Vol. 547 No. 3
43 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to price increases facilitated by the changeover to the euro; and the plans she has to deal with this matter. [3603/02]
45 Ms Clune asked the Tánaiste and Minister for Enterprise, Trade and Employment the role played by her Department in monitoring prices of products and services since the introduction of the euro; and if she will make a statement on the matter. [3669/02]
I propose to take Questions Nos. 43 and 45 together.
I am aware of reports of increases in the price of goods and services in the changeover to the euro. I am also aware that some prices have gone down, for example, public transport fares. I have repeatedly said that the introduction of the euro should not, of itself, require any trader to increase prices. However, prices increase all the time for legitimate reasons unconnected with the introduction of the euro and it is not clear that the rate of increase during the changeover period has been greater than it would otherwise have been. The consumer price index figures for October, November and December do not support suggestions that there were widespread, excessive increases in the run-up to the changeover. We will have to await the January figures to assess the position immediately following the changeover.
With regard to price monitoring, my Department does not have a role in this respect but the Director of Consumer Affairs has undertaken to closely monitor the CSO figures in the period surrounding the changeover and I will be maintaining on-going contact with her to ascertain any trends that may emerge. More generally, price control as a policy mechanism has not been pursued by any Government since the 1980s. Successive Governments since then have recognised that the encouragement of a competitive environment and promotion of greater price awareness is a much better way of ensuring value for money for consumers than the imposition of price controls. The introduction of the euro does not change this fact. There are legitimate grounds for price increases and it is a matter for the suppliers of goods and services, or the associations that represent them, to explain the basis for such increases as have occurred.
I urge consumers to be assertive in seeking explanations for price increases that they do not feel are justified. Consumers need to realise the power they have if they feel that they are not being treated fairly and that is to take their business elsewhere. Loss of business is the ultimate sanction for any trader.
The Minister of State has suggested that monopolies and cartels are not responsible for price disparity and has said we can compare like with like but in doing so we must be selective. Does he not agree that other factors in this country must also be considered, including the costs of higher VAT, commercial rates, rents, wages, traffic congestion, distribution, poor infrastructure and imports? In addition there is an added cost of 4% on transactions from meeting the demands of Government red tape on business. Does the Minister of State agree that all these costs are one of the main reasons for the increase in inflation in the economy?
The Deputy is referring to a related matter, that we can now compare prices across the euro zone. That is the most important development so far as the consumer's interest is concerned. I have been endeavouring to mobilise and energise the consumer voice and we now see on a daily basis the findings of surveys carried out by newspapers and others. On foot of this, I have asked Forfás to officially carry out comprehensive and reliable research and provide information for me as Minister of State with responsibility for consumer affairs. I look forward to its report. In carrying out this survey and important work, which is unprecedented, it will have to refer to the issues raised by the Deputy, including the costs that employers claim they have, which I have heard representatives of the Small Firms Association and others detail. I remind the Deputy that the Government has endeavoured to reduce tax rates in general for workers and create the right environment for employers. This has been central to its economic policy. The regime applied by it is fair in relation to that in other countries. While there are many issues, I want reliable facts from this important research. Clearly, we welcome the findings of surveys that have been carried out, but this research will give us comprehensive and reliable information.
If the Minister of State is on the side of the consumer, will he explain the disparity in the price of cars throughout Europe?
This question relates to something that is happening as we speak in Europe in relation to Commissioner Monti's proposals to end some restrictions in this area. As the Minister of State who represents the Government at internal market level and as one who has worked with Commissioner Monti, I welcome the fact that we can compare like with like. I acknowledge that tax levels, VRT and VAT, are high here, but they are higher still in Denmark. What is happening at Commission level is relevant to this debate. It will give the consumer a chance to see precisely what he or she is paying. Consumers will also realise that the tax regime in place for personal and other taxes is favourable. While I accept there are issues to be addressed, this is not my responsibility. Clearly, my colleague, the Minister for Finance, is the person who deals with this area. There are issues of transparency and openness, which I welcome. That Commissioner Monti is endeavouring to open up the system and ease restrictions is welcome.
The euro has been in circulation for the past six weeks and there have been many claims of price increases. The Minister of State told us in November that the Director of Consumer Affairs would closely monitor prices, that she had a code of good practice in place and would name and shame any company which did not comply. Has the Director of Consumer Affairs reported to the Minister of State on any incidence of overpricing or excessive profiteering? If and when the Minister of State is in a position to look at the final outcome of the introduction of the euro, will he consider, in the event of excessive price increases, putting in place price controls or price freezes?
The Director of Consumer Affairs has not had to name and shame any particular retailer. The amount of preparatory work done by the Euro Changeover Board of Ireland and retailers and the training provided, assisted by Forfás, was admired by all concerned. Everyone appreciates that a good job was done. The Government has to work with the facts. The consumer price index figures showed that there was an increase of 0.5% in December, which compares with an increase of 0.1% in December of the previous year, as a result of which annual inflation rose to 4.2%. In November the consumer price index increased by 0.1% which compares with an increase of 0.4% in the previous year. The other month for which we have relevant figures is October when the consumer price index increased by 0.3%. Obviously, there will be unscrupulous retailers who will take advantage. We are conscious of this. However, we have to deal with reality. The figures we are working with show that retailers have not taken advantage of the changeover. That was the issue at stake. The Director of Consumer Affairs had a job of work to do. We had a voluntary code of practice in place which was of tremendous help. Dual pricing was the key element of the campaign so far as the Government and the Director of Consumer Affairs were concerned.
To respond to the Deputy's last question, the Government has no plans to re-establish price orders. We did it once in relation to the drinks industry when the rate of inflation was an issue. The whole approach of the Government has been correct in providing a competitive economy. I welcome the fact that the introduction of the euro has given consumers a chance to compare prices across the euro zone and I am actively involved in trying to exploit this new situation in their interests.
Is the Minister of State saying that since 1 January there have not been excessive price increases? What consumers are saying and what we are hearing all the time – I have experience of this – is that prices have increased. The Minister of State says he has received no reports of price increases.
I am certainly saying that the figures for December, November and October show there has been no widespread abuse of the changeover period. The consumer price index remained relatively stable. In some cases there have been price increases. Obviously, the Deputy and I will get reports about various unscrupulous retailers during the period. I accept there is a separate issue of comparative pricing across the euro zone and have gone on record as saying there is an issue that needs to be addressed, but this is not a question of retailers taking advantage of the euro changeover. Before and since its introduction there is an issue that needs to be addressed. I have acknowledged this by asking Forfás to carry out indepth research. I look forward to receiving its report.
