We are now concerned with amending the Prices Acts of 1958 and 1965. In his introduction to this Bill on 9th February, the Minister is reported at column 1413 of the Dáil Debates as follows:
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.
I am glad to know that the Minister in the 1965 Act had wide powers to control prices. I can only say it is a pity he never used them. I do not think Deputy Enright need worry too much because I do not think the Minister has any serious intention of operating the powers conferred on him here.
I say the Minister did not use the powers conferred on him in the 1965 Act because, of course, it can be argued that the extraordinary price rises, which reached their climax last year, were not peculiar to us. I shall be arguing in a minute that in an economy as open as ours there are certain peculiar factors in regard to price control, anyway. When that has been said, we can look at price rises here and agree that in 1971 a lot of the world was experiencing this extraordinary inflation, a new phenomenon of inflation at a period of stagnation. There was the coining of the word "stagflation" to describe this. The table about inflation I choose to quote from is from the OECD Observer, No. 53, for August, 1971. It gives inflation rates in terms of the gross national product deflator for seven major countries.
I have chosen the first quarter of 1971 to illustrate my point. I will quote the rates for the first quarter, but it is an annual rate. In the first quarter, the annual rate was rising in the US by 5¼ per cent, in Canada by 3½ per cent in Japan by 4 per cent, in France by 5¼ per cent, in Germany by 7¼ per cent, in Italy by 5¾ per cent, in the UK by 8 per cent. They are OECD figures. In Ireland at that time they were rising at 10 per cent. We were away at the top of that league at a time when the Minister had, because of the 1965 and the 1958 Acts, wide powers to control prices.
Clearly the Minister was not using those powers at all. It was not a matter of keeping pace even with Britain's 8 per cent per annum during that quarter. We outpaced Britain. I do not think we led the league in that period—I think we were No. 2. Certainly we were inflating faster and with greater need for price control than any comparable countries around us. It was in response to that situation that we have this trivial Bill showing such masterly concentration on the inessential things. There are some nice little things in it, some little bits which are fine, but it is irrelevant to the problem of controlling prices.
Therefore it would be a great mistake for anybody, particularly in the labour movement, to think that a serious attempt at price control is the intention. This Bill is something the Government can brandish when accused of inactivity in this field. They can say: "Look at what we are doing." What they are doing in this Bill is irrelevant in a number of ways which I propose to point to in a minute.
What is extraordinary to me in the light of the past 18 months of rolling inflation, of fantastic price rises, is that people have been so quiescent about it. We have had major demonstrations, and indeed rioting, about price rises at periods in our history when the rate of inflation was much less. This time, people have accepted them with, of course, private grumbling, but there has been an extraordinary lack of public protest. There are several reasons for this. I think decimalisation codded people profoundly in the way that has been mentioned already but particularly in the way that has been criticised recently by a British consumer report as being hypocritical, because the unit of money is called the same although it is three times larger.
If I see that something is priced at 6p I say to myself that that is right, but, of course, that price is 2.4 times more than the price I regard as right. Everybody is making that same mistake at present. In that sense we are all too quiescent. We are quiescent about prices because during the period of the most rapid price rise we have been too occupied with the problems of the North and with the closeness of our decision with regard to the EEC. People were diverted also by the continuing political crises in this part of the country. I now paraphrase one of the heavyweight boxers of the past who replied when told that boxing was a hard life "every clout has a silver lining". In regard to the Government every clout had a silver lining in the past year because people were distracted. Between the problems in the North, the crisis here, EEC and decimalisation people have been quiet too long about the debasing of their wages and the debasing of the incomes of the old people and of the lowering of the standard of living of the small farmers.
Because of the factors I have mentioned people have not been sufficiently angered and have not reacted with demonstrations and otherwise against price rises. We must look at this Bill in that light. People are expected to believe that something significant in regard to prices will happen as a result of this Bill. I do not propose to enter into a discussion about what influences a mixed economy like ours. If we wanted a filibuster this would be a suitable subject on which to have one because I, like others, could talk relevantly for hours on this subject.
I wish to refer to one aspect which seems important and about which the Bill is silent. Our economy depends to an enormous extent on exporting and also on importing. A large percentage of what we purchase is manufactured outside this country. We probably have the most open economy in Europe. We are most open in our economy to the UK, with which we have a free trade agreement. One can read in The Economist any week the tables showing the rises in Britain's export prices as compared with a month ago, a year ago or even a week ago. One will see that prices have gone up by about 9 per cent. That is striking because it is the same as the rate of our inflation. What Britain exports is what we import at prices which have risen by 9 per cent. No legislation like this Bill can have any effect on the price of stock delivered at the docks. Inflation is being imported in a way that cannot be controlled.
I do not believe we should have free trade. We are not yet fit for free trade with the EEC. It is no pleasure for me to say that these are the factors which cause our inflation. An economist could establish how much of a price increase is the result of wage claims, Government borrowing, the taxation policy and import prices. We have no influence over prices of goods delivered to our borders.
If our economy was a closed economy like that of the US measures like this would be of some benefit, but they are not of any use in our open economy. I mean that as a fundamental criticism of this Bill, if we are to believe it would have anything other than a marginal influence. We import inflation particularly since we have the misfortune to import so much from Britain. Britain has had astronomical rises in prices of exports. The Minister in introducing this Bill spoke about something that looks interesting—the right to control price increases for imported products. It looked as if we were facing up to the problems. Under the Bill wholesalers would be required to give advance notice about any intention to increase the margin which they take on goods in which they deal. That is not much help. If an importer can mark-up the goods by 20 per cent he only has to follow the import prices in order to increase the amount of his mark-up in £s. He does not have to increase his percentage. If he bought goods at £100 he could sell them at £120 but if the goods go up to £200 he could sell them at £240 which would give him extra money for himself. His profit can go up even if his rate of profit is frozen. The Minister has no power to diminish this profit. He can see that the importer does not increase the rate of profit but that power is of very little use in terms of reducing prices. It has no effect at all. It cannot reduce prices. If the rate of profit of importers remains constant— and the Minister accepts in the Bill that it may do so without penalty— and if the delivery prices increase by 20 per cent the final prices will be increased by the same amount. Since it is a percentage increase in absolute terms it is a bigger profit, but not a bigger rate of profit. We could go on with this for hours.
I would applaud the fact that the Bill proposes to extend the existing legislation to cover interest charges. This is a good thing. At the moment interest charges are very low and seem like going lower still in the money markets of the world; 18 months ago, or less, in New York and London and in the other European markets interest charges were at an historical high. We are part of the sterling area. We have an open economy and we have no control over the price at which one can borrow money. That is decided in London and London is influenced by New York. We have no control over London or New York. If interest rates go up again those who want to borrow from banks or building societies have a simple choice; they can pay the going rate or they can borrow and no legislation here will alter that one little bit because we have not got economic sovereignty. If our interest rate drops by one half per cent below what it is in London, then the money will go to London.
We have no control over interest rates and taking power will have no effect on interest rates. If I could flap my arms quickly enough and strongly enough I could fly up to the Public Gallery this minute and there is no legislation to stop me doing that. But no one has ever succeeded in flapping his arms hard enough and quickly enough to fly and taking power to control interest rates is just as irrelevant as taking power to stop people flying of their own volition. One may control the enormous profit of some particular outfit. There is little competition between different borrowing and lending sources and interest rates are not wildly out of line with London or other places. What makes them high is not the extreme profiteering of some particular outfit and what determines interest rates has nothing to do with our economy and a small country like ours which wanted to lower interest rates would have to dam up its capital inside its own country.
It is provided in section 5 that the "Acts shall apply in relation to interest charged and any other charges made under hire purchase agreements". I am not the greatest admirer of the market place. I suppose I am one of the least admirers of it, but the existence of a market place ensures that nobody makes vast profits and this Bill will have no effect at all. Let us not cod ourselves.
I was interested to hear my immediate predecessor being worried, as a professional man, about the powers the Minister is taking to control professional fees. Section 2 (b) and (c) makes provision for charges for services wholly or partly of a professional character. Deputy Enright is a practising solicitor. I am a non-practising veterinary surgeon. But I did practise at one time and I do not think Deputy Enright need worry. No two bills for professional services, be they those of a doctor, a dentist, a veterinary surgeon, a solicitor, or anybody else, are identical because there is no flat rate and, even if there were, there could be slight additions, so that the section then has really no meaning.
At column 1415 of the Official Report of 9th February the Minister said:
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.
The Minister will not get any advance notice of this, except now and again, perhaps, from professional societies. The idea is all right, but it is not operable. It may sound well in theory but it cannot be put into practice.
I do not propose to discuss the efforts made since the late 1950s to control incomes, but even in the United States of America they have not found it possible to control professional fees. It is easy to control wages and, possibly, prices. It is very difficult to control profits and professional fees. This Bill is nothing more than window dressing and this particular section need impress nobody.
Subsection (1) of section 3 provides that the "Acts shall apply in relation to new houses". I shall not waste time teasing out all the arguments on this, but there are a number of inputs which determine the price of houses—the price of land, of materials and of labour. If one is serious about controlling the final output of the building operation then one must control the price of the inputs and, if one does not do that, then one does not control the price of the final article. I see no serious effort at controlling the price of land. Indeed, I see no effort at all at doing so. With regard to the price of labour, one can have an incomes policy, which will take a bit of persuading, or else the price of labour will be decided, as it is at present, in the market place. Many of the materials used in modern housing are imported and one can do nothing about their price. If the builders are told they can charge only a certain price, then they will stop building houses. If the builders are not squeezed, then prices will go up.
This power may exist on paper, but it means nothing and anybody who believes it does mean something, must be a little simple. We have seen the sharpest rise in the price of houses in the UK in the past year. Without bringing in documentation to prove it, it was certainly the sharpest in a long time. This results from handing housing to a private sector. A simple rule applies to the price of houses: if they are provided by the private sector, by the market, when there is a desperate demand and you can screw a lot of money out of people for them and they are very profitable, people rush into the business. When demand for houses is nearly satisfied margins drop sharply and people stop building until the demand opens up again. The market place is continually manipulating the price of houses to get as much money as possible from every section but they lean hardest on the poorest section, in the course of their striving to satisfy the need for houses.
Anybody who does not want to interfere with that market place mechanism for house prices should not cod people with this sort of Bill. "The Act shall apply in relation to new houses..." I have no doubt it will but the 1965 Act gave the Minister wide powers, to use his own words, to control prices. I am interested only in powers that are meant to be, can be and actually are used. This is not a power that has any meaning in our society in relation to the building industry. It is just useful to brandish as evidence of good intention to control prices, nothing more, and it should be taken as window dressing.
I want to pursue one example which, I think, indicates better than any other the inadequacies of this Bill and its unreality in regard to a real assault on price increases. The amount of income people spend on the products of the big oil companies was not very important 50 years ago but it now is. It is spent on fuel for motor cars and by farmers for necessary fuel for machinery and by transport operators and now people are also spending it on fuel for domestic heating in which there has been a great growth even among people who are not so rich. There is no competition in regard to the prices of these products in Ireland. There is one big British company which is Shell-Mex and BP and Burmah, which in many ways of looking at it, is a subsidiary. There is Standard Oil, the Esso Group and Jet and there may be a few other little ones. They work out the market among themselves and are able to determine the prices at which the product will be put into the country from outside. They can determine delivery prices in discussions among themselves and once they do that we do not know the rate of profit on those prices. The internal accounting devices of these big, multinational companies can successfully conceal the rate of profit. The market is completely controlled by those people and the control exercised by three or four big multinationals will enable them to drive their own price regulations through any Act.
Only one country that I know in the developed part of Europe has dealt realistically with this problem, and not by an Act but by breaking the monopoly through a co-operative. The Swedish Oil Co-operative wrecked oil and petrol price-fixing. There is no effort to tackle price-fixing by multinationals in this Bill. I have quoted oil which is a particularly simple example as there are only three or four big cartels to deal with. Incidentally, joining the EEC will not help us in this regard but the assertion of some economic sovereignty here in the Twenty-Six Counties, small as it is, would help, but until we face up to cartelisation in the market—I have instanced oil but it applies very widely—and until we face up to the accounting manipulations the multinationals can use to fiddle the price at the frontier we cannot approach a solution to this problem. If they want a price rise they just deliver the oil dearer and if they do that this Bill can do nothing about it. The price to the producer must go up. So, in regard to the multinationals which control so much of our economy now, this Bill has no meaning, no validity. I could document this argument in regard to other matters but it is a rather depressing and joyless exercise. Whether it be imports which are mentioned, whether it is professional fees or interest rates you find when you read the small print the Bill does not purport to control them. Yet, to the great Irish public at whom this will be brandished as a serious effort to show what we are doing about prices, it will appear that, yes, it has something about professional fees, the price of imports, interest rates and houses. There is something for everybody but none of it has any meaning. None of it has any real impact on prices.
I am pleased that these piddling extra powers are being taken by the Minister: it is better that he should have them than not. They may be of some conceivable use in the future when you get a Government resolute enough to use them for the people's protection. But let us not take this Bill as a serious contribution to controlling inflation in Ireland. Control of that inflation with an open economy and without economic sovereignty is not in our hands. Let us not play games on a serious issue with the population and deceive them into thinking that since our economy is so open we can have a significant impact on prices. We are dealing in subterfuges.
In fact, this is a bit of patronising of the public on a serious issue. It says: "What stupid people they are; they will take this as a serious effort." It is contemptuous of their perception, knowledge and insight to believe that a bit of window dressing like that will make any difference. It will not. Since there is no serious effort in the Bill or anywhere else that I can see or any serious using of the 1958 and 1965 Acts to control prices, what we see, in fact, is inflation causing a deterioration in the real living standards of the poorer section of the community.
I offer this to the Government to be distorted, taken out of context and used in any way they wish on future occasions and I know how dangerous it is in view of their cavalier way of dealing with what people say but, personally, I believe that an evolved, modern economy of our size must face the issue of an incomes policy. It is very difficult and the Labour movement hate it because they see it is a trap. I have said here that if somebody can show me where it has worked, I would have faith in it. I cannot indicate anywhere it has worked. Neither can I see the need to avoid doing it sooner or later if we are to have any sort of civilisation in our relationships in regard to prices and wages. I offer that although it will be hurled back at me on some future occasion, preferably at election time when there is nobody there to explain exactly what I said. There is nothing in this Bill to indicate a serious effort at such a policy. That policy must be real and has to go all the way across the board. Little bits of window dressing such as this are merely depressing and until there is real effort at formulating a real policy produced by real discussions and until there is a consensus about that, the only way the weakest and poorest sections of the community can defend themselves is by getting more wages.
Increased wages may be a minor contribution to inflation and to price rises but they are not the cause of inflation in our economy. I would like to be able to say: "Come on, fellows. Be sensible. Hold off because all you are doing is hurting old people, widows or those on fixed incomes." However, there is nothing in this Bill that is of a degree of seriousness that would induce me to urge any trade unionist or any section of organised labour to hold off. Should they hold off in response to the window dressing in the Bill, all they will be doing is accepting a disimprovement in their already too-low standard of living. I would like to see a serious Bill on this subject. It is much better that prices be controlled by Parliament in a rational way rather than that they be controlled in a savage and disorganised way. Until we have a real Bill on prices we will not be deceived by proposals of the kind now before us and we will not accept the seriousness of the Government's intention to control prices in the areas mentioned.
