The Tánaiste, the Minister for Finance and I met representatives of ICTU on Wednesday last to discuss further steps to reduce inflationary pressures. This was followed on Friday by meetings with IBEC and the CIF, as well as the IFA.
The Government shares the concern of the social partners that inflation is running at levels significantly above those envisaged when the Programme for Prosperity and Fairness was negotiated. A number of the principal factors which have contributed to the current trend are however of a once-off nature or are unlikely to continue to impact negatively on inflation. Accordingly while measured inflation will show a further increase in coming months, this will have fallen back significantly by the end of the year.
The Government has given careful consideration to the proposals and views put forward by the social partners. There is common ground between us that all appropriate steps should be taken to ease existing pressures, building upon those measures already taken by the Government, such as the allocation of new resources to the Competition Authority and the housing package. In addition, there is general agreement that a wage-driven inflationary spiral would be highly undesirable from the point of view of businesses and employees, as well as the achievement of the ambitious economic and social aims of the Programme for Prosperity and Fairness, including the incomes area.
Against this background, the Government yesterday decided on a package of measures, including a decision to bring into force immediately the Intoxicating Liquor Bill, which is due to be passed by the Dáil this week, in order to secure a significant increase in competition in the licensed trade, especially in urban areas. A commission on licensing to consider the issue of further liberalisation of licensing, in particular with regard to the off-licence sale of alcohol in the interest of greater competition, will be established immediately and required to report within three months. Pending the impact of the new competitive measures, current circumstances justify the imposition of temporary controls on the price of drink, which will be announced separately by the Minister of State, Deputy Tom Kitt. New increases in charges or levies by public bodies will not be approved by the Government for the remainder of the year.
The Government will consider the question of the role which indirect taxation might play in the context of preparations for the next budget. That budget will also be an important opportunity to progress the objectives for living standards set out in the Programme for Prosperity and Fairness. Relevant Ministers will initiate immediately, detailed consultation with representative bodies for the main sectors of the economy to impress on them the need for a sense of social responsibility and restraint in the setting of prices and margins, especially over the rest of this year. In coming weeks the Government will review the outcome of these consultations. We will consider in that context, the question of whether additional measures, over and above those announced yesterday, should be taken.
The office of the Director of Consumer Affairs will be significantly resourced to initiate a vigorous programme of price monitoring and publicity, to highlight trends and patterns in prices and to encourage greater price sensitivity on the part of consumers in the interest of stimulating further competition. The Government will maintain close surveillance of movements in prices arising from the enhanced monitoring through the office of the Director of Consumer Affairs.
In addition to progressing measures to accelerate the commitments made in the Programme for Prosperity and Fairness in respect of a number of issues impacting on quality of life, such as housing, public transport, and support for gain sharing at enterprise level, the Government has decided that the establishment of the new National Centre for Partnership and Performance should be brought forward. In recognition of the importance, for the quality of life, of the quality and cost of child care, the Government has decided to allocate an additional £40 million over and above the £250 million allocation in the national development plan, to the further development of child care. This additional funding will be allocated in coming weeks following further consultation with the social partners, as provided for in the Programme for Prosperity and Fairness.
The Government believes the package of measures announced yesterday represents a balanced response to legitimate concerns about the effect of higher than expected inflation, while at the same time maintaining a focus on the underlying importance of adherence to the terms of the Programme for Prosperity and Fairness.