Private Members' Business. - Electricity Charges: Motion.

I move:

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.

They come like thieves in the night to steal our food subsidies and to cut off our electricity. That is the public perception of this Government. That is how the ordinary, decent people perceive the parties now in Government. Quite frankly, they see no distinction between the Labour Party and their partners in Coalition. Sadly, it is as stark and real as that. This is a perception which is firmly branded and etched into the minds of the poor, the deprived, and the needy in our cities, towns and throughout the country at large. The long nights of August 2 and October 26 of this year will for a long time be remembered among the starkest and darkest in our history. The refusal of this Government to halt electricity price increases clearly demonstrates their heartless and cruel attitude to the poor and the unemployed and compounds a callous insensitivity which has been the hallmark of the reign of this Coalition Government, in office for the past two years. How a Labour Party could seek to justify the inflicting of such hardship and injustice surely defies comprehension and reason.

In these difficult times a powerful case is to be made, even for the middle income groups, for the controlling of electricity charges. Once again, however, the so-called left wing of the Government have dissipated before the monetarist hordes. There is no doubt that this recent increase will deal a very severe body blow to those already struggling to weather the ravages of the recession, the problems of unemployment and of Government cutbacks. I regard the wording of this amendment as an insult to those people to whom I have referred. In no sense of caring does it address the problem that this increase has inevitably compounded. To attempt to justify increases in the cost of electricity in these extremely difficult times on the basis of "decisions taken over many decades with the approval of successive Governments" is opting out of one's duty as a Government. Since this Government took office, every decision they took and every pronouncement they made, they qualified by reference to previous Government decisions. Surely it is about time this Government made decisions for themselves and were prepared to rule and form policies on the basis of what they as a Government considered right, proper, caring and reasonable. But no. Everything done, every announcement made is qualified in this way. The Minister opposite should be ashamed and embarrassed to be associated with this statement of amendment from the leader of his party. Very few people will be interested in its contents or in hearing what happened two, four, six or eight years ago. They are interested only in what is happening now and what is to happen tomorrow and how they are going to get by on the morrow.

For the past year or two ESB bills have represented a significant proportion of total family outlay on a regular basis. Even with the best system of family budget management, even applying this to the middle income groups as they are referred to, the payment of the ESB bill represents a serious burden which is not shouldered very lightly by most of the community. When we take account of the fact that even the middle income groups are hit by unacceptably high taxes, direct and indirect, and a shrinking national cake — as the cake shrinks the take shrinks and the burden becomes increasingly greater on those who are fortunate enough to have even the smallest chunk of that cake — their plight is worsening and their standard of living is eroding rapidly. They are asked to accept a pay freeze but at the same time to take on board a significant hike in what is for them an area of essential spending. Surely such a situation is untenable and must be denounced by any fair-minded person as a further attack on those who invariably are asked to carry the can.

This Government are inviting revolt — and I hope that my words are not true, that my belief is not accurate — from those still fortunate enough to hold down a job who, God knows, are becoming fewer as the days go by. They have taken more than could be reasonably expected of them, and quite clear is the answer they would give to either Fine Gael or Labour if they were to be given the opportunity tomorrow. Throughout my constituency former Labour Party activists are coming to me in the streets, outside the church and at my clinics, telling me how ashamed and disappointed they are and how their great expectations of the leader of their party have been so starkly and harshly dashed, particularly in the past year. They were prepared to allow a period of settling in, but they expected that the kind of social conscience that over the years they have come to associate with the Labour Party would be realised as he sharpened his teeth. Instead, all they find is the stark reality of capitulation. My duty as a public representative is to bring that message to this Minister, to his leader and to their party and to ensure that, in so far as is possible, this side of the House represents the views of those unrepresented former Labour activists. Some of them are still very confused. They do not know whether they are Labour, whether they are more to the left or identified with people who would be sitting normally on my right or whether they would favour coming across to this side in their support. Their confusion is great because it is created by those who presumed and still presume to speak for them and represent them.

Notwithstanding this provocative exercise, my overriding concern is for the unemployed, the poor, the aged and those on various forms of social welfare as well as those on very low incomes. The Government are attempting to take solace from the fact that they granted only a 7 per cent increase on the application for 12 per cent. This is poor consolation for those who have to attempt to meet the extra burden. A married man with two dependent children on unemployment assistance of £69.65 per week will not be convinced so easily by this kind of spurious defence. How is he expected to feed and clothe his family, keep adequate heat in his home and now pay anything from £5 to £10 extra for his ESB bills? This is what the extra amount will be. I understand that recent estimates of the average increase put the figure at around £3, but this seems extraordinary and out of line with the quantity of ESB bills being presented to me at my clinic throughout Dublin North-East. The average bill will be in the region of £100, and I cannot see any justification for using a figure of £3 which, I understand, emanated from a Government statement, again released in the dark of night on 26 October. There is courage, commitment and conviction for you. Take a widow with dependent children, a deserted wife, with dependent children or the father on disability benefit or invalidity pension. Gravest of all, how is the non-contributory old age pensioner expected to cope this winter? These are the silent, unrepresented groups — unrepresented in this Government — whose meek voices and gentle pleas have been callously ignored by this most uncaring Government. I suggest that a long, cold, hungry winter is in store for many of our citizens this year.

Voluntary and charitable organisations speak daily at local level of the impoverishment and hardship. They speak of increased and ongoing petitions for assistance to enable people to pay up so that disconnection does not follow. The conmanship and public relations exercises that have been brought to a sickening new low by this Government are to be condemned. This Government were seen to send civil servants late at night on 2 August to announce the halving of food subsidies. The Taoiseach had gone into hiding a few hours earlier. The people hardest hit are the recipients of social welfare. The Labour Party were not going to stand for such hardship, so the family income supplement was to be brought forward, so we were told. The one big problem was that when it was brought forward they forgot to include those thousands of our least well off. What a sick, cruel, unforgivable way to treat the weakest among us.

The Minister for Health and Social Welfare may attempt to defend this decision on the spurious basis that the health boards are available to assist those most genuinely in need. Surely to attempt to do so is to set out deliberately to mislead. After all, was it not he as Minister, who issued instructions to the board's superintendents regarding the new regulations, telling them how to fob off those applicants for assistance with ESB bills and those who found recently that they were denied the few bob which would have helped them as parents in need to purchase the school uniforms and shoes for their now embarrassed children? In 1983 upwards of 35,000 families had to be assisted in the payment of their ESB bills by the Eastern Health Board, but because of this instruction that figure for 1984 will be halved although the level of need has increased in the meantime. Increasingly my clinics — I suppose this applies to my colleagues also — are being filled by people old and young who are threatened with disconnection of their electricity supply or who have just been refused help with payment of bills because of their inability to make the first part payment. I have witnessed people crying with embarrassment and shame because of their woeful predicament. I refer to both old and young in that regard. I tell the Minister and his leader, the Tánaiste in this Government, as they seem to need to be told, that the needy in our society have no interest in the report of the inquiry into electricity prices referred to by the Minister if it is offered as an excuse tonight. The here and now with all its attendant difficulties is their full concern. Families have told me that they did without food in order not to suffer the indignity and stigma of being without electricity supply. Senior citizens living alone and dependent on electricity for heat are invariably so sparing and conserving in their use of the supply that they are left cold and miserable for most of the winter. If this Government do not realise the extent of the problem with this category, then they should go out and ask those people. These are the hardships the Minister and his party along with this Government have chosen to ignore, and by ignoring them they have either failed or refused to acknowledge the level of bitterness, disillusionment and demoralisation they are engendering.

The philosophy of the Government appears to be, "if you are down we will put you down further and keep you there". We have read about complaints from the ESB apportioning blame for their worsening trade deficit of £32 million. We have seen references to huge losses by the board on foreign loans. The Government should come forward and give us open, honest answers that have meaning and sense to the ordinary people.

I move amendment No. 1:

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

"notes that the Tánaiste and Minister for Energy has recently received for examination the report of the Inquiry into Electricity Prices, notes that the costs behind electricity supply result from decisions taken over many decades with the approval of successive Governments, notes that the finances of the ESB must be assured to maintain an appropriate level of service to all consumers, endorses the view of the Minister for Energy that it is likely that electricity prices can only be reduced through long term structural measures which allow for the regional, employment, and social, as well as economic aspects of electricity supply, and approves the decision of the Government to allow the recent increase in electricity charges, as recommended by the National Prices Commission, which keeps the increase in electricity prices below the already reduced level of general inflation."

The Opposition motion is totally unacceptable in its attempt to imply failure on the part of the Government to control the price of electricity. What is expected apparently is a refusal to allow the Electricity Supply Board any price increase at all without regard to positive justification for a price increase to compensate the board for increased costs which it has incurred. The ESB are not subject to any less price control than any other manufacturer or producer here and, indeed, they are subject to far greater control and scrutiny of their price increase applications in that they are examined in great detail by the National Prices Commission, whose recommendations are subject to the approval of the Minister for Industry, Trade, Commerce and Tourism. They are then examined by the Minister for Energy who in turn submits each application to Government for their approval. This, as no doubt the movers of the motion will know from their former experience in Government, is an extremely detailed and searching examination. This process needs to be put in perspective relative to the situation with price increase applications by most other manufacturers or producers whose applications pass through the process of examination by the NPC and approval by the Minister for Industry, Trade, Commerce and Tourism. Most of these applications do not, therefore, pass through the additional process of examination by another Minister and his Department nor are they submitted for final approval by the Government.

The recent price increase approved for the ESB was for an increase of 6.83 per cent on average to come into effect from the board's November-December 1984 billing period. This increase was recommended by the National Prices Commission following a detailed examination of the board's price increase application. Just how detailed that examination was is clear to anybody who takes the time to read the commission's monthly report No. 139 for May 1984. The commission's recommendation was designed to compensate the ESB for allowable increases in the costs of fuels, materials, overheads and payroll. A significant part of the allowable increase in fuel costs arose from the increased cost of fuel oil due to the fall in the value of the Irish pound vis-à-vis the US dollar. The increased payroll costs allowed were in accordance with the commission's standard price control criteria. The approved price increase of 6.83 per cent was an annualised figure which should be seen in the light of the annualised increase of 10.2 per cent which the ESB had applied for approval to implement in its current fanancial year.

The ESB are required to operate against a general requirement laid down in the Electricity (Supply) Act, 1927, that it must break even, taking one year with another. This is of particular significance in view of the present difficult financial situation of the board. The annual report of the ESB for the year ended 31 March 1984 shows that in that year it had a deficit of £23.3 million. It is the worst trading result ever experienced by the ESB and brought the cumulative deficit at 31 March 1984 to over £37.4 million.

This is a very serious situation for a board which can justifiably be proud of their record over the years since their establishment of being one of the most efficient semi-State organisations. The country indeed owes a great deal to the dedication and efficiency of the board and their workforce in their operations down through the past years. The situation, however, is likley to get worse before it will get better. In fact, in the current financial year, the ESB have been projecting a deficit of £40 million which would bring the cumulative deficit at the end of this year to over £77 million, that is without taking account of the recently approved price increase. This would obviously be an intolerable situation for the ESB and is one which has to be faced up to by all concerned including the ESB, the Government, the public at large and this House. This is the context in which the recent price increase of 6.83 per cent in ESB charges has to be seen.

As I mentioned earlier, that price increase will come into effect from the November-December 1984 billing period and will bring additional revenue of approximately £19 million in the remainder of the financial year ending on 31 March 1985. This will leave the board's projected cumulative deficit at that date at £58 million unless further measures are taken to reduce the costs of the ESB. This is essential to meet the present difficult situation but it must be carried through in a planned manner so as to ensure that all the considerations involved including the regional, employment and social, as well as the economic, aspects of electricity supply will be taken into account.

The ESB have a statutory responsibility to provide an acceptable electricity service to the community at minimum cost to consumers. However, the business environment in which the ESB must operate now is very different from that which existed for the past fifty years for two main reasons. First, the price of electricity has become a major problem because of a very substantial increase during the past ten years not alone in the price of electricity but of all other energy forms as well. In 1981 the ESB publicly declared their objective for the eighties to be to contain annual electricity price increases to less than the level of national inflation as measured by the consumer price index. To achieve this objective every cost factor in the board's operations is being challenged and various cost-reducing measures have been taken for the past three years. Secondly, the great development phase of the ESB is finished with electricity now readily available to every home in the country. Coinciding with this has been the upheaval in the energy world following two major oil crises which affected demand for all energy forms. The outlook for electricity in Ireland now is that demand growth for the next decade will be low or moderate compared with an annual increase approaching 10 per cent in past years.

Already the ESB have in hands plans based on their five-year Strategic Plan 1983-1988 which has as its primary objective, "to make major changes to achieve substantial price improvement". That plan was drawn up by the board and management of the ESB on their own initiative and responsibility. The plan sets out the measures which the ESB will be adopting to accelerate the transition of the board from a high growth expansionist organisation to a low growth stable one. The measures relate to each and every section of the organisation and aim to reduce costs by way of reduced staff numbers, improvements in administrative and accounting procedures and greater control of overheads generally. The proposals for overhead reductions include the setting of operating standards, improving efficiency and monitoring performance.

As is well known, the ESB, like most other electricity utility today, have substantial excess generating capacity which can be attributed to a number of reasons such as a sharp cutback in demand for electricity mainly due to the recession, generating capacity provided to burn Kinsale gas and the provision of the Moneypoint generating capacity to come on stream over the next three to five years as a measure to reduce dependence on oil. The strategic plan envisages greater efficiency in operation of the generating system with a view to achieving economies. When the present generating programme has been completed no further generating projects will be needed until well into the next decade. They also propose strict economies in premises construction. No further head office or headquarters development is envisaged before 1990 and other premises developments will be limited to absolute priority cases.

In the area of distribution, the plan proposes greater efficiency to reduce system losses and stockholding costs. Better organisation, planning and work methods which are proposed will lead to a reduction in staff numbers. In the marketing area the plan envisages the maintenance of a strong presence of electricity in the energy market, the development of new uses for electricity as well as shaping the increasing loads to give a satisfactory financial contribution. The development of tariff structures which achieve financial objectives and which support load shaping and load building is also proposed.

The ESB's financial position is now very serious in that it is financing heavy deficits and that the price increases allowed in recent years were often not alone insufficient to cover the costs incurred by the board but were also delayed until well into the board's financial year so that the additional revenues which accrued from the price increases were unable to impact significantly on the board's deficits at the end of financial years. Any situation where continuing serious deficit is incurred would damage the financial integrity of the ESB to the point where it could no longer borrow or service its borrowings and its future could only be seen in the context of another major burden on the Exchequer. The projected deficit for the current year arises from a combination of increases in costs and continuing relatively low growth in demand reflecting the effects of the recession. The ESB, therefore, in submitting its price increase application to the National Prices Commission, proposed that the deficit, existing after the implementation of a price increase, should be recovered over a five year period commencing in April 1985 in order to minimise the effect on prices. The board's proposals in this regard will be considered in due time.

I referred a short time ago to the proposal in the ESB strategic plan to develop tariff structures which will support load shaping and load building. This brings up an often repeated criticism in recent times that industrial and commercial electricity tariffs are unduly high and that these categories of consumers are, in effect, subsidising the tariffs of domestic consumers. It is, of course, easy for certain interests to simply suggest the loading of costs onto domestic consumers as a means towards achieving a reduction in industrial and commercial tariffs but this does not give due account to the already heavy effect of electricity prices on domestic consumers. Neither is it a fair thesis to advance that specific costs of production must, in themselves be lower than costs in other countries without taking account of the benefits of financial supports for industry here. It must be remembered that fair comparison between prices charged by different electricity utilities is an extremely difficult proposition because of the timing of such comparisons and the virtual impossibility of determining the level of, and of quantifying, the benefits to industrial and commercial consumers in other countries through such measures as fuel subsidies, preferential fuel prices, injection of equity capital, capital subsidies and underwriting of currency exposure risks.

A typical example of the importance attaching to the timing of price comparisons is represented by current ESB charges vis-à-vis those in the United Kingdom. There have been a number of indications in recent days of firm proposals to increase UK prices for electricity in line with the increase in inflation. Such an increase would restore the relative competitiveness of ESB charges with those of the United Kingdom.

It is necessary, however, to keep a sense of proportion about criticisms of high electricity prices for industry here. Apart from a few large and energy intensive firms the cost of energy to industry comprises a small proportion of overall costs. A survey of energy consumption undertaken by the Department of Energy and the Confederation of Irish Industry in 1981 indicated that for the majority of firms energy costs are less than 5 per cent of turnover — with heavy fuel oil the predominant fuel. The results of the follow-up survey, which was carried out this year, are at present being processed.

The price of electricity for industrial use is not a simple matter and is influenced by a number of factors such as: the tension of supply; the load factor; the level of consumption; the season of supply and day or night use of power. In addition, Ireland's relative geographical isolation, especially in regard to electricity where our country is the only one in Europe without an operable electricity interconnection with a neighbouring country, is a further consideration to be borne in mind when responding to calls to bring our electricity tariff structure into line with those of our European Community partners.

I should also like to refer to the report of the inquiry into electricity prices. The Tánaiste and Minister for Energy, in a press statement which he issued on 5 October 1984, announced that he had received the report of the inquiry, that it was very comprehensive and would require detailed examination in his Department and by the Government. It is hoped to have that examination completed at an early date. The Tánaiste also confirmed that, following consideration of the report by the Government, it is intended to have that report published. I do not wish to pre-empt in any way the considerations or conclusions of the inquiry but I am sure there is little doubt that the report of the inquiry will be addressing the question of industrial, commercial and domestic tariffs and the basis on which these should be determined.

It is also relevant to mention here that, when the price increase of 6.83 per cent in electricity charges was being approved, the Government decided that the increase would be subject to review when the report of the inquiry is being considered.

The difficult financial situation facing the ESB is not unique to that board. The same situation faces many electricity-generating utilities in other countries throughout the world. This has largely influenced the International Energy Agency into convening meetings of electricity experts in member states to carry out a study of the overall situation and to prepare a report on their study. The objectives of the study are:

(1) To assess the future role of electricity in advancing the economic development and improving the energy security of IEA countries;

(2) To identify obstacles which may prevent the electricity utilities achieving that role.

(3) To highlight experiences in Member countries which are relevant to the situations in other Member countries.

(4) To suggest policies to assure the proper role for electricity and in particular policies to: maximise efficient demand for electricity; improve the efficiency with which electricity is generated; transmitted and used; restrain cost increases; reduce the use of oil and other insecure primary fuels in electricity generation and enhance generally the contribution of the electricity industry to energy security; mitigate the environmental problems associated with electricity production and transmission; enhance international co-operation in the development and use of electricity resources and assure a sound relationship between electricity prices and costs.

The first meeting of the electricity study was held at the end of last June and it is expected that the report of their findings will be available early in the new year. There are also clear indications that the report will be a very comprehensive one which will be of great interest to anyone concerned with the industry, whether as a producer, distributor or consumer.

Deputy Flynn spoke about the importance of electricity prices in industrial expenses. This has to be seen in perspective. There is no point in not keeping a sense of proportion. For the majority of firms energy costs are less than 5 per cent of turnover. That is worth repeating because the Deputy seemed to give the impression that costs were running beyond that figure and instanced only two areas where that might have happened. Another survey is being done and when the report is available those findings will be updated and I am sure Deputy Flynn will be interested to know of them.

Would the Minister agree that our industrial electricity costs are more than 20 per cent higher than other competing EC countries?

I am sure the Deputy could pick out countries where that might be true, but he would also have to find out the other benefits or subsidies which are available to competing companies which export their goods to Ireland. It is not enough to take only one item of cost into account and say that because in one instance it is higher our energy approach is wrong.

The cost of all our essential services are in excess of the European average — electricity, telecommunications, transport and so on.

Please do not interrupt.

Only yesterday our export figures showed a magnificent increase, particularly in the industries the Deputy highlights. This could not have happened if competing companies had an advantage over our companies. Our exports last year would not have been so successful if our electricity and other charges were driving those companies out of business.

We could have 10,000 extra jobs if we maintained prices at the international level.

The Minister without interruption, please. He has five minutes to conclude.

The Deputy mentioned the cost increase claimed by the ESB. The Deputy accepted the disallowance by the National Prices Commission of a certain percentage of the increase demanded by the ESB and then said the Government should relieve the country of the rest of the increase. He has been in Government and should know that the National Prices Commission have gone through the various problems faced by the ESB and the reasons for this price increase and after a very detailed examination they recommended this increase. It was not something which was just thrown out and accepted by the Government. This recommendation was submitted to one Minister, then a second Minister and then the Government before it was finally accepted. We do not lightly accept national price increases and apply them to such an important commodity as electricity. If there is not strong justification for the increase mentioned in the National Prices Commission's report——

They recommended the elimination of the cost differential and that is the recommendation we want the Government to implement.

Deputy Flynn, please. The Minister without interruption.

I would like to refer to what Deputy Fitzgerald said in his opening speech. I thought he was about to read the lesson of St. Paul to the Corinthians. He said they come like thieves in the night to cut off the electricity.

We cannot get the message to sink in.

In the last year 26,000 connections were made to new houses. That is a significant figure. We will be building more local authority houses this year than were built for many years and they will be connected by the ESB. They will not be cut off, as the Deputy suggests is happening in his constituency.

I was asking how many people will be able to pay their bills given the present climate? It is all very well putting people in houses, but if they cannot pay their bills and they come to me because the Eastern Health Board cannot help them——

Deputy Fitzgerald, please.

As the rate of increase is below the rate of inflation——

Does the Minister agree that there is an increase in the number of representations from families?

That inflation rate was below the rate of inflation that existed when Fianna Fáil were in office. At that time an inflation rate of 20 per cent was not unusual. Fianna Fáil postponed an increase, which caused a big problem for the ESB.

We did not have 250,000 unemployed.

They postponed an increase and when the new Government came in——

That is to do with control.

——the ESB had less money to meet their commitments. This meant that a higher increase had to be applied to get the ESB back on the rails.

I would like to conclude now by calling on the House to approve the Government amendment to the motion and in particular to endorse the Government decision allowing the recent increase in electricity charges which was recommended by the National Prices Commission and which was in fact less than the increase in the already reduced level of inflation.

Ní mór dom a rá ar dtús go bhfuilim ag cuidiú leis an rún atá molta ag an Teachta Flynn. The first day I commented on the increases the Government so willingly approved, and confirmed here tonight, I said that the increase will further reduce the competitiveness of Irish manufacturers resulting in increasing imports and a reduced share of the export markets which would make the Government's national plan figures for industrial growth and job creation unobtainable. Since then I have had no reason to change that view. At present the Government are asking workers for wage restraint. Do they realise that this increase will make their request very difficult to attain? Surely the Government must be conscious of the fact that the increase could not have come at a worse time of the year, November and December, when it will affect householders, all industry, manufacturing and supporting industries and agriculture? Surely they realise that winter brings increased usage in all these areas. The price increase is outrageous. It shows the Government's insensitivity to our economic problems.

I take this opportunity of paying tribute to the workforce in the ESB, those people on whom we all depend, especially at times of storms or other bad weather. It is not my intention to try to detract in any way from that workforce; rather, I wish to show that the responsibility for the position in which the ESB find themselves rests with the Government. I wish to indicate particularly the adverse effect that the Government's action is having on industrial development. As reported at column 1286 of the Official Report for 1 March 1984, the Minister of State at the Department of Energy said:

Minister Bruton established a prices inquiry with regard to the high cost of electricity, particularly to industrialists. That inquiry has advanced in its work and the Tánaiste and Minister for Energy is at present considering an interim report from it. When that is completed he will bring the matter to the Government.

I presume that is the report that was referred to a few moments ago. It is my purpose to prove to the Government that another plank of their famous credibility is shaken by this action as well as by their various other actions in Government. They have created a situation, by their ineffective policies, in which demand for electricity is reduced. They contributed to the closing last year of 700 businesses. Demand has been reduced so the production of electricity must be reduced accordingly.

We know that were it not for the fact that a by-election was in the offing the Government would have closed many generating stations. Everyone knows, too, that the lack of confidence in the Government is stifling initiative in industry, is stifling the whole fabric of our industrial promotion. There appears to be no realisation on their part of the damage they are doing. The effects of the cost of electricity to industry have been established for some time. In this regard I quote from column 1287 of the Official Report of 1 March 1984 when the Minister of State, Deputy Collins, said:

There can be no doubt, and there should not be any doubt, that the price of electricity is vital to Irish industry.

He went on to say that the ESB must adapt to a slow emergence from a recession. We are going deeper into recession while this Government are in power and there is no indication that they are about to take us out of that recession. Further in the debate of 1 March the Minister of State referred to the national interest as being served by a constructive attitude by the ESB in regard to their future activity and in ensuring that the price of electricity to consumers — I presume he means all consumers — particularly industrial consumers was kept within reasonable terms and if possible returned to the price levels that prevailed in those countries with whom we compete, especially those in Europe. The Minister went on to say that the Government have the responsibility for putting the economy back into order. He said an important part of this would be to ensure that electricity prices to customers, particularly industrialists, are brought back into line with those of our competitors in Europe. He made that point twice in the same speech.

In case the Government may be under any impression that we on this side of the House are the only ones who are aware of the detrimental effects of the cost of electricity, I quote that renowned body, the CII, as reported in their Newsletter of 19 July 1983:

The Confederation deplores the decision to increase electricity prices solely to meet cost increases due to Government imposed charges on the ESB. These included additional charges in lieu of rates, higher profits from natural gas charges and the continuation of the highest taxes on fuel oil in Europe.

The confederation went on to say that major damage will have been caused to the industrial base without offsetting benefit. More recently, in the Irish Independent of 26 June 1984 in a report by Mr. Tom Shiel we read that:

As the ESB seeks a 9 per cent increase in prices, pressure is increasing on the Government to lower electricity charges for industry.

Further, the report continues:

Trade Minister, Mr. John Bruton, gave a clear indication last Friday that the Government intended to cut prices to industry.

The reference was to the Friday preceding 26 June. According to the report ESB prices are seen as a major factor in our recent industrial stagnation. In their Newsletter of 23 October last, the CII say:

The Confederation is appalled that the Government have decided to impose increased electricity charges on industry although large industrial users in Ireland are already being charged over 50 per cent more than their competitors.

The confederation indicate by way of a table what the differences are. Irish prices exceeding EC averages included the produce of small industries, 23 per cent, medium-large, 27 to 32 per cent, and large, 52 per cent. Those excessive prices already had resulted in losses of export orders and increased penetration of the home market by imports. Electricity intensive industries include synthetic textiles, cement, steel, aluminium, mining, chemicals and pharmaceuticals, in which electricity bills account for more than half of the total cost. Those industries will be most affected.

The imposition of these new charges means that more orders will be lost, that the attractiveness of Ireland for new investment in high output electricity intensive industries will be diminished. Irish industries must be cost competitive to survive in international competition. Essential services such as electricity must be available at internationally competitive prices. Higher prices for these services will result in fewer jobs in the industrial sector, on which most of the employment here depends.

A report has been issued by National Utility Services — each year that body do an international survey of electricity prices — and the findings for the year ended April 1984 were not a pretty sight when it comes to the ESB. According to the report the ESB charges to commercial and industrial users is the highest among the 12 countries surveyed. Surely the Government are aware of all these commentaries. Yet they go along and increase the price of electricity to an already damaged industrial sector. They must be aware of the first report of the Joint Committee on Small Businesses in regard to manufacturing industry. The report states:

Although State policy towards small industry is one of support there are contradictions including, on one hand, a variety of support services through various Agencies and, on the other, excessively high charges for State provided commercial services such as electricity, post and telecommunications. It is generally recommended that there should be a third tier of electricity charges introduced for the benefit of small industry.

When will the Government act on these reports in a responsible way, as everybody would expect them to do, so that our industrial development will be saved from annihilation?

The rate of inflation being 8 per cent, the last budget gave an increase of 5.25 per cent to the short term unemployed. The family income supplement does not include this. The budget gave more than 6 per cent of an increase for long term unemployed, a miserly and totally inadequate gesture, and this recent ESB imposition will leave them more isolated and hopeless. The domestic consumer will be hit hard and Deputies across the floor should be able to get this message across to Ministers. Government Deputies should not be turning a blind eye to this. Many people throughout the country are finding it most difficult to pay their ESB bills at the present rate, never mind the increase of 6.83 per cent that will be added for November-December. The days will be shorter but let us hope the winter will be mild so that they will not have to use too much heat. When they come to pay in January they will be under more pressure.

All Deputies must be aware of the pressures their constituents are under to meet present ESB bills. Those who do not qualify for the family income supplement, those on unemployment assistance and many other social welfare recipients who already are going hungry in order to pay their ESB bills, will be hardest hit. It is disconcerting and dishonourable for any of those people to have their electricity cut off.

The Government do not care a whit about the pressure they are putting on the people by their policies of financial rectitude, the balancing of the books, their building on reality, how are you? They are not facing up to reality and the sooner they do so before they do any more damage the better. The people of the country may be taking measures that none of us would encourage. If the Government cannot face up to their responsibilities they should ship out and let Fianna Fáil take over and restore confidence, credibility, initiative, so that the country will be taken out of the morass it is in. I wonder whom the Government will find to blame for their failures in their present term of office. On one occasion they blamed the Korean war; they blamed the Suez crisis between 1954 and 1957; in 1973 to 1977 they blamed the Arabs and the oil people. Who will be their whipping boy now?

Fianna Fáil.

That horse will not win any more. During the past year and a half the Minister has tried unsuccessfully to blame Fianna Fáil. That will not work any more because the people of the country realise from whom they can get leadership with commitment and reliability.

Debate adjourned.