Dáil Éireann Debate, Wednesday - 1 June 2016
225. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation the steps she is planning to address consumer prices, given the recent publication of the costs of doing business in Ireland in 2016 which reported them as 20% higher than the European Union average; and if she will make a statement on the matter. [13980/16]
View answerImproving Ireland’s competitiveness position is a key economic priority for Government. As set out in 'A Programme for a Partnership Government', our objective is to protect our national competitiveness from unsustainable cost growth and to deliver a job-fit business environment which ranks in the top tier globally.
Core inflation (consumer prices excluding food and energy) has been low in Ireland and across the Euro area in recent years. At present, Ireland is experiencing a negative consumer price environment. Prices on average, as measured by the Consumer Price Index, were 0.1 per cent lower in April 2016 compared with April 2015. As highlighted by the CSO, the most notable changes in the year were decreases in Transport (-4.9%), Furnishings, Household Equipment & Routine Household Maintenance (-2.6%), Clothing & Footwear (-2.3%) and Food & Non-Alcoholic Beverages (-1.0%). There were increases in Miscellaneous Goods & Services (+4.5%), Education (+3.8%), Restaurants & Hotels (+2.0%) and Alcoholic Beverages & Tobacco (+1.7%).
The Costs of Doing Business Report published by the National Competitiveness Council on April 21st provides an assessment of Ireland's cost competitiveness performance vis-a-vis a range of competitor countries. The report, which has been noted by Government, concentrates on the costs on enterprise that are largely domestically determined such as labour, property, transport, energy, water, waste, communications, credit /financial, and business service. It finds that Ireland’s cost base has improved across a range of metrics over the last five years. This has made Irish firms more competitive internationally and made Ireland a more attractive location for firms to base their operations in. However, despite these improvements, Ireland remains a relatively high cost location for a range of key business inputs and there is upward cost pressure evident in property, business services and the labour market. The Council warns that Ireland is particularly vulnerable to external shocks beyond our control – external risks at the moment include in particular Brexit, oil prices and exchange rate movements.
The report is a timely reminder of the risks of complacency regarding our cost competitiveness performance. The improved competitiveness of Ireland’s exporting sector, as reflected in the IMD Competitiveness rankings released earlier this week where we have moved to 7th position globally, has been one of Ireland’s greatest strengths in recent years and has been central to economic growth and job creation.
In relation to cost competitiveness, as the Council have previously pointed out, we must focus on the controllable portion of our enterprise cost base, and continue to take action to address unnecessarily high costs (i.e. cost levels not justified by productivity) wherever they arise. Measures that ensure open and competitive markets are also essential. At the same time, productivity performance will assume an even more prominent role in driving Irish international competitiveness.
Addressing Ireland’s international cost competitiveness is a key economic policy priority for Government and as set out in the Action Plan for Jobs, a range of initiatives are in train across Government Departments to support cost competitiveness. In addition, the Council and my Department and its agencies are continually engage with relevant public and private stakeholders, as there is a role for both the public and private sectors alike to proactively manage their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage expectations and cost competitiveness. The policy implications of the Costs of Doing Business in Ireland 2016 report’s analysis, and associated structural reforms required to address Ireland’s cost base, will be included in the Council’s annual Competitiveness Challenge report which will be brought to Government published later this year.
