I move:
That Dáil Éireann notes the continued failure of the Government to take decisive action in the area of the control of prices after almost three years in office: aware of the promises of the Government contained in pages 10 and 11 of the Fianna Fáil manifesto relating in particular to its undertaking to discourage increased costs and prices in all areas where it has control and influence; and to examine the accounting procedures of the ESB with a view to reducing the price of electricity; also notes that since the beginning of 1980 further price increases have been sanctioned by the Government, including increases of 10.5 per cent in coal, 20.5 per cent in ESB rates, 4 per cent in milk, 10 per cent in bread, 20 per cent in CIE fares, 29p in bottled gas—all of which have hit the weaker sections of the community hardest—and condemns this further abject failure of the Government to cushion the most disadvantaged sections of the community from the effects of price increases by their deliberate escalation of these price trends due to their own policies such as the abolition of food subsidies.
The increases in the prices of essential commodities and services which have taken place since the return of Fianna Fáil to Government in June 1977 not only places an intolerable burden on consumers but constitutes a cynical and unscrupulous breach of the election promises and undertakings made by that party in seeking support in that election.
The clouds of almost radio-active republican rhetoric which wafted out from the RDS last week-end cannot obscure this serious situation. Most politicians in relation to price control are long on analysis and short on solutions. However, listening to the Taoiseach last Saturday evening one felt that he was commenting on another world. The real world of price rises and PAYE does not apparently relate to the nationalist rhetoric of the Taoiseach. But then it is not every family in the country who can afford to pop out to the back garden, shoot a few pheasants, have them plucked, and served for dinner. It is indicative of the economic and social priorities of the Taoiseach that in an Ard-Fheis speech of over one hour we had a curt two minute reference to prices and the National Prices Commission.
I make these harsh comments because I feel that our country is once again drifting into the vicious spiral of prices—incomes escalation. There is clear evidence that such inflation is a guaranteed means of making the rich relatively richer and the poor relatively poorer. Campaigning against inflation and doing its utmost to reduce the worst effects of inflation should therefore be a high priority for any Government unless of course the Taoiseach wishes to see a continuation of a situation where the men of property gain all along the line and the pensioners are left at the bottom of the pile. Arising out of this inflation large numbers of jobs can also be threatened. It needs to be pointed out to every trade unionist in the country that, while some wage or salary groups may be able to get ahead in such an inflationary race for some of the time, all groups will not be able to get ahead all of the time and anybody in the trade union movement who thinks that this can be done is only indulging in economic fantasy. Such realism is evident from every single one of the reports of the National Prices Commission since 1971, which I had an opportunity to read over the prolonged Christmas Recess.
Consumer prices rose by 16 per cent in the year to November 1979. Since Fianna Fáil took office—and I am using the base of August 1979—prices have moved as follows: all consumer prices are up by 27.3 per cent; food prices are up by 26.3 per cent. If one had the mid-February figure that would be substantially greater. But essential food items which hit the housewife's purse and where subsidies have already been partially removed have increased as follows:
|
August 1977 |
November 1979 |
% Increase |
|
|
P |
P |
||
|
Milk (per pint) |
8.0 |
12.5 |
56 |
|
Bread (800 grms.) |
23.9 |
32.1 |
34 |
|
Butter (1 lb.) |
53.1 |
63.6 |
20 |
|
Cheese (1 lb.) |
71.6 |
97.7 |
36 |
|
Flour (plain: 2 kgs.) |
43.9 |
67.0 |
52 |
During the election campaign Fianna Fáil canvassers went from door to door with the famous gospel—not the manifesto, which was rather large for digestion—in the form of a handbook called the "Fianna Fáil Canvasser's Guide for 1977". It is rather interesting to quote the section on prices and a couple of questions in that guide:
Q. Will Fianna Fáil put VAT back on food?
A. No. On the contrary, Fianna Fáil is in favour of food subsidies which reduce the price of everyday foods and we pressed the Coalition to introduce them for the best part of a year before they finally did so.
In the field of price control I fully accept that miracles cannot be worked. Prices must bear some direct relation to costs of production. If wages and salaries or the price of materials rise, price rises must inevitably follow. If such price increases are to be prevented, then the increased costs would of course have to be met from either profits or from improvements in efficiency. It is also clearly quite evident that, if the profits of any undertaking are pushed below the level required to maintain and up-date a firm's plant and equipment, higher efficiency is quite unlikely to occur and in the long run such a firm will not survive for long.
However, having made this admission, I would strongly point out that price control and surveillance can be so operated as to limit price increases to the minimum and to prevent prices or charges being increased without full justification. In my opinion, if the National Prices Commission and the sanctioning role of the Government can be seen by the public to be operating with reasonable effectiveness over the general range of goods and services, this can be a vital factor in reassuring consumers that their interests are in fact being protected and that there is no licence on a general basis throughout the country to raise prices at will. I get the distinct impression that in recent months—and perhaps not unrelated to the fact that there is little sympathy between the Minister for Industry, Commerce and Tourism and the present Taoiseach—the sanctioning of such increases has just been let rip.
One of the most serious charges which can be made against the present Government is their obdurate refusal to consider any subsidy to reduce prices in critical areas of consumer expenditure. For example, in the June 1975 Budget introduced by the then Coalition Government there was a CIE subsidy increase in order to reduce fares to their level before 12 May 1974. Fares on Dublin city bus services, provincial bus services and Dublin and Cork commuter rail services accordingly were reduced at that time by no less than 25 per cent on average. That was part of a deliberate policy to keep prices down.
Also in the 1975 Budget the price of bread was subsidised by 5½p per loaf of 800 grammes and flour was subsidised by 4½p per kilo. On that occasion the cost of a loaf of bread was reduced by a net 4p or 20 per cent. In the same budget, at a time of exceeding stringency, the then existing subsidy of 2.4p per pound of butter was increased by 10p to 12.4p per pound and the price of milk for human consumption was subsidised by 2p per pint.
As many consumers are also aware, town gas costs have substantially increased in recent years. I would point out that, for example, in the 1975 budget a subsidy to producers of town gas was introduced to enable them to reduce the price to consumers by an average of 12½ per cent. Likewise in 1975, in relation to value-added tax this was removed from electricity and from all fuels except road fuels. It was removed from clothing and from clothing materials and footwear. These categories had been subject to the 6.75 per cent tax rate.
Thus, if one takes the 1975 Budget, in a period of relative stringency and recession, the net effect of the measures which we then introduced was at that time to reduce a rise in the consumer price index by no fewer than 4 percentage points. This was at a time of massive high inflation, and decisive action on our part succeeded in mitigating the worst effects on the middle and lower income group families in the country. There is a pattern for the Government to follow. But, regrettably, due to their profligate policy of recent years there is now no money in the national coffers to meet such subsidies and to follow a similar policy. This is a matter of profound regret and it directly reflects the fact that the management of the State's finances in the past three years has been, to say the least, catastrophic. The present Taoiseach was a member of that Cabinet since mid-1977 and he cannot now merely shrug off his share of collective responsibility for that debacle.
I wish to refer to the effects of taxation policy on prices and price control. The Labour Party strongly oppose any proposal to introduce further broadly based VAT increases. There is already a high level of indirect taxation in relation to total taxation. Such further VAT increases would inevitably cover many of the necessities of life. Price inflation would further accelerate. It would be inherently inequitable in that its incidence would not be directly related to taxable capacity or to family circumstances. It would result in a more inequitable distribution of the tax burden over the community. In effect, such reliance on indirect taxation would mean an additional burden on all lower and middle income families.
I would strongly stress that such prospective VAT increases would definitely raise the cost of living. It would immediately give rise to quite justifiable income demands for increases in wages and salaries. This policy could well have serious implications in relation to costs and our competitive position. In our opinion, at a time when stability of prices is generally considered to be a primary aim of economic policy it would be folly for the Government to deliberately raise prices over a wide range of commodities by the further inposition of VAT increases.
