Seanad Éireann díospóireacht -
Tuesday, 18 Jul 1972

Vol. 73 No. 7

Prices (Amendment) Bill, 1971: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. Lalor)

My powers to control prices for commodities and charges for services are derived from the Prices Acts, 1958 and 1965. Price Control, as operated since October, 1965, has taken the form of requiring manufacturers to give me advance notice of their intention to increase the price of their products and of requiring importers or wholesalers to give similar advance notice about any intention to increase the margin which they take on the goods in which they deal. Where I felt that the proposed increases were not justified, I took steps to prevent them from being imposed or to have them reduced.

This form of control was particularly appropriate when the majority of home manufacturers were protected by high tariffs, but it has been gradually losing a great deal of its relevance in recent years with the dismantling of tariffs between ourselves and Britain under the terms of the Anglo-Irish Free Trade Area Agreement, and the resulting gradual exposure of home manufacturers to competition from external manufacturers. In recognition of this fact, I have in recent months, on the recommendation of the National Prices Commission, begun exempting from detailed price control firms which satisfy either of the following criteria:

(a) Where not less than 75 per cent of the firm's output is protected against competing imports from Britain by a tariff of 10 per cent or less and

(b) where the firm are exporting 25 per cent or more of their output of a product range and selling the balance on the home market at a price which is not greater than the average delivered export price in the British market, excluding all British taxes.

I should add that all applications for exemption are referred by me to the National Prices Commission who consider them on their merits. Even where a firm satisfy one of the foregoing conditions, it may not be possible to exempt them from detailed price control if special circumstances prevail, for example, if the firm occupy a monopoly or near monopoly position.

While the need for control at the manufacturers' level is declining, there are other sectors and circumstances where there is a need to extend price control. The fact that the existing prices legislation does not apply to prices for commodities or charges for services which may be controlled under other legislation has meant that some large firms and organisations were subjected to price control on a less rigorous scale than under the Prices Acts. This has led to complaints from time to time that certain sectors were in a more favoured position than firms whose prices and charges were controlled by the Prices Acts. To remove any basis for this complaint the present Bill proposes in section 2 (1) (b) and (c) to extend the Prices Acts to prices for commodities and charges for services which may be controlled under other legislation.

The Bill proposes at section 2 (1) (d) the extension of the Prices Acts to charges for professional services. Where such a charge is a percentage of the price obtained for property or of the value of a contract, it is clear that recent inflationary trends have automatically increased the charge so that in some cases it may now be out of proportion to the value of the service given. The present Bill proposes to give power to the Minister concerned to require advance notice to be given to him of proposed increases in professional fees, and where necessary, to control such fees. The powers now proposed can be exercised even in cases where there may already be machinery in operation for the determination of professional fees.

Heretofore activities carried on by railway and road transport undertakings were excluded from the scope of the Prices Acts in accordance with section 5 (a) of the Prices Act, 1958. On the recommendation of the National Prices Commission, I tabled an amendment on Committee Stage in Dáil Éireann bringing the activities of such undertakings within the scope of the Prices Acts, and that amendment now appears as section 2 (1) (a) of the Bill. I am in agreement with the National Prices Commission that it is appropriate that the activities of railway and road transport undertakings should be brought within the scope of the Prices Acts, particularly as the activities of other service organisations are already within the scope of the Acts or are brought within the scope of the Acts by this Bill.

A feature of trading at the importing, wholesale and retail levels is the adding on in many cases of a customary percentage mark-up on buying prices. This practice, taken in conjunction with inflationary trends over the past number of years, can mean an increase in absolute margins to the trader concerned out of proportion to increases in his labour and overhead costs. There are situations where competition does not operate satisfactorily and traders continue to take customary margins which may have been reasonable in the past but, because of the inflationary trends mentioned, have ceased to be so. It is proposed, accordingly, in the present Bill in section 3 to extend the scope of the Prices Acts to permit of the investigation and control under those Acts of the margins of profit of importers, distributors, wholesalers and retailers as well as manufacturers. It is also proposed in section 3 of the present Bill to extend the scope of the Prices Acts to permit of the investigation and control of the amounts which may be added by traders for tax purposes.

In view of the importance of hire purchase and credit sale agreements it is proposed in section 4 of the Bill to bring hire purchase and credit sale charges within the scope of the Prices Acts. Powers for the control by the Central Bank of interest and other charges by banks and similar institutions are provided in the Central Bank Act, 1971.

Section 5 of the Bill will enable the range of products which may be covered by a retail price display order to be greatly extended and the prices of such products to be shown as tax-inclusive. The section will also enable price display orders to be made in respect of service charges. Quite apart from products which are the subject of a retail price display order, however, power is also being provided in section 5 to require by order that all prices marked on goods, displayed or quoted at the retail level shall be tax-inclusive. This provision of the Bill was recommended by the National Prices Commission and was inserted as an amendment on Committee Stage in Dáil Éireann. This provision stems from the commission's concern, which I share, that as much information as possible on the prices of goods should be available to the consumer, and that, as far as possible, the consumer should be facilitated in the matter of comparing prices as between one retailer and another. It would not be sufficient to compel retailers to state whether their prices were tax-inclusive or not, since this would mean that the consumer would still have the rather difficult task of comparing tax-inclusive prices in one retail outlet with tax-exclusive prices elsewhere.

Section 6 of the Bill provides for the amendment of the Prices Acts to enable the Government, by order, to transfer from the Minister for Industry and Commerce to any other Minister, powers and functions under those Acts for the investigation and control of particular prices or charges. For example, in the case of professional fees it is intended that powers to control legal fees will be transferred to the Minister for Justice.

The Bill provides in section 7 for the amendment of the second schedule of the Prices Act, 1958, so as to revoke the statutory requirement for maintaining a prices advisory committees panel from which members of any prices advisory committees must be appointed. In the period from 1963 to mid-1965 seven prices advisory committees were appointed, but with the coming into operation of the Prices (Amendment) Act, 1965, recourse since then has been had to the appointment of prices advisory bodies under that Act, whenever formal price investigations were warranted. The Minister may appoint any persons of his choice to be members of a prices advisory body, or he might invite nominations for appointment to a particular body from appropriate organisations. The amendment of the 1958 Act which is now proposed brings the position in relation to membership of prices advisory committees into line with prices advisory bodies. It would not in any way interfere with the Minister's powers to appoint such committees. I should also mention that great difficulty has been experienced in obtaining nominations for formal appointment to the prices advisory committees panel.

The Prices (Amendment) Act, 1965, specified that the Minister's powers under that Act for price investigation and control could only be exercised after the Government had made an order under the Act enabling him to use those powers. The Government made such an order on 7th October, 1965—the Prices Stabilisation Order, 1965. The Act required that the enabling order would have a maximum life of six months but that it could be renewed by the Government for periods of six months by continuance orders. Since 1965 the Prices Stabilisation Order has been continued in force for successive periods of six months by continuance orders; the amendment of the 1965 Act proposed in section 9 of the present Bill is necessary in present circumstances so as to remove the "temporary" element from the Prices Stabilisation Order, 1965, and to eliminate the need for further temporary continuance orders to be made by the Government.

As regards the implementation of prices policy generally, Senators will be aware of the activities in recent months of the National Prices Commission whose function broadly is to keep under review the prices of commodities and the level of charges and fees for services and to advise the Minister thereon. The commission, one representative of employer, trade union and consumer interests with an independent chairman. The commission, whose monthly reports are published, have been very active in regard to the re-orientation of price control from a policy which was largely oriented towards manufacturers to one which is increasingly oriented towards active surveillance in the distributive fields. The commission have been instrumental in showing up the shortcomings of market forces by comparison of prices of similar commodities in Dublin and Belfast and by regional price surveys.

I am confident that the object of the Bill commends itself to the Seanad and I recommend the Bill for its approval.

Mr. Alexis FitzGerald

This Bill is obviously an attempt to improve the existing machinery for controlling prices and essentially for controlling incomes. As I understand it, the scheme of the Bill is to extend the existing controls of the profit margins of manufacturers to the margins of other persons who are in the chain of distribution of goods and services, and to extend, in particular, the price control to services. A great divide of opinion exists as to the effectiveness and usefulness of price control, but I take the view that it has to be demonstrated to be ineffective before it is relaxed or abandoned. While the manner of its operation can have distorting effects, it is administratively costly. As it has been operated in the past, it has worked unfairly in the case of certain concerns through delays in the approval of increases. Despite all these facts, there is sufficient to recommend this Bill and I welcome it.

Yesterday, or this morning, we received the current quarterly economic commentary in which the contributors who have written useful commentaries before expressed a generally optimistic view about how the growth rate of the economy is likely be affected in the coming year. One certainly hopes that they are right.

In one paragraph they say what their assumptions are. The major assumptions on which the projections shown are based are that the situation in the North will remain tense and uncertain for most of the year, but that there are grounds for hope that progress towards a peaceful solution will be maintained; that 14th round pay settlements, however reached, will not be so inflationary as to endanger the ordinary conclusion of the existing national pay agreement; that there will be no strikes in Ireland or the UK of sufficient magnitude to have a significant macro-economic effect on the Irish economy; and various other assumptions of lesser importance.

They particularise what they have to say with regard to the serious socially and economically disturbing factor of inflation. This year, they state, restrictive policies could either be irrelevant or counter-productive in combating inflation. The only key element in the situation which is under internal control and on which some action could be taken is the rate of increase in money incomes. While dividends, rents, professional fees, trader margins and other forms of income are all important, it is the rate of increase in regard to ordinary wage and salary earners which is of the greatest significance in determining the rate of price inflation.

It is wrong to put excessive faith in the preservation of the value of money by the operation of price control because the tendency of prices to increase reflects the tendency of the cost of producing the goods which are being dealt in to increase. If it does not reflect that, it reflects an excessive demand for these goods.

I do not think a sufficiently thorough study has yet been done on it for us to have any confident view on what the situation is here. To some extent, in so far as there are monopolistic situations being taken advantage of, price control can keep prices down and can eliminate tendencies for costs of producing the services or the goods in question to get inflated. The monopolistic situations which have given rise to the necessity for this kind of control have probably been greater in the past than they are at the moment.

The Government can be criticised for introducing now this amendment to the law which might well have been amended, as they were advised to do, a considerable time ago. I do not object to the extension of price control to services. The Minister had a valid point when he said that certain charges reflect inflationary tendencies in the value of property and that these charges have got to justify themselves if they are to be permitted.

The most important point with regard to this whole thing relates to keeping wage and salary earnings in line. We will not get the co-operation from wage and salary earners that we will need, for their own sake and the sake of the country in trying to get inflation curbed, unless they have the sense that the whole business of the State is being justly administered. To give them the sense that there is effective public concern about preventing people from taking advantage of situations which they did not bring about and which they do not justify in getting increased earnings may be an important element in getting their co-operation in keeping control of costs. I welcome the recognition that the intelligent consumer has an important part to play in watching price inflation and in preventing it from being excessive.

In regard to section 6, the Minister gave an example of the intention of this section which provides for the amendment of the Prices Acts to enable the Government, by order, to transfer from the Minister for Industry and Commerce to any other Minister, powers and functions under those Acts for the investigation and control of particular prices or charges. The example he gave was the case of professional fees. It is intended that powers to control legal fees will be transferred to the Minister for Justice. There are existing powers with regard to control of fees by the Minister for Justice which are more or less extensive.

Questions have been raised in this House in relation to defects in the existing arrangements and whether one should not have a debate on proposals to change these rather than to make an amendment by a back door. The Minister must be aware, from discussions with his colleague, the Minister for Justice, that there is a general fear among lawyers, including the bench, that there may be an attempt here to strengthen the power of the Executive as against the people who are concerned with the administration of justice. I do not get frightfully excited about it, but I should like to think that a franker view with regard to the problem involved would be taken and there is the problem in regard to certain aspects of the administration of justice. If the Minister is advised to control, for example, the cost of litigation, in effect he is determining what is open to the judge to determine and which lies as a matter of justice between the parties. The question arises as to whether this is an intervention which should not be made without a full explanation of the Ministerial position with regard to it.

In his speech, the Minister referred to the extension to certain sectors— people who would be mainly controlled under other legislation—and said that he brought in an amendment on the recommendation of the Prices Commission where the activities of rail and road transport undertakings would be brought within the scope of the Prices Act. I welcome that extension and amendment.

I should like the Minister to tell us about the other commodities and services which are at present under legislative control which are now going to be subject to control under this Bill. For example, if we are to be as successful in our exporting in the future as we have been in the past, we have got to watch the cost of all services our exporters have to buy here if they are to compete successfully. People who have concerned themselves with setting up industry have talked about the efficiency and cost of posts and telegraphs, in particular the telephone service. I do not know if there is to be a body established under this Bill which will be concerned with these. The matter is worth a comment from the Minister.

We do not sufficiently underline the social injustice of inflation. It takes money from savers which is not put into a protective form. It transfers effectively part of the wealth they have saved by eroding its value and passes it to people who may not have saved, or makes transfers between persons in an indiscriminate way. The only way in which savers can protect themselves from the injustice which is done through this operation is by moving out of money and into goods and services and by exacerbating the inflation which has led to these decisions.

Taking the historical view, one wonders can society survive if inflation continues at the rate at which it has proceeded in the past. There are technical difficulties in relating savings to cost of living increases but there are also technical difficulties in relating earnings increases to cost of living increases. One wonders if these technical difficulties ought not to be faced up to in order to protect the savings of people from the effect of price increases; I give the Bill a limited welcome.

Miss Owens

In conjunction with Senator FitzGerald, I give this Bill a qualified welcome. We all welcome any effort to curb an increase in prices or an investigation into the justification of such increases. The greatest problem facing the country at present is inflation and rising prices. Very little thorough investigation had been carried out until the National Prices Commission began their work last year. I should like to commend the work they have done so far and I should like to see them extending their operation to other areas and proving to be a watchdog committee on prices.

The problem of inflation is one of the phenomena of Western European countries at the present time, but prices seem to have been rising more steeply here than in the majority of European countries. Over the last three years retail prices have risen by approximately 27 per cent in this country. This is blamed partly on increased wages and salaries. But when a wage earner gets an increase after hard bargaining, part of it is immediately taken back in income tax, and, despite the adjustments in this year's budget, if the proposed national wage agreement is accepted, it will bring back into the income tax bracket many of those whom the Minister for Finance let out.

For a man living in a municipal house the differential rent is increased and, if he is paying into a pension fund, he pays a percentage of the increase towards this. The net increase is, therefore, considerably reduced, and his take-home wage affects his wife's budget. Some of the emphasis which has been placed on the wage and salary factor could be diverted to increased profits and the discrepancy in prices generally. This Bill attempts to do this and to that extent I welcome it.

We have, as a community, neglected to stir up consumer awareness. We are behind other countries in this type of organisation. The campaign carried out by the Irish Housewives Association for some months past highlighted effectively what can be done. I should like to see a widespread campaign publicising prices and spelling out what makes up the retail price of goods so that the housewife is aware of what the profit margin is. Rightly or wrongly, a great many people feel colossal profits are being made in certain areas and we should be able to identify these areas, if they exist. This would lead to a more reasonable attitude to the whole problem of an incomes policy.

I do not underestimate the problems of price control, and, even as far as this Bill goes, the Minister will be faced with difficulties. Even with a very alert and active inspectorate there will still have to be a consumer awareness. With both these things we will have gone a long way, and possibly as far as many other countries have gone, in getting a fair price policy. This must go hand in hand with a fair incomes and wages policy.

I welcome the Minister's decision to include commodities and services. These have been left out of the price control net. I also welcome the approach the Minister has taken under section 5 of the Price Display Order under which I understand there will now be an inclusive price. This should save the housewife some confusion in having to go from one supermarket to another comparing prices. Often when you reach the cash desk, the percentage has been added on and wipes out what you thought was a saving. I hope section 5 will be rigidly enforced.

I regret the Minister has seen fit to exclude housing from the scope of the Bill during its passage through the Dáil. He stated this is a matter for the Minister for Local Government and he has made an order to have the matter looked into. The real problem of housing is land values, and land is also excluded. This is a bread-and-butter issue for all citizens, particularly in urban areas where there is an acute housing problem, and one which the local authorities will not beat because of the cost involved. This cost ultimately falls back on the community, whether through taxation or rates, until we can effectively control our land values, particularly where the community have already made a contribution in having serviced land sites.

I regret that the Minister did not take this opportunity to deal with this particular problem. I have nothing more to add on this Bill except to repeat that I give it a qualified acceptance in that, as far as it goes, it may do something. I would hope that the Minister and his Department would consider more fully this whole problem and that the Minister would come back to us with a new, comprehensive Bill.

Ruairí Brugha

It is appropriate that the Minister should place this Bill before us at a time when, as published in yesterday's newspapers, agreement between the Employer-Labour Conference on the scaling of wages over the next 18 months has been arrived at. As Senator Owens has mentioned, it is unfortunate that it seems to be the wage earner who is expected to be the main influence on prices. It is a fact that, outside of the cost of goods, wages happen to be the biggest item. This is the problem which faces all our industries. I welcome many aspects of this Bill referred to in the Minister's speech, notably the intention to acquire the power to require retail prices to be displayed. In common with other Senators, I share the doubt as to the possibility of making price control, as such, effective in an economy such as ours.

There are two limitations. First, so many officials would be required to deal with this matter that the budget would have to be expanded considerably. Secondly, prices are influenced almost, but not entirely, by the cost of goods and the cost of production. The Minister is right to acquire the power to enforce the display of retail prices. It is in this area that one can try to ensure that there is genuine competition in the sale of goods. I also welcome the intention to give power to the Minister over the activities of railway and road transport undertakings. Here again one is up against virtually a monopoly situation. It is very important that, where a monopoly situation exists, the public authority should be in a position at least to examine the reasons for increases in prices.

The intention in section 2 (d) to control prices of a personal character is a good one, especially as an increase in inflation leads to increased fees. When the Minister is replying, I shall be interested to hear if he has in mind retail price display in any particular areas. There are many areas in which retail price display as carried out on the Continent could be of considerable benefit to the consumer. It applies to prices of meals and drinks. It has an effect in European countries which is not apparent here. This is the reason why tourist bodies have issued booklets displaying the prices chargeable for certain services. This is a significant contribution to the whole area of prices for goods and services for the ordinary person looking for meals or drinks and for the visitor.

Dr. Belton

I would like to add my welcome not so much to the Bill itself but to the Minister's intention. I know what the Minister is seeking to achieve but I fear that he may not be able to implement to the full what is intended in this Bill. I would welcome it if he could do it. He has been Minister for Industry and Commerce for only a short period. I should like to speak on various items adverted to by previous speakers. Senator Owens, who is not present at the moment, raised a point which has been omitted from this Bill. I have read the Minister's reasons for not controlling the prices of houses.

The reasons given by him today may be quite valid but previous Ministers had an opportunity of rectifying the position that now exists. Ten years ago I advocated in Dublin County Council that County Dublin, perhaps taking in Meath, Kildare and Wicklow, should be serviced. By servicing I meant not only putting down roads but also providing sewerage and water. When the land was developed a levy could be put on the people who owned it because the prices they would then get would be much higher than the agricultural value of the land.

My reason for making that suggestion was that there was piecemeal development of land around conurbations like Dublin, Cork and Limerick and that this piecemeal development of these places inflated the price of land beyond all recognition. You had builder competing with builder for sites. My suggestion to the Dublin County Council was that the sites be created first and let site compete with site for the builder. You would then have one element of the cost of houses being reduced.

This, to some extent, has been recognised by the city manager in that he is trying to provide services for a huge area of north County Dublin as well as the west side at present. It is now being recognised that this was one of the reasons why the price of houses went up. If there were sufficient sites at any time there were services, you surely then would not have the present price of land for building. I have been hammering at this at county council meetings over the past ten years. I am not blaming the Minister for Industry and Commerce. I doubt if it is a matter for him at all, but it does come within the realm of prices.

The Minister finds that he cannot at present include housing prices in this Bill. The fault was generated many years ago. If he spent £1 million in a place in County Dublin on providing sewerage and water and, when these places were developed, putting a levy on the people who took advantage of this development, that is, the owners of the land, that would defray the expenses of putting in the sewerage and water supply for these areas. Of course, one could not put in roads as it would destroy the whole farming aspect of the area.

If I had to advise the Minister on the control of the price of houses, I might not be able to tell him how this could be done. That is one of the problems that are agitating people in this country today.

Senator FitzGerald referred to monopolies. Monopolies can be dealt with in two ways. If we enter the EEC small units may be of no advantage to us, but there are certain aspects of our economy in which monopolies may be working against price control. The grocery trade is one example. If all the small grocery stores are put out of business because of huge monopolies and these monopolies control the whole country, they are then at liberty to fix their own prices. The Minister will of course have the power to control these. Those are two aspects of monopolies.

I am all for the displaying of prices anywhere. If prices are displayed outside premises and people go in and buy goods in that premises having seen the prices beforehand, then they are going in at their own risk. They can shop around without going into a shop. As Senator Owens suggested, there should be more of this price display outside shops.

We are inclined in this country, or at least we were, to take as much money as possible from those who would give it to us. I will give you one example of this. I went to a wedding in Limerick on one occasion. The day afterwards, I went into the bar and had a drink. I had two sherries and I queried the price. I brought the manager and he agreed with the barman. I asked for a receipt. He refused. It would be unfair to mention the place here but if Senator Brugha wants to hear where it is, I will tell him afterwards. What the manager did was to cut the price in two and charge me half of it.

In general I welcome the intention behind this Bill. Whether it can be fully enforced or not, I am slightly dubious. There will be pressures brought to bear on the Minister. For example, there will be pressure from agencies and from those elements within the economy which will inevitably bring profit to people dealing in certain commodities. Therefore, the Minister cannot say, at any stage, that the price of a certain commodity will be such a figure and will remain at that figure for so long. This is the correct way to look at this Bill, but it is also a dangerous way. I do not know whether the Minister realises the pressures that arise either because of labour costs, freight charges or other economic conditions.

I welcome this Bill. I think the Minister is trying to do what should have been done years ago.

Mr. Crinion

I should like to welcome this Bill which is a step in the right direction. It is a difficult task to maintain control over the prices of all commodities.

One section of the Bill provides that manufacturers must notify the Minister before increasing prices. This provision is well justified. Manufacturers should put the recommended sale price on items. Supermarkets could say they are selling an item at the recommended sale price. In an advertisement in the Evening Herald last Thursday I noticed that the leading item on a large advertisement was being sold at 1½p lower than wholesale price. This would indicate that it was a loss leader although it was not an item that one would expect to be a loss leader. However, in such cases, it would appear that there is some unfair practice. If a person is selling goods at a lower price than they cost there must at least be a motive for doing so. Either they wish to clear a slow-selling line or it is a gimmick to encourage people into the shop to buy generally. There should be some type of control in respect of these loss leader prices. It can be taken for granted that, as against low priced articles, there will be other items on which there will be a large profit margin. Sometimes these articles would be at a higher price than that recommended.

Senator Owens mentioned the value of land. Of course, the farmer is entitled to a reasonable price for his land but we hear little of the colossal increases in the price of property within the city. Proportionately the increases have been much greater than have been the increases for undeveloped land for building. There are other factors —for example, labour costs—which increase the price of land. The land in urban areas does not come under the agricultural rate rebatement so that the farmer must pay the full rates as against the rebatement which people receive who are further out in the rural areas.

Senator Belton mentioned the development, with full services, of County Dublin. The cost and time of such a project would be enormous and would mean that no houses could be built in the interim. We must continue to build houses. If Senator Belton's project was to go ahead there would be a complete halt for a number of years and, ultimately, house purchasers would suffer because prices would have increased in the meantime. This project could work if there was no shortage of houses, if there was plenty of money available and if we were developing for expansion work to start 20 years later. We must meet requirements as they arise.

In regard to the control of prices I should like to see stringent control of taxes. I read recently where an electrical firm went out of business simply because the smaller shopkeeper was able to underprice him due to the widespread evasion of wholesale and turnover tax. On account of this the smaller businesses were able to compete with the larger firms. In order to keep prices down we must ensure that any tax placed on commodities, which I presume will become value-added tax later, will be paid so that there will not be unfair competition due to evasion of taxes.

Senator FitzGerald mentioned the fears of the legal profession regarding the possibility of the Executive acquiring undue control over them but he was not in complete sympathy with that view. I would welcome some form of price control in the legal profession. It is the one profession which the ordinary individual seldom consults. The average person only has occasion to consult the legal profession if, for example, he needs a mortgage for his house. He would not be in a position to question any fees that may be charged by them. I am not speaking here of house mortgage fees in particular but fees which may be charged for court cases which very often amount to substantial sums. I am glad that this Bill will cover such fees. The Minister for Justice has, I believe, been notified that increases in legal fees will be controlled in future.

Persons in need of medical care have already the benefit of cheap medical services except where snob-value medical care exists around Fitzwilliam Square. In that area a doctor becomes well known because of the high fees he charges which may bear no relationship whatever to his ability. However, in the medical profession some effort is made to keep charges down but people who need the help of the legal profession will not argue about the fees charged because they think that, perhaps, if they take the matter to a higher body such as the solicitors' association they will not be prepared to adjudicate against one of their members. I know of some people who have been charged excessive fees and I am glad this problem will be dealt with in this Bill.

I also wish to welcome the fact that hire purchase charges will come within the scope of the Bill. The Government have tackled the problem of hire purchase in the last few years. One of the regulations brought in was that the hire purchase company would have to show exactly how much interest will be paid over the year. That was the first big step taken in the field of hire purchase. It meant that people were able to compare interest rates as between the different companies. I am glad the Minister is taking a further step in this Bill in an effort to control hire purchase charges. Some charges, particularly if they cover a high security risk, can be excessively high. Under this Bill the Minister and his Department will have an opportunity of observing the rates being charged and they will have some form of control over them. It is very hard to bargain with such companies if you have no money in your pocket. If you are lucky enough to be in a secure financial position when you approach a hire purchase company you receive better treatment than a person in a poor financial position. I should also like to see some form of control over the commission given by the hire purchase company to the firm selling the article. I do not think it right that a hire purchase company should give commission to a firm selling an article.

Mr. Reynolds

The commission should go back to the purchaser.

Mr. Crinion

I agree entirely with the Senator. I think the commission should be passed on to the purchaser because at present the firm or shopkeeper is getting ready cash for the article and also getting a commission for it at the expense of the purchaser.

I notice in the Bill that more emphasis is to be placed on the display of price lists in shops. Only occasionally does one observe a price list in shops. The price list should be displayed and made readily available to customers, as the Minister mentioned in the Bill, so that people will be in a position to compare prices and do business with the firm giving the best value. I was interested in Senator Belton's story regarding a receipt for two glasses of sherry. If a price list is displayed it will help to keep prices within reasonable limits.

I was surprised to note that some of the price advisory bodies are experiencing some difficulty in getting nominations. I was disappointed on hearing that because it is only by having good, active committees that we can hope to keep a firm watch on price increases. I hope something will be done to make nominations for such bodies more attractive to capable people. As I said at the beginning of my speech, I welcome this Bill. I believe it is a step in the right direction in ensuring that prices are kept at reasonable levels.

Professor Quinlan

I, too, wish to join in the general welcome for this Bill. We all endorse any action taken to try and control prices although we do not appear to have been too successful in the last few years in coping with this problem. While I welcome the Bill, I am not too happy about its likely outcome because many more functions and investigations are placed on various Departments, including the question of legal fees which has become the responsibility of the Department of Justice.

I question whether the Civil Service machine is adapted to this type of work. In my opinion it is too slow moving and it would be far better to develop much more fully the National Prices Commission and extend enormously the scope of the secretariat and the advisory services available to this body. It is much more likely that a body, such as the National Prices Commission, composed of employers, trade union and consumer interests, will be able to see quickly if there is something really wrong in the situation. In them we have represented the real interests involved, and I would have much more confidence in this body acting quickly and acting decisively than in any Civil Service Department, no matter how well meaning. The civil servants involved have not the same personal connection, or indeed the same expertise, in these three conflicting fields—the employer, the trade unions and the consumers—as the represented bodies have. Therefore, in the period ahead, when the Minister is trying to implement the rather far-reaching powers that are given to him for price control in this Bill, I think he should seek to devolve an increasing amount of this work on to the National Prices Commission.

I congratulate the National Prices Commission on the work they have done down the years. I should also like to compliment them on the report they have issued and on the fair-minded and balanced way in which they have always approached their task. But I am always conscious of their lack of resources and the fact that they can only cope with a certain amount of the problems on hand. Many of the people involved are part-time, being busily occupied elsewhere. I would appeal to the Minister to increase very substantially the resources that he puts at their disposal. The present amount—about £20,000 a year— spent on the National Prices Commission is very paltry. When we think of the giant task we are facing—better control of prices—then a sum of £20,000 is paltry and I would like to see that sum increased tenfold, if necessary. I would like to see it increased in such a way that each of the groups concerned would be well recompensed if certain of their officials in the trade unions, in the employers' or in the consumers' associations devoted more of their time to the task, so that they could build up in their own organisations greatly increased units for dealing with it.

The problem is an urgent one, because during the past five or six years we have been in a very inflationary situation. We are moderating it a little by reason of the fact that we are getting a national wages agreement. A national wages agreement, by virtue of the level at which it is pitched, is itself quite inflationary and will create an amount of inflation over the next few years. Consequently, price control in that context becomes very important. Price control also becomes very important in preserving this type of national wage agreement, because the people concerned are very much aware of the fact that their gains are being steadily eroded by increased prices.

Therefore, unless they can be assured that there is reasonable and proper control, control in which they, through their representatives on the National Prices Commission, are exercising a strong say, it is difficult to try to get our demands gradually brought back from the type of hyper-inflationary increases that were given four years ago to the moderately inflationary ones of the last two years, and indeed to the moderately inflationary ones that are promising to continue for the next couple of years. If we have any hope of moderating those, it is only through the efforts of the National Prices Commission.

The control of prices is only part of the policy. What is called for at all stages is a national prices and incomes policy. Four or five years ago it was quite fashionable to preach this policy, but nothing has happened effectively about it. We have not yet an adequate incomes policy, because the Government close their eyes to profiteering in, say, land for development and to profiteering in shares. All those take-overs involve a very large measure of profit-making and sudden increases, from which in other countries, such as England and America, a contribution would have to be given towards the capital gains fund. I cannot understand why the Government are dragging their feet on this issue, when countries like the United States—which certainly is not a socialist republic—is taken as the epitome of capitalism. This, of course, is wrong, but the United States has always had a national gains policy. Whenever I read of shares jumping on the stock market due to an effective take-over or some profits that have been effectively concealed over the previous years, my reaction always is, "Why is the Minister for Finance not there to take his share on behalf of the plain people of Ireland?" I appeal to the Government to get on with their incomes policy as a matter of urgency.

I agree with the suggestion in this Bill that percentage commissions are indeed becoming increasingly unjust in their application, especially with the great inflation that has occurred. Very often the percentage bears no relation to the amount of work that has gone into the effort. For instance, in relation to solicitors' fees, I have often tried to calculate how much per hour the fee has involved, and it boggles the imagination to calculate it sometimes. I think that is grossly unjust. I do not mind paying a stated fee. A professional service is worthy of the fee of the person concerned and to make its contribution on a clearly stated basis to the overheads of the office. I do not think anybody could quibble at that, but this arbitrary one of taking either 4 per cent or 5 per cent on the conveyance is, I suggest, totally wrong.

I am glad the Minister shows that he is making some tentative moves to question whether there is a grave disparity between the service rendered and the fee charged. It is important that we equip ourselves rapidly for dealing with inflation because of the impact of joining the EEC in the coming year. Many increases will be tried on that pretext. It is proper that we have a surveillance that will quickly establish if the increase is justified due to EEC entry. There are few price increases that will be justified under that heading. The claims made by the pro-EEC speakers, including myself and others during the referendum, will be borne out on that. We need protection from those who seek to use the EEC to increase their own prices and profits. We will have to see that that does not happen.

We know that decimalisation left us quite a legacy of inflation. It is evident to anyone today that if we did not have that unfortunate D-day of 15th February, 1971, our prices today would be less. It can be seen in the disregard for the smallest coin. In the mind of the buyer or consumer the new penny is associated with the old penny but in actual fact it is two and a half times its value and consequently the price of small articles, especially food, have increased out of all proportions since D-day. If we accept that decimalisation was something we had to do, we cannot pride ourselves on the effectiveness by which we controlled the price of small articles. I hope we will be more effective in controlling whatever inflation will be caused by our entry into the EEC.

I am in favour of the display of prices. I suggest that there should be occasional announcements on the radio in regard to prices to give some idea of what the National Prices Commission consider fair in the various circumstances. I find the big notices in some of the large stores, which say "no turnover tax charged", obnoxious. This is a message for the ordinary customer that he is getting something for nothing. Of course the store has to remit the turnover tax. I submit to the Minister that it is wrong that stores should be allowed to mislead the public in regard to the tax situation and especially in regard to turnover tax and wholesale tax. That is something which calls for a clear statement from the Government. They should point out to the public that such notices are false because everyone has to pay turnover tax on the goods purchased in the shop. I deplore such insidious types of consumer bait in the larger stores. Again I appeal to the Minister to place his confidence in a greatly expanded National Prices Commission. We, the consumers, place dependence on the commission much more than any army of civil servants in any of the Departments charged with this task. Here we believe we have the true competition of price regulation where the consumers, the manufacturers and the workers come to a decision as to whether a price is proper or not. That is the only way to do it. I commend the Bill to the House. I wish to compliment the National Prices Commission on the excellent work they have being doing.

Minister for Industry and Commerce (Mr. Lalor)

I am naturally pleased that everybody who contributed to the debate this afternoon welcomed this Bill. There were some qualifications in this regard, but in general they could be described as minor criticisms, or not criticisms of the Bill, as such. In one instance there was criticism of the exclusion of the control of new house prices, which had been introduced originally and subsequently withdrawn, during the passage of this Bill through the Dáil. Otherwise, all Senators spoke encouragingly about this Bill.

Senator FitzGerald positively welcomed the measure. He said a few words in general that price control, in itself, does not have the end result that we invariably hope for, that is, to prevent the inflation that we all condemn. He mentioned that the administration of price control was a costly operation and that price control could have a stultifying effect on the manufacturers because one often has the experience of a price increase application being held up for an unduly long period. To a great extent these holdups have been cleared up. Since the setting-up of the National Prices Commission the applicant firm are asked to submit their notice of intention to increase prices. Unless they are notified within a month of an objection, on the recommendation of the National Prices Commission, they are free to increase their prices.

This has come about from representations made to me by the Confederation of Irish Industries about 12 months ago. It is working quite satisfactorily and is, in its own way, a further compliment to the National Prices Commission. A number of Senators praised the operations of the National Prices Commission since they were formed. I acknowledge this and join with the Senators who paid this tribute to the Commission.

They have generated a greater public awareness of the need to be part of this overall surveillance of prices. Senator Belton indicated the volume of good the consumer can do by questioning prices. There is exploitation of customers and this gives a bad name to the retail business. A consumer who feels he is being overcharged should demand a receipt and send it to the Minister for Industry and Commerce for investigation.

Senator FitzGerald stated he did not object to the extension of price control to services. Senator Crinion commented on the part of my speech which mentioned the power to control services. I stated that in section 6 of the Bill there was provision "for the amendment of the Prices Act to enable the Government, by order, to transfer from the Minister for Industry and Commerce to any other Minister, powers and functions under those Acts for the investigation and control of particular prices or charges". I then quoted the example "In the case of professional fees it is intended that powers to control legal fees will be transferred to the Minister for Justice".

Senator Crinion seemed to assume from that that the only power I was taking over the professional fees was the power to control legal fees and that I was not also taking the power to control the medical fees of the Fitzwilliam Square specialists. This Bill embraces the power to control the fees of all professions. I emphasised my intention to transfer the operation of the power in the Bill regarding legal fees to the Minister for Justice. In the same way, the various powers which would be more applicably used by another Minister can be transferred by Government order to that particular Minister.

Senator FitzGerald while speaking on section 6 of the Bill referred to the question of giving more power to the Executive. Senator FitzGerald is extremely careful in the manner in which he picks his words and presents his case, but I should like to stress the fact that I take exception to his stating that it was giving more power to the Executive as against those who are more concerned with the administration of justice.

Mr. Alexis FitzGerald

I did not mean anything pejorative by that. I was referring to the distinction between the ordinary Executive and the judicial arm.

Mr. Lalor

I felt there was a suggestion that the Executive, in this case meaning the civil servants within the Department of Justice, were not concerned with the administration of justice.

Mr. Alexis FitzGerald

If I seemed to say that, I withdraw it.

Mr. Lalor

Senator Quinlan subsequently stated that I would be presuming that, on the transfer of this power to the Minister for Justice, he might still use the National Prices Commission to obtain advice in this regard. There was a comprehensive discussion on this matter in the Dáil. On that occasion I had to "kneel" to reassure some of the Deputies, and I read a portion of a letter I received from the Incorporated Law Society indicating that they were reasonably happy, from their point of view, with the commitment the Minister for Justice had given them in setting up an advisory body.

We are now discussing the power in the Bill to transfer the specific functions to the Minister for Justice. There is nothing written into the Bill determining the manner in which the Minister for Justice would seek advice on the operation of this control. This may be referred to on the Committee Stage. Senator Quinlan's contribution draws attention to a particular aspect which was not referred to in the Dáil.

Senator FitzGerald referred to the effect inflation has on a person's savings in that it takes away the money saved. This is just one of the dreadful effects of inflation. It hits hardest at those with fixed incomes, such as State pensioners.

Senator Owens commended the National Prices Commission. She said that we have had price increases here over the past few years higher than in Europe. It is not possible to deal with that subject and at the same time try to avoid the fact that wages have been a major contributing factor. Senator Owens said that wages were not the entire reason for price increases. That is so. The control of prices and profits has to be watched to try to ensure that some effort is made to curb this overall spiralling price increase.

Senator Owens also mentioned the fact that a wage increase is not much good if it is eroded by increases in prices. With regard to the last wage agreement and the one that is being debated at the present time there is a built in clause in connection with the cost of living index increase and a wage increase to compensate for it. The Senators who spoke spelt out the necessity for prices surveillance. Most Senators commented favourably on my intention to give myself power to insist upon greater publicity being given to the price of goods sold in shops. It is my intention to continue that policy. Some time ago I had an order made, again on the recommendation of the National Prices Commission.

On the other hand, I must stress that shops cannot give too much space to displaying prices. They might be left with no space to display their goods. The last order I made was criticised on the grounds that the size of print was too small when seen from a distance. The whole object of the exercise is to have a situation whereby the housewife or consumer would know that within the store or in the window there is a list displaying the price of goods. They can then inspect the list and compare prices. The responsibilities of the Minister for Industry and Commerce in this field have possibly been overplayed.

Reference has been made to the fact that the housewife cannot spend all her time shopping around, but, as Senator Belton has said, the housewife can do more to make the retailer or supplier more forthcoming with information. I propose with the power given to me under this Bill to insist on the public display of the price of a given number of items. I also propose to spell out the fact that each item on sale must be marked on the packet with the resale price. That resale price must include the appropriate tax, whether turnover tax or value-added tax, so that the housewife will know what her take-home price is. She can then compare that price with the prevailing price in the shop down the road.

Senator Crinion referred to the fact that an article can appear attractive on the top of a sizeable advertisement in our daily papers. That item, whether essential or non-essential, is used as an inducement to get the unsuspecting housewife into the shop in the hope that she will buy other articles at an inflated price. Arising from the publicity one sees in the newspapers as a result of surveys taking place, if one looks down the list one finds shops which charge no turnover tax and do not give stamps, others give stamps but charge no turnover tax, others again do both, but one invariably finds that each of those three shops has some items selling at a lower price than the others. This is a catch to attract the consumer.

I now have the report from the Fair Trade Commission which was commissioned by my predecessor. I made a statement in connection with this recently. It is being examined at the moment. Specifically one might say that it might not have anything directly to do with the Prices (Amendment) Bill but there are a number of recommendations which I am having processed in connection with the distributive end of the grocery trade. An order which I propose to make in connection with that will enable me to make quite a considerable amount of progress in price control and stabilisation.

In addition, I recently asked the National Prices Commission to examine consumer protection exhaustively and to make recommendations to me for improvements in this field. I imagine if I had made that statement 12 months ago I would probably have found myself saying I expected to have those recommendations in about two years time and then I would see what I could do about them. In asking the National Prices Commission, under its present chairman, to look into this matter and make a report to me I know I am asking a willing group of people who will act speedily and decisively. They will probably get out some papers, circulate and publicise them with a view to getting observations and come up within three to four months with their positive recommendations arising from the publication of the first papers issued for consideration and the reaction from the general public and trade. I propose to widely use the price display powers I have taken in this Bill.

Senator Owens and other Senators referred to the fact that control on the price of houses was left out of this Bill. I appreciate the approach the Senators have made to this exclusion. I have tried to explain that I am very anxious to get the Prices (Amendment) Bill through both Houses of the Oireachtas before the summer recess. In discussion with my colleague, the Minister for Local Government, that an effort to get the former section 3 of the Bill straightened out to give the Minister for Local Government sufficient power of control over new house prices, would involve a considerable amount of extra time for discussions between officials of my Department, officials of the Department of Local Government and the Attorney General. The time involved in this would have meant that I could not get what I look upon as a very necessary Bill through both Houses before the summer recess.

The Minister for Local Government then said to leave it with him. I said to him: "How about you getting your Housing Bill by way of special legislation in your own Department?" and this is what was eventually decided.

I welcome the fact that no Senator made the allegation that the Minister for Industry and Commerce or the Government, having announced their intention to take steps to control new house prices, allowed themselves to be forced into a position of withdrawing from any effort to control new house prices because big building business, which is very heavily committed to the Government, and vice versa, succeeded in pressurising them out of going ahead with this prices legislation. Maybe it is good politics to make such allegations.

Dr. Belton

Does the Minister not agree that this should have been tackled some years ago?

Mr. Lalor

The Senator in his fair contribution conceded that controlling new house prices is not easy.

Dr. Belton

I said that.

Mr. Lalor

The Senator may not have been here for a contribution made by Senator Crinion who said I felt reasonably satisfied with the suggestion of Senator Belton in relation to the provision of serviced sites in Dublin comparable with the County Dublin area. Senator Crinion logically drew attention to the cost of providing those services. He said that if Dublin Corporation and Dublin County Council set out to provide the sort of services Senator Belton spoke about, in that area three years ago——

Dr. Belton

Ten years ago.

Mr. Lalor

The moneys that would be required for the laying of those services would be quite a lot in relation to sewerage alone. The Senator did not suggest road services, but said water and sewerage facilities would be essential.

Dr. Belton

There was a levy when they were begun.

Mr. Lalor

This would be more a matter for discussion with the Minister for Local Government. The decision to withdraw section 3 of the original Bill was not because the Government were not anxious to control new house prices. Originally when the Bill was introduced and when the Second Stage was being taken in the Dáil, the question of taking power to deal with existing houses was raised. Senator Crinion commented today on land prices. Senator Belton had drawn attention to the fact that land prices, when a question arose of housing needs, were inflated and out of proportion. Senator Crinion drew attention to the fact that building costs within the centre of the city had inflated in the intermediate period, perhaps more than land prices. He went on to say that the farmer was entitled to see the price of his land going up as well. One could argue in that regard, but we know that to try to control new house prices while at the same time endeavouring to leave out the consideration of land prices is difficult.

I said in the Dáil when I was moving the amendment for the withdrawal of the previous section 3 that the National Prices Commission had commissioned a report from An Foras Forbartha seeking recommendations in relation to how to apply price control in relation to new houses along with land prices. The Foras Forbartha report to the National Prices Commission will issue during the present month and will be known as their "Second Advisory Paper". It will then be circulated and made public for comment and at the end of maybe a three-month period, when this public comment has been made in relation to it, it will go back to the NPC. The NPC will then make representations to me. This, in turn, will be very useful to the Minister for Local Government in relation to the further steps that he now has committed himself to taking regarding controlling new house prices. I want to make this quite clear to the House that my opposite number in the Dáil, at the end of a long Committee Stage debate, because I had not commented on an observation he had made, assumed that I agreed with what he had said.

Dr. Belton

I was not criticising the Minister——

Mr. Lalor

I appreciate that, but what I was saying was that I was glad the House here saw the difficulties of controlling house prices without deciding to have a "bash" at the Minister for having acceded to strong pressure groups.

A number of Senators referred to price display. Senator Brugha made a recommendation about trying to follow a pattern created on the Continent. He wondered if I had power under this Bill to control hotel charges. I can make a display order requiring hotels to display their charges for meals et cetera. This brings me back to Senator Belton who said that although I had very good intentions, somehow there were a number of provisions which I would find it impossible to implement. He went on then to deal with the housing situation but did not itemise which of my good intentions he thought I would not able to implement. Maybe he will have a go at it on Committee Stage.

Senator Brugha dealt with the difficulty of divorcing prices from wages and other costs. Senator Crinion welcomed the plans I made in regard to manufacturers being obliged to notify the Minister of their intention to increase prices. I would point out to the Senator that that is a reiteration of a situation which exists at present.

Senator Quinlan suggested that the power to examine legal fees be retained by the National Prices Commission on the basis that the Civil Service operate too slowly, one way or the other. The existing price control in relation to legal fees in general is operated by various legal committees and the process is quite obviously slow. There was a discussion on this subject in the Seanad in February or March last, in connection with an order which the Minister for Justice opposed. It transpired that there had not been an increase since 1965. I do not know if the move to negotiate the increase had started in 1965. This looks a slow process but it was not the responsibility of the Department of Justice. It was a joint responsibility because it was the committee—whichever committee it was—which had the power of laying the order on the Table of the House and it was at that stage being opposed by the Minister for Justice.

The National Prices Commission have shown a capacity to deal efficiently with any of the problems with which they have been confronted in the short period since their establishment and because of that I have no doubt they would be able to deal with this problem. On the other hand, there is a justifiable fear on the professional side in general because they are not represented on the National Prices Commission as at present constituted. The Minister for Justice in that regard would, of necessity, need an offshoot committee of the National Prices Commission.

There is some justification for the case made by Senator Quinlan that the National Prices Commission are now becoming so important there must be some improvement in their secretarial staff. They are supplied entirely by my Department at present. They have to work extremely hard in order to supply the National Prices Commission with their requirements and keep them updated.

I have endeavoured to cover most of the points in the debate. I cannot say I have covered them all but I tried to pick out the particular items raised which merit comment in view of the fact that comment was specifically sought.

Senator Quinlan expressed the hope that I would be in a position to see that there would not be any specific price increases arising from our entry into the EEC. He compared that situation with the change-over to decimal currency. I do not accept that the change-over to decimal currency had the effect of a large cost-of-living increase. On the other hand, I cannot accept responsibility for Senator Quinlan not appreciating that the present 1p is two and a half times as much as the other penny. I doubt if the price of a lb. of tomatoes two years ago was much less, in relative terms, than the 5p at which they are quoted now. The Senator also spoke about the price of fruit. Most of our fruit comes from outside the country and we have the situation where possibly that has increased in price.

Senator Quinlan also spoke about the big banner announcement "No turnover tax charged". It must be accepted that whether the distributor wants to create the impression that he is or is not charging turnover tax, the fact remains that having sold goods he must pay turnover tax to the Revenue Commissioners for so doing. Any claim that no turnover tax is charged means that no turnover tax has already been built in, which would be a completely wrong claim. Until such time as I make an order that prices must be inclusive of turnover tax, there is nothing illegal in the claim, even though it is deceptive.

Question put and agreed to.

Agreed to take remaining Stages today.