That Seanad Éireann condemns the Government decision to approve increases in telephone charges of up to 400 per cent in day-time local calls; regrets that the Government's decision failed totally to address the overall cost levels of Telecom Éireann or to encourage greater competition, as recommended in the Culliton report; calls for a retention of the present position regarding VAT on phone bills; and calls on the Government to withdraw the increase in local call charges.
I welcome the Minister to the House and thank him for his attendance. Due to the importance of this issue for individuals, small businesses and the disabled, the Progressive Democrats has taken the opportunity in the Seanad this evening to follow up on its initiative in the Dáil last week where the party insisted that the House debate a motion condemning the totally unfair and excessive domestic telephone price increases announced by Telecom Éireann.
The Progressive Democrats motion before the Seanad this evening reiterates our opposition to the increases of up to 400 per cent in some local calls which will take effect from next September. It condemns the Government's failure to introduce greater competition in the provision of telephone services within the country as recommended by the Culliton report. It also urges the retention of the present VAT level on telephone bills rather than the proposed further, increase of 10 per cent next September and in April 1994. Finally the motion urges the Government to withdraw the proposed increase in local call charges.
I have no doubt that if the Government fails to act in this matter, Telecom Éireann will be forced to rethink its so-called rebalancing strategy, which amounts to nothing more than having domestic Irish telephone users subsidising international telephone calls at a hefty cost, by the intervention of the EC since it is plain that the transfer pricing proposals are a direct contravention of the Treaty of Rome.
This deliberate policy of cross subsidisation, which involves greatly increased domestic charges where Telecom Éireann enjoys a monopoly in order to reduce international charges where the company is subject to effective competition, will be successfully challenged in the European Court of Justice. That court has given a variety of judgments under Article 90 of the Treaty of Rome to the effect that State bodies which enjoy special exclusive rights under national law cannot use those powers to engage in differential pricing which are not commercially based and which have the effect of abusing a dominant position.
That form of judgment is a classic definition of what Telecom Éireann proposes to do in relation to telephone charges from next September. I am also aware that Telecom Éireann is already the subject of a formal complaint to the European Commission from the Esat company in Ireland which is alleging anticompetitive practices on the part of the semi-State company.
I believe ordinary householders, the elderly and disabled persons will look ahead with trepidation to the likely impact on their telephone bills from next September and they will be equally incensed by the manner in which the Government and the Minister, who is here this evening, have sought to put the price increases across in a totally misleading, selective and unrepresentative way. Most people simply do not accept the validity of Telecom Éireann's claim that over 70 per cent of local calls in this country are less than three minutes' duration. This raises the question of the manner in which the Government and Telecom Éireann are prepared to proceed on a hand-in-glove basis.
The Department and the Minister seem satisfied to accept Telecom Éireann's analysis of the situation and the likely impact on its customers. Surely it would have been fairer to the telephone using public for the Department to have engaged independent consultants to examine the impact of various price changes rather than relying on the obviously self-servicing approach by the company, an approach which understandably from their point of view, seeks to totally minimise and obliterate the negative impact on people's telephone bills and to hype the undoubted benefits which a reduction in our international telephone charges will bring to some business users, although those benefits are to be welcomed.
I stress that this will benefit some business users because our country is one where not only the domestic telephone user will be severely hit but thousands of small businesses, the very sector we are relying on to boost job creation in the years ahead, will also suffer severe increases in operating costs. Auctioneering firms, travel agents in provincial towns, co-operative marts and farmers, almost all businesses outside the greater Dublin area that are not part of large multinational or manufacturing companies will suffer. This is the area which it has been repeatedly said will bring jobs to the country through the promotion of indigenous industries and services. These proposals are contrary to that rhetoric.
Most smaller companies are reliant on the domestic market for their sales and business. Undoubtedly, their telephone charges will increase massively from next September. What about disabled people, or elderly people living alone or people who are confined to a wheelchair? For people confined to wheelchairs the telephone is their lifeline. Are they now being told "do not make that call". As time has passed, the full impact of the increased telephone charges is getting across to the public who have reacted with justifiable anger.
I note the relative silence from the Labour Party on this issue and I have no doubt that this ill-judged and ill thought out price increase strategy approved by the Government for Telecom Éireann will prove to be a major embarrassment and impediment to both Government parties, and to the Labour Party in particular. One can imagine — and the Chair will readily appreciate this — the howls of outrage with which this decision would have been greeted by the Labour Party had it still been in Opposition. Over the past few weeks we have seen that party indulge in a totally misleading and unfair strategy of seeking to suggest that the price increases will be reviewed.
Various Labour Party spokespersons have said they want the prices reviewed. However, in the Dáil last week, all the Labour Party Deputies trooped through the division lobbies and approved price increases of up to 400 per cent for many domestic users. That is the bottom line. The Irish public, both domestic consumers and business users of telephones, can and must judge the Labour Party by its actions and not by its fine flown sentiments. I have no doubt, notwithstanding any crocodile tears which may be shed by the other side for the hapless consumer and for small businesses, that both Government parties will once again vote to approve these unacceptable price increases.