Deputy Spring gave me notice of his intention to raise on the Adjournment the matter of the price of petrol and drink.
Adjournment Debate. - Petrol and Drink Prices.
Thank you, a Cheann Comhairle. I shall confine my remarks to the price of petrol.
Are you satisfied with the price of drink?
I would not know anything about the price of drink.
Over the last few days I have accused the Minister for Industry and Commerce of misleading the public in the matter of petrol prices. I repeat those accusations here to night.
I believe that the Minister has misled people in two ways: first, by concealing the increase he granted in petrol distribution and retailing margins at the start of this month, and, secondly, by relying on the interim report of the Fair Trade Commission to justify that increase, when that report clearly states that:
It is not possible ... for the Commission to recommend a particular margin which would be appropriate. To do so would entail an in-depth examination of costs within the industry. Such an examination might be intensive and time-consuming.
I have to say that the behaviour of this Minister over this matter has been little short of astonishing. Within the last 24 hours, the Leader of the Progressive Democrats who has made a career in recent years out of promulgating the virtues of the unrestricted marketplace and the free play of market forces, has threatened to impose price control on every business that sells imported produce and that has failed to pass on the benefits of a stronger punt to their customers by way of reduced prices. I would be tempted to applaud this convention: yet, when the same Minister had the opportunity less than two weeks ago to do precisely what he is urging business to do, when he had the opportunity to ensure that Irish motorists enjoyed the benefit of an improved exchange rate, he did precisely the opposite, and gave those benefits to the businesses instead. He made a present of almost £5 million to the oil multinationals, some of the richest companies in the world. I cannot see how he can justify that in any terms.
He went further than just giving that present to the oil companies. He also concealed the fact. He concealed the fact that an increase in the wholesalers' and retailers' margins are being applied from the start of the month, and that a reduction in the price of petrol due to motorists was being withheld. If I had not revealed that in my statement last Friday, the Minister would never have made any announcement and when he was caught out he misused the interim report of the Fair Trade Commission to cover up his action.
The interim report of the Fair Trade Commission was published on 5 September last. My statement yesterday accusing the Minister of not publishing the report was based on the erroneous assumption that in his television interview on Friday night he was referring to a later report, or perhaps the final report, which is due now. That mistaken assumption was reinforced by the fact that the interim report simply does not justify the action he took.
The publication of the interim report does not alter the fact that the Minister has seriously misled the public. I have already referred to his concealment of the increases he gave the oil companies, and I want now to deal with his misleading reliance on the interim report.
As far as I can tell, the Minister in replying on recommendations made by the Fair Trade Commission has been saying that in fact he has only implemented a fraction of what the Commission actually recommended, saying on television last night, for example, that the Commission has recommended increases ranging up to 13p a gallon. What the Commission as a body said about the wholesale margin is worth repeating:
It is not possible ... for the Commission to recommend a particular margin which would be appropriate. To do so would entail an in-depth examination of costs within the industry. Such an examination might be intensive and time-consuming.
The Commission also called for the establishment of a Prices Advisory Body, which would, among other things, examine the wholesaler and retailer margins, based on a thorough assessment of their costs.
There were two members of the Commission involved in the preparation of the report — the Chairman (Mr. Myles O'Reilly) and Mr. Patrick Lyons. Since they were unable to agree on a range of issues covered in the report they each wrote individual reports which were then published together as one report. One of the relatively few issues they did agree on was the inappropriateness, as described above, of attempting to set a margin for retailing and wholesaling, without any way of analysing the costs involved in those operations.
They did put forward individual suggestions, based on different interpretations of how the consumer price index might be applied to these margins. The chairman suggested an increase in the wholesale margin of approximately 4.5p a gallon, and Mr. Lyons suggested an increase of around 6p a gallon in the wholesalers' margin.
Taken together with other changes they suggested in the overall price structure of petrol, as opposed to the multinational mark-up, which is the only subject we have raised, the chairman's views could have led to an increase of around 8p a gallon, and Mr. Lyons' view to an increase of around 13p. But none of these views can be regarded as an explicit recommendation by the Fair Trade Commission that the margin payable to the multinational companies should be as large as the Minister appears to be willing to give, and I believe the Minister knows that.
Some changes were implemented by the Minister immediately on publication of the report, and the result was an increase of 3p a gallon in September last. Almost all of that increase went to the wholesalers and retailers. There was a further increase of almost 1p a gallon in October, and as we know, a 2.3p reduction was retained by the Minister in November and passed straight to the wholesalers and retailers. The Minister has therefore been working every month to ensure that the wholesalers and retailers — the multinationals — got increases in their margins.
The circumstances in which the Fair Trade Commission report was brought forward need to be remembered. The previous Minister had reduced the wholesalers' and retailers' margins at the time that he abolished gift stamps. In March last, for instance, the wholesalers' margin was 4.270 pence per litre. When stamps were abolished, this was reduced to 3.97 per litre. Now after the Minister's intervention at the start of November it stands at 4.39 per litre.
In effect, despite all the rows with the companies, what has happened is that the companies now have a higher margin than when they were offering stamps — even though the purpose of abolishing stamps was to reduce the margin. Since the abolition of stamps only a few months ago, they have got an increase of almost 2p a gallon in their profit margin, just over 10 per cent in seven months. The same pattern has been followed in the case of retailers. I question why the previous Minister took on or gave the impression of taking on the oil companies at a number of meetings which took place in his Department earlier this year.
The Minister for Industry and Commerce has also argued that he had to take this step because at least one of the companies in the business is in serious trouble. It is widely believed in the oil industry that one company in Ireland are facing financial difficulties. This company have about ten per cent of the wholesale and retail markets in this country.
The Deputy might now bring his speech to a close.
I will. The total value of the increases given at the start of this month to the oil companies was £4.8 million. The company in difficulties have about ten per cent of this market. In order to give them about half a million pounds the Minister in effect has also given Texaco, Esso, BP and other multinationals over £4 million. I do not see how one can justify that in relation to serving anyone's interest.
The Minister for Industry and Commerce has a number of obligations to the people he serves. He has a responsibility in relation to inflation, development and protection of jobs and to consumers. He has also the responsibility to let the public have information to which they are entitled. I believe he did not live up to this responsibility in the past few months.
Sir, notice was given to you that the Deputy wanted to raise the matter of the concealment of recent price increases in petrol and in alcoholic drinks. I take it the alcoholic drinks have been dropped.
That was not in it.
That was what the Ceann Comhairle's office informed me and that is what the people listening to it today had to say, but presumably the Deputy is withdrawing his allegation that I concealed price increases in regard to alcoholic drinks, so I will not have to deal with that matter any more.
On a point of order——
I have fewer than five minutes and I think I should be entitled to say what I have to say. I did not interrupt the Deputy.
On a point of order, I feel for the record I should state I never mentioned anything about alcoholic drinks.
I checked the matter with the Ceann Comhairle's office recently——
Yes, the subject matter so far as my office were concerned——
——and they confirmed that he wanted to raise the alleged concealment of increases in the price of alcoholic drinks, as everybody who heard it today can verify.
I would like to deal with the press statement of yesterday in which the Deputy accused me of refusing to publish a recent interim report of the Fair Trade Commission on the price formula used to control prices in regard to petrol and autodiesel. This allegation of his yesterday was the central allegation he made in the statement on which everything else hinged. I wish to state categorically, as I did yesterday, that, as in many of his other assertions, the Deputy is misinformed.
The facts are that the interim report was not only published by me as long ago as 5 September last but was accompanied by a detailed press release setting out my reaction to the report. A quotation from the report in the press release issued by Deputy Spring is totally selective and misleading, as well he knows. Contrary to what Deputy Spring implied, the very next sentence in that report after what he quoted and which is set out in paragraph 6.9, page 25, contains the specific recommendatiions of the chairman of the commission as to what the increases in the wholesale margin for petrol should be. Furthermore, Deputy Spring attempted to misrepresent what I said about the matter when I was interviewed on Friday last. As I confirmed yesterday, I made it clear that the concern that prompted me to implement a small part, a very small part, of what the Fair Trade Commission had recommended by way of increases in their interim report in relation to the wholesale and retail margins was that there was a threat to the viability of a number of small Irish oil companies and not to the multinationals. My decision to grant a fraction of what the commission had recommended was taken to ensure that employment involved in Irish companies would not be jeopardised. In addition, had I not taken the action I did, there was a danger that we would be left in this country with only multinational oil distributors. Surely that is not what the Deputy or this House would require. Certainly I would not wish to encourage it.
As I also made clear last Friday, there was no alteration in the retail price. I did not consider it necessary to make a public statement any more than I made a public statement in August last when again there was no change in the retail price. There is nothing unusual, as a "no change" situation would not be particularly newsworthy. The question of concealment does not in any way arise as each and every one of the petrol companies and all the 3,500 garages and filling stations throughout the country which distribute this product would have been fully aware of the changes. In addition, as is the practice, copies of the maximum prices order were presented to both Houses of the Oireachtas, presentation No. 6889 of 3 November 1989. This order sets out clearly both the present wholesale and retail prices for both petrol and auto-diesel and how they are calculated. Thus what is being bruited as having been concealed has been on public record since that date, 3 November, which is 11 days ago. I am accused in this House of concealing something. I do not think I can make it any more public than to lay it on the table of this House for the inspection of any Member of either House who cares to look at it. I did that 11 days ago. The matter could not be more public. It was also made public to 3,500 different businesses throughout the country, plus, of course, the oil companies. If that is secrecy I would hate to think what announcing something publicly would be.