in the economy. Had the projected growth targets been reached as envisaged at the time of planning, we would have had no spare capacity by 1990. Sales grew during the seventies by an average of 8 per cent and if we had a genuine interest in providing jobs for our people then sales would again have to reach those percentages. However, there is no indication in the national plan that it could even be expected or hoped that such percentages would be reached. That is why the general public have condemned out of hand the plan of no hope that was recently published by the Government.
Planning future capacity should be carefully considered. In the meantime the existing capacity should be used as an investment incentive and so increase demand and revenue for the ESB. In any service where there is excess capacity any sale that will reach minimum fuel operating costs should be utilised. The contribution these sales will make would reduce the capital and interest costs expended in installing that very capacity. It would keep the installations operational, maintain the job complement already in the service and encourage electricity intensive industries to locate here. A marginal cost pricing strategy has merit and it should be considered favourably at this time.
The results of two inquiries are awaited at present. The first is the review of the electricity generating programme which will deal with the need for existing levels of capacity and planned additions for the future. The second is an inquiry into prices which was set up in October 1982 by the Fianna Fáil Government and has been sitting there for the past few years. This will have considerable impact on job creation in industry generally. It is a national scandal that these reviews have not been published. What good reason can the Minister give for their non-publication at this time? What is he trying to hide by not immediately having the reviews published and debated here in this House? These two inquiries are interdependent and they should be published forthwith.
In May 1984 the National Prices Commission considered a proposal to renew the ESB annual prices contract from April 1984 to April 1985. The ESB, as we understand it, wanted £63 million extra revenue for that period. They claimed, in support of their application, projected increases in fuel, materials and payrolls, with exchange losses. It is difficult to understand how they could have included all these matters in their application. In the area of fuel, there is no consistent view of energy cost movement for the period. The National Prices Commission were quite justified in disallowing this part of the claim. The claim was for £15.9 million extra under the heading of material overheads and payroll, of which £13.9 million was allowed. It is very difficult to understand why this was allowed, considering the downward trend, if one is to believe the Government, of the inflation rate and taking note of the public pay policy as announced by the Government in the national plan. The allowable cost increase by the National Prices Commission ended up at £42.43 million but there is evidence available that would suggest that this could have been further pruned. The National Prices Commission also recommended the elimination of a cost differential between Irish and European tariffs, particularly in industrial costing. There is no justification for further delaying this recommendation. The commission deemed it inequitable that industrial, commercial and domestic consumers should have pay increases in costs controlled by the Government which their competitors do not have to bear.
Holding the line on electricity costs can benefit every sector of the economy, exporters, industrial effort, job creation and consumers. We can maintain our competitive edge by controlling prices of essential services. This, in turn, will control price increases for the necessities of life and give the country what it most needs at this time — faith in itself and a sense of optimism for further development and job creation. There is no doubt that electricity prices have a very big impact, not just on our competitiveness but on the attraction of further industries to this country. There has been a very big shortfall in the number of industrial projects in the pipeline to be considered by the IDA in recent years. It is reckoned internationally that one of the prime reasons for this is our essential services costs. Principal among those are our electricity costs.
The Government are a major contributory factor in the high level of electricity cost and must be made to see that their inactivity in stabilising prices has caused widespread hardship on the domestic front and considerable job misplacement and redundancies on the industrial front. They must act now if these interests are to be protected in so far as job creation is concerned. We as a political party are demanding that the reviews should be published forthwith, so that we will have an indication as to what is being recommended in this area, rather than allowing increases to go on apace and then suddenly publishing the inquiry at a more favourable time, obviously to the Government's interests. We are asking the Minister to give a commitment in this regard this evening in so far as the publication is concerned and we are asking him to withdraw the last increase because of the hardship it is causing consumers on the domestic front, the difficulties it is causing our industrialists and which it is creating for job creation prospects as far as development is concerned. We ask the Minister to consider this favourably.