Development of Economic Environment: Motion.

I move:

That Seanad Éireann is concerned that we do not yet as a nation fully appreciate the massive economic and social benefits to be gained from creating a fully competitive open-market society.

I tabled this motion because I am very enthusiastic about the potential of competition and I want to share my enthusiasm with the nation. I purposely worded the motion so that it does not criticise anyone and I am surprised that the Government has tabled an amendment. However, we might deal with that issue later.

I will now discuss my enthusiasm for competition. We are virtually ignoring the massive economic and social benefits which could flow from a truly competitive society. Despite this week's arrival of new competition in broadcasting and telecommunications and the establishment of an aggressive Competition Authority with sharp teeth, Irish culture remains profoundly non-competitive at heart. Most of the change on the competitive front has been driven by Europe and has emanated from Brussels. We would not have brought about such changes on our own.

As a nation, we do not understand the benefits of competition. Left to ourselves, we tend to turn away from and dilute competition rather than embrace it enthusiastically and exploit its benefits. A competitive society is one of open doors, not closed shops. It is a society where the cardinal principle is of earning a living through meeting the demands and needs of customers and doing so better than the competition. It is not a society where the cardinal principle is that the world owes me a living. This antipathy to full competition is deeply ingrained in Irish people. It extends to the media and includes legislators, administrators and the management and workers of many organisations in the private and public sectors.

Many people share a perception that open competition is somehow evil and must be controlled and diluted. This attitude is holding us back. It is not in our best interests to allow this to happen. We must recognise competition as a good thing in economic and social terms and seek to nurture, encourage and protect it wherever possible. I will provide four brief examples of this attitude.

If a retail price war is in prospect, the media treats it as negative not positive and such headlines as "Price War Looms" are typical. However, vigorous price competition is good and almost always benefits the customer in both the short and long term. I have been involved in the grocery business for 31 years and fierce competition for a generation or more has had a major influence on keeping inflation at bay. Without an effective distribution centre and sector, our overall cost of living during the past 30 years would have been at least 20 per cent higher than at present. That is a substantial benefit. I work in a business where 18 grocery chains have ceased trading but customers and the economy have benefited.

Another example of the wrong attitude was highlighted when Ireland obtained a full derogation from the full liberalisation of the telecommunications industry. Originally this was to have been for five years but, thankfully, it has been reduced to two. This derogation is a bad thing but it was hailed as a victory because Telecom Éireann would not have to face competition for a further two years. I do not understand that attitude and we should have stated that it was a failure on our part. This delay on the road to full liberalisation is bad for the customer and, therefore, bad for the citizen because they must pay more. It is bad for the economy because low priced telecommunications are a critical element in accelerating growth. People have stated that competition should not be encouraged because Telecom Éireann is a semi-State company. However, competition benefits customers, taxpayers and the public in general. The derogation will, perhaps, have the worst effect on Telecom Éireann and its workforce. Far from protecting the company and its workers, it exposes them by putting off the day when they are fully equipped to survive and thrive in a newly competitive marketplace. Seeking derogations from competition is akin to King Canute attempting to turn back the tide.

The third example of an anti-competitive attitude involves Dublin taxis. This is one of my pet hates because totally artificial constraints are placed on supply and demand. The customer's needs are not being fully met and the classic market response to this would be that new interests enter the market to increase supply. However, that has not happened in the case of Dublin taxis. The number of taxis in Dublin is controlled not by market forces but by bureaucracy. I favour the regulation of taxis because carriage vehicles should be safe and their drivers should be extremely familiar with the territory they cover. I am very impressed with London taxis. However, Dublin Corporation does not seem to bother with regulation and is not concerned with such niceties. It is primarily concerned with what is effectively a cartel. An understandable side effect of this is the market in taxi plates which raises the cost of entering the carriage business. Keeping the cost of market entry high never benefits the customer, it benefits those who want to exploit the customer. Our entire approach to transport is riddled with anti-competitive attitudes.

My final example also involves artificial constraints on meeting customer demand and I believe it will appeal to the Minister of State who has strong views about competition in this area. Howls are emanating from the publicans' lobby in response to the suggestion by the head of the Competition Authority that the lack of full competition is keeping prices high in the Dublin area. The prices charged for alcohol in off-licences, where full competition exists, decreased during the past ten years. However, they increased sharply in public houses in the same period. A person operating a successful restaurant cannot complain if someone opens another restaurant in the adjoining premises. What would have happened in Dublin if it had been decided 20 years ago that there should be a cartel of restaurants and no one could open a new premises unless they obtained a licence and permission to do so? What would have happened if we had limited the number of hotels because we wanted to ensure that people did not actively compete with each other? In that context, we must consider the number of hotels in Dublin which are booming, thriving and attracting increased business to the city.

Suggestions that full competition would infringe the sacred property rights of existing publicans are hogwash. Subtly and suitably disguised, this is the dreary old whinge that "the world owes me a living". My company owns a number of licences and it paid money for them but I am not foolish enough to think anybody owes me a living as a result. When I hear talk of the correct number of pubs for an area or of maintaining an orderly market, I am reminded of the first time I was in Leningrad, Russia. As we went down Leningrad's main street, our guide said that an art gallery and a museum were on our left and the best grocery store in the city was on our right. I asked if we could stop and see the store. We were disappointed as it was not even self-service and was very old fashioned. She said they had a supermarket also and made arrangements for us to see the supermarket the following morning. I met the grocery manager of the supermarket and I asked him how many customers he had, to which he replied 19,257. This is the first question anybody in business should ask, not how much money one takes in. I was impressed because that can be figured out with good technology. I asked him how he knew that because he did not seem to have good technology. He said this was the number of people who live in this town. At that time in Russia the size of a supermarket was related to the population of the town or city in which it was built. It was the worst supermarket I have ever seen, was clearly not related to customers needs and there was no competition.

A way has to be found to create competition in everything we do. I am delighted to see it coming into radio this week. It will liven up radio and will be hugely beneficial to listeners. I want to see competition with Telecom Éireann because it will benefit callers.

However well intentioned one may be, when one restricts competition the customer suffers and not just in price. Competition is about a great deal more than price. I want to make a connection between a competitive culture and a society that is fully customer driven. They are almost two sides of the one coin. The trend towards a customer driven society is one of the great historical movements of the twentieth century. Long after people have forgotten about Communism and Thatcherism, this trend will remain and will be seen as one of the great shifts in society. A truly customer driven culture is democracy in action. It works for the benefit of the people, not the benefit of a small elite group within the community.

Most companies are not customer driven, even fewer State companies are, although there is no necessity for that to be so. A sense of customer commitment in the public service is even rarer, but if one injects that type of customer focus wonderful things begin to happen. As part of the strategic management initiative, all Government Departments are identifying their customers and are putting their needs at the centre of what they do. We as a nation have to find a way of recognising the great benefit of having a competitive marketplace. I am not talking about privatisation but about a competitive marketplace. The beneficiaries in such a marketplace are the customers. As a nation, we want to move towards a much more competitive marketplace in everything we do.

I am firmly divided on this motion and I will try to strike a balance. I hope Senator Quinn does not take that badly. I agree with virtually everything he said, but had he referred to a fully competitive open market economy I would have little difficulty in agreeing with 95 per cent of what he said. However, when one refers to an open market society one is bringing in a much wider dimension than economy. One must strive for the optimum balance between competitiveness in those areas where competitiveness is appropriate and co-operation in those areas of social activity where co-operation is more appropriate. The Senator would not dissent from that, but the phrasing of the amendment applies a monolithic criterion of competitiveness across every area of activity.

I agree there is a strong anti-competitive streak in our inherited psyche. It is largely explicable in historical terms because of a need for security, given our historical background, which is understandable in an objectively insecure society. We have carried it over into a period when we have become much more successful and prosperous economically and when there is not the same objective explanation for the obsession with security. Therefore, I welcome the emphasis on greater competitiveness in many areas of economic and administrative activity.

My background is in education, an area which many would regard as highly uncompetitive. There is little direct institutional competitiveness in higher education. I get paid the same whether I work 100 hours per week or zero hours per week. There is little incentive on the one hand, and little disincentive on the other. It is the same with virtually everybody in this sector. It is quite remarkable how many people work a great deal more than one might expect, although there are also some of the other type. We are not uncompetitive and do not think in those terms. We do not compete in monetary terms but compete intensively internationally in reputation terms, because every word we write in academic journals etc. will be scrutinised — and repudiated, if possible — by dearly beloved colleagues at home or abroad. We are not profit driven in a strictly economic sense. There are people in this country who may not appear to be part of a competitive economy but who nevertheless have a highly developed competitive instinct, at times a murderously competitive instinct. We need to take account of how we harness those impulses if we are to optimise the potential of latent or diverted competitive instincts.

There is a big difference between competitiveness in a small home market and a big one. We undoubtedly fostered many small protected firms in this country behind the tariff walls which had little idea of a competitive instinct. They formed cosy cartels quickly with each other and their unions in order to exploit the customer. One of the reasons so much Irish industry went to the wall after the 1965 and 1966 agreements with Britain and entry to the EEC was that even after 30 or 40 years a competitive instinct had not been inculcated in many of those who were doing nicely with a cosy share of a protected market.

Our small scale and the insecurity, which was an integral part of Irish existence for a long period, contributed to fostering this mentality. I do not believe we are not normal people. We are changing as opportunities improve; and it is important we drive further in that direction, although we must strike a balance. It is admirable that Senator Quinn tabled this motion at this time.

I was interested to hear Senator Quinn speak about the strategic management initiative. I hope he is placed on every committee dealing with it because I contacted three Departments this week and not one has heard of the strategic management initiative or, if they have, they are concealing it very effectively. I have no doubt it is flourishing in other quarters. There is still some distance to go before everybody becomes fully aware of it.

I welcome the general thrust of what Senator Quinn said. I agree with his observation that it is not privatisation as such but the competitiveness of the competition privatisation is assumed to bring that is the gain for the economy. Privatisation in other economies has had a detrimental rather than a positive effect in a number of cases. Whatever about public monopoly, private monopoly is even more likely to involve a rip off of the customer. I would look strictly at the merits — in so far as one can look at things on their merits independently of an ideological position — of specific proposals in these areas. I would not be as ideological as the phrasing of the motion implies, but a pragmatic competitionist, if there is such a word. One of the greatest challenges confronting us is how we combine a capacity for competitiveness in the economic sphere with a capacity for co-operation in the wider social sphere. Civilisation depends on striking that balance — we cannot have economic efficiency without a high degree of competition or a civilised society without a high degree of co-operation. We must find a way to foster the competitive instinct while fostering the co-operative instinct. That is the real challenge. I agree with Senator Quinn that we need to go further in the competitive direction in the economic area, which is why I am happy to second the motion.

The Government amendment to the motion will not be moved. Much of what the two previous speakers said was very constructive. However, I was confused when Senator Quinn made the comparison with Russia. Ireland has never been compared to Russia and I would not like people to think we should learn from them, because even in our worst days we did not only have one supermarket or shop in a town. We had huckster shops and people were in competition with each other. I do not agree with the notion that because others are opening up supermarkets our society is better off. Supermarkets are not losing money as a result of the competition — people compete to make money.

Would we be better off if there was competition in all areas? If there was competition in the health area, many people would be without health services. If we allow competition in the electricity area, we must be sure we get a proper service. Looking at the British economy, concerns have been raised as regards the supply of water, particularly in northern England, and the cost of water since it was privatised. The British Government sold off many areas in which there was a need for competition, particularly transport. However, money is not being spent in many areas of transport since privatisation because it is not worth it to those who have invested in this area.

Senator Quinn was right in what he said about taxis in the capital city. In Cork city, a taxi or hackney service is available at a keen price and at any time of the day; but is everything above board? Are they operating in the same way as taxis and hackneys in Dublin? I give credit to taxi drivers in Dublin because they put in the hours and provide a service. While there is a need for more taxis in Dublin, it should not be a free for all because some will operate illegally. While the public is getting a service, it is not necessarily a good one.

Although the economy is doing well, there are not enough people, particularly young people, at work. If we do something we do it well and we should take pride in that. People coming from Europe or the United States to Ireland to invest see the opportunities provided by our education system. If Senator Lee works ten or 40 hours per week, he gets paid the same; but I do not. He said if he does not work, he still gets paid the same wage. Is that fair? I am not saying for one moment that Senator Lee does not put in the hours. He has an excellent mind and has considerable abilities, like Senator Quinn and others, and they should be complimented.

Three weeks ago a private college in Dublin went into receivership, although students had paid huge fees. Should we allow our health and education systems be privatised and face competition? Unlike the State, nobody would spend over £4 billion on our education system, £4 billion on our welfare system or a similar amount on our health service. If we were to privatise these areas, elderly people would not be looked after.

Senator Quinn was right in what he said about Telecom Éireann but it is still not cheap enough. Our telephone charges are still the highest in Europe or even in the world. If we had not allowed money to be borrowed at cheap rates, would we be experiencing this economic boom? Inflation has been low in recent years, and this has been good for us. It should not be forgotten that when inflation was high financial institutions made the most and benefited from this country more than anyone else. The two largest banking institutions make over £400 million per year each in profit, which is £1.2 million per day. They open for five hours per day, five days per week, are closed Christmas Day and St. Stephen's Day and still make £1.2 million per day. This is where there should be more competition.

The airlines are another example. If we had not allowed Ryanair to invest and compete, how would Aer Lingus treat us now? However, the middle ground should be taken on this and I would be afraid of the consequences of not doing so. Nonetheless, Ireland is doing well because Ryanair is prepared to compete.

I support the principle of the motion, but I agree with Senator Lee that there are aspects of it which need some form of control. It is timely that Senator Quinn has tabled this motion and I compliment him for it. No one could disagree with the points he made.

The best example of the positive impact of competition is the removal from the old uncompetitive Department of Posts and Telegraphs of some semi-State bodies and their transformation into the new companies of An Post and Telecom Éireann. Many say they are still uncompetitive but they are making major strides in the direction of competition. This is also true of the old CIE company and the new Bus Éireann one. Five or six years ago it cost £23 to travel from Galway to Dublin by bus or train but it now costs as little as £6 or £7 by Bus Éireann due to private competition on the route. Nowhere has there been greater development than in the airlines, where the influence of Ryanair has reduced fares on the London route significantly. There are also bad examples where competition does not exist on air routes — for example, the regional airports. Shannon Airport recently allowed competition between A B Shannon and Aer Lingus on the London route which has significantly reduced fares.

I agree in principle that there is a need for a more competitive culture. However, some areas require control. While I agree there is a need for open and strong competition in Senator Quinn's business, supermarkets, it has resulted in negative effects. I would like to hear what he has to say about this. Strong competition in the supermarket business has led to below cost selling, small suppliers being squeezed significantly and difficulties being created for suppliers and consumers. I recall ten years ago being a member of the Joint Committee on Small Business and Services which studied the impact of below cost selling. It found that some supermarket chains with a good marketing policy were able to convey the message that they were selling at very low prices when it was only a small number of loss leaders and the basket of goods was more expensive to the customer overall. This is an example of the ingenious methods people employ to show they are competitive without their being so. Would open competition allow that sort of abuse?

No one could but argue that there is a need for more competition in the taxi business. In Galway there has been a liberal regime of issuing hackney licences with several hundred being issued in the past years. It has not had any major effect on fares but it has been unfair to people who have paid £50,000 for a taxi licence. Their neighbours can spend £100 on a hackney licence and, by stretching a bad law, can compete unfairly with the taxi driver who has paid dearly for his licence. Regulation is necessary; but I agree with the principle of competition in the area, especially in Dublin, where there are not enough taxis. The fault lies with the authorities, who have not responded to the need for more licences to be issued as necessary. In Galway it was a back door effort on the part of the local authority to grant hackney licences when it should have granted taxi licences in the first instance and charged a proper price for them, bringing money into the public sector.

I find the issue of pubs an interesting and useful one and the Minister is to be congratulated for the stance he has taken with publicans on the price of drink. In the little town of Gort, where I used to live, there are 27 pubs for 1,000 people. In the new town I represent, Knocknacarra, on the western environs of Galway city, there are 8,000 people and no pub. There was one attempt to build one, which was disallowed for a variety of reasons. There is a need for some form of proper planning, control and development which will change the situation of having 27 pubs in Gort — they know all about competition — and major suburbs with none and where, if permission and a licence could be obtained, one would have it made.

I agree we are a society which shuns competition, and nowhere more obviously than in the public service. I am glad to see that a transformation is taking place in the public service and in the semi-States. I hope the strategic management initiative will enhance that, where previously, public sector bodies did not want to know about competition.

The teaching profession, which I and the Leas-Chathaoirleach come from, is an example of a radical new approach which must be taken. Many teachers do not want to be teachers and perhaps did not want to be for the past ten to 15 years. They are now in their late 50s, are burned out and want to retire. I hope we can soon afford to allow them retire and then pay more to good young teachers to be competitive and better than the others. It is a system which works well in France where public servants are paid on the basis of performance. Denis Brosnan said recently that you must examine your position in the company which employs you and decide if you are an asset or a liability. If the company were without you, would it make more money or do a better job? I hope the public service goes that route and that public servants, be they teachers, civil servants or others, are paid for performance and become more competitive.

I am concerned about this motion. If it advocates unfettered capitalism, I do not agree with it. There must be some restrictions. In a global context restrictions are necessary in the protection of undeveloped and underdeveloped economies. We did not say no to structural and cohesion funds when we felt we needed a leg up in competing with our European partners. We were grateful when the EU decided to tilt the balance in favour of certain countries thus giving us a chance to participate in the market.

I received a questionnaire from Oxfam today. The last question says:

Throughout the developing world, transnational corporations have been attracted by unregulated, open-door investment policies. Unregulated transnational operations often lead to poorly paid jobs conducted mostly by women and children in conditions that are extremely hazardous to health. Do you believe that a social clause which would seek to protect workers' basic rights as outlined in International Labour Organisation's core conventions should be included in trade agreements negotiated, implemented and monitored by the World Trade Organisation?

My answer is yes. There has to be control in relation to workers rights and in the protection of those who have no jobs. If a limiting of the competitive environment through such measures as the working time legislation is not attempted, certain people will have no jobs while others will work all the hours God gives them, leaving no time to see their families.

There must also be a geographical balance. The Minister for Enterprise and Employment recently announced incentives to bring more jobs to smaller towns. That type of development is positive and to be welcomed. Whatever measures are taken to maintain the population of rural areas are also to be welcomed. This may mean limiting competition. The attempts to modify the growth of Dublin Airport to the benefit of Shannon is good. Whatever can be done to avoid having everything happen around the Dublin area should be done. I think Senator Quinn would agree with me.

Regarding essential services such as telephones and electricity, there has to be a social clause whereby people living on the side of a mountain can have basic services even though, competitively, they could not cost effectively pay for those services. Neither should there be competition in areas such as health and education. I totally oppose a schools' league table which is being spoken of in Britain. A basic service should be provided for everybody on the basis of need and access.

There must also be control in the area of private monopolies. We are aware of the debate over Sky TV.

Competition is not fair if some people are operating in the black economy while others are operating in the white economy. I do not think Senator Quinn would have any problems with my reservations in these areas.

There should be competition in the fairly traded commodities sector once the areas I have referred to are excluded, namely, the provision of basic services, worker protection and the protection of underdeveloped economies. I agree with Senator Quinn that we have not been as competitive in the past as we should have been. However, this is changing. An Bord Tráchtala's annual review and outlook published at the end of 1995 speaks of a strategy for 2001. Their primary target is to increase indigenous exports from the 1994 base of £3.28 billion to £8.2 billion by 2001. They are trying to achieve this through intervention by establishing targeted marketing consultancy programmes using Irish Embassies, a business leads campaign and a group marketing scheme. They are helping producers compete on the world market. The work being done by Forbairt, Shannon Development and the IDA in supporting industry is positive. It is an intervention in the market.

I am concerned about the amount of money floating around the world financial markets. I know we are getting our slice, particularly through the IFSC, but there is a huge amount of money moving around on a 24 hour basis and I feel that only a very small sector of the population is benefiting. It is uncontrollable.

I have a yes and no attitude to the motion. As long as the various controls are maintained, which involve Government intervention, I am in favour of competition. We have come a long way from the old days of putting in the time and not really putting in the effort. Small businesses are in an extremely competitive market and they have had to sharpen themselves in order to compete. That is very good for the consumer.

I thank Senator Quinn for sponsoring this motion. It is appropriate that this House considers issues such as this. I acknowledge Senator Quinn's credentials in terms of contributing to this debate. In business he has put the focus on the customer and the proof of the pudding is in the eating. Like Senator Lee, I describe myself as a pragmatic competitionist. The difference between Senator Quinn and Senator Lee seems to be that if Senator Lee had been in Leningrad he would have chosen to go to the Winter Palace first and then the supermarket.

We had done that already.

Both Senators have a major contribution to make. Senator Quinn has raised four areas that are not as major or significant as I thought might have been the case when I was anticipating what would be raised. Concentration on the incidence of retail price war, derogation from the telecom liberalisation, the matter of taxis in Dublin and the issue of pubs in Dublin and other major urban centres betrays a conviction on Senator Quinn's part that in so far as the thrust of economic policy goes, we have come a long way and that the thrust of economic policy in general is in favour of the competition ethic. That revolution has taken place.

As Senator Fahey said, the situation with regard to publicans is very peculiar. It can probably be explained in historical terms in so far as we probably do have sufficient licences in the country but they are probably in the wrong places. It seems crazy to any reasonable person that the situation is so anachronistic that some Victorian law determines whether one can open a pub in a centre of large population because the law states that the pub must be opened within a certain number of paces. If the distance between licences does not satisfy this stipulation, one pub must be closed to open another, or two licences must be quenched to get a new one. As Senator Quinn is aware, we are seeking to deal with those anachronisms. The Competition Authority, which I think is evidence of the conversion, is carrying out a study on the whole question of pub licensing and the resultant impact on pub prices and customer service. The authority, as a result of the Competition Amendment Bill, 1996, has the capacity to have its own decisions implemented through the office of the Director of Enforcement and we look forward to that. In the interim, I had to take certain steps to stabilise pricing until the report is ready. I am not arguing that price control is the ideal way to deal with this problem. It is not. However, in a situation where one is confronted by unreasonable demands, given what vintners' representatives said to Government before the budget and given that Government kept its side of the bargain, I do not think there was very much choice in the matter.

The taxi situation in Dublin is also a historical matter. It would be a very foolish Minister or city manager who would wade into the middle of that debate without having some regard to how they tread. If one does not tiptoe carefully through the tulips on that issue, none of us will have any taxis. It is a situation which has to be examined on its merits but it does seem very unfair to the customer.

On the question of the retail price war and the allegation that price is always a good thing, I am not sure that things are quite as clear-cut as they have been made out to be. I do not think that price is always necessarily a good thing because costs are externalised to other lower wage countries. One could be confronted with the phenomenon to which Senator O'Sullivan referred if one were to adhere entirely to the competitive ethic in that area. Senator Fahey also raised the question as to whether retail price wars would drive small retailers out of the market, consequently resulting in the dominance of the few. Clearly, there is a balance to be struck there. Nonetheless, there would probably not be popular support for putting corner shops and smaller traders out of business. I am not suggesting that should be countenanced if the price situation is so absurd that the service being offered by the multiples becomes the better choice. I do not think that will happen because there is a competitive dynamic even in those situations.

I also believe it is true that lower prices can create more competitive local companies, but not if prices are so low that no national supplier cannot compete. I think Senator Cregan was making that point. Even in the retail area, the case is not an open and shut one. I have been in the United States on Government business, and with the IDA in five American cities over the past five days. One of the lasting impressions I was left with concerned the quality of their television programmes. It is an absolute nightmare to try to find out what is going on in the world and to have to put up with some brand of hair spray or dog food intervening between the first and second news stories. Competition in broadcasting in the United States seems to have slumped to the lowest common denominator. One found oneself harking after the good old BBC or even RTÉ, which I am not suggesting is perfect but which is a very fine station, given its resources by comparison with what is inflicted on the consumer — and which perhaps is having an impact on turning them into zombies — in the United States.

With regard to the Telecom situation, which I accept is crucial for the reasons of which we are aware, I want to quote briefly from the report Growing our Competitive Advantage:

Within that context, Telecom Éireann's charges have been substantially cut with reductions in charges worth £130 million to business and domestic consumers having been implemented since the start of 1995. The company has also introduced a customers' charter with provision for compensation if the company fails to meet its standards for line connection and fault repair.

Senator Quinn would probably accept that a good deal of progress has been made there. We are confronted with a situation where a company which employed 21,000 people in the recent past now employs in the region of 11,000. Many people's livelihoods rest on that and it is a question of managing transition effectively.

Let me say, in the manner of Senator Lee, that I found the concept of Senator Quinn's notion of an "open-market society" intriguing. I certainly hope he does not view society purely in terms of markets, which smacks of the monetarist view that there is no such thing as society, only an economy. I suspect that a society composed of nothing more than competitive markets is not one in which the vast majority of this country would want to live. In that regard, I think the House should have no concerns at any perceived lack of public appreciation for such a creation. A society dominated by unregulated market competition can yield massive economic benefits, as has been demonstrated again and again throughout history wherever, to use Senator O'Sullivan's term, unfettered capitalism has been given its head. However, these benefits accrue to the few, not to the many, and are won at a high cost, one which is paid throughout society.

Therefore, I would dispute some of the premises on which the motion is founded. What we should be seeking is the development of an environment which stimulates innovation, entrepreneurship and enterprise at all levels and which fairly rewards those who contribute positively to this. By creating the appropriate environment for enterprise which stimulates risks and spreads the rewards, we can achieve both economic and social benefits. This was very much the message of the Culliton report and it will be reiterated and amplified in the statement on Enterprise Strategy which the Government intends to publish shortly.

We are currently seeing the benefits arising from the improvements the Government has made in the environment for enterprise. These are reflected first and foremost in the economic fundamentals. Recent years have seen a dramatic improvement in Irish economic performance, as Senator Cregan said. GNP growth, in particular, has been very impressive, with growth rates of 7 per cent in 1994 and 1995 and an estimated increase of 6 per cent for 1996. The average GNP growth of 4.5 per cent since 1992 compares very favourably with the EU 15 average of 1.5 per cent. Ireland's fiscal deficit is now one of the lowest among EU member states and is continuing to fall. The general Government deficit (GGD) has been reduced from 2.2 per cent of GDP in 1993 to approximately 1.5 per cent in 1996. The debt/GDP ratio has also fallen, from 94 per cent in 1993 to an estimated 76 per cent at the end of 1996. In addition, inflation and interest rates in that period generally have been historically low.

Taxation issues have also been tackled by the Government. Over its lifetime 4 to 5 per cent has been taken off the tax take from the average industrial wage. There has been a 12 per cent decrease in the small business corporation tax rate and 4 per cent off the higher corporation tax rate. In addition, we have delivered significant reforms of employers' PRSI, with two thirds of the workforce on the lower 8.5 per cent rate of PRSI.

These achievements have translated into an environment for enterprise in which people are willing to take risks, to invest and to generate employment opportunities right across the economy in both services and manufacturing. In the three years up to April 1996, the numbers at work grew by 136,000. When the 1997 labour force survey is published it is likely to show a further net increase of 40,000 in the numbers at work.

The prudent management of the economy, supported by the consensus approach embodied in the PCW, has created an environment in which enterprise can play its part in the creation and reinforcement of a virtuous circle of growth and employment. The recently concluded national agreement, Partnership 2000, will further underpin that growth. However, it would be wrong to put the improved performance down to fiscal prudence in terms of the management of the main economic indicators. My concern would be that the fully competitive open market society envisaged in Senator Quinn's motion is one in which total faith is put in the private markets to sort matters out. As the economist Cathal Guiomard has pointed out in his book The Irish Disease:

Markets cannot do everything. They are not such perfectly self-regulating mechanisms that they can be turned over entirely to prices, profits and competition and thereafter left to their own devices.

As Guiomard points out, unregulated markets can easily fall prey to anti-competitive practices like cartelisation and bid rigging, which are fundamentally antithetical to the consumer's interest.

Perhaps of even more concern is that markets in themselves are inherently short term in their outlook. An emphasis on the bottom line is fine when looked at on an individual company basis, but taken in the aggregate it ignores public goods such as education, training, healthcare, crime prevention and infrastructure. These are the kind of factors crucial to the welfare of society, as distinct from economy, and its longer term economic performance.

In his book Ireland 1912-1985: Politics and Society Senator Lee gives an eloquent description of the hardships caused by under-investment in many of these areas in Ireland in the 1920s and 1930s. We can see the backlash in both the UK and the US against the “greed is good” mentality of the 1980s and the widespread concern about falling educational standards and declining infrastructure.

There is a strong and continuing role for Government in ensuring we invest in the seed-corn of future growth. This aim is shared by our partners in the EU through the Structural Funds, which, in tandem with national resources, have been deployed in ways which have a tangible effect on employment, economic performance and standards of living generally. For example, in transport, £2.6 billion is being invested in our roads, seaports, airports and public transport systems under the 1994-1999 community support framework. For business, these investments cut time to market and help to reduce the disadvantages Irish exporters experience due to our geographical peripherality. Investments in support of enterprise are also of critical importance.

There is no general consensus in favour of all-out, unregulated competition. Free and fair, and I stress the term fair, competition, however, is very much part of the concept of a pro-enterprise environment that I outlined at the start of my address. The State has a key role to play in ensuring that such competition is fostered.

The Competition Act, 1991, brought forward a new era in Irish national competition legislation. The Act prohibits all restriction on competition — for example, price fixing, market sharing, bid rigging, and abuses of a dominant position — and applies to all areas of the economy, both private and public sector alike. The Competition Authority which was established under the Act has performed a very important role in its decision making and in promoting pro-competitive business behaviour. Since the introduction of the legislation many companies have adopted competition compliance programmes and there is now a greater and growing awareness of the benefits of competition for the economy as a whole and for business generally.

An acknowledged limitation of the 1991 Act was its reliance on private individuals or firms to take civil actions in the courts to remedy alleged anti-competitive practices. It is understandable that enterprises, particularly small enterprises, have frequently been reluctant or unable to take this route, given the high costs of litigation, fears of commercial retaliation and problems of gathering sufficient evidence to sustain a prima facie claim in a civil action.

This concern has been addressed in the Competition (Amendment) Act, 1996, which gives the Competition Authority the power to investigate alleged breaches of competition law, either as a result of complaints from third parties or on its own initiative. The Act also allows the Competition Authority to take legal action where it judges this to be warranted. This new more pro-active element in our framework of competition law underpins the Government's commitment to promoting the kind of free and fair competition that benefits the consumer.

On the international stage, the Government also promoted competition as part of its programme during the recently concluded Irish Presidency of the EU. The Culliton report highlighted the relative disadvantage faced by Ireland in the face of the high levels of industrial subsidies offered by certain other EU member states. During the Presidency, Ireland put forward detailed proposals for the reform of the system of control for state aids in Europe. While, as might be expected, these proposals did not achieve universal approval, they nevertheless represented a first step in addressing the issue of a more rigorous control of state aids within the Union which, with the expressed support of the EU Council, can be built on over the coming years.

The House will, of course, be aware of the general EU environment for competition as it applies across the area of infrastructure. In that context, markets are being opened up in Ireland in a way which is sensitive and appropriate to our particular circumstances. Telecommunications is a case in point, where increased competition within the industry has been provided for in the Government approved mandate of July 1995 which sets the liberalisation date for the industry at 1 January 2000 for both infrastructure and services. This is a two year derogation from the date generally applicable within the EU. However, it should be noted that the Government is not exercising its right to apply for the full five year derogation which it was originally granted.

Terminal equipment and value-added services are already liberalised and provision for the introduction of private networks to carry currently liberalised services will be effected from mid 1997. Competition has also been introduced in mobile telephony, where Esat Digifone has been awarded the licence to provide a competitor GSM mobile telephone service. In addition, Telecom Éireann, through its shareholding in Cablelink, is committed to developing the cable network as a platform open to third parties on a cost-oriented and non — discriminatory basis for the delivery of a range of competitive services.

The Government is also committed to establishing an independent regulatory regime as provided for in the Telecommunications (Miscellaneous Provisions) Act, 1996. The legislation provides for the establishment of an Office of Director of Telecommunications Regulation and the transfer to that office of the Minister's existing regulatory functions in the areas of telephony, radio communications, and cable television services and infrastructure.

The identified need for increased investment in the telecom system and for increased scale in the face of global consolidation of the industry has been addressed by the sale of a 20 per cent stake in Telecom Éireann to PTT/Telia. The consortium involves the Dutch telecom company PTT Telecom BV and Telia BV of Sweden. Such investment will underpin the continuing competitiveness of Ireland as a location for services businesses depending on advanced telecommunications.

I will now return to the role of Government in enterprise development. I am concerned that the motion before the House sees no role for the State in helping companies to grow and to develop their competitive advantage.

The key issue here, which applies to all of the State's interaction with enterprise, is one of balance. Clearly, closed markets and protectionism are not the foundations of high living standards and long-term growth. Nor will an unfocused and overly generous grants regime foster innovation, entrepreneurship and jobs. Having said this, there remains a valid role for the State in industrial development, both in terms of promoting indigenous enterprise and in attracting foreign direct investment.

Over the past number of years we have been moving towards a more balanced approach which seeks to identify where the State can most effectively assist company development within the context of the overall enterprise environment. That balanced approach is demonstrably delivering results. For example, a particularly encouraging feature is the fact that the historical trend of net job losses in the indigenous sector has been reversed, with jobs in indigenous companies assisted by Forbairt growing by 4,700 net last year. This jobs growth has been accompanied by significant increases in output, which indicates an improvement in the underlying competitiveness of the indigenous sector.

Foreign owned companies have also been making a major contribution to Ireland, both in terms of the jobs generated and in other ways. In addition to the 7,300 new jobs created by foreign-owned companies last year, Forfás estimates that some £320 million in corporation tax was paid to the Exchequer by companies in the sector, and this does not include revenue returns from International Financial Services Centre companies. These financial returns, along with the £5 billion plus spent in the economy by overseas companies, have very positive knock-on benefits for indigenous manufacturing and services companies which are reflected in the overall job creation figures.

As I have said, these results have been achieved by a balanced approach which does not depend solely on the blunt instrument of capital grants. Science, technology and innovation is a case in point. My office is responsible for a comprehensive range of supports which address the research and development infrastructure, through the programmes in advanced technology; skills issues, through the Techstart and Techman programmes and direct grant supports via the measure one scheme, which helps companies offset the risks involved in undertaking research and development. These supports have helped create an environment in which business expenditure on research and development has risen from 0.47 per cent of GDP in 1987 to 1.02 per cent in 1995. This increase in spend has moved Ireland much closer to the research and development spend of other advancing small countries, such as Norway and Denmark, and is an essential component in the achievement of sustainable, competitive advantage.

Another example of the positive contribution made by Government is in the area of finance for enterprise. Initiatives, such as the business expansion scheme, the access to finance scheme and the recently introduced seed and venture measure have incentivised both private individuals and the financial institutions to provide much needed seed capital and equity funding for manufacturing and services enterprises. These initiatives, with the increased use of equity funding by Forbairt and SFADCo, are helping to create a culture in which the financial institutions become less risk averse and more receptive to funding enterprise, while companies for their part begin to develop a better appreciation of the disciplines and performance requirements which attach to such funds.

In conclusion, I would put it to the House that substantial and worthwhile advances have been made towards the creation of an environment which stimulates innovation, entrepreneurship and enterprise, and that tangible benefits are flowing from this in terms of increased employment and improved living standards. These benefits are, contrary to the motion before the House, fully appreciated. I would stress that they are benefits which have been achieved by a balanced approach which is based on a commitment to sound economic management, regulation to achieve free and fair competition and long-term investment in the productive capacity of the economy. This approach has been pursued in a way which acknowledges the strengths of the private markets but which also aims to identify where the market failures exist and moves to correct them. Increasingly, this is being done through partnership with the private sector rather than by competing with, or substituting for, private enterprise.

It would be naive to suggest that no more needs to be done. The essential nature of competitiveness is that it is a dynamic phenomenon. For example, we are only beginning to appreciate how the emergence of the information society will affect both enterprise and society generally. In addition, Economic and monetary union will further increase the competition Irish manufacturers experience within the domestic market while simultaneously improving the growth prospects of our most competitive enterprises. In other words, the key competitiveness issues which face us today may not be those which are at the forefront in three, five or ten years time.

It is for precisely this reason that my Department is actively working on the development of a competitiveness review mechanism. The new mechanism will involve the establishment of a national competitiveness council involving the State, the social partners and private enterprise as envisaged by Partnership 2000. The competitiveness review mechanism will ensure that we can build further on the achievements I have described and, critically, do so in a way which ensures that the benefits of improved competitiveness are felt throughout Irish society.

I compliment my colleague, Senator Quinn, for introducing this important motion. Its importance lies in the fact that it is to a large extent a philosophical and ethical notion to which he brings very considerable experience as a successful businessman and entrepreneur, so one must listen with great deference to what he says. I must hedge my bets on this one and I hope my friend and colleague, Senator Quinn, will not feel that I am paying him back for gallantly and graciously seconding my motion recently and then distancing himself as far as possible from its substance, and I will return to some of the matters I raised during that debate.

Listening to the Minister of State in his erudite but very ministerial way, I wondered where was the socialist fire which used rumble in that non-ministerial belly because it seemed a little dampened by all this economic material, a large portion of which went completely over my head. I deal in comparatively simple concepts, such as the battle between capitalism and socialism, and I must say I am still unashamedly a socialist, although I might well be a champagne or smoked salmon socialist because, as the Minister knows, nothing is too good for the workers.

I was amused to discover that the Government had tabled and then withdrawn an amendment; that showed a curious lack of the same kind of passion. The Government amendment read:

To delete all words after "Seanad Éireann" and substitute the following:

"supports the development of an environment which stimulates innovation, entrepreneurship and enterprise at all levels, and which fairly rewards those who contribute positively to this."

It is better to avoid a vote on theis kind of motion and simply discuss the ideas and allow the substance of the motion to pass into the record of the House. However, I would be very tempted to follow the wording of that amendment because I can agree completely with a notion that we should foster innovation, entrepreneurship and enterprise but I am a little concerned at the notion of some aspects of a completely open market because we then get down into a rather cruel and uncaring society.

I am not too worried about the taxi service in Dublin but then I own a car and I bicycle. A certain amount could be done by introducing further taxi licences and competition. I wish — although this is totally irrelevant to the debate — that they would rid O'Connell Street of taxis as it was a mistake to spoil that impressive walkway to the top of O'Connell Street by providing an indentation for a small number of taxis which could be put somewhere else.

I agree completely with Senator Quinn that a comparatively small number of licencees have cornered a market and reaped an undue advantage from the limitation of pub licences in Dublin and they are milking that advantage outrageously.

Senator Quinn referred to his visit to Russia. I have not been to Russia but I am interested in the situation there. I can understand some of what he feels about the state monopoly in supermarkets, that some faceless bureaucrat could decide that one shop is sufficient for 29,750 people and thereby imprison the customers. He is right to talk about the value of a customer-driven society. Anybody who has had the pleasure and privilege of visiting one of his emporia could not but remark on the success of this attitude and the rewards which customers gain from it.

However, I have some questions about the disintegration of the Soviet Union. I wonder if the introduction of capitalism in so marked a form in Russia has been entirely to the benefit of the population at large. If one went to Russia and asked ordinary people in the street of their experience, would it be so undilutedly blissful as we sometimes suppose? There may, indeed, be luxury goods in some of the shops but nobody can afford them except the western capitalists who are pouring in to pick on the corpse of that unfortunate state.

One of the biggest and most competitive growth industries in the former Soviet Union which has spread into many of the Baltic States is the rise of the Russian mafia in a terrifying and horrible manner, and that is not what people want. Civil servants are never sure of their pay and the army is mutinous because the State cannot guarantee its wages either. The poorest, weakest and most marginalised members of society in the former Soviet Union are now paying for the mistakes of their masters. The elderly are not receiving their pensions and things that were at least guaranteed under the grey and sometimes ghastly days of state socialism in the Soviet Union are no longer guaranteed. I do not applaud the fact that the weakest members of Russian society are being penalised.

Although there was much glee about the disintegration of the former Soviet Union, I felt at the time it would be a great mistake if the ideals of the October Revolution were entirely abandoned. I am naive enough to think that the simple formulation of the socialist creed "from each according to their talent to each according to their need" is a noble one and should be incorporated, if possible, into——

An Leas-Chathaoirleach

The Senator has one minute left.

Oh dear. What a pity because I wanted to have a smack at Rupert Murdoch, at Dunnes Stores — which shows you what happens when you have this kind of thing where they tie their unfortunate suppliers in — and at the loathsome Alan Clarke, who I was disgusted to see has managed to creep his way back into Westminster. He not only shafted his best friend but then followed it up by shafting his best friend's wife and their daughter. He then gloated about it in his bleating autobiography, which I read but am glad to say I did not pay for because I read it in a bookshop. I would not contribute to it. This is the man who is peddling arms all over the world so that people like the East Timorese could be exterminated and then justified it with reference to the open market economy.

I regret that by squandering my time I did not allow myself to deal with the really interesting experiment in Nicaragua which was extinguished by American intervention. A wonderful experiment was tried there of attempting to mix the ideas of capitalism and socialism. I believe that although socialism is in great difficulties and communism is in a state of disintegration, the day of unrestrained capital will come as well. I do not believe it is capable of solving all our problems. I will not, however, go quite so far as the Anglican cleric in London during the week who recommended theft from supermarkets in revenge for the extermination of the corner shop.

In conclusion, I commend Senator Quinn for his initiative in promoting this debate.

I thank all the speakers who contributed and particularly the Minister of State, Deputy Rabbitte. May I attempt to criticise the red herrings that tended to crop up? The first one was the confusion between competition and privatisation and the belief that in some form or other they have something to do with one another. That is one of the great red herrings. In this case, Senator Cregan spoke about health, electricity and water in Britain. I am such a believer in competition that I think we are now ripe and ready to accept it.

In recent years the Government has put into operation such things as a Competition Authority that the Minister of State referred to. I am opposed to monopolies and cartels. The purpose of the motion was to remind us as a nation to avoid monopolies and cartels no matter who owns them. As the Minister of State pointed out, I selected just four as examples.

We do not and should not impose cartels. I was impressed by the chairman of the Competition Authority who, a couple of weeks ago, said he did not see any reason why we should have licences for pubs. I do not think we should have licences for taxis and telephone services either. Finland has decided to deregulate telephones to the extent of saying that anybody can set up a telephone system, although they must contribute towards the telephone service up the side of the mountain. A clever European invention, if I may use that word, has put that operation in elsewhere. We do not need to create cartels and we should never create licences to restrict the number of people who may enter a trade. In so doing we will bring a huge benefit to the nation as a whole, which then becomes a customer driven competitive market.

I cannot understand why we could find any reason not to go in that direction, in spite of the words used here tonight. The red herrings concerned privatisation or, in the case of Senator O'Sullivan, who made a good point, unfettered capitalism. Those are lovely words. How can one defend it? Senator O'Sullivan then went on to talk about workers' rights, safety and hygiene legislation. Of course, we need legislation to protect those. This is to do with a number of companies competing in a market place where they must obey the law. That point applies to Senator Fahey's contribution also.

I want to concentrate on the benefits and results of competition in a marketplace where everybody must keep within the law. I am enthused about recent legislation and the fact that the chairman of the Competition Authority has voiced a similar opinion. Senator Cregan cited the example of airlines. Some 15 years ago two airlines were operating between Dublin and London. Both were State owned and they charged something like £239 for a return ticket. We then allowed competition into that market place and have now ended up with a number of different airlines which do not just compete on price. They also compete on quality, service, punctuality and choice of airports. That came about not solely because we accepted it with enthusiasm, but because Mr. Peter Sutherland as European Commissioner said that anybody who wishes to run an airline between two cities should have the right to do so without a licence as long as they meet safety and other criteria. Mr. Sutherland was an example of someone who imposed competition on people who did not want it.

What we need here is a similar attitude in everything we do. I am delighted to see RTÉ getting competition from Radio Ireland. I do not understand, however, why we must limit that by saying someone must have a licence to run a radio station. If you remain within the law in all other areas, why do you need licences for pubs, taxis, telephones and radio stations? Let us have competition with no cartels created by the State or monopolies created by the Dublin city authorities. On that basis we would have a much healthier and more economically viable customer driven economy and society.

I accept entirely the point made by Senator Lee. We probably have inherited this from a sense of historical insecurity. We should, therefore, be able to compete with one another nowadays and we should encourage competition. I am hoping this debate will remind the Government and ourselves as a nation that competition is in the interests of the citizens of this State. The more competition we can encourage in every area, the more likely we are to find a customer driven economy and society. That will be a better and healthier society but, of course — to return to Senator O'Sullivan's point — not unfettered. It needs the law. Many of those laws are now in place so we can allow the removal of all those cartels and monopolies to encourage competition in every area. We have the laws in place to ensure we do not break the standards that we as a nation have decided to insist upon.

Question put and agreed to.
Sitting suspended at 7.30 p.m. and resumed at 8 p.m.