Vol. 522 No. 3
1 Mr. Quinn asked the Taoiseach if he will make a statement on his meeting on 21 June 2000 with representatives of ICTU to discuss the recent inflation figure; the decisions reached at the meeting; and if he will make a statement on the matter. [18103/00]
The Tánaiste, the Minister for Finance and I met representatives of ICTU on Wednesday last to discuss further steps to reduce inflationary pressures. This was followed on Friday by meetings with IBEC and the CIF, as well as the IFA.
The Government shares the concern of the social partners that inflation is running at levels significantly above those envisaged when the Programme for Prosperity and Fairness was negotiated. A number of the principal factors which have contributed to the current trend are however of a once-off nature or are unlikely to continue to impact negatively on inflation. Accordingly while measured inflation will show a further increase in coming months, this will have fallen back significantly by the end of the year.
The Government has given careful consideration to the proposals and views put forward by the social partners. There is common ground between us that all appropriate steps should be taken to ease existing pressures, building upon those measures already taken by the Government, such as the allocation of new resources to the Competition Authority and the housing package. In addition, there is general agreement that a wage-driven inflationary spiral would be highly undesirable from the point of view of businesses and employees, as well as the achievement of the ambitious economic and social aims of the Programme for Prosperity and Fairness, including the incomes area.
Against this background, the Government yesterday decided on a package of measures, including a decision to bring into force immediately the Intoxicating Liquor Bill, which is due to be passed by the Dáil this week, in order to secure a significant increase in competition in the licensed trade, especially in urban areas. A commission on licensing to consider the issue of further liberalisation of licensing, in particular with regard to the off-licence sale of alcohol in the interest of greater competition, will be established immediately and required to report within three months. Pending the impact of the new competitive measures, current circumstances justify the imposition of temporary controls on the price of drink, which will be announced separately by the Minister of State, Deputy Tom Kitt. New increases in charges or levies by public bodies will not be approved by the Government for the remainder of the year.
The Government will consider the question of the role which indirect taxation might play in the context of preparations for the next budget. That budget will also be an important opportunity to progress the objectives for living standards set out in the Programme for Prosperity and Fairness. Relevant Ministers will initiate immediately, detailed consultation with representative bodies for the main sectors of the economy to impress on them the need for a sense of social responsibility and restraint in the setting of prices and margins, especially over the rest of this year. In coming weeks the Government will review the outcome of these consultations. We will consider in that context, the question of whether additional measures, over and above those announced yesterday, should be taken.
The office of the Director of Consumer Affairs will be significantly resourced to initiate a vigorous programme of price monitoring and publicity, to highlight trends and patterns in prices and to encourage greater price sensitivity on the part of consumers in the interest of stimulating further competition. The Government will maintain close surveillance of movements in prices arising from the enhanced monitoring through the office of the Director of Consumer Affairs.
In addition to progressing measures to accelerate the commitments made in the Programme for Prosperity and Fairness in respect of a number of issues impacting on quality of life, such as housing, public transport, and support for gain sharing at enterprise level, the Government has decided that the establishment of the new National Centre for Partnership and Performance should be brought forward. In recognition of the importance, for the quality of life, of the quality and cost of child care, the Government has decided to allocate an additional £40 million over and above the £250 million allocation in the national development plan, to the further development of child care. This additional funding will be allocated in coming weeks following further consultation with the social partners, as provided for in the Programme for Prosperity and Fairness.
The Government believes the package of measures announced yesterday represents a balanced response to legitimate concerns about the effect of higher than expected inflation, while at the same time maintaining a focus on the underlying importance of adherence to the terms of the Programme for Prosperity and Fairness.
You might agree with me, a Cheann Comhairle, that the reply was delivered with inflationary speed and much information was conveyed by the Taoiseach. I presume you will bear with me therefore if I ask a number of supplementary questions.
The Deputy should not exaggerate the amount of information conveyed.
I was referring to the speed at which the reply was delivered, not the quality of the content. A number of questions arise. At what rate is it projected officially that inflation will peak before it subsides? I know the Taoiseach has received such reports which are part and parcel of the information available to a Taoiseach and a Minister for Finance. In relation to the Taoiseach's comment regarding indirect taxation, costs and levies, is the Government prepared to consider reducing public transport fares, in particular bus and rail fares? In my case the rail fare was increased by 5p, from 80p to 85p. On child care, an additional allocation of £40 million has been announced. How will this be allocated? Will capital grants be made available, for example, to recognised or bona fide applicants who wish to establish child care facilities or will it be allocated by way of capital allowances as described previously by the Minister for Finance? This does not address the need for such facilities in some areas. The radical measures to be announced by the Minister of State, Deputy Kitt, are so insignificant that they have been delegated to a Minister of State. Any Minister with the power to control the price of the pint would keep that function to himself or herself. May I presume therefore that the price control order will be confined to the price of the pint as sold in a public bar and will have no effect on the price charged in lounges or any other drinking establishment?
The projected rate of inflation is about 6%.
The Taoiseach has the exact rate. What is the official figure?
I do not have a chart but I have seen a figure of 6%.
Will that be the peak?
I think the highest it could go will be 6.2%. I do not have the chart, but I understand that is the highest point on it. It refers to August-September.
Will that be the peak?
Yes, but that is based on prices not increasing in the domestic sector. Two thirds of the increase in the current rate derives from three areas – interest rate rises, fuel and cigarettes. On price inflation on the domestic side, there continues to be concern about prices in other categories, mainly from the sterling area. The supermarkets have argued that they have not passed on some of the price increases from the sterling area. For competitive reasons, I hope they do not do so.
Is the Taoiseach saying the rate will peak at 6.2%?
That is the projection. To the best of my knowledge it is the Central Bank projection.
I thank the Taoiseach for sharing that with us, as they say in the Californian films.
"Share your pain" is what they say.
We should share figures from the beginning of the year. It is not intended to reduce transport charges.
Why not?
If transport charges were to be reduced by 10% it would not even take 0.1% off the inflation index. When we looked at these issues, child care was considered to have a far greater impact not in reducing the index, but on people. As we said yesterday, there should not be any price increases in any area between now and the end of the year.
The child care issue is based on the supply side. A mechanism has been established for use of supply side moneys, which the Department of Health and Children is using. It is working well, but ICTU has views on this area. It believes it might be addressed more effectively. Yesterday it presented us with a paper and asked us not only to follow the other scheme but to look at its new proposal. At the last moment we decided to consider it, rather than including it with all the other measures. I am not sure if we will adopt it, but the ICTU appears to have done a great deal of work on the paper, so we will look at it. It is concerned with the supply side.
Will it involve capital grants or capital allowances?
I understand it involves grants rather than allowances.
Has that been decided?
No. I looked at the ICTU proposal.
The Deputy's microphone is not on, so there will not be a proper record of proceedings unless Question Time—
I am more concerned with results than with the record.
There should be an accurate record of proceedings.
I take your point, Sir.
The power of the order lies with the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Tom Kitt. It is being drafted to this effect. I hope it will be ready tomorrow.
Will a price control order on the price of beer, stout or whatever apply to the entire drinking establishment of a public house or will it be confined to what was traditionally known as the public bar?
I am not aware of that. I assume the Deputy believes it should apply to the entire premises.
Yes.
I will note that.
What about the snug?
The order will be retrospective; it will not apply from now.
Is the control on the price of drink a stand still order or a control order? Are prices to be frozen at their present level or will it be a requirement that henceforth, each individual price increase be sanctioned? Has a survey been done on all licensed premises to establish their current prices so that it will be possible to monitor whether there have been increases? Without knowing a base line it will not be possible to know if there has been an increase. Will the Taoiseach indicate if the drink price controls will apply to all drinks on sale in public houses, including spirits and mixers, or a few, such as stout, ale or lager? Will they apply to off-licence sales and, if not, why not?
These are points relevant to the order. I have not seen the order, but there is a price freeze to a retrospective date. While I do not believe every licensed premises is covered, an amount of data has been collected which can be referred to. From now on more inspectors will be required on the monitoring aspect, but they will have data on the period they are taking.
Does this data relate to all public houses or to a cross section of houses and of regions?
The data is based on the normal surveys undertaken in the section. It does not include everywhere but tries to take into account as much as possible. It is fairly widespread. From the data I have seen, it is extensive. An enormous number of inspectors would be required to cover every licensed premises and all other venues where drink is sold, be they clubs or whatever. The numbers of inspectors will have to be increased to allow for the kind of monitoring that is required. However, the information is fairly widespread.
In the statement published by the Government, item No. 4 refers to an extensive campaign of awareness and enforcement of price monitoring. The Government cannot do that with a new recruited army of inspectors for logistical reasons which the House understands. Is it the Government's intention through the appropriate agency, be it the Competition Authority or a new body to be established by the Minster of State at the Department of Enterprise, Trade and Employment, Deputy Tom Kitt, to ensure that there is a helpline which aggrieved customers of public houses, who are the victims of the non-implementation of price control, could use and that, in consequence, an electronic or telephonic pub spy could inform the Minister of State that the publican in question had not implemented the price control? Is that what is meant by what is described as "an extensive campaign of awareness and enforcement of price monitoring"? As the staff will not be available, will the public be recruited and facilitated in this regard?
There has been much discussion on this and the social partners and others have expressed their views. It does not relate solely to the drink area. For a number of years inflation has been very low, so a number of the mechanisms available to try and curb price increases have ceased, especially the ones used in public media studies. For this to be successful, the consumer must be involved. I was amazed to see the differentials in some of these issues.
A pint of Bass would cost a mighty sum in certain parts of the country.
According to this survey the price ranges from between £2.10 to £2.85, which is very serious.
Will the Taoiseach bring it in from Kennedy's if the price goes through the roof?
I believe they charge the lowest price. There is competition on petrol prices, but I do not believe there is much awareness of that. There is a difference of £8 on a full tank.
There is a cartel. The staff will not be available to administer this. Does point No. 4, dealing with an extensive campaign of awareness, include a facility whereby the public can telephone with regard to point No. 1, dealing with a freeze on drink prices? If so, how will it work and how will the public know?
It includes that, but there will also be an advertisement campaign. Over the past ten years, advertisements set out information on a range of areas. It was, and could still be an effective system, showing the prices for individual products. This would be very useful. These campaigns were stopped 12 or 13 years ago. However, to involve the public, the information must be given through advertisements or other means. Advertising was very successfully used before, where the products and the range and the differentials were shown. It is a model which would work again.
I asked the Taoiseach about this before. There seems to be a trend in admin istration that the urban areas do best in all of these price competitions. Is the Taoiseach aware that there is at least a 10% gap between petrol prices in urban and rural areas, that this is impacting heavily and causing poverty in rural areas? It is mainly because there is no competition in the retail petrol sector in rural areas.
Clearly there are differentials, but the prices of the three main companies which each hold about 25% of the market in this area, vary across the country and are quite competitive. It seems as if different locations are picked and the situation changes, but there is price competition.
On petrol, the Deputy is correct. On drink, the surveys show that prices of drink in rural areas are far more competitive than those in city areas. I suppose that is the reason there are about 10,000 licensed premises for about two thirds of the population and only 1,000 for the 34% of the population in the greater Dublin area.
I note and welcome the additional £40 million for child care to which the Taoiseach referred in his reply and look forward to hearing exactly how it will be spent. I note also that the Taoiseach mentioned that this was a contribution towards improving quality of life. Does it have as much to do with that as it has to do with the shortage of labour and the need to ensure as many parents as possible are involved in the conventional workforce? If he is to pursue the quality of life issue and given that the issue is now coming to a head, at this point would he give a commitment on the introduction of an indicator, to which he referred before and which he considered before?
On the inflation figures in general, would he agree that direct subvention would be preferable to cutting indirect tax, certainly from an environmental point of view? Given that transport costs, including congestion, and accommodation costs are a large factor in inflation, in that regard would he consider that subventions in those two areas are badly needed? Will he make a more radical proposal regarding subvention in both the accommodation and transport areas to come to grips with both the quality of life issue and inflation?
On child care, it was agreed in the PPF that following a completion process with the social partners the Government would adopt before the end of this year a strategy to support parents in meeting their child care needs and implement it over the period. We are trying to put more resources into that and look at the submissions which have been put forward.
Deputy Quinn asked me about the areas included in that. The submissions made include proposals regarding grant aid for private child care providers; increased levels of grant aid for non-profit child care providers; funding for a greater number of those who have applied for grant aid for disadvantaged areas; and enhanced training programmes. Some of those would fit into the original programme and some of them would be looked at in the context of the £40 million to which I referred.
On Deputy Sargent's other questions, no option has been ruled out on this issue. We must keep monitoring it. It is the only area of the economy which requires close attention and therefore there must be an ongoing way of looking at proposals and suggestions. There are different views within the sectors about the different means of tackling inflation and there are different views among the social partners, and among economists also. However, cutting indirect taxation could have negative consequences for inflation as well as for the overall performance of the economy and therefore these issues must be looked at. That option must be looked at in the context of the budget and a balanced assessment of all the factors over the next few months.
I did ask—
I call Deputy Bruton. If time permits, I will return to the Deputy.
Regarding the standstill on price increases by Government bodies and agencies, could the Taoiseach indicate the areas in which there were proposals in the pipeline for increases which have now been stopped? How many additional inspectors will be needed to police the drink price controls? Why did the Government choose to focus on reducing the price of drink? Does he see some irony in the fact that the Government is simultaneously spending resources on an anti-alcohol policy in view of the fact that alcohol contributes more to domestic violence than any other cause and that it is almost equal to cigarettes in terms of its contribution to premature deaths, and yet it is the one area where the Government will spend resources to keep prices down at a time when it is deliberately increasing the price of cigarettes for an opposite purpose? To put it at its mildest, does the Government see irony in focusing on this area or is this simply a CPI manipulation exercise without social vision?
On cigarettes, all Deputies will be aware of the cancer strategy programme and where the money is going. The money is going towards trying to make some impact in the area of research dealing with the cancer strategy programme.
The Intoxicating Liquor Bill, which will be passed in the House this week, contains a range of measures which have been debated for many years which we hope will be effective. They involve trying to curb drinking and stop young people drinking by involving the licensed trade, which is in the best position to help.
Asking the licensed trade to curb their custom is like asking turkeys to vote for Christmas.
In fairness, I do not accept that. Many members of the licensed trade go to great efforts to stop people who are under age from going into pubs.
It is not under age people who beat up their wives when they come home drunk.
It is about under age drinkers and others.
It is adults who over consume.
Remarks should be made through the Chair.
Under age people go to the off-licences.
It is not fair to say the licensed trade does not make efforts to try to control under age drinking, but there is a particular problem about under age drinking the difficulties of which have been debated at length in this House, and that is addressed in the Bill. There is a need for greater responsibility in the licensed trade in dealing with people who drink excessively irrespective of their age, but the license trade is conscious of that. The days of allowing somebody drink until he or she falls down are long gone. Publicans are far more responsible nowadays.
These issues, cigarettes and drink, are both health issues. The reason the focus is on drink is that in CPI terms for years and not just recently, the price of drink has been far higher than anything which could be justified.
The opposite approach has been adopted with regard to cigarettes. The Taoiseach is contradicting himself.
(Dublin West): I protest that in the last week before the recess we have not been allowed put questions regarding Northern Ireland and the Portugal Summit to the Taoiseach because of yesterday's statements.
That is not a supplementary on the question.
(Dublin West): Nevertheless it should be stated. If the rate of inflation over the next 12 months is likely to be at least 6% and the first 12 months of the PPF involves a wage increase of 5.5%, does the Taoiseach agree that the increase has been completely wiped out for ordinary workers; and other areas of Government policy are also wiping out the tax cuts in the most recent budget? Does the Taoiseach agree that the increase in inflation added to the introduction in Dún Laoghaire-Rathdown of a refuse charge of £150 per year, for example, completely wipes out the tax cuts for low paid workers and that both together mean a reduction in the living standards of low paid workers in that instance? The Taoiseach stated that he does not want to see wage-driven inflation. Does he agree that the current rate of inflation is not wage-driven but has been caused by profiteering and that workers now naturally want to catch up?
It is pathetic that an important part of the Government's solution seems to be to advise people to change pubs so they can buy cheaper drink. Does the Taoiseach consider it pathetic that the Government wants to control the price of the pint but the price of rented accommodation is allowed to go through the roof? Does he understand that low paid public and private sector workers now pay more than 50% of their income on a monthly basis to rack-renting landlords, that they work two weeks out of every four for the landlord and that the Government does not have a single proposal to deal with that?
It shows its priorities.
(Dublin West): Does the Taoiseach agree that it is all one way traffic and that working people have been asked to tighten their belts and make do with nothing while profiteers have been allowed by the Government to continue on their merry way?
Was the Taoiseach surprised that the Irish Congress of Trade Unions was prepared a few months ago to sign a partnership agreement involving these wage provisions without tying in a provision for workers in the background of increasing inflation, and that it is unconvincing for it to now make noises when the inflation horse has bolted? Does the Taoiseach understand that the ICTU is increasingly out of touch with hundreds and thousands of its rank and file members? Is he aware of the anger and disillusionment of ordinary working people because of what is happening and because of how they are being made the sacrificial lambs while the profiteers are allowed to get away with murder?
As the Deputy concerns himself with working people, I remind him of an important point, which is that people are at least working now, which is due in part to the great work of the Irish Congress of Trade Unions. Some 1.7 million people are at work today which is unlike the way it used to be when we had 18% unemployment and only one million people working. The policies of the Irish Congress of Trade Unions, along with others, have succeeded in bringing that about, so the Deputy's criticism neither stands up to scrutiny nor is it fair.
The combination of the reduction in taxation which came into effect in April last, the standard pay increases under Partnership 2000 and the first part of the Programme for Prosperity and Fairness will ensure that the vast majority of workers will have increases in take-home pay of a minimum of 9% and a maximum of 14%, and it may be higher for other categories. That is significantly in excess of even the most pessimistic forecast this year on inflation. It shows that social partnership remains by far the best way to secure improvements in living standards.
Regarding housing, the Government has formulated a package to deal with this issue.
The Taoiseach has said nothing about the private rented sector.
We still have to deal with the supply side, and the report on the private rented sector will be published in the next few days. It will contain recommendations which must be dealt with. I know the Deputy will welcome the provisions we made under the Finance Bill which tie people into adhering to the proper standards and regulations for private landlords. This means they will not be able to be racketeering landlords because they will be subject to the new regulations. There is a significant incentive for private landlords to adhere to the new regulations and to sign up to the report on the private rented sector when it is published.
(Dublin West): Rents should be controlled at affordable levels.
This question deals with measured inflation and, as Deputy Joe Higgins rightly said, rents are not factored into that measurement. They are not being controlled and the Government's attitude leaves a lot to be desired. We await the report on the private rented sector. It may be Bacon four or bacon cure, but it will have the same impact on the housing market as the three Bacon reports.
I wish to return to a question I asked the Taoiseach earlier. I ask this of a former Minister for Finance as a former Minister for Finance myself, and with another former Minister for Finance present. Am I right in thinking that this package was brought to the Cabinet by the Minister for Finance and that it proposes the spending of £40 million on additional child care provision? The Taoiseach outlined in reply to a supplementary question some of the measures on which that £40 million could be spent. Under the normal conventions which apply to the Minister for Finance or to any Minister bringing a memorandum to Government involving a cost, a precise costing within what is available from known statistics is required before that memorandum will be tabled. Will the Taoiseach elaborate, confirm and finalise what precisely is intended in that £40 million package? Am I correct in presuming that that memorandum set out clearly how that £40 million would be spent and how it was costed? Why is that not in the public domain, if it is real?
It is in the public domain. It is envisaged that £40 million will be allocated to support the overall strategy and that the money will be used to enhance the supply side of child care. Specific options have been identified but these remain to be finalised pending discussions with the social partners, because the social partners were asked under the PPF to make submissions. A scheme is already in operation with the money which has already been allocated, but the social partners, especially the Irish Congress of Trade Unions, have asked that other areas be examined. Some of the supply side options in child care which have been put forward are grant aid for private child care providers, increased levels of grant aid for non-profit child care providers and funding for greater numbers of those who have applied for grant aid for disadvantaged areas or enhanced training programmes. The money, as with the £250 million designated in the national development plan, is for the supply side and this has been well spelled out in the child care report.
Am I correct in understanding that the Government has offered an additional sum of £40 million by way of a menu of options for the social partners to buy into, confirm or indicate and that no formal—
No.
Will the Taoiseach give the breakdown of the £40 million? How much will go in grant aid, how much for additional areas and how much for socially deprived areas? Is that information available? Was that funding signed off? I am working off what was published in The Irish Times today. It states £40 million in the round. Is there a detailed breakdown? If the Taoiseach does not have it available to him today, can it be made available? Is this an aspirational sum?
No, it is not. In response to the child care report in which many areas were highlighted where it was thought the best effect would be had on the supply side, £250 million was allocated in the national development plan. The social partners, in the examination of how best that would be spent, found that there were other areas that could be usefully examined which could have immediate effect but which would not affect the existing programme. This is the £40 million and that will deal with the areas they have specified and put forward in their latest report. The ICTU report arrived on Tuesday. Rather than have it as part of the scheme that has already been devised, which is working well and which deals with the supply side, the £40 million might well go to some of the suggestions put forward by the Irish Congress of Trade Unions.
Might well go.
The reason we did not just put it in is that if there are valid suggestions in it – I have mentioned some of them – we should go with it.
So it is a provisional figure?
The figure is definite. How precisely it will break down must await the examination of the suggestions put forward.
When will that be known?
The submission was only received on Tuesday so it has yet to be examined.
Is this an anti-inflation measure?
The resources exist. It is a quality of life issue.
Does the Taoiseach agree that the greatest rip-off in the drinks trade is in the mixers, with a baby mixer costing £1.30 whereas a litre of the same mixer can be bought for 90p in any supermarket? Will the price control be extended to include the price of mixers? Why can a pint of Guinness or Carlsberg be bought in my native village of Goleen for 50p less than in Dublin, although it has to be delivered 240 miles from St. James's Gate to Goleen? How can there be a general freeze on the price of drink when there is a disparity of 50p in the price of a pint between Goleen and Dublin?
It tastes better in Goleen too.
Particularly on the right side of the bridge.
I do not have the details of the price order. However, it is an effort to put some control on it by a price freeze. That will be made retrospective. We will have to wait to see the order to get the details.
Will that extend to mixers?
The Deputy will have to wait to see the order.
Is the Taoiseach talking about a rebate for punters?
I have already asked the Taoiseach about his claim that the measures to deal with inflation would also help improve quality of life to some degree. Is he now in a position to give a commitment in relation to indicators to measure quality of life, which would warn us of inflationary pressures and threats to quality of life? I would like to be given a commitment on that rather than simply being told the matter is being considered, which was the reply I received previously.
As Deputy Sargent knows from previous questions he asked me and correspon dence, we are looking at the kinds of indicators used in other countries across a wide variety of issues. I spoke to the OECD people about this recently, when many of their senior regulatory reform people were in Dublin. There is no harmonised system available. Some indicators are used but they are, frankly, fairly meaningless. I have looked at some of the details and had some of them researched for me. I have read the conclusions of some of the reports. I do not think they deal with the kinds of issues the Deputy and I have been talking about. However, there are some possibilities of devising a model and I have somebody working on that issue.
In view of the fact that the impression given about the Government's approach to inflation lacks harmony, does the Taoiseach agree it is necessary to have a special Cabinet group to organise this war on inflation and that it needs to give monthly reports at present?
It is correct that that is taking an amount of time recently. Members of the Government, along with the Competition Authority, consumer groups and the social partners will have to spend an amount of time on this. It is the only one of our economic indicators that is a cause of worry, so efforts and activity must be focused on that area. That will continue on a monthly basis for the next number of—
Will there be public reports?
There will have to be an ongoing review. We are committed to that under the social partnership.
I have been approached recently by many women who do the shopping and who, while not so concerned about the price of a pint, are extremely concerned about the increase in the price of milk. These people, many of whom depend on social welfare, will soon be charged for plastic bags too. While I support that move, it will increase the weekly shopping bill. What does the Government intend to do in relation to the price of basic foodstuffs like milk?
It was signalled during these discussions that there would be an increase in the price of milk, mainly because the company concerned has not been doing particularly well in that area. Some of that information is in the public domain but I am not at liberty to give other information. The supply of liquid milk is not a profitable end of that business—
Have we independent verification of that assertion?
I understand so.
Look at the share price, it has gone to a quarter of its original level.
On the other side of it, I understand that supermarkets make one of their highest profit margins on milk. We should look at that. While suppliers are having grave difficulties, supermarkets, where the Deputy correctly said hard-pressed housewives shop, make some of their largest profits on milk.
(Dublin West): Profiteering again.
What will the Taoiseach do about it?
That is what is going on.
