Amendment No. 2 arises out of Committee Stage proceedings and amendment No. 3 is related. Is it agreed that amendments Nos. 2 and 3 be discussed together? Agreed.
Competition Bill, 1991: Report Stage.
Amendment No. 1 not moved.
Acting Chairman:
I move amendment No. 2:
In page 4, between lines 9 and 10, to insert the following:
" `service' includes all manner and type of service including such services as professional services, rights of access to land and buildings and public services save where the latter practices and activities have been given statutory recognition in existing legislation;".
In the Bill the Minister seems to indicate that there is a difference between the private and public sector. It was pointed out on Committee Stage by Deputy Barry that "service" should include, in the widest possible sense, the public sector as well as the private sector. Indeed, we argued that the words "engaged for gain" should have been deleted but this was not accepted. By re-entering this amendment we are seeking to level the playing field between the private and public sector so that public services, unless specifically excluded in other legislation, should be deemed to be part of this Bill. I see no reason why State companies such as the ESB and Telecom Éireann should not be included in this section. Why do we not include refuse collection services and road maintenance? They should be the subject of discussion on competition. If there is a monopoly or an abuse of a dominant position and the consumer is not getting proper value we should be permitted to raise questions.
I agree with my colleague, Deputy Hogan, on amendments Nos. 2 and 3. On Committee Stage the Minister stated that all services were included, professional, public and private. It seems that the public service are being given an advantage over the private sector. As my colleague said, I do not see why companies such as the ESB and Telecom Éireann and local authority services such as road maintenance and refuse collection are not included in the Bill. What is the Minister's view on this?
Amendment No. 2 in the name of Deputy Barry seeks to ensure that the scope of the Bill includes professional services, local authorities and rights of access to land and buildings. Deputy Barry also appears to require that public services be excluded from the terms of the Bill where there is a statutory basis for their activities. This seems self-contradictory on the face of it. The latter aspect to the amendment is, in fact, the object to amendment No. 4 in the name of Deputy Rabbitte.
Professional services are included in the Bill by virtue of the definition of the word "undertaking". Section 3 states:
"undertaking" means a person being an individual,... engaged for gain in the... provision of a service.
That is very clear and, obviously, comprises all professional services.
Local authorities are not included as they are not engaged for gain. Although there may be charges for services in some places it is not a commercial activity. The key point to be made is that it is not the description of the "undertaking" which is the determining factor, it is the nature of the activities engaged in. The words, "for gain", do not mean simply for payment, it must be for what is reasonably considered for commercial gain. As I suggested, I believe correctly, during Committee Stage the problems of rights of access to land and buildings are more proper to land law and to landlord and tenant law. The problem referred to by Deputy Barry, such as a restrictive covenant in a lease, relates to the right-of-way appurtenant to the land or premises. It would not, therefore, fall for consideration under competition law.
Finally, it might also be useful, by way of clarification, to remind Deputies that unless the undertaking or association of undertakings is capable of preventing, restricting or distorting competition in trade, it would not come under the scope of the Bill. It is very difficult to see how an undertaking not engaged for gain would be able to do any of these things.
A point was raised by Deputy Hogan in regard to the public sector. He seemed to suggest that the public sector was, by and large, excluded from the Bill. That is not so. There is no distinction in the Bill, or in any of the definitions, between the public and private sectors except for local authorities. All commercial activities are included, whether public or private. I would remind Deputy Hogan that in amendment No. 2, for some reason that I cannot understand, Deputy Barry sought to exclude public bodies or public corporations, generally State companies, because the last words of the amendment are:
...save where the latter practices and activities have been given statutory recognition in existing legislation;
That would appear to exclude companies such as the ESB, Bord na Móna, Telecom Éireann and a whole range of companies who are given statutory recognition in legislation. I do not think that would be advisable.
My amendment seeks to expressly include professional services in an effort to tackle the current position where professional bodies can and do engage in price fixing. The scaled fees system does not operate in the interest of the consumer. Apparently, it has been legal for the various professional bodies to engage in this practice in the past. I do not know if it was challenged and I understand that the opinion is that it could not have been challenged successfully. Therefore, where price fixing of that manner operates it cannot have been in the interest of the consumer. I want the Minister to confirm, if he considers there is no necessity to expressly include this specific reference, that as he understands the Bill it can tackle this situation. I would like to hear his comments on the arrangements that have been taken on board recently, for example, in the Law Library. Does he consider that the changes suggested there are of any import, that the consumer is likely to benefit and that the changes promised are more cosmetic than real.
I welcome the Minister's clarification. However, there is concern about the words "engaged for gain" in the legislation which was indicated by Deputy Barry. There should be a right of veto on access to land and buildings, although I know the Minister said it appertains really to landlords and tenants. These are the aspects of the Bill which must be threshed out because there has been very little consultation. A competition Bill should cover all aspects of landlords and tenants, mergers and monopolies, etc., but that is not the case here.
Local authority services — or indeed any services offered to the public — should be subject to competition. If the Minister agrees in that regard they should be covered by this section. If there is to be genuine competition anti-competitive practices should be outlawed. Even though at present local authorities do not provide the services for gain, that might not always be the case as there might be sub-contracting of services, which applies at the moment in refuse collections, which has a mixture of private and public competition. I cannot understand why we cannot be more specific and include all services which should be subject to competition in this Bill. However, I will not press the matter.
Amendment, by leave, withdrawn.
Amendment No. 3 not moved.
I move amendment No. 4:
In page, 5, line 9, after "services" to insert "serves to create a temporary environment to nurture and develop new areas of economic endeavour, compensates State companies for social obligations which are imposed,".
The purpose of this amendment on Committee Stage was misunderstood. Far from arguing for any form of protectionism, I am doing the contrary. I have explained that my philosophy in approaching this Bill is the same as I would bring to bear on any industrial legislation, which is that the purpose of the Bill should be, where possible, to assist retention of employment in the economy and to contribute to the creation of new employment. In the context of the present crisis in job creation, it is incumbent on all of us to look very closely at any legislation to see if it attempts to meet the twin objectives of retention of employment and creation of jobs in new areas. For that reason, I have been arguing for a very long time for the necessity for a total root and branch review of industrial policy.
The Minister's announcement last week showed that he had come round to that view himself. Our industrial policy is seriously failing us, we are not getting value for money, there is a crisis and with the impending falling apart of the CAP and the overrun on budgetary targets in terms of the Exchequer, unemployment is likely to get worse in the years ahead. This legislation is designed to facilitate economic growth for which the Minister has made somewhat extravagant claims in terms of what its impact or contribution will be. I am merely seeking to allow our options to be kept open in the critical area of import substitution, for example. I am saying that, for a temporary period, it may be necessary that the normal prohibition rules should not apply where we are seeking growth in domestic industries which might otherwise be snuffed out by force of international competition.
It is one thing for the Minister to strive to create ideal competition in so far as that can ever be realised between existing companies, but I argued on Committee Stage that perhaps a more reliable yardstick of true competition would be ease of entry to the market-place. Quite frankly, in the world of transnational corporations, aggregation of capital and so on, it is very difficult to see where new interests can come into the market-place in many segments of the economy. The notion of import substitution is simply not on in a number of areas because we could not compete. I am not seeking to throw up tariff barriers or to go back to old style protectionism. I am merely seeking a temporary period where, if in conjunction, say, with a State company we want to nurture an industry from a basic nucleus to where it can thrive and compete, there should be particular arrangements.
The second aspect of the amendment specifically deals with the question of whether State companies should be compensated for the social obligations imposed on them by the mandate given to them by this House. I do not wish to dwell on the arguments I made on Committee Stage but it is a fact that some of the commercial State companies are given a very definite social mandate to deliver services which are manifestly unprofitable in certain areas. If we accept — as I think all sides in this House do — that even if you live in a wild and remote part of the country you are entitled to certain essential public services which are available to those living in a populous or urban environment, then regard must be had to the cost on the commercial State company of providing that service, otherwise they are not operating in a truly competitive environment. The system we have adopted up to now does not have regard to that.
It is very easy to provide a telecommunications service in a populous eastern region of the country but it is not as cheap to do so along the western seaboard, for example. The same applies to transport and postal services. There should be some method of identifying the cost of that social imposition, otherwise one is militating against some of the leading State companies being permitted to operate on a level playing pitch.
The Minister on the last occasion promised I would have an opportunity in the near future to debate in a comprehensive sense industrial policy. It may be that the Minister and I approach this matter from a different ideological point of view but I suspect there are major areas of convergence also. I hope the Minister will acknowledge that, having regard to the crisis in unemployment which all economists agree will get worse, the Government are floundering about, they do not know the answers. Whatever about claims from the Opposition, which can be made without having to put them into effect, that we know the answers it is at least clear that the Government do not know them. In those circumstances I would have thought the minister would acknowledge that there is, must be and should continue to be a role for the commercial State companies. They are essentially the two limbs of the argument for this amendment.
In terms of the first aspect of the amendment, I would not like to see us enacting legislation that shuts off a possibility that the new review group established by the Minister may want to examine. I am very gloomy about the prospects of us tackling in any substantial way the objective of import substitution. I do not believe that, in terms of using the yardstick of ease of entry into the marketplace here, there are areas of the economy where it is not realistic in modern commercial market trading conditions to expect somebody to come into the market a new and be able to survive to the point where they can compete. Some temporary respite and, perhaps, other aid, ought to be targeted on developing that area of the economy. After all we are spending enormous amounts of money on industrial policy. Why should there be an argument that the money ought to be spent in the traditional way? Why can we not re-examine how that vast amount of money — £800 million or £1 billion per annum — is being spent and refocus it in a different fashion?
We should keep our options open. I do not think it is essential to the Minister's Bill that this element is kept intact until such time as this House has an opportunity to consider the conclusions of the new review group and make decisions accordingly in the hope of job creation.
Deputy Rabbitte's amendment seeks to give immunity to State companies. This is contrary to the spirit and the underlying thrust of the Bill, and for that reason it is not acceptable. It is the opposite to what some Fine Gael Deputies said on the last group of amendments. Indeed, it is contrary to an amendment tabled this morning specifically saying the direct opposite to what Deputy Rabbitte is suggesting.
In this Bill there are no derogations or allowances made for any company, private or public, whether new to the market or not. It would not only be wrong to have one set of rules for the public sector and another for the private sector but it would be a false comfort to shield the public sector from the stimulus of open competition. Deputy Rabbitte made the point that we should look after State companies and that they perform various services which should be recognised. He feels I do not sufficiently support State companies, but he is wrong in that. I entirely support State companies on the basis that they compete on equal terms and operate commercially. What I am opposed to is the way commercial State companies were often looked after in the past. They were heavily cosseted and subsidised and were allowed to continue to lose large sums of money each year while the Exchequer, through Votes in this House, put large sums of money into them. One has only to look at the accumulated losses, for example, of some companies to realise that.
In recent years many of these companies improved their performance enormously, and that was after they were told that the good old days were over, that large sums of money would no longer be pumped into them and that they would have to operate commercially if they were to survive. Some of them, happily, have been able to respond to that challenge with some success. It would be wrong to reverse that policy and go back to a situation where these companies would get special protection, whether through this Bill, this amendment or by any other means. There cannot be what Deputy Rabbitte describes as a temporary shelter for anyone. The lack of success of protectionism has to be learned. The world economy, as much as the Irish economy, has no future if it is going to relapse into protectionism. That lesson was learned, I would have thought the hard way, over the last 20 years here, and we should not now turn our back on it and go back to the economic policies of the thirties which are no longer relevant today.
I would point out in particular that the Competition Authority, as proposed under section 4 (2), may licence activity "which contributes to the production or distribution of goods or the provision of services or to promoting technical or economic progress". This possibility exists equally for the public and the private sector. I suggest to Deputy Rabbitte that it covers at least some of the instances he gave in arguing for this amendment. It is furthermore open to the authority to invite any Minister concerned to offer observations. In this way the authority will be aware of public policy in the formulation of their decisions on the question of the granting of licences or certificates and they can take that policy into account before they make their decision. For those reasons I ask the House not to accept amendment No. 4.
When the Minister says semi-State companies should compete on an equal basis and be open to the winds of competition I entirely agree but the point being made by Deputy Rabbitte — I agree with him — is that in many cases that does not apply. In some aspects of the activities of semi-State companies the playing fields are equal. They are free to carry on their activities where, how and to the extent they wish, but the point being made is that in many instances that does not apply. Constraints and directives are imposed on semi-State companies by Ministers or the Government to do certain things which are not commercial and which they would not do if left to their own devices.
One example is the bus services. Independent bus companies who decide to run services between Dublin, Cork, Galway and so on choose the profitable routes they want to operate. There are routes to rural towns which are not commercial but the Government, or the relevant Minister, may feel it necessary in the social interest that they should be serviced. Accordingly, the semi-State company concerned are obligated either directly or indirectly, to provide that social service and to suffer that commercial obligation, which is what it is. It is something that in ordinary, basic commercial terms would make no sense. If the criteria of a commercial test were to be applied to it, they would not do it. That is just one typical example. There are many other examples right across the board.
Those are the kinds of categories that this amendment seeks to address, very properly. Recognition has to be given to that because when those social obligations are imposed the semi-State company concerned are not — in the words of the Minister — able to compete on an equal basis. Recognition ought to be given to the semi-State company and measures should be provided to enable them to meet those social obligations. For those reasons the Labour Party support the amendment.
A separate aspect of the amendment seeks to provide recognition for new areas of economic endeavour. That is a fair and reasonable proposal. I agree with the Minister that to some extent section 4 (2) as it now appears goes down that road but it is not sufficient. It would be better and desirable to spell out the provision in greater detail.
It is always a hazardous arrangement when a company come to a new era of economic endeavour and produce a new product. In the beginning the market has to be tested and the company have to try to establish a new product in an environment in which there might be perhaps overwhelming competition from a multinational company. The development of new products deserves special attention. Protectionism is talked about as if it was a dirty word, which is unwarranted. Protectionism had a role to play and, it still has some role to play. I know that there are problems and difficulties associated with protectionism and that it has had its ups and downs, but nonetheless it is very often the exception that proves the rule and there can be instances in which it might be very much in the public and the national interest to give special recognition to a new economic endeavour. It could provide employment, it could maintain employment and in due course it could lead to something bigger if it was given a chance to get established and grow. What can happen and what has happened all too often is that something new and exciting in the commercial world is stifled early on; it is squashed before having a chance to attain a sufficient degree of strength to enable it to stand on its own feet and compete on an equal basis with stronger companies, many of them multinational companies, that were previously in the market-place. Recognition should be given to that fact, and that is what the first part of the amendment seeks to do. It is a good amendment, and the House should support it.
I am disappointed with the Minister's reply. The Minister acknowledges, as do this side of the House, that the major failure in Irish industrial performance has been our inability to construct an indigenous sector of any dimension or employ any significant number of people. If one takes the examples of the closure of Nixdorf in Bray, Kingdom Tubes in Tralee or Travenol in Castlebar, it is crazy that whenever a multinational company decide to pull out of a major Irish town the entire town is left destitute of employment. The only reason that the closure of a branch of a multinational company has such severe impacts on towns such as Bray, Castlebar and Tralee is that in the past 60 years we have been unable to develop a significant indigenous manufacturing sector. In fact, for all of the scorn with which the term `public service" is used, were it not for the existence of the public service sector in Castlebar, Tralee or Bray those towns would have scarcely any employment. That is how grim the position is and that is how badly we have failed to develop an indigenous manufacturing sector. It is simply not right after 60 years that if a multinational company sneezes in the boardrooms of Tokyo or New York an entire significant provincial Irish town should catch cold. All I seek is that we keep our options open in relation to the development of an indigenous sector in the economy, which we have failed to do up to now.
The Minister went back to talk about the days of Seán Lemass in the thirties, of protectionism and its inherent failure and so on. As Deputy Taylor said, there was a great deal to be said for protectionism in that context at that time.
Yes, at that time, they had no alternative.
To say that all we have to do now is clasp the internal market to our bosom and free competition throughout the trading bloc of which we are a member or throughout the rest of the world will solve our employment problems is not correct. The Minister must recognise the apparent evidence everywhere that we have not managed to create jobs for our people. I repeat that I am not arguing for a reversion to protectionism. I am arguing for conditions under which we may facilitate the growth of domestic indigenous new areas of economic endeavour within this economy. I merely ask that that opportunity be kept open.
It is not very helpful for the Minister to point back to the performance of the commercial State companies through the past 20 years. I would agree with him about a great many of the defects he points to, but I point out that those defects are more due to the political culture in Ireland than to any inherent mistakes made by commercial State companies, which are partly the subject of this amendment.
The political culture fostered featherbedding in terms of employment, refusal to tackle the debt/equity ratio, political interference and giving mandates that were undesirable, if not impossible, to fulfill. The Minister himself was part of that political culture. He has only recently sought to break the mould and get away from that culture. At one time he was a very prominent exponent of it and a serious prospect to lead it. I do not stand for that political culture which on a nod and wink basis, got jobs for people in commercial State companies where there was no productive work to be done. I agree with the Minister on that point, but, as he said, that was in the past. The Minister acknowledged the fine performance of some of those companies in recent years. Some of them are now our major employers. They have been slimmed down and are capable of competing with anybody. I speak of companies such as Bord Telecom and the ESB. The performance of some of those companies has been so good that they have been privatised. Some of them have shown the way with joint ventures, which seems to me to suggest one limb of recovery. There is an example in the operation of Aer Lingus on the Naas Road in terms of the joint ventures between Airmotive and Pratt and Whitney. That seems to me to be the ideal kind of project that we should argue for, and whereas I accept what Deputy Taylor said about section 4 (2) going some way to meet some of the aspirations in this amendment, I still think we should keep our options open in terms of the purpose and thrust of this amendment.
Amendment put.
The Dáil divided: Táil, 18; Níl, 74.
Tá
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Byrne, Eric.Ferris, Michael.Gilmore, Eamon.Higgins, Michael D.Kavanagh, Liam.Kemmy, Jim.McCartan, Pat.Mac Giolla, Tomás.Moynihan, Michael. |
O'Shea, Brian.O'Sullivan, Gerry.O'Sullivan, Toddy.Quinn, Ruairí.Rabbitte, Pat.Ryan, Seán.Sherlock, Joe.Stagg, Emmet.Taylor, Mervyn. |
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Ahern, Dermot.Ahern, Michael.Aylward, Liam.Barrett, Michael.Brady, Gerard.Brady, Vincent.Brennan, Mattie.Brennan, Séamus.Briscoe, Ben.Browne, John(Wexford).Burke, Raphael P.Calleary, Seán.Callely, Ivor.Clohessy, Peadar.Collins, Gerard.Connolly, Ger.Coughlan, Mary Theresa.Cowen, Brian.Cullimore, Séamus.Daly, Brendan.Davern, Noel.Dempsey, Noel.Dennehy, John.Ellis, John.Fahey, Frank.Fahey, Jackie.Fitzgerald, Liam Joseph.Fitzpatrick, Dermot.Flood, Chris.Flynn, Pádraig.Gallagher, Pat the Cope.Geoghegan-Quinn, Máire.Harney, Mary.Haughey, Charles J.Hillery, Brian.Hilliard, Colm.Jacob, Joe. |
Kelly, Laurence.Kenneally, Brendan.Kirk, Séamus.Kitt, Michael P.Kitt, Tom.Lawlor, Liam.Lenihan, Brian.Leonard, Jimmy.Leyden, Terry.Lyons, Denis.Martin, Micheál.McCreevy, Charlie.McDaid, Jim.McEllistrim, Tom.Morley, P.J.Nolan, M.J.Noonan, Michael J. (Limerick West).O'Connell, John.O'Dea, Willie.O'Donoghue, John.O'Keeffe, Ned.O'Kennedy, Michael.O'Leary, John.O'Malley, Desmond J.O'Rourke, Mary.O'Toole, Martin Joe.Power, Seán.Quill, Máirín.Reynolds, Albert.Roche, Dick.Stafford, John.Treacy, Noel.Tunney, Jim.Wallace, Dan.Wallace, Mary.Walsh, Joe.Woods, Michael. |
Tellers: Tá, Deputies McCartan and Sherlock; Níl, Deputies V. Brady and Clohessy.
Amendment declared lost.
As amendments Nos. 5 and 6 are related I propose with the agreement of the House, that for discussion purposes we take amendments Nos. 5 and 6 together. Agreed? Agreed.
I move amendment No. 5:
In page 5, line 18, to delete "A licence" and substitute "An exemption".
This is a simple amendment which was indicated on Committee Stage. As the Minister is keen to have the wording of the Treaty of Rome followed as closely as possible throughout the legislation, why has he changed the word "exemption" to "licence"? Having regard to case law which might have to be examined, the Minister should think long and hard about changing any wording in Articles 85 and 86 of the Treaty of Rome. In legislative terms, a word can mean many different things and there are different interpretations of one word when it comes to case law. The Minister's argument does not convince me that he has any grounds for changing the word to "licence". The wording in the Treaty is all right and I cannot understand why the Minister would want to change it.
These two amendments were debated at considerable length in exactly the same form on Committee Stage. The only reason they are here is that they were not reached so far as voting was concerned, although there was a lengthy debate on them. Apparently they were allowed to be put down again. I do not want to go into this at great length because I dealt with it fully on Committee Stage.
Both amendments seek to substitute the word "exemption" for "licence". The term "licence" was carefully chosen after a good deal of thought. In an ideal world the word "exemption" would be preferable. However, "licence" is a term which fits, from an administrative and legal perspective, the activity of the authority. It is a term used to emphasise that the powers of the authority are administrative as distinct from judicial. It helps dispel doubt about any constitutional critism of the character of the authority's decisions. For those reasons it is not proposed to change it.
I am disappointed with the Minister's reply. One has to apply for a licence but one can be granted an exemption. If the Minister wants to remove administrative bureaucracy from the competition area he is not succeeding. He has not made a strong case to change the wording. His change brings more regulation into business. It is something I thought the Minister, with his philosophy, would be trying to remove. The Minister is wrong to put in the way of business, particularly small businesses, a further obstacle and the extra paper work involved in applying for a licence while an exemption——
It would still be the same whether it was called an exemption or a licence.
It would not.
Of course it would — a rose by any other name——
If one is exempt from something one does not have to apply for it.
One has to apply for an exemption.
It is a matter of being granted an exemption, but one has to do all the paper work involved in issuing a licence. A licence involves a lot of bureaucratic red tape. Certain forms of administration are cumbersome and many questions have to be answered. Businesses want to get away from that.
It is only the terminology; it is just a term of description. It makes no difference.
If there is no difference between "licence" and "exemption" why has the Minister changed it from what is in the Treaty?
Who says we have to slavishly follow the draft from Rome?
If there is no other reason from changing it——
No matter who says what, the order says that we now adjourn.
Debate adjourned.
Sitting suspended at 1.30 p.m. until 2.30 p.m.