Dáil Éireann díospóireacht -
Wednesday, 9 Feb 1972

Vol. 258 No. 10

Private Business. - Prices (Amendment) Bill, 1971: Second Stage.

Minister for Industry and Commerce (Mr. Lalor)

I move "That the Bill be now read a Second Time." My powers to control prices and charges derive from the Prices Acts, 1958 and 1965. While the powers given in the 1958 Act may be exercised only in certain limited circumstances the amending 1965 Act gave me wide powers to investigate and control prices and charges, but these powers are of a temporary nature renewable by the Government at six monthly intervals. Price control as operated since October, 1965, has taken the form of requiring manufacturers to give me advance notice, at present one month, of their intention to increase the price of their products and of requiring importers or wholesalers to give similar advance notice about any intention to increase the margin which they take on the goods in which they deal. Where I felt that the proposed increases were not justified I took steps to prevent them from being imposed or to have them reduced.

The system of price control operated up to now has been directed primarily towards manufacturers, importers and wholesalers. It was expected that competition would be instrumental in keeping retailers' prices generally at reasonable levels. This form of control was particularly appropriate when the majority of home manufacturers were protected by high tariff walls, but it has been gradually losing a great deal of its relevance in recent years with the dismantling of tariffs between ourselves and Britain under the terms of the Anglo-Irish Free Trade Area Agreement and the resulting gradual exposure of home manufacturers to competition from external manufacturers. With our entry into the EEC competition from external firms will be further accentuated and if in these circumstances a home manufacturer succeeds in making good profits, it will generally be the result of the efficiency of the firm concerned and not through charging excessive prices.

Experience of the working of price control demonstrates that while the need for control at the manufacturer's level is declining, there are other sectors and circumstances where it is apparent that there is a need to extend price control. The fact that the existing prices legislation does not apply to prices for commodities or charges for services which may be controlled, regulated or specified under other legislation has meant that some large firms and organisations were subjected to price control on a less rigorous scale than under the Prices Acts. This has led to complaints from time to time that certain sectors were in a more favourable position than firms whose prices and charges were controlled by the Prices Acts. To remove any basis for this complaint the present Bill proposes in section 2 (1) (a) and (b) to extend the Prices Acts to prices for commodities and charges for services which may be controlled under other legislation.

The extension of the Prices Acts to charges for professional services, proposed in section 2 (1) (c) of the present Bill, is desirable particularly in view of the fact that where such a charge is a percentage of the price obtained from property or of the value of a contract, recent inflationary trends have automatically increased the charge so that in some cases it may now be out of proportion to the value of the service given. Furthermore, trade union representatives have sometimes argued that while their members are required to negotiate increases in remuneration with employer bodies or through conciliation and arbitration machinery, some professional people are in a position to a large extent to achieve an increase in their remuneration without having to justify the need for the increase. The present Bill, accordingly, proposes to give power to the Minister concerned to require advance notice to be given to him of proposed increases in professional fees, and where necessary, to control such fees. The powers now proposed can be exercised even in cases where there may already be machinery of a kind in operation for the determination of professional fees.

A feature of trading at the importing, wholesale and retail levels is the adding on in many cases of a customary percentage mark-up on buying prices. This practice, taken in conjunction with inflationary trends over the past number of years, can mean an increase in absolute margins to the trader concerned out of proportion to increases in his labour and overhead costs. This type of situation is not likely to occur where there is real competition in a trade and I recognise that there are many such cases. There are, however, many other cases where, for whatever reason, market forces do not operate satisfactorily and traders continue to take customary margins which may have been reasonable in the past but, because of the inflationary trends mentioned, have ceased to be so. It is now proposed in the present Bill in section 4 to extend the scope of the Prices Acts to permit of the investigation and control under those Acts of the margins of profit of importers, distributors, wholesalers and retailers as well as manufacturers. It is also proposed in the present Bill to extend the scope of the Prices Acts to permit of the investigation and control under those Acts of the amounts which may be added by traders for tax purposes and to enable orders to be made requiring retail traders to display their tax-inclusive prices for all goods being sold by them.

A particular feature of the last few years has been the increase in the price of houses. It has not been possible to control such prices under the existing Prices Acts since these Acts relate to commodities and, according to the legal advice tendered to me, houses could not be regarded as commodities. To remedy this situation it is proposed in section 3 of the present Bill to extend the scope of the Prices Acts to enable prices of new houses to be investigated and controlled.

The existing prices legislation does not apply to interest charges et cetera in relation to hire purchase and credit sale agreements and in view of the importance of this type of trading it is proposed in section 5 of the present Bill to bring hire purchase and credit sale charges within the scope of the Prices Acts. Powers for the control by the Central Bank of interest and other charges by banks and similar institutions are provided in the Central Bank Act, 1971.

The Bill also provides in section 8 for the amendment of the Second Schedule of the Prices Act, 1958 so as to revoke the statutory requirement for maintaining a prices advisory committees panel from which members of any prices advisory committees must be appointed. Nominations for appointment to the panel are invited from the Confederation of Irish Industry, the Irish Congress of Trade Unions, the Federated Union of Employers, the Federation of Trade Associations, the Institute of Costs and Works Accountants and the Irish Housewives Association. In the period from 1963 to mid-1965, seven prices advisory committees were appointed, but with the coming into operation of the Prices Act, 1965 recourse since then has been had to the appointment of prices advisory bodies under that Act, whenever formal price investigations were warranted. The Minister may appoint any persons of his choice to be members of a prices advisory body or he might invite nominations for appointment to a particular body from appropriate organisations. The amendment of the 1958 Act which is now proposed would bring the position in relation to membership of prices advisory committees into line with that of prices advisory bodies. It would not in any way interfere with the Minister's powers to appoint such committees. I should also mention that in actual fact great difficulty has been experienced continuously in obtaining nominations from the organisations I have mentioned for formal appointment to the prices advisory committees panel. The Bill also provides for a number of consequential amendments of the Second Schedule to the 1958 Act which became necessary because of the abolition of the prices advisory committees panel.

The Prices (Amendment) Act, 1965 specified that the Minister's powers under that Act for price investigation and control could only be exercised after the Government had made an order under the Act enabling him to use those powers. The Government made such an order on 7th October, 1965—the Prices Stabilisation Order, 1965. The Act specified that the enabling order would have a maximum life of six months, but that it could be renewed by the Government for periods of six months by continuance orders. Since 1965, the prices stabilisation order has been continued in force for successive periods of six months by continuance orders; the amendment of the 1965 Act proposed in section 9 of the present Bill is necessary in present economic circumstances so as to remove the "temporary" element from the Prices Stabilisation Order, 1965, and to eliminate the need for further temporary continuance orders to be made by the Government.

Section 7 of the Bill provides for the amendment of the Prices Acts to enable the Government, by order, to transfer from the Minister for Industry and Commerce to any other Minister, powers and functions under those Acts for the investigation and control of particular prices or charges. It is the intention, for example, that powers and functions under the Prices Acts in relation to the prices of new houses would be transferred to the Minister for Local Government and that there would where appropriate be a similar transfer of powers and functions, particularly in relation to professional fees, to other Ministers.

As regards the implementation of prices policy generally, Deputies will be aware of the establishment in recent months of the National Prices Commission whose function broadly is to keep under review the prices of commodities and the level of charges and fees for services and to advise the Minister thereon. The establishment of the commission does not mean that prices advisory bodies cannot be established for specific purposes, although the need for the establishment of such bodies should become less having regard to the activities of the commission. The commission is representative of employer, trade union and consumer interests with an independent chairman. A word of congratulation is due to the chairman and members of the commission for the exceptional vigour and enthusiasm with which they have gone about their tasks. The monthly reports furnished by the commission show that in addition to making recommendations on applications for price increases, the commission has undertaken several worthwhile projects in the prices field and I look forward confidently to the undertaking by them of several further such projects in the future.

I am confident that the object of the Bill commends itself to the Dáil and I recommend the Bill for its approval.

Mr. Donegan

The party for which I have the honour to speak has no objection to this measure. It is, indeed, part of its policy that there should be proper control legislation and in its published policy document it comments on the fact that price control has never been 100 per cent successful. It is extremely easy to control the price of the loaf of bread or the bottle of beer because these are consumer goods measured by weight or by volume. When, however, one comes to articles of choice control can be difficult. One may buy a pair of shoes one year at a certain price and buy what looks like an identical pair of shoes the following year at an enhanced price. There may be some slight difference or modification, but for all practical purposes the shoes are the same. The greatest difficulty is experienced with regard to wearing apparel for women. There is difficulty too where certain articles of male apparel are concerned.

There must be price control. The Minister underlined the fact that this Bill is designed to control the price of services as well as of goods and commodities. It will, therefore, apply to doctors, dentists, veterinary surgeons, legal practitioners and so forth. This is a step forward but I doubt if it will be 100 per cent successful. It may well result in an increase in the cost of certain services. I do not suggest that all doctors have no regard for money but there are many who, if they were paid a proper fee for the time and attention they give their patients, and the number of hours they work per day, would earn far more than they do. In the past many doctors have been almost unthinking where their own families are concerned and almost too thinking about their patients' welfare. This Bill is designed to bring all these sections of our community under price control legislation. We do not oppose the Bill. It would be quite unfair to expect a working man to accept that he must pay a certain price for a certain article or accept a certain emolument for his services while, at the same time, those in the higher income group are not expected to accept the same stricture upon their incomes. I do not think the result of this measure will be a reduction in the cost of the services of doctors, dentists, veterinarians, legal practitioners and so on.

I certainly approve of bringing new houses under price control. We know the situation at the moment. Young couples enter into a contract and pay a deposit. When the house is ready for occupation they find the cost has increased and they have to pay more than they anticipated. Usually they have to meet the deficit out of their own pockets which results in their buying no carpet for the diningroom in the first year of occupancy. Price control of new houses is a good step, but I doubt if this Bill will result in a spectacular reduction in the cost of new houses. We have spiralling inflation and there are increases in wages and increases in the cost of materials. These are increases which cannot be avoided. Inevitably between the time of the signing of the contract and the taking up of occupation the cost of the house will have increased but in future that increase will have to be justified both to the purchaser and to the Minister for Local Government.

With regard to the services of doctors and the bargains made under the Health Acts, I do not regard the fees charged to private patients as excessive. Perhaps this Bill is in the nature of letting it be seen that justice is done rather than in aiming at the eradication of injustice. Doctors' fees have not been excessive. If at times heavy fees are exacted from patients the Revenue Commissioners subsequently remove almost four-fifths of the fee charged. Last year a specialist in this city paid to the Revenue Commissioners 16s in every £ he charged his patients.

This brings up the question of whether one of the greatest niggers in the woodpile of increasing costs is the Government itself by that particular application of income tax legislation and also by the application of selective wholesale tax of 20 per cent and turnover tax of 5 per cent. These taxes over a wide area of goods must surely increase prices and when that has happened and there has been political agitation about them we then find legislation must be introduced and justice must be seen to be done. I believe that justice will now be seen to be done in this sphere of doctors, dentists, veterinary surgeons and, to a lesser extent, house-builders, but a reduction in prices is something that I, as a politician could not, in honesty, offer the people I represent as a result of this legislation. I do not think there will be a spectacular reduction in the cost of services provided by these gentlemen.

More and more people involved with professional persons whether in the matter of health or animal health are covered in various ways. In dentistry there are fixed fees already for the earning contributor to social welfare. In the case of doctors there are fixed fees in hospitals which doctors and specialists enjoy for the provision of services, whether surgical operations or other services. When you come to private patients the success of the voluntary health insurance scheme established by Deputy O'Higgins when he was Minister for Health has meant that the great majority of the population not otherwise covered are included in the voluntary health insurance. When, as I have at the moment, one has a member of the family in hospital and when the bills come, one sends them to the VHI board. I expect the bills are scrutinised there and would be in line with the proper fees to be charged. That is a matter of past congratulation for Deputy O'Higgins who is just now arriving. It is nice to find a Government, sinning in many other ways, but carrying on something which the people would never have tolerated them removing.

In regard to health and dentistry services the Bill will not change things to any great extent and may create a situation in which if there is a fixed fee per visit or a fixed fee for certain attention, doctors and dentists charging private patients a lesser amount in the past may adopt the fixed fee in future. If there is a fixed fee and you have the qualifications and are providing the service nothing would be more natural than to charge the prescribed fee, neither more nor less.

As regards veterinary surgeons' fees, if the powers are transferred, as the Minister suggests, to the Minister for Agriculture and Fisheries it will be found that there has been much discussion already about whether veterinary surgeons' charges are generally higher than doctors' charges for calls to farms at present. It has been suggested that the vets are charging too much but it is forgotten that very often vets must undertake most arduous tasks which take a long time, involving remaining on the farm for long periods. One thing that might be mentioned is the common operation now of a caesarean being performed on a cow which cannot give birth to a calf. Fifteen years ago this operation was unknown but it might now require a vet to stay four or six hours on a farm. One could not expect in such a case that the vet would charge £1.

At present, one is charged at the current rate for a mechanic working on one's car, 30 shillings per hour outside the city and £2 in the city. I do not say the mechanic gets that amount; he does not, but when one adds all the garage services to it, that is the going rate. That is what Deputy O'Higgins will pay if he puts his car into a city garage. If one considers a fee is high one must realise these men have costs and expenses and are physically able to perform only a certain number of these services in a day. My considered opinion is that when the Minister for Agriculture and Fisheries meets the veterinary surgeons on this matter it will be found that justice will be done, a label will be put on this service and a proper fee, whatever it is, will be fixed but this will not mean a reduction in fees. We cannot look to this legislation for any reduction in prices in the field of professional services.

I have referred to houses but have not mentioned the fact that I, because Drogheda and Dundalk are developing so rapidly, have had groups of people coming to me. These people had bought new houses and they complained that when it came to the final payment an extra charge was included in respect of the extra costs of labour and goods incurred by the builder during the course of building the house. That sort of thing will continue. Creeping inflation will stay with us at the best. At present we have galloping inflation and even that may stay with us and become something we must tolerate. If the building of an average house takes nine months and there is a wage increase in that period, inevitably a clause will be included in contracts recompensing the builder for the extra costs. The evidence for this is that every local authority accept this situation and you could not get a builder to build houses or build even one private house if that clause were not included. The only way it could be avoided would be to pay so much that you would be gambling on whether the amount by which costs increased during the building of the house would equal the extra amount of money to be paid, over and above what should have been the actual price.

To some extent I see in this Bill a whitewash brush for the Government. They can point to the fact that there is control but I cannot see any reduction in costs or that in respect of doctors, dentists and in most cases house-builders—although there may be individual instances of overcharging—that there will be the spectacular reduction for which we might have hoped with the introduction of this Bill.

Debate adjourned.