Dáil Éireann debate -
Thursday, 23 Oct 2003

Vol. 573 No. 2

Written Answers. - Industry Costs.

Bernard J. Durkan

Question:

32 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she proposes to address the issue of the ever-increasing burden of costs affecting Irish industry; and if she will make a statement on the matter. [24562/03]

Bernard J. Durkan

Question:

87 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which the action she has taken has improved the competitiveness of the economy in the past 12 months; and if she will make a statement on the matter. [24730/03]

Bernard J. Durkan

Question:

89 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she proposes to take to combat the ever-increasing burden of escalating costs affecting job creation; and if she will make a statement on the matter. [24732/03]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

I propose to take Questions Nos. 32, 87 and 89 together.

The Government recognises the importance of ensuring that Ireland remains competitive as a guarantee to future economic success and to correctly position ourselves to take advantage of improvements in the global economy. The annual competitiveness report for 2002, which was produced by the National Competitiveness Council, while confirming many of Ireland's strengths, highlighted the many challenges we face and the difficult choices we have to make in the present uncertain global economic environment.

Strengthening competitiveness requires a number of actions and the Government is fully committed to taking these appropriate measures, as I have stated on previous occasions. The recent IMF report, Ireland: 2003 Article lV Consultation, commended the Irish authorities "for their exemplary track record of sound economic policies, which have resulted in a dynamic, open and robust economy with growth notably above the EU average over the past decade and resilience to external shocks."

The new partnership programme, Sustaining Progress, has at its core the need to underpin Ireland's competitiveness. The goal of Sustaining Progress is to create a virtuous circle of low inflation, moderate wage growth and higher productivity, thereby providing a firm competitive business environment for Irish industry. The Government continues to take steps to strengthen competitiveness across the economy and to implement specific measures to tackle cost pressures in key areas for Irish industry. One such area is insurance. As the Deputy will be aware, I am 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. I am committed to continuing with the reform programme and bringing about improvements in the functioning of the insurance market.

The trend reduction in inflation, recorded at 2.9% last month, is encouraging, but we cannot become complacent, especially in the light of lower levels in many of our EU partners and other competitors. A low inflation rate will stabilise firms' costs and result in a reduction of the cost burden on Irish industry. While a number of factors outside our control affect the inflation rate, we need to keep a focus on those elements which are within our control.

I have stated on several occasions that the principal and most sustainable method for reducing costs and maintaining them at an acceptable level is to increase competition in all sectors of the economy. We cannot afford to have sheltered sectors of the Irish economy immune from price competition. Competition in all sectors must be encouraged to ensure goods and services are provided at an efficient and affordable price. 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.