Skip to main content
Normal View

Dáil Éireann debate -
Tuesday, 25 Mar 2003

Vol. 563 No. 4

Priority Questions. - Programmes for Government.

Richard Bruton

Question:

102 Mr. R. Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment her strategy to tackle inflation in view of the commitments to do so as part of the social partnership agreement, Sustaining Progress 2003-2005, and taking account of the serious deterioration in economic competitiveness, which is resulting in a rising trend of job losses; and if she will make a statement on the matter. [8352/03]

While the recent trend in job losses is primarily the result of the continued low levels of growth in many of our export markets, the partnership programme, Sustaining Progress, recognises that renewing competitiveness, both within the domestic economy and on the international stage, is central to the overall macroeconomic policy of sustaining non-inflationary economic growth and high levels of employment.

The effective reduction of inflation requires actions by all social partners. Government has a major role but it requires the active support of the social partners. The Government is already taking measures to improve our competitiveness that will play a critical role in the fight against inflation. These include strengthening competition across the economy and implementing specific measures to tackle cost pressures in key areas such as insurance, increasing investment in research, technology and innovation which will provide the basis for future productivity growth and continuing to invest in key infrastructure such as broadband telecommunications.

Increasing competition and implementing necessary structural reforms is critical to controlling inflationary pressures in the domestic services sector which has been the source of much of our recent inflation. The powers and resources of the Competition Authority have been increased substantially to enable it to effectively tackle cartels and abuses of dominant position and to recommend regulatory reforms to improve competition in key markets. As part of this work, the Authority is carrying out a detailed study of eight professions and only last week published a consultancy study that will serve as the basis for a report and recommendations by the authority on each of the professions in turn.

I am also in the process of implementing a programme to fundamentally reform the insurance market to tackle the issue of high premiums which have had a detrimental effect both on consumers and on business competitiveness. This programme is already having an impact and it is heartening to note the recent reported comments from a number of major motor insurers here, that in one area they have already reduced premiums. I am committed to continuing with the reform programme and bringing about improvements in the functioning of the insurance market.

Additional informationIn addition to effective competition it is also important to ensure that shoppers have the necessary information so that they can make the best choice to suit their needs. Earlier this year I introduced new regulations, which oblige retailers to display both general price information and a unit price – that is, price per kilogramme or per litre – for all packaged products sold by quantity. This will enable consumers to make accurate and immediate comparisons as between competing products that are sold by quantity. This is part of an ongoing campaign to increase consumer information and awareness.

Does the Minister share my alarm at the recent finding by a Forfás report that one in five of the jobs within IDA Ireland and Enterprise Ireland have been lost in the past two years? This is an alarming increase in job losses in those sectors.

At a time when prices for manufacturing goods are falling – they have fallen by 3% in absolute terms since April – would the Tánaiste agree that the Government's policy of stealth taxes is making it harder for companies to hold jobs? Does she agree that stealth taxes have added 2% to the cost of inflation, as recently estimated in one prominent newspaper?

She made much publicised comments at Davos that if her colleagues had had their way inflation would be much worse. What exactly would have happened, in relation to stealth taxes and other inflationary impacting measures, if her colleagues had got their way?

Obviously everybody must be concerned about any job losses and unfortunately in the past 12 months we have seen a huge increase in the number of job losses and notified redundancies over and above previous years. However unemployment remains very low at 4.5%, employment is still growing and since 1997 we have added an additional 307,000 to the numbers employed in the economy.

In the context of the recent budget, we were mindful of the impact that any decisions we might make would have on inflation and a number of decisions that could have been made in order to raise much needed revenue for expenditure in key areas were not pursued by the Government in order to keep to a minimum the impact the budget would have had on the rate of inflation. We kept that impact to well below 1%, as the Deputy will be aware.

On decisions of State companies to increase the cost of utilities or whatever, clearly companies must operate commercially. The most important way we can affect inflation is through enhanced competition across the economy. That is why it has been a priority of mine to both increase the powers of, and the resources available to, the Competition Authority and also, where possible, to introduce competition. We need to do a great deal more of it, particularly in the sheltered sector of the economy.

I will allow a brief supplementary question. There is less than one minute remaining.

Does the Minister not agree that the bulk of increases in recent times are coming from the Government sector – the 2% in stealth taxes? They include: 8% in rates, 10% in utility charges, 30% in waste charges. Her own area, insurance, is up 71% for small business. This is actually killing off jobs. Manufacturers are facing declining prices.

You are making a statement.

Would the Minister comment on the fact that one in five of the jobs for which she has responsibility has been lost in the past two years? Why is that happening?

As the Deputy will be aware, we have lost jobs every year, including the best years.

Never at that pace.

We are creating jobs at an unprecedented pace also. Like most of our European partners, we are not competitive at basic manufacturing. Jobs and companies which could have been sustainable here in the past are no longer sustainable. In the context of what has happened in the global economy, particularly with telecommunications and the electronics industry, and the aftermath of 11 September, we have done extremely well. The unemployment rate is just over half that in the EU generally. That is a terrific performance for a small open economy.

We are not competitive because the Government is making it difficult to compete.

The time for this question is concluded.

Top
Share