Vol. 430 No. 8
I move:
"That Dáil Éireann condemns the Government's decision to approve increases in telephone charges of up to 400 per cent for day-time local calls and 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,"
I wish to share my time with Deputies Cullen and Molloy.
Is that agreed? Agreed.
Last week's announcement of changes in telephone charges for domestic and overseas users has brought a new level of Orwellian-speak to Government announcements in this country, which is becoming a particular trait of this coalition Government. We saw its first manifestation with the mantra-like declaration of a "partnership" Government which has to be uttered by every member of Government, Cabinet member, junior Minister and back-bencher alike, whenever they string even a single sentence together.
Even when there are deep divisions between Ministers, and between the Government parties everything has to be described as a "partnership" operation. They sometimes forget that the legal essence of a partnership is that each partner is liable for all the acts and faults of the other whether they are aware of them or agree with them.
This ludicrous abuse of language of course reached new heights with the announcement by the Minister, Deputy Cowen, of his telephone charge proposals, when increases of up to 400 per cent for an existing service are labelled "pro consumer", and are euphemistically summarised as nothing more than a "rebalancing" exercise.
Indeed, the public's outrage at the level of price increases they will face, as both private and business users, is exceeded only by their sense of anger at this blatant attempt to pull the wool over their eyes, and to confuse and deceive them, by the us of bland PR-jargon, notably by the Minister, Deputy Cowen, and by his colleague at the Department of Enterprise and Employment, Deputy Quinn.
He is not here.
Nor, of course, does the misrepresentation end there. We are also told that the new telephone pricing structures represent the implementation of the Culliton report in relation to telecommunications services in Ireland. This, of course, is wholly inaccurate. Culliton never recommended any increase in local calls. Similarly, there is not a line in the entire set of ministerial proposals which tackles the central tenet of Culliton in relation to this matter; namely, the creation of competition in the provision and delivery of telecommunication services and the reduction of Telecom Éireann's costs.
Last week, after the Minister, Deputy Cowen announced his proposals, I stated on behalf of the Progressive Democrats that while we welcomed the reduction in our totally uncompetitive international telephone charges, the associated increase in domestic charges, which was not consequential, as suggested by the Minister, was completely excessive. That remains the kernel of our approach to this matter.
Yes, there are welcome features; most notably the reduction to normal levels of our overseas telephone charges, and also the creation of an effective local call tariff system for the entire island at weekends.
However, what is notable about the reduction in our international telephone charges is the fact that this is the single area where, of course, Telecom Éireann do face competition, and where, on the Minister's own admission, the company is actually losing revenue because of its uncompetitiveness — at a growing rate of at least £15 million a year.
I dare say that if this were not the case, Telecom would have been in no hurry to reduce its international charges to Irish businesses, and other users of the service. We should take with a high degree of scepticism the pro-user declarations on the part of Telecom, and the Minister, that all of this is being done solely for the benefit of Irish exporters. It is being done primarily for Telecom's benefit.
However, it is when we turn to the implications of the new regime on domestic telephone users, for both business and private calls, that the present proposals are seen to be so totally unacceptable.
Firstly, let us take the private phone user. I find it incredible that the Minister has persisted in arguing that the average bill, even after the additional VAT increase, will only increase by 4 per cent. He states this, notwithstanding the fact that, elsewhere, he and Telecom Éireann are agreed that domestic users will face cumulative price rises of over £60 million, £29 million of that from increased VAT charges, and more than £30 million arising directly from the increased cost of calls, where the duration is greater than three minutes.
Last week, in the Dáil, when replying to a short Adjournment Debate on this topic, the Minister declared that the average domestic subscriber would find an increase of just £3 per bill, even with the increased VAT charges. I do not believe that the Minister's figures reflect the likely scenario facing the vast majority of the 750,000 private telephone users in the country.
I suggest that a much more accurate picture of the increased charges, which most people will face from next September, is reflected in a very interesting report in last Sunday's edition of The Sunday Press newspaper. One of the paper's reporters, William Rocke, had his most recent telephone bill recalculated by Telecom on the basis of the new charges which will apply from September next, and also the further revised charges of April next year, when the VAT rate of telephone bills will go up by a further 5 per cent.
The figures from that pertinent and timely exercise are most revealing. They would reflect the experience of the average householder in this country, rather than the obviously, entirely selective approach of Telecom and the Minister in their PR-pronouncements to date. Incidentally, Telecom's enormous and illegal advertisements are very costly, and are being paid for by all telephone subscribers.
Under that exercise, Mr. Rocke's present bill of £70.66 will go to £85.96 from next September, when the new charges, and the first 5 per cent VAT increase, will take effect. That is an increase of more than £15.00, or 21 per cent plus on the present bill. When the further 5 per cent increase is applied from April of next year, the same bill would go up by a total of £19.10, compared to its present level, which is a price rise of 27 per cent.
These are huge increases, and they give the lie to Minister Cowen's PR-sanitised claims of a mere 4 per cent average rise. Of course, in the case of The Sunday Press reporter, Telecom's observation was that it was unfortunate that the person concerned was not making calls to Europe, Australia or America, where he could have saved a great deal of money. What a stupid and specious argument this is. The reality is that there are hundreds of thousands of domestic telephone users who would have very little reason to make overseas calls.
That is not true.
Telecom and the Minster might as well adopt an attitude of suggesting to telephone users that they get rid of the telephone altogether, and that they would thus save an enormous amount of money. Their argument is that ridiculous.
The reality is that, from next September, Ireland will become the second most expensive country in the European Community in which to make a peak-time local call of nine-12 minutes duration. And even for calls up to six minutes, we will be the fourth most expensive country within the Community. Compounding the situation further is the fact that on top of the charge increases and the VAT rises, we also have to endure the highest line rental charges within the Community, which are exactly 50 per cent dearer than the Community's average.
Besides the Minister's claim that the average phone bill will only rise by 4 per cent being incredible, his, and Telecom's, assertion that 72 per cent peak time calls within the Republic are of less than three minutes duration does not reflect the experience of anybody I have spoken to about this matter.
It may be that many unsuccessful phone calls are very short, in the sense that people hang up having been informed that the person they are seeking is not available. However, it is equally certain that 72 per cent of local call time is not spent on calls of less than three minutes duration. I would like to know much more about the Telecom survey on which this figure is supposed to be based. I would like to know why it was conducted in the month of December last which, given the extended Christmas holiday period, is bound to have a distorting effect compared with other months of the year.
Exhortations, too, by the Minister for Transport, Energy and Communications, Deputy Cowen, and the Minister for Enterprise and Employment, Deputy Quinn, to domestic telephone users to alter their calling habits are of little comfort to firms and industrialists who do the bulk of their business here. The implications of this suggestion are that companies would have to work late at night and at weekends and have to retain staff on costly overtime rates. They might also be seeking to do business with people who probably would not be available on the other end of the telephone line in any case.
I would like now to turn to the claims by those two Ministers that the new telephone charges represent the implementation by this partnership Government of the Culliton report in so far as it relates to telecommunications services. I would remind the Minister that the section in the Culliton report on telecommunications begins with a commitment to competitiveness and declares that "a pro-competitive approach is also in order in the field of telecommunications". The Culliton report goes on to state that "the complex question of providing competition for as many of Telecom's services as is feasible, in order to ensure downward pressure on these price levels, should be actively explored". This urges competition in such areas as the resale of leased lines and the establishment of a proper regulatory framework to control those services which are not open to competition to ensure that they are being provided on a cost effective basis.
On the other matter of a regulatory authority, it is simply amazing that the Minister relies solely on data provided by Telecom on the impact of major price rises for what most people, both business and private users, now see as an essential service. Why did the Minister not use outside consultants to examine Telecom's price structures? Does the close relationship between Telecom and the Department of Transport, Energy and Communications not directly conflict with the European Community's mandate that the operation of telephone companies should be totally separated from their regulation?
In short, there is no doubt but that the Minister's latest proposals, far from representing the implementation of Culliton, are nothing more than a gross distortion of the most fundamental objective of Culliton in this area, which is the creation of competition in the provision of telephone services here for both private and business users and downward pressure on the cost of those services. The Minister's statements made no reference whatsoever to the installation of competition in this vital area despite the fact that Telecom has already shown plenty of evidence of some of the worst features of State-owned monopolies. Yet there is nothing in the Minister's pronouncement to indicate anything but that he is entirely happy with the operations of this company and with its management's performance. On the contrary, it is evident that this Government is happy to see the company proceed with the expenditure of a further £900 million in capital spending over the next five years on top of the £1 billion debt which it has already accumulated.
I would remind the Minister and the Irish public generally that this is the same Telecom company and the same Telecom management that presided over the Ballsbridge site debacle, which has now ended up being a £12 million white elephant derelict site. The people who bought the Ballsbridge site have brought you a 400 per cent increase in charges. This is also the same Telecom management that saw nothing wrong with paying a fee of £40,000 to an auctioneer for simply driving around the same Ballsbridge site.
Is it any wonder then that Telecom originally proposed to the Minister that he should allow it charge local calls at the rate of 5p per minute? Clearly this is a management either not in touch with the real world, or who feel so cosseted by its monopoly situation that it does not need to take day-to-day market realities into consideration at all.
Unfortunately, I believe that one of the sorry fruits of this so-called partnership Government is that the Minister, Deputy Cowen, dare not even look at the major organisational defects in Telecom which result in its productivity level being well below that of comparable telephone companies in Europe. Its operating cost per line are the highest of all telephone companies in the world for which data is available and the company has not developed a proper customer ethos essential to the kind of service operation it is. Telecom needs a revolution in its culture, in its procedures and in its management approach and none of these will happen while it remains a monopoly supplier and is answerable to such a captive and complaint partnership Government.
Of course, we will be faced during this debate with the particular irony of the Labour Party, on the one hand, standing four square against any prospect of competition being introduced against Telecom in the provision of telephone services. while on the other hand it will shed crocodile tears for the hapless consumers faced with these exorbitant increases in telephone charges, whether they are business or private users.
Unfortunately, as this is Private Members' time, I cannot call a quorum in the hope that one or two Labour Deputies might wander into the notoriously empty Labour benches.
Continuously empty.
They are listening.
Let us hope so.
Their partner is represented here.
Already we have had by by now ritual distancing of themselves by various Labour Deputies from the telephone price increases and we have had a rash of calls for reviews, revisions and rethinks. I believe it is a safe bet that, come tomorrow evening, those same Labour Deputies will all troop through the lobbies in support of the Minister, Deputy Cowen, and his selective, cynical and excessive telephone price increases.
Apart completely from the policy aspect of this con job on the public is the disaster that lies in wait for these changes on a legal basis. The fact that Bord Telecom proposed at the diktat of the Government to effect a deliberate policy of cross-subsidy which involves greatly increasing domestic charges, where Telecom has a monopoly, to reduce international charges, where Telecom, is ineffective competition internationally, raises significant questions of European law and domestic law. It seems to me to be inevitable that these charges will be successfully challenged in the European Court of Justice. That court has ruled, under Article 90 of the Treaty of Rome, that state bodies to whom special or exclusive right are given by national laws of a member state cannot use those powers to engage in differential price structures which are not commercially decided and which have the effect of abusing a dominant position.
I am advised that these new charges if challenged before the European Court of Justice by an aggrieved party, whether a consumer body, a business, or a competitor, will probably: (a) be struck down by the court, (b) become the subject matter of a large fine, and (c) become the basis for a compensation order to the Irish telephone users. If that happens, as I believe it will, we will find that the Minister's incompetence has cost us all dearly. And once again we will thank our lucky stars that there is a European Court in existence to correct our own misdeeds and our own foolishness. I call on the Minister now to withdraw this proposal before it is struck down.
Even if the European law dimensions were not there, I am advised that the Postal and Telecommunications Act, 1983, and section 90 in particular, does not authorise the cross-subsidy of services proposed now by this Government. On the basis of several established cases it would appear that the logic of the "Fares Fair" decision in the English House of Lords in the Bromley Local Borough Council v Greater London Council (1982) 1 All ER 129 would prohibit this scheme of charges in Ireland as well.
These legal objections are quite apart from the provision of the Competition Act, 1991, which may or may not, because of the statutory instrument aspect of this scheme, have application to these facts.
I am calling on the Government to withdraw this proposed scheme now in the name of jobs, in the name of social justice, in the name of the law and above all in the name of simple common sense before it is struck down by the courts, both Irish and European.
I welcome the opportunity to speak on this important motion this evening. The Minister of State at the Department of Finance, Deputy Eithne Fitzgerald, speaking on "Questions and Answers" yesterday evening stated that the Government were implementing these charges because the Culliton report stated it must be done. Nothing could be further from the truth. The Culliton report and its back-up reports do not state that we must reduce international telephone charges here by increasing domestic charges to an exorbitant amount. That is an indication of how this Government is trying to defend the indefensible in the actions taken by it since coming into Government. A more significant point made by the Minister of State yesterday evening was that competition cannot be created in the telecommunications area without selling the instrument, in other words the telephone. In her opinion that was as much as could be done. If that is the Government's understanding of competition and the depth of its knowledge of the telecommunications industry it is a poor indication of how the industry and all of the other semi-State companies will be developed. I believe the future for these companies will be hopeless and they will, effectively, have no future whatsoever.
Where is Telecom Éireann going and where should it go? Nothing of what has taken place in the past few days would lead anyone to believe there is a clear development role for this company. Will opportunities for expansion and the embracing of competition, both international and domestic be sacrificed totally in defence of the local patch to the detriment of everything else? This would appear to be what is happening now in Telecom Éireann both within the management and in some of the comments being made by David Begg through the CWU. These people are not looking to the future. I would liken it to the opportunities that existed in the air traffic sector for Aer Lingus but which were not grasped when competition was available. The airline became defensive and has ended up in an extremely difficult situation. If it succeeds in getting over its difficulties it will at best become a small regional operator. Is that to be the future of Telecom Éireann also? This is a company that has opportunity, that has been held up by all sides in this House as having developed well in the past number of years and which has the capacity to compete at international level. I agree with my colleague, Deputy O'Malley, that the only reason these changes have been brought about is that Telecom Éirenn faced competition in one area only, namely the international sector. Can we not look to developing this company on a much broader scale? Can it not become what I believe Culliton intended, a major player in the international communications area rather than a domestic player? A future in a domestic sense will not sustain that company when it has to face real competition from overseas.
What should this company do? It should look to become a healthy, dynamic organisation. If David Begg and the people who work in Telecom Éireann examined the long term opportunities they may decide they would rather be representing workers in a company which is developing internationally, which will create sustainable jobs and which will offer challenges and opportunities. Why should a company like Telecom Éireann, with its expertise, not be involved in either a joint venture or on its own developing telecommunications systems in Poland, Hungary or elsewhere rather than always defending the indefensible in terms of its own patch? That is not the way for this company to develop and the Minister and his Department are failing to encourage Telecom Éireann to become a major international player in terms of the telecommunications industry.
We can take the example of Cable and Wireless and consider how it is developing. One could not compare Telecom Éireann to this company in terms of size but the direction in which that company is going is also open to Telecom Éireann. It should develop into a substantial company that is not afraid of competition whether it comes from the domestic or international market. If Telecom Éireann does not embrace the ideals and value of competition the company and its workers will have no future because of the mistakes being made and the decisions being taken by this so-called partnership Government of Labour and Fianna Fáil. The decisions this Government is making do not offer any real future to the Telecom Éireann workforce. They will be reduced in size as competition increases rather than facing competition and adapting to it.
One may ask how this can happen. Singapore has a population of two million people but developed its airline, Singapore Airlines, into one of the greatest in the world today. That is an example of how proper policy, direction and facing of competition can develop companies into substantial players in the world market.
The major talking point of people today is the effect of these charges on the domestic consumer, local businesses as well as the private telephone user. What about the effect of these charges on small businesses such as auctioneers? Anyone familiar with that area will be aware that much of the business is conducted on the telephone involving potential purchasers and people wishing to negotiate and renegotiate. That is domestic business which occurs within defined rural areas. Bigger companies may operate nationally but very few will operate at this level. This is a clear example of a service industry facing major increases without any thought by this Government for decisions made by it in the past few days.
Many retail shops, particularly small family run businesses throughout rural Ireland, purchase from wholesalers. Much communication takes place involving price checking, where the best deal is operated and where the best advantage can be obtained to be competitive with the major multiples. Much of that business depends on fast communication and being at the head of the market so as to face the enormous competition created by these multiples. The companies that are trying to survive and create sustainable employment in local areas are being crucified by the actions being taken arbitrarily by the Minister and his Department. Charitable organisations have filled the void created by Governments' lack of action here in the past 20 years. I could not begin to count the number of organisations here who operate on a voluntary basis. These people give of their time to provide much needed services to their own communities and communities nationwide, filling the void created by Governments in this area over the past two decades. What about people who desperately need to talk to a friendly voice at the other end of a telephone line? They will not be able to afford the increased cost of local charges proposed by the Government. Many organisations who phone people who have called them seeking help will also not be able to afford these charges.
The Government seems to have forgotten the ordinary citizens. It is justifying the proposed increase in local charges on the basis that the cost of international calls will be cheaper for industry. The Government has forgotten the ordinary citizens who have to survive and who have been under enormous pressure for the past number of years. Many people do not burden the State with their needs; rather their families look after them. This fact has also been ignored by the Government in proposing these increases. Will a person who cannot afford these increases have to wait until off peak-time or the weekend before telephoning a family member for help in a time of crisis? Even children in school would regard that as nonsense.
The reasons for these increases do not stand up. County council managers are trying to defend the indefensible on behalf of the Government. Who decided that the telephone rental charge should be as excessive as it is? Is this charge laid down in legislation or did the public demand that we should have one of the highest telephone rental costs of any country in the world? Why has this charge not been looked at by the Government? The reason is that there is no competition in this area. The only way of eliminating this type of interference by the Government is through the introduction of competition in the marketplace. This has been proven time and again in various industries through the world. Of course, no consideration is being given to the introduction of competition in this area. The typical attitude of the Government in many areas has been to latch onto, for example, the Culliton report and use it to defend every ill thought out and ill conceived initiative it has taken. If the Government continues to treat semi-State companies in the way it has done to date it will have ruined this sector by the time it leaves office.
Tá an Pairtí Daonlathach go láidir i gcoinne moltaí an Rialtais costais teileafóin a ardú 400 faoin gcéad. Is buille uafásach é seo ar ghnáth mhuintir na tíre agus cuireann sé ionadh an domhain orm go ndéanfadh an Rialtas nua cleas salach den sórt seo a imirt ar mhuintir na hÉireann.
Níl aon dabht ach go gcuirfidh sé ardú uafásach mór ar na billí telefóin a thagann isteach gach trí mhí i ngach teach ar fud na tíre. Bíonn an-imní ar dhaoine os rud é nach mbíonn mórán smacht acu ar na billí sin. Tá a fhios againn cé chomh minic a théann daoine go dtí an Ombudsman chun a iarraidh air na billí a cheistiú agus chun a chur in iúl in a lán cásanna nach bhfuil na billí ceart.
Cuirfidh an moladh seo chun an tréimhse ama a ghearradh siar ó 15 nóiméad go dtí 3 nóiméad go mór le costas an ghnáth-dhuine. Tá athruithe á mholadh ag an Aire ach ní bhainfidh mórán daoine tairbhe astu. Tá siad ar fáil ag an deireadh seachtaine, san oíche, ar laetheannta nach mbíonn an gnáth-ghnó ar siúl agus ag amanna nach mbéadh mórán daoine ag baint úsáid as an gcóras teileafóin.
Is sórt cleas é sin chun a chur ina luí orainn go bhfuil na moltaí go maith. Ach nuair a bhreathnaítear taobh thiar den hype feictear go bhfuil droch-chleas á imirt ag an Rialtas nua ar ghnáth-mhuintir na hÉireann.
Creidim go bhfuil fearg ar mhuintir na hÉireann faoi seo. Creidim go mb'fhéidir nach dtiocfaidh an toradh as a cheapann an tAire a thiocfaidh as ó thaobh méadú ar theacht isteach.
Tá a fhios ag na daoine cad tá ar siúl. Tá fhios acu go bhfuiltear ag iarraidh an costas a laghdú do ghnó atá ag déanamh glaochanna idirnáisiúnta. Leis an bhfírinne séard atá ar siúl anseo ná laghdú ar chostas an fóin don lucht ghnó nó do na daoine saibhre agus ardú costais fóin do ghnáth-dhaoine. Ní éireoidh go rómhaith le haon rialtas a dhéanfaidh iarracht cleas den sórt sin a imirt ar mhuintir na tíre seo.
Mar sin iarraim ar an Aire deireadh a chur leis an dallamullóg. Tá sé ag iarraidh a chur ina luí gur mhol Culliton na hathruithe seo. Níor mhol. Mhol sé go mba chóir go mbeadh iomaíocht sa chóras teileafóin. Níl aon mholadh ag an Aire chun sin a chur i gcrích cé go bhfuil iachall orainn mar bhall de Chomhphobal na hEorpa sin a dhéanamh. Caithfear é a dhéanamh sul i bhfad. Ach níl aon rud i gceist ag an Aire chun Telecom Éireann a dhéanamh níos éifeachtaí, chun na costais a ísliú taobh istigh den chomhlacht sin, nó chun táirgiú a mhéadú ann. Tá sé chun iarraidh ar ghnáth-mhuintir na hEireann íoc as an ísliú chun go mbeadh tairbhe éigin ag an lucht gnó a dhéanann gnó idirnáisiúnta. Mar sin iarraim ar an Aire anois ath-smaoineamh a dhéanamh ar na moltaí.
Tá sé le feiceáil nach bhfuil aon bhall de Pháirtí an Lucht Oibre anseo. Is léir go bhfuil imní orthu faoin moladh seo nó go bhfuil náire orthu. Cén fáth nár tháinig siad isteach fiú amháin chun éisteacht le pé rud a bheadh le rá? Níl ach triúr ó Fhianna Fáil anseo. Mar sin ón breis agus céad Teachta Dála atá ag dhá pháirtí an Rialtais níl ach triúr anseo. Níl ach an t-aon chúlbhinseoir amháin anseo ón Rialtas — an Teachta Ned O'Keeffe. Níl fhios agam fós cad a bheidh le rá aige.
Cá bhfuil na teachtaí eile? Caithfidh go bhfuil náire oraibh de bharr an rud atá á mholadh anseo. Mar sin, iarraim arís ar an Aire agus ar a chomh Airí ath-smaoineamh a dhéanamh ar an moladh seo.
Tá an-fhearg ar mhuintir na hÉireann de bharr an mholaidh seo. B'fhéidir gurb é an rud a thiocfaidh as ná go mbeidh daoine chomh mí-shásta nach mbainfidh siad úsáid as an bhfón. Beidh a lán daoine ag iarraidh an coin-box a chur isteach ina dtithe cónaithe ionas nach mbeidh biltí móra ag teacht anuas orthu agus gan iad in ann iad a íoc.
Tá daoine eile ann nach mbeidh ar a gcumas úsáid a bhaint as an bhfón de bhárr na gcostaisí móra atá a mbrú orthu.
Leis na meáin cumarsáide uile agus an teicneolaíocht nua agus an tairbhe ar féidir le muintir na tuaithe, muintir na mbailte móra agus an lucht gnó a bhaint as an gcóras nua, is uafásach an rud é go bhfuil rialtas againn anois atá ag iarraidh costais chomh mór sin a ghearradh ar an bhfón nach mbeidh daoine in ann é a úsáid. Ba chóir go mbeimis ag ísliú na bpraghsanna chun go mbeadh daoine in ann níos mó úsáid a bhaint as.
Mar sin, ní thuigim cén sórt smaoinimh nó cén sórt loighic — ní chreidim go bhfuil aon loighic — atá taobh thiar den moladh seo. Tá an-droch obair ar siúl ag an Rialtas faoi láthair ach tá am acu ath-smaoineamh a dhéanamh agus tá súil agam go mbeidh sé de chiall acu sin a dhéanamh.
I wish to give five minutes of my time to Deputy Ned O'Keeffe.
Is that agreed? Agreed.
I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
Notes and approves the action of the Minister for Transport, Energy and Communications in authorising the implementation of a package of telephone tariffs which will improve competition and assist in job creation in the economy, allow Telecom Éireann to further develop and update our national telecommunications infrastructure and provide incentives for maximising public usage of the telephone system; further approves of the Government decision to recommend State and Local Government agencies to maximise the use of freefone facilities and welcomes the decision to establish the Telephone Users Advisory Group to monitor the impact of the rebalancing of the telephone tariffs.
Ní aontaim leis an argóint shimplí a dhein an Teachta Molloy.
The Opposition motion before the House is a further selective misrepresentation of what is a fair and balanced overall package. Before going into a discussion on tariff changes let me set out the underlying facts. The facts are that overall telephone charges are being reduced. The total revenue of Telecom Éireann will fall by £15 million perhaps more; the tariff for 75 per cent of all calls, local, trunk and international is being reduced in some cases by as much as 60 per cent including 80 per cent of local calls; the increase is confined to 15 per cent of all calls, that is those local calls over three minutes peak and 15 minutes off peak.
To highlight a particular change in those circumstances is selective and biased and intended to mislead the public. What counts at the end of the day is not the change in the rate for any particular call but the overall effect the tariff has on customers' bills as well as the contribution it can make to job creation by lowering costs and improving competitiveness; and the opportunities and incentives it gives to all customers to control their own costs and utilise the phone system fully for social and business purposes.
The tariff structure that I have approved of will achieve these purposes. It also introduces fairness and more equality between different user groups and moves towards ending discrimination that exists in our existing tariff structure. What I set out to do in the course of this address is to outline once again for the benefit of this House and the public, what I am doing, why I am doing it and the effect it really will have on customers' bills rather than the selective impact highlighted in the motion before the House. It is against this background that the tariff must be examined.
In looking at the overall changes I will pose two issues for consideration: Is the tariff fair; are the changes justified? We must consider too the effect on bills stripped of all the emotional and misleading comment that has confused the issue.
There is much that is both unfair and outdated in the current tariff structure. The cost structure has been changed beyond recognition by technology with costs no longer determined by distance but by duration of calls. There is a great deal of artificiality in the present structure and competition is beginning to play an increasing and welcome part in determining tariffs.
My objective is to bring fairness and economic reality to bear on an outmoded tariff. Let me give examples: The public seem to want unlimited time on local calls throughout the day. If this is to remain there is a price to be paid by many for the benefit of the few. Over 70 per cent of peak calls are concluded within three minutes and I regard that time interval as reasonable period in which to apply the lowest unit charge.
Why should a message conveyed in a short 15 seconds cost as much as a 15 minute call? Why should the majority of phone users who want to conduct urgent business calls at peak hours feel frustrated and delayed while exchanges and lines are tied up and clogged by long duration calls, many of which could be postponed to off peak hours?
Another example of unfairness and inequality is the imbalance between international, trunk and local charges. A local call extending to a range of 20 to 25 miles can cost less than 1p per minute for a 15 minute call. Going another 20-30 miles beyond that costs 12.1p per minute, nearly 15 times as much for a call that costs very little more to set up and transmit than a local call. Calling beyond about 50 miles doubles the cost again, and calling internationally, for example, to Britain, the cheapest destination, costs two and a half times as much again:— 59p per minute peak time as against under 1p per minute for a 15 minute local call, a ratio of nearly 80 to 1. If I were introducing such wide discrimination in tariffs now there would be an outcry against it. Yet that is the tariff structure that has evolved; that is what we have inherited and which I propose to remedy.
The Minister is making a bad story worse.
The effect of all this is that international and trunk callers are subsidising local calls.
These changes will narrow the differences between tariffs, introduce more equality, more choice and more balance in relating charges more closely to usage and costs. It is only in this way that equality and fairness will prevail.
This is the acid test of the changes. While there are considerable changes in the new tariffs to remedy the discrimination and unfairness I have spoken of, most of these changes tend to cancel out and leave bills considerably less affected than is feared by many. I accept the concerns of those who are worried and anxious and will do my best to allay them. I have taken a great deal of trouble to analyse the effect on bills and have ruled out proposals which I have regarded as too severe.
In approaching the effect on bills let me say straight away that the reductions in international and trunk calls benefit most residential customers. These reductions come to £35 million per annum and considerably exceed the increase in local calls of £18 million for residential customers. There is therefore a net reduction in the average charge for calls on residential bills. For the business sector the reduction in international and trunk charges come to £43 million very comfortably exceeding the additional cost of local calls of £16 million. To check the effect on bills I had Telecom carry out an analysis of all bills in a recent billing period, broken down in as much detail as possible. This analysis shows that most customers benefit from reductions and when increases occur they are not excessive. This is why I approved this tariff package because its overall effect is counter balanced and moderate despite the exaggerated claims made as in the case of the proponents of this motion. To put the matter beyond doubt, I propose to circulate tables showing the breakdowns available to me of different forms of bills. It may surprise Deputies to know that the average bill for trunk calls and international calls combined for the average residential customer is almost twice as high as that for local calls. The relevant figures in the sample of all bills were: local — £7, trunk — £5.70, international — £6.56 almost as much as local calls. Trunk and international charges are being reduced by an average of 30 per cent. Within the local call category 80 per cent of calls are being reduced by 15 per cent. It should be obvious therefore that the overall effect of an admittedly substantial increase in the remaining local calls is going to be limited for the average customer.
In a further breakdown it emerged that less than 10 per cent of residential customers made no trunk or international calls in that billing period. Making such calls is not the prerogative of a minority or of the better off. Old age pensioners, for example, spend considerably more on trunk and international calls than they spend on local calls, yet the cost of local calls is being highlighted by those who propose to protect their interest. I am all in favour of protecting their interest when it is based on facts not sentiment.
For the 43,000 pensioners who made international calls the relevant details were: local—£8; trunk—£9; and over £15 for international. These are the customers who are most victimised by the present unfair tariff paying unreasonable charges in trying to keep in contact with family and relatives in different part of the country and abroad.
As I said last week, the focus has been on the 15 minute local call and this type of phone call constitutes one call in 25 while conveniently ignoring the 20 calls which are now cheaper.
Since 1990 Telecom Éireann absorbed 10 per cent of the residential VAT charge. It is legally entitled to pass this on to customers. What I have asked it is to phase in the VAT; 5 per cent in September and 5 per cent when the 25 per cent reduction in A trunk rates takes effect next April. While it might have been wiser to pass on taxation as soon as it arose it is clear that Telecom Éireann could no longer absorb it while giving the substantial price cuts proposed resulting in a net overall loss of £15 million to themselves. The choice therefore to Telecom Éireann was between a VAT pass through over which I have no control or smaller reductions in charges or higher increases elsewhere both of which would not have approved.
There are areas of genuine concern among the public and I am taking the following measures to deal with them. The Government has decided to establish a telephone users advisory group to provide independent monitoring of the operation of the new tariff, its effect on different categories of customers and report to me on its deliberations.
As a further step towards reducing costs for persons calling public offices, the Government has decided that all Government Departments, State agencies and local authorities will be obliged to facilitate a fast and efficient service to their callers involving the maximisation of the freefone service and a call-back service where queries cannot be answered speedily.
The Minister should try that some time.
Does the Minister think it is going to happen?
In my discussions with Telecom Éireann before announcing its rebalancing of telephone tariffs proposals last Tuesday I had expressed concern with Telecom Éireann regarding the impact of the new charges on certain helpline services. I am pleased to inform Deputies that Telecom Éireann is setting aside £500,000 to provide free access to certain high priority services—no charge to callers — namely, the Samaritans, Childline and the Rape Crisis Centre. Telecom Éireann will now discuss with these and other helpline service operators how best to facilitate callers.
The importance of competitive international telephone charges to job creation and retention cannot be over stressed. Deputy O'Malley did not mention this. More than 2,000 "back office" jobs have been created in Ireland by both Irish companies and international or US companies. These typically operate by processing, for example, insurance claims on personal computers in Ireland or American Express data relating to foreign currency purchases in Europe and transmitting the data to a mainframe computer in the customer's home country. Such firms have created employment in small urban areas like Loughrea, Fermoy and Killorglin as well as disadvantaged areas of Dublin to name just a few locations. I understand that the IDA estimates that there is the potential for the creation of 1,000 to 2,000 jobs per annum in this area if conditions are right in the nature of telecommunications services and prices.
They use lease lines; it does not matter what the charge is, they are open all the time.
The Minister to continue without interruption.
There are also some 6,000 jobs in the overseas international services of which some 3,500 are in the software development field. Other jobs in this sector include data processing, consultancy and so on. There are a further 3,000 jobs in the Irish owned software development field. I am advised that the latest development in the software industry is remote software development where the software developer, rather than mailing his package to his customer or having it delivered by courier, transmits it over the national and international telecommunications networks.
Telemarketing is also a developing industry which has been described to me as the IDA's biggest new product. This is an industry where the market is reached only by telephone and where it is primarily outside our shores. The importance of competitive international tariffs in such an industry, if it is to develop, is obvious.
In more traditional industries there is a move towards what is termed just in time deliveries and this is of vital importance to the export industry in such areas as fresh foods and so on where the freshness of the product, the delivery of a stated amount at a stated location at a specific time is all important. Similarly, industry generally is moving to just in time processes for the delivery of components from sub-contractors. All of these industries are dependent on not only high quality communications to service their customers abroad but also competitive international telephone tariffs.
In the service sector area industry is highly mobile and its location is of little importance to the customer. Given the importance of telecommunications charges to this sector it is imperative that our international charges are more closely related to cost.
This package is necessary now to support employment creation and retention in Ireland. It is necessary that we all adapt. The urgency of taking all possible measures to alleviate unemployment means that change can no longer be leisurely and gradual and await further efficiency gains in Telecom Éireann. These will come in time but will be needed to fund other tariff adjustments in future.
Turning now to that portion of the motion which alleges that the Government has failed to address the issue of overall cost levels of Telecom Éireann or to encourage greater competition as recommended in the Culliton report, I would again refute the charges made. Telecom Éireann has taken many steps to improve efficiency since 1984. It has, through voluntary programmes, reduced its workforce by more than 25 per cent not only without disruption of service but at a time when both its customer base and its quality of service increased dramatically. I am aware that much more needs to be done. I have already spoken with the chairman of the board of Telecom and the company's chief executive on the need for greater efficiency. In short, I am insisting that the continuing drive for higher productivity in Telecom Éireann be pursued with even greater urgency and that the gains of such productivity be translated into reduced charges for all consumers.
The Culliton report has been quoted by the Opposition in support of this motion and quoted selectively. There were no less than five recommendations in the Culliton report, three of which are the subject of this debate.
The first of Culliton's proposals was for a radical rebalancing of the current telephone tariff to bring our tariffs into close alignment with the actual cost of making connections. This is a recommendation which has been acted upon within the past week and which has been the subject of deliberations and examination within my Department over the past seven months or so. The second proposal, which is related, requires that our telephone charges be brought into line with cost-based charges in Europe at the least and again this has been done.
The third recommendation relates to the cost structure within Telecom Éireann and I have already outlined both Telecom Éireann's past actions and my own in this respect. This package imposes a burden of £15 million on Telecom which will have to be met by increased efficiency. I will be having the matter examined in greater depth and, within the resources available to my Department, I would hope to meet with the deadline proposed by Culliton.
On the subject of competition Deputies will note that the Culliton report recommends that competition should be encouraged on all of Telecom Éireann's services. I would draw Deputies' attention to the Government decision on that issue which is as follows:
Competition across all services and areas of the telecommunications system will be encouraged, subject to correspondence of public service obligations on all competing service providers to the fullest extent possible.
Deputies will appreciate that it is not possible to take such measures overnight but I can promise Deputies that the fullest possible competition will be made available at dates not later than those required under EC legislation and, where possible, at earlier dates. There has already been the fullest possible liberalisation given the current state of telecommunications development in Ireland and competition now exists in terminal equipment supply. There is also a licensing system which authorises the provision of public value added and data transmission services by licenses.
In 1983, this House created Telecom Éireann and gave it a mandate to operate in a commercial manner. If the House does not wish to withdraw the commercial mandate given to Telecom Éireann it should allow it to operate in a manner which enables it to compete on something approaching an equal footing with its competitors in Europe and the USA. The tariff proposals which I approved are a major step in updating and reforming our telecommunication network.
As regards the amendments tabled by Deputy Gilmore I would say that of course everybody would be delighted if the increases in local charges were revised and all the other reductions kept in place. The tariff proposals and it is not possible to reject the downside and keep all the upside.
I have already explained that the VAT adjustment is a matter for Telecom, and I have insisted that it be introduced on a phased basis. I will be addressing questions of competition and liberalisation and the developments in EC policy in the months and years ahead.
Finally, I wish to restate that the overall package will not be an onerous and severe imposition on customers. Its effect on average bills will be limited. A majority of users who make trunk and international calls will break-even and the overall increase should be limited to between 4 per cent and 5 per cent, if calling patterns do not change. I envisage that most customers will avail of the off-peak incentives to minimise their costs. The new telephone users advisory group will advise on any particular issues that may arise.
If the overall flow of revenue from the new charges exceeds the projected budget I will expect Telecom to come forward with new proposals for further reductions. I am also confident that most customers will exercise the choice and options now open to them to reduce their costs and increase the value and benefit they get from the overall significantly cheaper tariff. I recommend that the House adopt the amendment to the motion which I have tabled.
I call Deputy O'Keeffe who has 11 minutes.
Why does the Minister not deal with the legal points I made?
No response.
I will answer them.
The Deputy in possession to continue without interruption.
The people would be interested to hear what the Minister has to say in relation to the points I made in regard to European law.
The Government last week announced changes in the tariff structure for telephone calls made by users of Telecom Éireann installations effective from 1 September this year. I support these changes for a number of reasons.
Shame on the Deputy.
The present tariff structure reflects the needs of the telephone system before its modernisation when the two main factors involved in pricing a call were distance and time. Timing was not applied to low value local calls with the result that international and national trunk calls were particularly expensive compared to lengthy local calls. Developments in technology have reduced the cost of carrying calls over distance and the bulk of the cost of any call is now incurred in setting it up in the subscriber's local exchange. The introduction of the new tariff means that all subscribers are being asked to pay equally for this service.
Modern business at international level or ambitious nationally-based companies need ready access to this international market. The most direct method of communication is via telecommunications. However, the relatively high cost in recent times of international calls from this country has caused and continues to cause a loss of international traffic to Telecom Éireann through business people here using leased line or call-back facilities to route international and crosschannel calls through British Telecom and the United States telephone systems at those countries' international call rates. Despite the cost of the leased line, it continues to be a cheaper option for large companies than placing a call through Telecom Éireann. for example, calls to Ireland from the United States of America are now running 2:1 in favour of United States' telephone companies, the effects of which are that Telecom Éireann is losing some £15 million cumulatively per annum in international telephone traffic. In time this could have predictable negative effects on employment in Telecom Éireann. Therefore, this loss cannot be allowed to continue. Telecom Éireann needs a tariff that is internationally competitive, cost-related, flexible and which promotes the efficient use of the telephone system. The new tariff has been designed to do just that.
The new tariff structure will reduce business costs in line with the stated objectives of the Programme for Government and the recommendations of the Culliton and Moriarty reports. I regret there is so much opposition to a recommendation of those reports by the people on the Opposition benches. Henceforth business calls to Britain will be cheaper than from any other country. In addition, rates to our main export markets in Europe will match rates in those countries. Calls to North America will be cheaper than those made from any other country except Britain.
It is true that the effect of the introduction of the new tariff structure will be felt most by domestic consumers at local level and that the money gained from local calls will be used to reduce the cost of international calls. However, the tariff structure has been carefully devised to provide a method whereby, given efficient use of the telephone on the part of domestic consumers, the cost of local and trunk calls can be rendered cheaper than at present. Including the new VAT rate on domestic calls, bills based on the current pattern of usage would increase by an average of 4 per cent. However, the reduction in short distance peak rates from 1 April next year by 25 per cent and the introduction of special rates at weekends and public holiday periods mean that trunk call costs will fall by over 11 per cent, a point Opposition Deputies neglected to mention.
In answer to consumer's questions as to why Telecom Éireann cannot fund the reduction in international call charges from its annual profits in excess of £90 million, there is a simple answer in that such would be counter-productive. In 1992 Telecom Éireann paid £56 million of its profits to the State in the form of dividends and advance corporation tax. Telecom Éireann also has an extremely high level of debt, in excess of £1,000 million, which must be repaid and spend some £180 million annually on maintaining and improving their services. Investment experts have stated that Investment should be in the region of £225 million annually. Therefore, it will clearly be seen that Telecom Éireann simply cannot absorb the cost of reducing international tariffs, which must fall to the consumer for whom the service is provided.
At this point I should take the Opposition to task for their shameless opportunism regarding the new charges.
Who wrote the script for the Deputy?
It is not a popularity contest, as Deputy Carey appears to think.
Have they been in Opposition for so long that they have forgotten that taking tough decisions in Government is a serious business? The Government is doing what is best in the national interest.
This is being savaged by a dead sheep.
Is Deputy Cox a dead sheep?
No, but it sounds like it on the part of the Deputy.
Therefore, Telecom Éireann, with the aid of this tariff system, will have an opportunity to improve its services, expand its business and equip the company to meet and match increased competition at home and abroad. Through this revised tariff structure Irish business can remain competitive, develop their international links and attract more foreign investors, ultimately generating much needed employment. That is what the Culliton report recommended. This Government is committed to the implementation of these recommendations and the creation of new jobs.
I am amazed that such a Private Members' motion was tabled in the House. I cannot understand the Progressive Democrats in particular tabling such a motion in that they have been so critical of the failure of the Government to implement the recommendations of the Culliton and Moriarty reports, since this proposal involves the first section of the report being implemented. It has been undertaken by the Minister present, Deputy Cowen, who is being courageous, not afraid to face the challenge. Amidst all the hype there has been in recent days about these charges, there was one only single call made to my home from an Opposition supporter critical of those charges.
They did not telephone the Deputy because the charges had gone up.
This is because the people of rural Ireland will benefit from this change. The people opposite are simply trying to make this a hype into politics. But they have lost the battle in their effort.
(Limerick East): I should like to share my time with Deputies Finucane and Deenihan.
Fine Gael opposes the Government decision to rebalance telephone charges announced by the Minister for Transport, Energy and Communications on Tuesday afternoon last. Fine Gael will support the motion tabled by the Progressive Democrats Party when this debate concludes at 8.30 p.m. tomorrow evening.
The decision of the Minister announced on Tuesday last was an appalling one. It transfers a huge liability onto the shoulders of those who use the telephone principally for local calls and does not seek to differentiate in any way between local calls made for business rather than social purposes. The decision has reduced the cost of international calls. The Government claims that this will be of major benefit to Irish industry. However, it ignores the consequences for business on the home market.
The Minister on his own figures has made concessions to the value of £81 million and decisions which will raise extra revenue of £67 million. The shortfall of £14 million is to be carried by Telecom Éireann in the short-term, but according to the Minister's statement will be regained subsequently through elasticity of demand. It is clear from the Minister's own figures that Telecom Éireann intends collecting £34 million extra from local calls, that it will save an additional £29 million by transferring liability for VAT from Telecom Éireann to its customers and intends gathering an extra £4 million by charging 30p for each directory inquiry after the second such inquiry in any one month.
Therefore, it is quite clear that the ordinary householder and business person who conducts his or her business on the home market will have to pay for this package. We may quarrel about the actual amounts but it is quite clear, again from the Minister's own figures, that at least £18 million extra will be collected from ordinary householders on local calls and that an additional £10 million approximately will be collected from the same people by way of VAT liability. This is a huge increase in charges which will have enormous consequences for the social and economic life of the country. Families with a number of teenage children will find themselves in a permanent state of warfare——
Hear, hear.
(Limerick East):——as parents try to control telephone costs. Old people, especially those living alone, whose only contact with the outside world quite frequently is by telephone, will either have to cut down on their calls or face dramatic increases in their telephone bills.
Those agencies which offer helpline services, such as The Samaritans, will have their services seriously disrupted under the new scale of charges. We should remember that many persons who avail of counselling on helplines ring in on a confidential basis from a family telephone. A scale of charges which allows conversations of up to 15 minutes for 11p. preserved that confidentiality. Now that the cost for the same call will be increased by 425 per cent, their confidentiality within the famly will disappear as soon as the telephone bill arrives.
Anybody listening to the Minister's various interviews would think that everybody in business in Ireland is involved in internationally-traded goods and services. The reductions on international calls is lauded by the Minister and extravagant claims are made about the downstream effects of these reductions in terms of jobs to be created. The Minister conveniently forgets about business people who conduct their business by way of local calls every hour and minute of the day and how the new scale of charges will add to their costs at peak time from Monday to Friday.
The Minister's selective quotation of statistics does not take from the fact that in many cases by the time one will have heard two verses of "Home on the Range" or "Greensleeves" while waiting for a call to be put through, one will be into the second ten pence halfpenny.
The effect on business in the larger cities will be particularly servere. For example, the 01 area comprises over one-third of the population of the country. An enormous amount of business is conducted, day in day out, by way of local calls. Therefore, the costs of these businesses will increase, leading to a loss of jobs rather than their creation. This will be during office hours, at peak times, as specified by the Minister.
In this regard it is very difficult to believe the Telecom Éireann statistic that 75 per cent of local calls last for less than three minutes. The Telecom Éireann statistical base is poor, their figures unreliable. The fact that they are the State agency about which the Ombudsman has received most complaints tells its own story. Of course, quite a large number of calls are ineffective when a person sought is not available. Naturally, those calls are of very short duration. I have no doubt that they are all included in the Telecom Éireann statistics.
Business calls last much longer than three minutes and every additional three minutes on the telephone will cost 10.5p when VAT is included, to which Telecom did not refer when advertising the charges. It is clear, therefore, that there is a huge cost to the ordinary householder and the local business person, the bulk of whose calls are local. The Minister will claim he rejigged the charges to reduce the cost of international calls so that Irish business can be more competitive. This is a sound argument in so far as it goes but it is quite clear that this was not the motivation of Telecom or the Minister when the action was taken. Telecom was beginning to feel the breeze of international competition. The EC Directive 93/88 will add to this competition. Telecom's charges for international calls are no longer sustainable. It has already lost a tranche of the international market and had to move before its losses were unsustainable. One would expect 50 per cent of international calls in any country to be outgoing and 50 per cent incoming. That normal flow of traffic is not the pattern in Ireland where 60 per cent of calls are incoming and 40 per cent outgoing. It is quite clear that the effects of international competition are already being felt.
Ireland and Spain have the highest rates for international calls in the EC and many businesses have already switched to more competitive services. The narrow interpretation of the Department of Transport, Energy and Communication of EC Directive 93/88 will shore up the situation for some time but the spirit of the Directive, which requires telephone monopolies, such as Telecom Éireann, to sell lines in bulk to the private sector which they, in turn, break down and sell to the business community is frustrated by the narrow interpretation of the Directive by the Minister's Department. The Department insists that the Directive requires Telecom to provide a facility prescribed for the transmission of FAX and data only, there is no requirement to provide the facility for voice transmission. I believe it is in error in this interpretation and I doubt if even Telecom believes in the position it has adopted. It is simply another restrictive practice to defer the day when competition must apply to the industry. I have no doubt that in the short to medium term Telecom will voluntarily—or as a result of a decision of the European Court—be forced to allow competition and follow the practice in the UK, France, Germany, Belgium, The Netherlands and Spain as a result of the Directive which came into effect on 1 January this year. Telecom and the Department know this and because competition is already in place Telecom has transferred £67 million of revenue from areas which were becoming increasingly subject to competition to the local call area where there is no competition—and unlikely to be any — in the foreseable future. That is what this increase in charges is about. It is not about Culliton, job creation or cutting costs to internationally traded goods and services business in this country but the protection of Telecom from competition, some of which is already blowing through the economy and more which will follow as a result of the Directive of 1 January last but which the Department is frustrating on behalf of Telecom. As access to new competitive networks will be by way of local calls, Telecom, by loading the new schedule of charges against local calls, is ensuring it has the potential to squeeze further competition out of the international lines because it will not be possible to access international lines except by way of local calls in the first instance. Telecom will maintain its stranglehold.
All through the sorry saga of last week the Minister insisted that he was merely following the recommendations of the Culliton report in respect of Telecom Éireann. He is, of course, doing nothing of the sort. Culliton recommended the rebalancing of telephone charges but in the context of a number of other proposals in respect of Telecom. The Minister has taken one proposal out of context and distorted the intent of the Culliton report which recommended that the Government bring forward a three year plan to enable Telecom Éireann to become more commercial. Why has the Minister not brought forward this plan? Culliton also recommended the sale of extra capacity on trunk lines to provide competition and pressure to keep prices down. This is not being done. He also advised that the Government should, if the circumstances required it, bring forward legislation by June this year to enable Telecom to trade in a fully commercial fashion and to provide a competitive service to its customers. Why did the Minister not mention this? It is clear that the committee chaired by Culliton was deeply concerned about the cost of communications. It pointed out that Telecom's revenue accounted for 2.75 per cent of GDP, by far the highest of any EC country in 1989 with most other member states having a revenue in the range of 1.3-1.8 per cent of GDP — almost twice the amount of GDP can be ascribed to telephone revenue in this country compared to the EC average. Quite clearly this is not due to the incidence of telephones per head of population, indeed we have a comparatively low incidence in that regard, but to the fact that the charges are very high across the whole range of services, particularly in respect of international calls. This will change as a result of the Minister's decision, the charge will now be transferred to local calls with a resultant imbalance.
The manner in which the Minister and Bord Telecom handled the announcement was intended to be misleading. Extravagant claims were made that the new scale of charges would benefit all consumers but it is clear that financing the package, from the Minister's own figures, depends on a huge extra take from local calls. The reduction in charges was exaggerated by not including VAT. Telecom's newspaper advertising was probably illegal because VAT was not included in the charges initially quoted and when it was included late last week it was calculated at the rate of 16 per cent instead of 21 per cent. Even in Leinster House the Minister sought to disguise his intent. Extensive briefing material was provided to Government backbenchers but other Members, did not have access to information. When the Minister makes an announcement he has a responsibility to inform all Members and not to be selective on a party political basis.
The Fine Gael Party is committed to Bord Telecom. We believe that the question of its ownership is not relevant. It should continue in public ownership but must become competitive. The winds of competition are blowing from Europe and the Department of Transport, Communications and Energy should not try to organise a Custer's last stand in defence of Telecom's uncompetitive practices. Telecom's future will be guaranteed, not by trying to hide from these competitive forces but by gearing the company to take on competition in Ireland and to complete for business throughout the EC and in Eastern Europe where its skills and expertise will be in high demand.
One of the failings of industry in Ireland is that we have very few large indigenous companies. We have the semi-State sector, however, and the commercial semi-State bodies such as Telecom Éireann and the ESB should be encouraged to expand their business either in traditional areas of expertise or in new areas. Telecom has experience and expertise and if it takes the decision to operate on commercial lines it will expand, any loss of jobs will be more than compensated for by opportunities for extra jobs in new areas of activity and by generating new business. That is the way forward, not the very limited proposal which the Minister has brought forward.
The Minister has done a bad job, he has let down the Irish consumer, the small businessman and — probably most seriously — Telecom Éireann by not allowing it to face the new Europe which came into being on 1 January of this year.
I listened with great interest to Deputy O'Keeffe's contribution in which he said he had received only one telephone call of protest — from a member of the Opposition. I thought Deputy O'Keeffe was a realist but I am beginning to wonder now. I received numerous calls from concerned small businessmen and from a great many ordinary consumers. I hope to reflect their views in my contribution. It is interesting that the announcement of the dramatic increase in charges was made against the backdrop of Bord Telecom Éireann's annual report in which it announced annual profits of £91 million and its success in installing over 125,000 new telephones, it now has over one million lines. The blurb was very interesting but I was surprised by the changes in telephone charges. I was also surprised at the Government's insensitivity to the older people in our community, who number over 100,000. A great many public representatives are approached by older people seeking a free telephone, as they perceive it who discover later when they are concerned about the charges, that only the telephone rental is free.
The telephone is a lifeline for older people, especially those in rural Ireland's by which to keep in contact with their families. The Garda are trying to encourage communities to keep in contact with these people. The telephone is essential for them and the Minister's proposal in this regard is particularly cruel and insensitive. So much for the social conscience always championed by Fianna Fáil on behalf of the older community.
I will read what I regard as a very hollow statement from Telecom Éireann's annual report in which the chairman states: "Customers will be consulted periodically about all aspects of the services we provide and their experiences in dealing with the company". That is a very interesting quotation. It is a pity it is not transferred into the world of reality. Apart from a select number of Fianna Fáil and Labour Party members who were consulted and issued with briefing documents on this matter, to everybody else the announcement of increased charges was a surprise. There was no consultation with interested parties or local communities about the charges. For that reason I regard that statement as very hollow and insincere. The chairman should not include unnecessary rhetoric in annual reports because by doing so he is duping the public.
The question of the 15 minute call and the increase of 425 per cent has been mentioned. An increase from 11.17p to 47.5p is excessive. Regardless of what the Minister may say about limiting calls, people have become used to spending time on the telephone. The Irish people are gregarious and like to talk; this is a desirable quality. Increased charges will lead to rows in families. It will result in a return of the traditional egg-timer, used in years past, to measure the length of time teenagers spend on the phone. Parents will become very frustrated when their sons and daughters spend more than three minutes on a call. It may even result in a spin-off business whereby people with an entrepreneurial spirit who can afford to make phone calls——
There is no sand in Offaly.
I read in last Sunday's newspaper comments from Labour backbenchers on these increases, many of them extremely critical. They said they were reflecting the views of their rank and file supporters. I wonder whether those same backbenchers whose names were mentioned in the Sunday newspapers will support the Government on these proposed charges. They want jam on both sides of their bread on issues such as this. They want to appear publicly as if they are distancing themselves from these issues but when they come in here they vote with the Government. It is time for these people to stand up and be counted. They should not continue with unnecessary rhetoric in newspapers in relation to their intent and ideas while taking a different stand in the Dáil.
These increased charges are ill-considered and ill-conceived. It was interesting to hear the Minister of State, Deputy Eithne Fitzgerald, supporting these charges; she said she hopes she reflects the viewpoint of her party. There is none of that party here tonight, which of course is the tradition when dealing with contentious issues such as this.
The silent partner.
When one considers that these increased charges were announced the same week as the implementation of the 1 per cent levy, it shows how uncaring and insensitive this Government has become. However, the public can see through what is happening. These increases are a scandal. The Minister talks about the international scene and industrialists but ignores the small Irish businesses who are the backbone of our economy and who depend on the telephone. In many cases international companies move on when profits begin to fall but Irish business people remain here. I appreciate that these people feel they must lobby in regard to these charges because they will greatly impact on their businesses.
The Minister should realise he has made a mistake on what he considers a rebalancing of telephone charges. This is a retrograde step and I ask him in the interests of the people I have mentioned to reconsider his decision.
It is easy to understand the deep sense of public outrage about Telecom Éireann's increased telephone charges. It is very obvious that the Government is simply using Telecom Éireann to generate revenue for the Exchequer. Telecom Éireann claims it is engaging in this price rearrangement in order to meet the demands of the Culliton report, but Culliton did not support increases in local phone calls.
Irish domestic local and long distance calls are among the most expensive in the OECD. This rebalancing act will make them even more expensive. From figures produced by the consumers association, Irish consumers already pay the highest rental charges in Europe, at £10.23 per month or £122.76 per year. That compares with £75.84 per year in Britain.
The cost per minute of local calls will be increased by in the region of 325 per cent. This will be a devastating blow to rural Ireland, especially to senior citizens whose only communications with the outside world is in many cases the telephone. It will lead to increased isolation for this, the most vulnerable sector of society. The increased cost of local calls from 11.17p for 15 minutes to 9.5p for three minutes will be a further cruel imposition on this sector of the population. It is an insult to say that these people should wait until off-peak times to make their calls. As the Minister should be aware, old people may need help at any time during the day and may not be able to wait until off-peak times to make a call. As emphasised by Deputy Finucane, the advantage of the free telephone allowance will be eroded by this draconian measure.
Increased charges will affect all sectors of the population. They will result in added cost to domestic businesses unless they transact their business in less than three minutes, which is unlikely considering the amount of business conducted over the telephone. We are all familiar with the regular slow responses from Government Departments, banks and several other business places — in some cases people may have to wait ten to 20 minutes before a call is answered.
Of even greater concern was the statement that the company will pay 5 per cent of VAT due on residential customers' bills until next March when the full 21 per cent will apply. On the other hand the Minister emphasised that the corporate sector will pay the net amount —as virtually all companies are registered for VAT most of them will pay the net amount and will not be penalised to the tune of 21 per cent. The private customer cannot claim a refund so that they will pay 16 per cent more than a company up to March and 21 per cent thereafter. The increases will have a devastating effect on small business whose bills are expected to double every two months. Whereas it will help exporting firms it will do serious damage to firms selling on the home market. So far as I am concerned the proposed new charge is a kick in the teeth for small business and the domestic user.
