Dáil Éireann debate -
Tuesday, 8 May 2001

Vol. 535 No. 4

Euro Changeover (Amounts) Bill, 2001: Second Stage.

Minister for Finance (Mr. McCreevy)

I move: "That the Bill be now read a Second Time."

This is a short, technical Bill. Its main purpose is to provide, where necessary, for the replacement of Irish pound amounts in law with convenient amounts in euro to apply from 1 January 2002.

The need for the Bill arises from the fact that under Regulation (EC) No. 974/98, Irish pound amounts in law at the end of 2001 are from then on to be read as amounts in euro, converted at the fixed conversion rate 1 euro = £0.787564 and rounded to the nearest cent. As a result, convenient Irish pound amounts, for example, £10, £100 or £500 will convert to non-convenient amounts in euro or 12.70, 126.97 and 634.87, respectively. Action is therefore required to provide in necessary cases where, for example, amounts are usually paid in cash, for convenient amounts in euro to replace existing Irish pound amounts from the start of next year.

Much work has been done on this issue already. For example, this year's Finance Act provided for the replacement of Irish pound amounts in the tax code with convenient amounts in euro from 1 January 2002, and the Social Welfare Act did the same for money amounts in the social welfare code.

The current Bill is aimed essentially at dealing with places elsewhere in law where convenient amounts are necessary. The amounts covered in the Bill have been identified by Departments, following a trawl of their legislation, as needing to be replaced by convenient amounts in euro from 1 January 2002. I stress that the principle on which the move to convenient amounts, where necessary, has been made is that we should favour the citizen in all such cases.

Before I turn to the specific provisions of the Bill, it is proper to give the House a brief description of the current state of changeover preparations. Euro notes and coins will be introduced into circulation on 1 January 2002. There will then be a short period of about six weeks while the use of euro cash will be increasing and the use of Irish cash will be decreasing. Under our cash changeover plan, published last year, it is intended that legal tender status will be withdrawn from Irish notes and coins at midnight on Saturday, 9 February 2002. This period should be long enough to enable people to familiarise them selves with the new currency and short enough to ensure that the changeover is carried out quickly.

In March I laid a draft order before both Houses of the Oireachtas to provide for the withdrawal of legal tender status at midnight on 9 February 2002. Deputies will be aware that a resolution approving the order is being taken together with the debate on this Bill.

Preparations for the changeover to the euro essentially involve six elements, namely, legislation, the production of euro cash, preparations by the public sector, preparations by the private sector, consumer matters and the provision of public information.

I have already dealt with recent legislation. As regards cash production, I am assured by the Central Bank that this is on target. The process will involve 250 million euro notes and over 1,000 million euro coins.

Departments continue to confirm that progress on implementation of their changeover plans and those of bodies under their aegis are on target. Each Department and body is responsible for the changeover of its own operations, but they must report regularly to my Department.

Preparations by the private sector are primarily a matter for companies themselves. However, as long ago as 1996, Forfás established a campaign to provide businesses with the information they need to prepare themselves for the changeover. The EMU business awareness campaign has distributed large quantities of information to Irish businesses. Forfás has also involved business extensively in its campaign by means of its consultative committee which includes a wide range of business organisations and its retail group which includes a wide range of retail organisations.

The Forfás Loughrea euro town project, under the aegis of the Minister of State, Deputy Treacy, provided excellent case studies of the practical experience of businesses making changeover preparations. More recently, Forfás produced a document entitled Getting Your Retail Businesses Ready for the Euro. Over 150,000 copies of these guidelines have been issued, including one to every retailer in the country.

Despite the excellent work Forfás has been doing and continues to do and despite the fact that by now every business person in the country must have heard many times that the euro is coming, it is clear that some businesses have still to engage seriously with their changeover preparations. The message for these businesses is simple – prepare now.

While I am dealing with business preparations, I should mention a recent agreement aimed at facilitating a speedy changeover to euro cash next January. The House will be aware that under the cash changeover plan retailers will give change only in euro from 1 January 2002 and that Irish notes and coins being received inwards will be retained and not issued outwards again. The purpose of these measures is obvious, namely, to ensure that the changeover to euro cash is carried out as quickly and efficiently as possible. This is particularly in the interests of retailers.

However, retailers have been concerned that they will have to pay bank handling charges for the euro cash they will need to get in advance of 1 January 2002. They have also been concerned that they will face cash lodgement charges on the Irish cash they will be depositing with their banks during the dual circulation period.

I am pleased to tell the House that the Euro Changeover Board of Ireland and the Central Bank have reached an agreement with the banks whereby banks will not charge cash handling charges on euro cash provided to retailers in advance of 1 January 2002 and will not charge cash lodgement charges on Irish notes and coins lodged by retailers during the dual circulation period and for a short time afterwards, namely, from 1 January 2002 until the end of the week after legal tender status is withdrawn from Irish notes and coins.

In return for this waiver, the Central Bank will, during the dual circulation period and for a short period afterwards, provide the banks with a lodgement fee for Irish notes and coins it receives from them. The lodgement fee will partly, but only partly, compensate the banks for the fee income they will forgo. The cost is estimated at £5 million to £6 million.

The banks will shortly be communicating with their retailer customers about their arrangements in relation to this agreement. In addition, they will be giving details of the date next January on which they will debit retailer customers for the euro cash provided to them in advance of 1 January.

The consumer aspects of the changeover are being addressed by the Minister of State with responsibility for consumer affairs, Deputy Tom Kitt, and by the Director of Consumer Affairs. They relaunched the national code of practice on the euro changeover last December, with an action plan for consumer protection during the changeover. The House will be aware that a key aspect of the code is that subscribers to it, and any sectoral code approved under it, commit themselves to carrying out the changeover fairly and to seek no advantage from the conversion.

The final element in the changeover preparations is the provision of public information. The Euro Changeover Board of Ireland has responsibility in this area and it has been carrying out very extensive public information activities since its establishment in a programme that is part-funded by the EU. Among many other items, the board has sent a leaflet about the euro to every household every year since its establishment; organised widespread circulation of leaflets, posters, booklets and other information materials, including educational material for schools and materials for every teacher; run several advertising campaigns on television and radio and in the press; set up a lo-call helpline and a website, the latter with a special section for schools; and made a train-the-trainers pack widely available for general use in both the public and voluntary sectors.

The needs of low-awareness and special needs groups are catered for through the board's consultative panel. Furthermore, the board runs a programme of part-funding for non-governmental organisations carrying out euro information activities, and many of the projects funded under the programme relate to these groups. This programme has been operated by the board since 1998. Its most recent round of funding, which closed in early April, attracted over 150 applications.

The board is issuing large quantities of information. In April alone, it issued over half a million items of information about the euro. The board is also currently distributing a leaflet on the euro to every household in the country. Public information activities will intensify greatly in the autumn.

Let me now return to the Bill before the House. As I have said, it is a short, technical Bill. It has been the subject of widespread consultation among interested parties, including those represented on the Euro Changeover Board of Ireland. Most of the money amounts covered in the Bill are routine fees and charges in respect of licences, permits etc., which are, or may be, paid in cash. These amounts are being reduced to the nearest convenient amount below the exact euro equivalent, so as to favour the citizen. A typical example, with which Deputies will be familiar, is the deposit for candidates at Dáil elections. This currently stands at £300, which would convert to 380.92 at the conversion rate. However, in the Bill I am providing for the more convenient and easier to remember amount of 375.

The Bill also includes a number of thresholds which are being increased to the nearest convenient and memorable euro amounts, again so as to favour the citizen. An example is the £500 threshold for disclosure of gifts under the Ethics in Public Office Act, 1995, which would convert to 634.87. The Bill provides for a convenient amount of 650 in this case.

Section 1 provides for the replacement of IR£ amounts at specific references in Acts and Statutory Instruments with convenient euro amounts to apply from 1 January 2002. It does so by means of general provisions which refer to the Schedules to the Bill. Schedule 1 lists the IR£ amounts being replaced and the euro amounts to replace them in respect of fees and charges while Schedule 2 lists the statutory references at which the replacement will take place. Similarly, Schedule 3 lists the IR£ amounts being replaced and the euro amounts to replace them in respect of thresholds while Schedule 4 lists the statutory references at which the replacement will take place. In all cases only the specific amount appearing at the exact statutory reference will be replaced. Other amounts appearing elsewhere in those Acts will not be affected, but will convert to euro at the conversion rate under the EU regulation.

Sections 2 and 3 are technical provisions in support of section 1. They provide respectively for dispensing with consents and for the continuation in force of existing powers to set amounts. They are included for the avoidance of doubt. Section 4 provides for technical amendments to the Economic and Monetary Union Act, 1998, to align the exact time of the withdrawal of legal tender status from IR£ notes and coins – intended for midnight on Saturday, 9 February 2002 – with that of the repeal of earlier law under which IR£ notes and coins are issued or under which limits are placed on the number of coins that may be tendered. Due to a wording difference, under the 1998 Act as it currently stands, these repeals would come into effect from the start of the day for withdrawal of legal tender status from IR£ notes and coins, whereas legal tender status itself would continue until the end of the day. The effect of the section is to eliminate this gap. The draft order I have laid before both Houses to withdraw legal tender status has been drawn up on the assumption that the 1998 Act will be amended as provided for in this section. The order will not be made until the Bill is enacted.

Section 5 amends the Credit Union Act, 1997, in a number of ways with effect from 1 January 2002. First, it redefines a share in a credit union as one euro, in place of one pound, standing to the credit of a member in a share account. It goes on to make a number of consequential changes to amounts dependent on the definition of a share and to substitute convenient amounts in euro for certain minimum and maximum amounts in the Act.

Section 6 provides for the threshold for declaration of interest by staff of the Heritage Council. The IR£ and euro amounts are already included in Schedule 3, but 1,300 in figures is being substituted for the current "one thousand pounds" in words in the Heritage Act in line with general drafting practice. Section 7 contains the usual citation provisions.

I intend to propose a number of amendments to the Bill on Committee Stage. One amendment will defer until the next working day the giving of value by banks in respect of transactions that fall due for processing by them on a day when the TARGET interbank settlement system is closed by decision of the European Central Bank. This is similar to what already happens in respect of public holidays. The vast majority of the closed days already correspond with our public holidays. The exceptions are Labour Day on 1 May – our public holiday is on the first Monday in May – and 31 December this year when the ECB has decided that TARGET should be closed in order to safeguard the smooth conversion of retail payment systems and internal bank systems to the euro. The ECB has welcomed our intention to introduce this provision.

Regarding the other amendments, a couple are technical while others merely add a few references that have come to notice recently from Departments and delete a reference that will now be dealt with otherwise. I commend the Bill to the House and I look forward to Deputies' contributions.

Mr. J. Mitchell

In general, I support the Bill. We are coming towards the end of the changeover period from the IR£ to the euro. However, our currency was undervalued when the value of the was set at IR£0.787564. We are stuck with that exchange rate but if it was still a free currency, the value of the IR£ would be higher. This is a significant point because the fact that the settled rate is less than it might otherwise have been means the national wealth has been diminished in relative terms. It is also an inflationary factor.

I remember the change from pounds, shillings and pence to pounds and pence when 240 old pence per pound became 100p. It meant that the minimum increase in prices thereafter was 1p, which was equivalent to 2.4 old pence. Although some people dispute it, this factor tended to have an inflationary effect. Previously, prices increased occasionally by one old penny, but subsequent increases were by 1p and then 5p, which was equivalent to 12 old pence. There is a great danger that something similar could arise on this occasion, although that should not happen because the value of 1 cent is less than the value of 1p. Therefore, if prices are increased by 1 cent or 5 cents, it will be equivalent to less than 1p or 5p.

People cannot use the excuse of convenience to introduce inflationary increases. However, every possible step should be taken to clamp down on people who try to exploit the changeover and make a killing at the expense of the consumer, thereby adding to inflation. There is a serious danger in that regard and the Government has not given adequate consideration to it. I am aware that this aspect is a matter for the Minister with responsibility for consumer protection in the Department of Enterprise, Trade and Employment and I hope he and his Department are fully aware of it and taking every appropriate step.

The Bill provides for a 40 day changeover period, which is less than six weeks, and this is much too short. The original proposal was for a changeover period of six months.

Mr. McCreevy

That is correct.

Mr. J. Mitchell

A period of at least three months should be provided because, as it stands, tender will cease to be legal on 9 February after only five and a half weeks. What will happen if people still have large amounts of £5 or £10 notes or coins? Will they lose the value of this money immediately? Will there be a transition period during which sums can be exchanged for new currency? The Minister is aware that money is kept under mattresses in thousands of homes throughout the country, particularly by elderly people. It may be some time before this money is used and it should be possible for people to exchange old money for new currency in banks within a certain period. Will the Minister comment on this suggestion?

The period of 40 days provided for in the Bill could cause serious problems because people will not have enough time to get used to the new currency. Items that now cost £1 will cost 1.26. They will appear more expensive and there will also be an opportunity for some people to increase prices. My concern is based on the fear that retailers will decide on new convenient sums at the higher rather than the lower range. That is where the inflationary danger will arise. This issue has not been adequately addressed.

I am puzzled that the Central Bank is to pay the financial institutions between £5 million and £6 million during the changeover period. The Minister states:

. . . the Central Bank will, during the dual circulation period and for a short period afterwards, provide the banks with a lodgement fee for Irish notes and coins that it receives from them. The lodgement fee will partly – but only partly – compensate the banks for the fee income they forego. The cost is estimated at £5 million to £6 million.

I understand that banks must be profitable and that they must operate on a commercial basis but we have been badly let down by them in recent years. I do not refer only to the DIRT issue but to the high level of bank deposits in the Isle of Man and elsewhere and the need for these to be examined as a means of tax evasion. I will return to this aspect at a later date.

I am also concerned about the banks' total lack of social obligation or awareness of their duty to be good corporate citizens. They have withdrawn from involvement in areas of activity that occur lower down the socio-economic ladder. This has all the hallmarks of a cartel operation between the main banks. For example, when one withdraws from engagement in one area another withdraws from a different area. There is a state of collusion rather than competition between them. There are also worrying signs of bad corporate governorship by the banks and financial institutions.

It is for these reasons I take exception to the Minister's confirmation that the Central Bank is to pay the banks £5 million to £6 million during the changeover period. That is wrong. It is a cost the banks should bear. They will have much extra business during the changeover. Furthermore, membership of the euro is highly beneficial to them.

The Minister said that section 5 will amend the Credit Union Act, 1997. It redefines a share in a credit union as one euro, in place of one pound, standing to the credit of a member in a share account. This could be construed as meaning that members of credit unions will see their shares reduced in value from pounds to euros. Will the Minister clarify this aspect?

The changeover to the new currency requires painstaking preparation over a long period. It is part of a great project to give much of the EU a single currency. The changeover board has provided much timely and comprehensive information. I hope its efforts are successful and that those businesses and individuals who have not taken sufficient notice of the forthcoming change begin to do so and begin to make the preparations that are so necessary to ensure this transition will be fluent and successful.

Mr. McDowell

I will take stock of our position as we commence the third stage of economic and monetary union and address the details involved in the changeover to the new currency. There is virtually no chance of avoiding serious chaos at the start of next year. There is overwhelming evidence that all of the good work of the changeover board is not making any impact. All the surveys demonstrate that the percentage of trade in euros by companies within Ireland is the lowest in Europe and that the proportion of their trade in euros with companies abroad is among the lowest. They also demonstrate that the numbers with cheque books in euros is very small. I doubt if there is an instant solution to this but over the next few months there is a need for those in the House who care about this issue, the Director of Consumer Affairs, the changeover board and all concerned to redouble their efforts and use whatever innovative means are necessary to get the message across. Otherwise we will be in serious trouble at the start of next year.

This is an unprecedented project. It must be the most ambitious economic project in Europe since the industrial revolution. That it already involves 12 countries is a measure of its success and almost certainly guarantees its future. The euro will rapidly become used in eastern Europe, probably before the countries of the region accede to the formal mechanisms involving the ECB and so on. I visited Latvia 18 months ago and was interested in debating the issue with people involved in the Ministry of Finance. They take the view that the euro will be used by them within a relatively few years whether or not they are part of the ECB structure. As long as they accept the currency as legal tender or businesses use it when engaging in transactions outside their country there is nothing to stop them from proceeding on that basis. In terms of its acceptance throughout Europe the euro is almost certainly a guaranteed success. That was not obvious four or five years ago. It is something with which those of us who supported the project can be pleased.

The project exists on two different but interlinking levels. It has always had and continues to have a very significant political aspect. It is, at least in part, a political project. It was intended, and will have the effect, of binding together the Continent through binding together business and the interests of citizens in a way which very few other measures could do. That is hugely important.

The currency is also necessary to make it possible to complete the Single Market. A currency exchange acts as a barrier to internal trade within a structure such as the EU but it is also a safety valve for under performing economies. That tension has always been there. It was inevitable that a choice would be made sooner or later on removing the barrier or maintaining the safety valve. The inevitable and correct choice was made.

In joining the eurozone we have sought to become part of a zone of economic stability. That has been largely achieved in the few years since the start of the third phase of economic and monetary union. This year economic growth in the eurozone will be between 2.5% and 3%, depending on the figures to be believed. We are told that is roughly where the sustainable level of non-inflationary growth generally stands within the eurozone and it is something with which we can be happy. The eurozone will have a budget surplus this year, something that would have been virtually unimaginable ten years ago when some countries within the eurozone had what appeared to be incurable and permanent budget deficits. Many countries which do not have a tradition of budgetary stability now have budget surpluses or small deficits and that must be an incontrovertibly good thing. It can be largely ascribed to the euro and the stability pact that underpins it.

The Minister will forgive me for moving a little from the consensus when I say the European social model is alive and kicking within the eurozone, despite the carping of those who still speak in a negative way about deregulation, structural reform and so forth. I agree with certain comments but I retain a critical eye and approach to many of them.

It is worth looking at what benefits EMU was supposed to bring to Ireland and how much we have benefited so far. One of the major benefits was low and stable interest rates. It is important to state clearly what most of us knew or should have known all along, that internal stability within the eurozone is far more important than exchange rate stability. Ireland is in a unique situation. It is more dependent on exporting to non-eurozone countries than the rest of the eurozone. The bulk of trade carried out by countries within the eurozone is with other countries within that zone. Maintaining control of inflation and internal stability within the eurozone must, therefore, have paramount importance.

Nobody who looked at the argument which preceded Maastricht could have believed anything different. We should bear that in mind during the current debate on where interest rates should be. The Minister has famously not engaged in this debate and I do not blame him. Not many years ago I was one of those who believed, perhaps naively, that it was possible to have a genuine public debate about these issues and that politicians, including Ministers for Fin ance, should engage positively in that debate. I believed it was simply part of accountability, given that the bank was an independent bank. I have regrettably come to believe, after a couple of years observing the dynamic of these things and how the markets interpret and overshoot following the most innocuous comments from players, it is not possible to have such a debate in public. That is most unfortunate but it appears to be an inevitable part of how the markets work. I regret that. However, I am not bound in that way so I feel entitled to express my view.

We cannot be impervious to the argument that a reduction in interest rates would benefit the global economy, specifically the US economy. Ireland, in particular, cannot be unaware of that argument given our dependence on foreign direct investment from the United States. Nonetheless, it is my strong belief that as long as the euro is relatively weak against the dollar the case for reducing the ECB interest rates within the eurozone is not well made or well grounded. The bank might well abandon its current policy in future weeks but I believe it is right to hang on to it for the present.

We should not return to the days of the Bundesbank when anything resembling an inflationary threat was met with an immediate hike in interest rates or to the attitude that the ECB should be, as the Bundesbank undoubtedly was, completely immune to any thoughts about the need to stimulate or assist growth. We need a bank which has balance and, at present, the ECB has got the balance right. The mandate of the bank, in terms of internal stability and inflation control, is probably about right too.

I am tempted to reflect about the markets generally, at the risk of giving succour to Deputy Joe Higgins. The events of recent weeks have been fascinating, particularly how the markets reacted to events in the United States where they appear to be screaming for a further reduction in interest rates despite Mr. Greenspan giving them a far greater reduction more quickly than had been anticipated. They are still not satisfied, however, and are unlikely to be satisfied until further reductions are delivered.

One cannot help thinking that some of this, at least, is being sought to sustain what the markets have already themselves decided are unsustainable asset prices, particularly stock market prices. It is astonishing that the markets can decide that the stock market is too high and can promptly reduce it yet their spokespersons have no difficulty in demanding of public policy makers that they intervene to sustain those unsustainably high asset values. Perhaps that is the way markets work. Markets overshoot, they propagate themselves and are self-centred but they are indispensable in the context of a market economy, which is the reason parties like the Labour Party argue for regulation of institutions to provide a measure of balance.

It is also interesting to look at what has happened to Irish trade. The experience in this coun try is most informative and has been different from what would have been expected a few years ago. Our assumption was that Ireland would re-orientate its trade even more towards the eurozone, given that it had a fixed exchange rate and, consequently, no exchange rate risk. However, the opposite happened. For most of last year our exports to countries outside the eurozone grew, particularly our exports to the United States. The conclusion to be drawn is fairly simple. The value of the euro and the fact that it is weak vis-à-vis the dollar has been more important in determining where trade has gone than the fact that we have a fixed exchange rate with the rest of the eurozone.

So far, that has had a benign effect. Perhaps it simply indicates that we are flexible and that business can take advantage of the – what I believe to be – short-term, weakness of the euro but it might also indicate a dependence on the US and the United Kingdom which could be difficult for us if the euro appreciates, as it surely must, and could have consequent effects on our competitiveness. We must re-orientate. Business must be given the message that it should re-orientate within the eurozone, not only because it is safer to do so in the long term but because not to do so would involve a massive loss of opportunity for Irish business, which would be a great pity.

There was a three year period for eurozone countries to move from fixing the exchange rates to providing the notes and coins. That was intended to give people in business time to familiarise themselves with and get used to the new currency and to adjust their systems. That intent, however, has been little short of a failure. All surveys indicate we are not well prepared and that we have moved in our thinking and preparations less far than any other European country, with the possible exception of Italy. I read in Le Monde last week that, according to a Commission report, only Italy could be said to lag behind Ireland. It listed a raft of areas in which Ireland is deficient both in terms of the arrangements made by the banks and small and large businesses and in the way it has impacted on the consciousness of individuals. We have a real problem and the first thing we must do is appreciate that fact.

The difficulty with individuals is a basic one. They have got used to the idea that the euro is, in theory, our currency. However, it has the existence of a virtual currency and they seem to imagine that this will continue. They see the changeover not as a switch from the punt to the euro but as the two currencies continuing alongside each other for a longer period than will actually be the case. We need to make it clear that this is not the case and that the punt will disappear and be no more. Many people, particularly older people, have not understood that fact.

Deputy Mitchell referred to the experience of decimalisation. I do not remember it well because I was just 12 or 13 years old at the time. However, many people are making that comparison but it is a fundamentally false one. Decimalisation was basically about pennies, 100 pence as opposed to 240 pence. This is about something much more fundamental, namely, the unit of currency, and the cultural shift will be much more important than decimalisation ever was. We need to put that point across, especially to older people.

I said to the Minister on Committee Stage of the Finance Bill that I had a cultural difficulty in reading the Bill because it set out the tax credit and other provisions exclusively in euros without pound conversions. I then had to amend that. I have had a similar experience since, as I am sure others who have to do this have had, when reading the Central Bank report, for example, which appears to have converted exclusively to euros and does not give the pound equivalent. It is only when we all have such experiences of being confronted with a unit to which we are not accustomed and without a conversion that we will begin to realise it is for real and that we need to think in a different way. Unfortunately, we are a long way from that.

The Bill provides that the euro equivalent for various amounts the Government charges and the provision it makes for different items will be rounded to the benefit of consumers. That is right and proper and is right in principle. However, there is a major difficulty to which the Minister alluded. It is not just a question of rounding to the nearest amount but also that rounding will inevitably be to the nearest convenient amount. A lottery ticket costs £1.50 and should be 1.90. It will not stay at that for very long and will become 2 very quickly if it has not already been announced. There is a range of different costs and charges of that variety. I received a bill from Dublin Corporation for the first time for service charges amounting to 120.69. This will still be charged in six or seven months' time and will not remain at that level. It will obviously be rounded up or down to a convenient amount and not just to the nearest 5c or the nearest euro or whatever. The Government needs to give a lead in making clear that, in the next budget, there will be a move to convenient amounts where tax credits and social welfare benefits are concerned rather than just the nearest figure to which they are rounded up.

I read with interest recently that IBEC urged its members to examine what it euphemistically called its pricing policy. It was referring to the decision of retailers to pitch prices at £9.99, for example, which converts to 12.70. The £9.99 is there for a reason. It is just short of £10 and gives an impression of being a little cheaper. That advantage does not attach to the euro equivalent and it is likely when reviewing pricing policy that many retailers will round up.

I spoke to a friend who is a doctor who always felt and certainly said to me that the call-out charge of £25 for his private patients was not great. This will be a little more than 31 and I know, because he told me, that he will use the opportunity to increase the charge to 35. This increase in prices by the back door will happen wholesale unless we take specific measures to ensure it does not happen.

I know the Euro Changeover Board and those in the Department of Enterprise, Trade and Employment who are involved will say we will have dual pricing and that people will be able to see on 1 January if prices increase. I know they will say competition should keep prices down and that there is a responsibility on us all to keep an eye on prices to ensure they do not increase in the first few weeks of January next. However, I do not believe it will work. If retailers are allowed to do it, there will be a significant amount of rounding up unless we take measures to ensure it does not happen. The Government should examine the possibility of giving the Director of Consumer Affairs additional powers to ensure this does not happen. If that entails something approximating to price control or a price freeze for the first three to six months of next year, we should go that far. The credibility of this process is very important and it is something on which it is a little short.

I attended a meeting of the Irish Wheelchair Association addressed by the Euro Changeover Board and others and the cynicism of the public was palpable. They are determined they will be ripped off and nothing I nor the Minister could say will persuade them otherwise. Notwithstanding that that type of cynicism is something to which, unfortunately, we have had to become accustomed, they have some basis for that cynicism. We must ensure prices are not increased in the manner I have outlined and, if that involves giving additional powers to the Director of Consumer Affairs, then they must be given.

The message is not being put across and the only way it can be is by our taking certain measures which we have not envisaged taking heretofore and which will oblige people to take cognisance of the fact the euro is around the corner. The Government and banks have a specific role to play in this. The commercial banks, certainly in the case of AIB with which I bank and, I presume, in other cases, give customer account statements in both pounds and euros in separate columns on the same page. They should consider switching earlier to euro figures rather than maintaining the dual statement for some months into next year. They should consider changing over in October or November of this year. It would make people look twice at their statements and try to make sense of them. It would be a benign way of shocking people into taking account of the fact that this will happen and that the pound equivalent will disappear quickly. Without such measures, people will not pay any attention to it.

Banks should also give a choice to their business customers, from the smallest retailer to the largest, as to whether they want their next chequebooks in euros or pounds. The banks should pro-actively push the idea of giving people euro chequebooks. We have issued very few and that reflects in the amount of business conducted in euros. Banks have a role to play in pushing the process further, and I would like to see the number of euro chequebooks in circulation increasing dramatically this side of summer, if possible.

There is also a role for public bodies who, presumably, can be trusted not to use the process of changeover to increase prices. There is a role for them in pricing exclusively in euros as quickly as possible. For example, we could ask An Post to begin billing people in euros for their television licences. There are a number of other measures which could be taken to make people face the fact that this is something which will happen soon.

I would like the Minister, in his reply, to say something about the implications of the changeover for the system of Government and the manner in which his Department and other Departments which interface with the public more regularly will deal with it. I was struck, when reading the budget day report, by the claims of both the Revenue Commissioners and the Department of Social, Community and Family Affairs that it will take them months to effect the changeover. I want to know why. Is this a change in software or systems? Does it mean printing more books with the euro amounts on them? What is it? Why will it take so long? What is the process that will be undergone?

There are two other questions to which the Minister might like to respond when summing up. How are we fixed regarding ATMs? I hope most of them will convert immediately on 1 January next to the use of euros, but perhaps the Minister will confirm that is the case and indicate the percentage of ATMs which will change over. Will he indicate whether other machines routinely operated using coins or notes will be changed over and if any difficulty is expected? Six months ago the operators of machines which use coins were concerned that they might not have sufficient time to change over. Has the Minister had contact with their representative organisation and does he expect, when we go to pay a car parking fee on 1 January next that the machine will be capable of accepting euro coins and notes?

I support this process, both at a political and economic level but I am concerned that the changeover will not be as smooth as we would like. I am aware that the changeover board has produced much material and has gone to great pains to make that material as accessible as possilbe. I assume that process will accelerate rather than decelerate over the next few months. However, I am concerned that it is not being made clear that what will happen on 1 January next is far more serious than decimalisation or Y2K, and will be with us for much longer. It behoves those of us who have a role in telling people about the changeover to do so between now and 1 January 2002.

Mr. Fleming

I welcome this opportunity to speak on the Bill. This topic has been discussed on several occasions in the House in the past two or three years. When the matter was introduced many of us questioned the need for such a long transition period. However, time flies and the prospect of the changeover is now upon us. Within a matter of months the Irish pound will be replaced by the euro.

People have a clear and simple understanding of what will happen on 1 January 2001. When bank business resumes after the New Year holiday withdrawals from accounts will be in euro and ATM machines will dispense in euro notes only. Will the 50 euro or 100 euro note be the largest to be dispensed from ATM machines? We have seen a dramatic increase in the number of £50 notes in circulation in the last year. This results from their widespread availability from ATM machines. The 50 euro note will be a smaller denomination and I wonder if ATM machines will dispense 100 euro notes. This will be quite an increase in the amount of currency which can be handed out in a single note from an ATM machine. Wages, salaries, pensions and social welfare payments will also be in euro from that day. The first day of 2002 will be an interesting one. It will be the start of a new tax year and a new social welfare year and the beginning of a new currency. It will take a few days for people to become used to the new currency. I advise older people to ask their children to explain the changeover, just as we now ask the youngest rather than the oldest member of the family how to use the video recorder. Children are being very well taught about the new currency in school and will be well equipped to tell their parents and grandparents about the exchange rate.

On 1 January retailers will charge in euro only. It will be quite a surprise to people to pay for goods in Irish pounds and be given their change in euro. Retailers will then take the old currency to the bank and it will never be seen again. Banks, building societies, post offices and credit unions will exchange up to £500 per person in Irish cash for euro, free of charge and will continue to accept Irish cash in their customer lodgments until 9 February, the end of the dual circulation period. We will have six weeks of frenetic activity.

I am an optimist and I tend to believe everything will be all right on the night. Some Members have expressed the fear that individuals and businesses are not ready, but, as has happened in many other situations, we will cope with the changeover when it happens. We will not cope a minute beforehand but we will rise to the situation on the day.

The changeover is essential because so much of our trade is with countries within the euro currency area. Some people have made the mistake of thinking the changeover will cause difficulties in cross-Border trade. We already have two currencies in Ireland and that situation will remain unchanged after 1 January next. We already cope with two currencies and the introduction of the euro will make no difference to cross-Border trade.

The dual circulation period is welcome and I am pleased it is short. Within two weeks 85% of the new currency will have worked its way into the system and people will soon realise the need to change any cash in hand into euro. If people find they have Irish currency in their homes after 9 February 2002 will they be obliged to go to a bank? I understand that retailers will not accept old currency after that date.

I compliment the Euro Changeover Board on the large amount of explanatory literature it has produced. If people do not understand the new currency it is not the fault of the board. However, I wonder why so much emphasis has been placed on the equivalence of £1 to 1.27 euro. The public has not grasped the fact that 1 euro is worth 79p. Perhaps it has been decided that it is enough for us to grasp one idea at a time.

What will the cost of the changeover be to the Exchequer? What will the cost be to the Central Bank and how will it compare with the cost in other countries. Is our Central Bank efficient compared with the central banks of other countries?

The clearing banks will have contractual arrangements with the Central Bank to deal with the changeover. It is my understanding that the Exchequer will fund the changeover. Much work will be done in banks during the change-over period. They will have their own internal change-over costs and will have a separate cost for the work they do on behalf of the nation in taking the old and distributing the new currencies. There must be no crossover between the costs of the two procedures. Banks must fund their own internal costs as all other businesses do. They must not use their special position to include normal banking costs with the overall costs of the currency changeover. No other organisation will be in a position to do this and I hope banks will not do so either. The Minister has mentioned the cost of counting the dual currencies during the changeover period but I am sure that is a very small part of the changeover cost.

I read in today's newspaper that the Central Bank is inviting tenders from people to collect old coins to be transported abroad to be minted down because we do not have a mint in Ireland. What will happen to the old notes? Will they be shredded or incinerated? I hope they will not be transported by train so that some latter day Ronald Biggs can head to Brazil for another 60 years and we will be forced to extradite him.

Mr. McCreevy

The Deputy may like to know that some of the notes that are shredded end up like bales of briquettes and can be burned.

Mr. Fleming

That is very good, once they are put to good use. People will be curious to know what precisely will happen to these hundreds of millions of Irish banknotes. The same article mentioned that we will have an additional problem of forgery. It is a problem that we have never really had up to now, although there has always been an element of small-scale forgery. Because the country is small and our currency is not internationally known, there never was an effort by major international criminal groups to forge Irish banknotes. As part of the euro zone, however, we will come under increasing pressure from forgers across Europe, and European central banks will have to address the matter. The coins are different and specific to each country but the notes will be the same.

We will have to watch inflationary trends, including the rounding up of prices. Deputy McDowell said it was a separate issue but some people will take advantage of the changeover. The oil crisis which spurred high inflation, occurred around the same time as decimalisation so people associated one with the other, although they were caused, substantially, for different reasons.

A pint of milk may rise to 90 cents but we must remember that pensions will be increasing also. We have all talked about having a weekly £100 old age pension and, hopefully, next year we will have an old age pension of at least 150 euros.

Mr. McDowell

Think about it.

Mr. Fleming

I commend the Minister for introducing this legislation. The Euro Changeover Board has done tremendous work. From next autumn and into 2002, the Director of Consumer Affairs will have to be given greater resources to monitor price changes. Everybody knows that all business operators will be affected. We are talking about people who are in the business of making money and if there is an opportunity to make an extra few bob they will use it. Therefore, prices will have to be policed in the change-over period. The euro is long overdue and is very welcome. I look forward to the day when Britain decides to join the euro zone so that the anomaly caused by having two different currencies on this island can be eliminated. It is a matter for Britain to decide but I hope that in a few years it will join the euro when they are satisfied that it is working well. When that happens there will be greater currency stability because the vast majority of our trade will then be within the euro zone, including the United Kingdom. I commend the Bill to the House.

Mr. Durkan

I am glad to have an opportunity to speak in support of the legislation. The departure from the old currency is an historic occasion. It will be the third time that we have made such a major change: first, with the introduction of decimalisation, second, in breaking the link with sterling, and now with the introduction of the euro. We have become accustomed to such changes. I do not recall any debate from the time when we introduced our own currency as to whether prices were rounded up, down or side ways. My only memory of dealings with our neighbours in the UK is that we always seemed to have had a lower value currency for some unknown reason. That made life difficult for importers and others buying goods from Britain.

The Bill is important for many reasons. It opens up a whole new era in which European unity will be copper-fastened by having a common currency. Although there are a couple of exceptions at this stage, it is to be hoped that those countries still remaining on the sidelines will come on board quickly. That will be important for the success of the euro.

Napoleon was the first person to come up with the notion of a European single currency, although he had a different way of going about achieving it. Fortunately, his ways were not pursued. The concept of a single currency has been there for quite a long time and it is fundamental to the workings of the European project.

Much store has been set by the degree to which inflation rose as a result of decimalisation but I am not sure that is correct. Take the example of shopping over the past 12 months. This is not a political point. I am just talking about checking prices over that period during which there has been a fair amount of price inflation here and there. Yet, there has been no currency change-over in that time. I presume that if the change-over had taken place on 1 January 2001, inflation would have been attributed to that, whereas in fact it did not cause it. Inflation is an ongoing process that takes place all the time. I mean no disrespect to the medical profession, a Leas-Cheann Comhairle, but I was very interested to hear that particular part of the debate. It is simply a fact of life that such changes take place in the normal course of events and they are not unique. There is always a danger that we would stop short and say this is attributable directly to the change-over, when it is as a result of something totally different. For example, cost fluctuations for businesses may necessitate price increases at a particular time.

My only quibble with the proposal is that the euro should have been introduced on 1 January this year for a variety of reasons. I said that a couple of years ago. It was hoped that a number of countries would come on board if some delay in introducing the euro was exercised. That is fine except that it did not work and because it did not work it raised question marks which is the case with anything that continues for too long. Once we procrastinate on issues such as European enlargement there will be a tendency to lose the impetus and impact. It would have been much more effective if the euro had been introduced on 1 January 2001 and it would have been as easy to do it then as one year later.

The Euro Changeover Board is to be congratulated on the work it has done so far. The Minister, his Department, and those associated with it have done a tremendous job. They have created an awareness of the impending change by encouraging dual pricing. Such a move is not evident in the United Kingdom. Although the UK financial services sector is aware of the issue other areas are not, even though the UK will have to introduce dual pricing on 1 January 2002.

The point was raised as to how the changeover will affect our trade with Northern Ireland. There is no doubt that it would be much better if we had a common currency throughout the island of Ireland. The sooner the UK joins the euro zone the better for everybody inside the zone, as well as for the UK itself. I see no reason for harking back to the past and attempting to opt out. There are people who say, "the old ways were so nice. The old currency was different; you had the feel of it in your hand and you were accustomed to it".

Mr. McCreevy

It was grand if one had enough of it.

Mr. Durkan

Exactly. That is the point; we never had enough of it. It was so elusive, it escaped us all the time. There were good times but we experienced some hard times, also. Let us hope that this new era will open up something of real importance to the people and to the economy. Somebody once explained it to me as follows: in the 1960s the United States had the same standard of living that we reached in the late 1990s. That puts the matter in perspective, although it is a serious matter to think that a progressive European country could find itself being compared in that fashion. We now recognise that we have come into a new era and have played our part in every aspect of European development, expansion and integration, including financial services and the business sector generally.

It is of critical importance that everybody recognises the beneficial impact of Ireland's integration into Europe and all that entails. People will hark back to the good old days, but that is a sad reflection on what happened for 150 years during which we exported our people and imported consumer goods. Our people left through no fault of ours. They did not want to leave nor did we want them to but we could not keep them here. However, circumstances have changed primarily as a result of our membership of the EU and our involvement in the European project. It is essential that the benefits Ireland has accrued and will continue to accrue from EU membership are recognised.

Some people will say it was nicer in the old days because there were fewer people. What did they expect when huge numbers of people had left? There were many wide, open spaces and there was nothing but grand, wild countryside as far the eye could see. To this day along the west coast where I was born there are remnants of houses on the hill sides which belonged to people who gradually, inexorably were forced to leave as a result of economic misfortune. That was the case for approximately 150 years. I do not know whether we fully appreciate and recognise what has been opened for us as a result of European involvement.

Continental Europeans will say Ireland has benefited significantly from direct payments by the EU. That is true and Governments of all persuasions put the money to good use and set an example for all other member states and aspiring member states. Nobody can gainsay our success and the use that was made of EU payments. The greatest contributory factor to our success in the EU has been access to the wider market within the EU. We are keeping our people at home instead of exporting them. We are now producing and exporting consumer goods.

Some people think it would be grand to revert to the old days and the old ways to which we had become accustomed. Letters were sent from America and the UK and they were very important because more often than not they contained money from another economy. We should be glad we have moved away from those days. What we do with our future is entirely in our hands.

With regard to the euro changeover and everything else associated with our economic development I hope we do not get greedy and become complacent. Everything can change and the degree to which we are committed to the concept of European integration is the degree to which we will achieve success in that area.

There is no doubt we must compete with everybody else and as long as we compete successfully our economy will continue to thrive and full employment will be maintained well into the future. I do not accept the notion that our economic development is a short-term phenomenon. It can continue for the next 30 years uninterrupted given our economic development. The industrial revolution passed Ireland by because the country was not seen as a good investment prospect but things have changed now.

The euro will pull together all the strands within Europe but that will not be an easy task. The notion of a single currency has been contemplated previously and has been worked on repeatedly. If everybody pulls together the rewards will be hugely beneficial to the economy.

The euro changeover will have less of an impact on the economy than had decimalisation. It will impact positively because there is a major difference between the two conversions as a result of the time that has gone into Euro Changeover Board's efforts to make the public aware of what is likely to happen. The only danger is that people assume the date is so far in the future it will not affect them and an event such as the euro changeover may catch them unawares. However, the board will undertake the necessary campaign to ensure that does not happen.

Every price increase was attributed to the advent of decimalisation. Many people spent weeks figuring out what the new price of a product would be when the conversion took place and then decided they were due an increase and slipped it in because if they did not they would have had to wait six months or a year for it or would not have been able to impose an increase at all. It was unfortunate that happened but the increase in inflation that followed directly as a result of rounding up was not as great as some people said and it would have occurred in any event.

People who shop regularly say there has been a dramatic mark up in prices over the past 18 months but the euro changeover has not taken place yet. If it had, the increase in prices could not be attributed to it. However, the changeover will be used by those who have negative notions about European integration and European services generally and we need to keep a close eye on that type of attitude. Freedom of speech is a right and everyone is entitled to make his own case. The people who wish to denigrate the concept of European integration will seize any opportunity. I do not blame them for that but they should not be allowed damage the concept of a single currency which will be hugely beneficial to Europeans in general and Ireland in particular.

The single currency has been contemplated and agonised over for long enough. However, it would have been better to introduce the currency at the beginning of this year rather than next year. I hope when the time comes the Irish business sector will avail of the opportunity presented to it to enhance its prospects and, thereby, improve the economy further.

Minister for Finance (Mr. McCreevy)

I thank Deputies for their contributions. They raised many issues. It will take me some time to go through a number of the points raised by Deputies so I will have to return to them. I will have to conclude on another day.

Debate adjourned.