One must be careful dealing with this issue. I have no problem with the Bill and I can only echo other speakers by asking why it is being given priority when there are other areas where regulation is required on matters which have a far more immediate impact on the lives of ordinary people. Like other Members, I refer to taxis, licensing laws, etc., where a profound shake-up is required, not merely a tinkering at the edges. I note that the new programme of the Government parties does not commit itself to deregulating taxis but rather makes a commitment to progressively increasing the number of taxis available. Members of the public are sick of such progressive increases, particularly if the number of taxis available does not rise accordingly. I am left to wonder about priorities.
I have no difficulty with what is being attempted in the Bill. However, as Senators Ross and O'Toole stated, perhaps 80 per cent of the market is dominated and controlled by Cement Roadstone Holdings. Even if there is one other competitor in the market the tendency will not be to reduce price, it will be to fix price. That happened in the mortgage market until the Bank of Scotland commenced business here and threat ened the position of the five or six players in that market. Until an outside operator genuinely interested in competing entered the Irish housing market, the players in that market conspired, de facto– I do not mean this in a legal sense – to extract extra money from mortgage holders.
While I have no difficulty with the ending of the principle of seeking a licence to build a cement plant, I have a considerable problem with not putting in place a regulatory regime to ensure that a cosy 80-20 split is not arrived at between the current provider and another provider, based on a reasonable guarantee that they will not be too awkward with each other. There are significant examples of the existence of cosy arrangements. The classic example can be given by the Tánaiste's colleague, the Minister for Agriculture, Food and Rural Development, Deputy Joe Walsh, who can tell her all about tenders for the supply of milk to a psychiatric hospital in Cork. When the Minister was not in Government his company dared to challenge a long established monopoly and saved the Southern Health Board £40,000 per year on one hospital's milk bill. Allegedly competitive tendering had been going on for years between two allegedly independent companies which miraculously tendered the same price for liquid milk for that hospital every year.
If that could be done between two milk producers what can be done if we have only two cement producers? You cannot have a large number of cement producers in a State this small; you can import. The scale required to make cement production viable is enormous. The tendency of big business is not to compete; on that scale where you do not have multiple providers the tendency is to fix prices. For the past 60 years one of the pursuits of the United States Government has been its pursuit of large dominant forces in the US market. Over the years that government learned that large scale market players attempted to fix prices. What device does the Minister have to ensure that a de facto cosy cartel will not replace the existing monopoly?
We should consider the complexity of the job that the telecommunications regulator has to do to ensure that Eircom, the dominant market force, does not make life extremely difficult for new participants in the marketplace. We should also consider the succession of arguments and litigation. In spite of vigorous competition from a second participant in the mobile telephone market, no rational person can give a rational analysis which says that one is cheaper than another. Detailed analytical reports can be seen in consumer magazines and business pages of newspapers but at the end of those reports it will say that it is a matter for the consumer to decide. No one can tell you that one is cheaper than another. I do not understand why, if we have that level of regulation, we still have no evidence of price competition. With regard to mobile telephone call rates, I know they have been reduced but their cost would have been reduced anyway because of changes in technology. The profits that would have been generated if people were allowed charge the old prices would have been so obscene that the companies would have been under enormous pressure with or without competition.
Given the overheated state of the building industry here and of the construction industry in general, simply abolishing the regulation and allowing a second participant – and that is the most there can be – will not immediately or at all guarantee price competition. That is not the way these people work. It is not the way CRH has operated in the past. As a number of my colleagues have said, it has been a ruthless predator in terms of eliminating possibilities for competition. John Kenneth Galbraith always says that there are very few segments of the market which have genuine competition. There is a degree of competition on the margins but unless new hungry participants continuously enter a marketplace, practices evolve which amount to a form of cartel.
This has happened in the banking system and the licensed trade. There is no genuine price competition in the licensed trade because there are de facto, convenient, cosy arrangements. You know what the margins will be. You know not one pub in Dublin will charge below a certain price because it is too much trouble to do so and the other participants will do a little squeezing through their trade associations. If that is the case in Dublin where there is a degree of under-provision of space for new entrants into the marketplace, what will it be like in this case when the new entrant will have the huge initial capital costs of a new investment? If it has to pay for that, it will not want to reduce the price of cement at a stage when it needs to pay back a substantial investment. Therefore, we will get a little competition and an awful lot of price fixing.
I invite the Minister to encourage the Competition Authority to keep a close eye on this area, though I am not persuaded by the degree to which this will happen. Allowing one of our two gargantuan uncompetitive banks to buy a small bank which was providing a modicum of competition, thereby reducing the choice available to consumers in the financial services areas, is not good evidence of a real commitment to competition. It would be better to keep companies like ICC in State hands than reduce competition, particularly when it will not benefit consumers and shareholders. Perhaps it will be of benefit to shareholders but we are supposed to be helping consumers.
I have no problems with the deregulation of this industry. I assume the Environmental Protection Agency will deal with Senator Costello's concerns. I have considerable respect for the EPA and I say that knowing who introduced the legislation in this House to set up the EPA. I have no concern on that issue. However, I have a concern that there will be no more than pretend competition, as there is to a considerable extent in the banking sector, unless the Minister encourages the Competition Authority to take a vigorous role in ensuring that there is real competition.
Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney): I thank Members for their contributions. In Ireland we are often suspicious, perhaps because we are so small, as to why people do certain things or why certain things happen. Senator Ross felt that this legislation was being introduced due to pressure from the EU but I will dissuade him of that. When I took up office in the Department of Enterprise, Trade and Employment over two years ago I was given a very large brief, which is customary for most Ministers. Departmental officials usually spend the time between an election and the formation of a new Government putting together a brief for a new Minister. When I read my brief over the summer I saw a reference to Cement Acts. Up to then I had been unaware that a licence was required to manufacture cement. I spoke to Secretary General of my Department and said we must repeal the Cement Acts. Even though this Bill is short it has taken until now for it to get through the legislative process. This Bill was not a priority for the Parliamentary Draftsman for a host of reasons. That is why it happened.
In 1999 no one can say that any Minister, no matter who they are, should be able to decide who can make cement, where they make it and how they make it. Therefore, I take issue with much of what Senator Costello said. He was worried by the vacuum that will be left now and who will control or licence the manufacture of cement. The Acts we are repealing predate the Planning Acts. When this legislation was introduced we had no planning legislation at all. Since then we have had comprehensive planning requirements, legislation and the EPA. The manufacturer of cement is required to get a licence from the EPA and must also go through the full rigours of the planning process.
Six or eight months ago a lobbyist came to see me on behalf of a possible new entrant into this market. He asked for my advice on how the company would deal with so many planning issues. In jest I said it would have to get a licence from me before it could manufacture cement. Even though this person was an expert he was taken aback that a licence would be required. I am not sure many people were aware of the licence requirement.
It is extraordinary that only one licence was granted to one company. There is an irony in what Senator Ross said, that the only company that ever got a licence to manufacture cement ran an unlicensed bank from its headquarters while Mr. Traynor was chairman of the company. A licence is certainly required for a bank. From his and his clients' point of view, he ran a very successful bank at that time.
Comments were made about large companies and I share the concerns expressed. It is often assumed that the national interest is the same as the interest of a large company. There have been many examples in recent years of a particular company seeking favours which were granted and then justified on the basis that it was in the national interest. That is a dangerous attitude.
In an economy this size we need competition more than anything else. Until the earlier part of this decade there was no competition legislation. In 1990 the Minister for Industry and Commerce introduced the competition Acts and set up the Competition Authority and my predecessor, Deputy Richard Bruton, gave that authority powers of enforcement. Those powers are working. I recently extended the resources available to the authority and appointed a new member to give it greater capacity. That authority has taken on some of the most powerful economic interests in the State, interests involved in price fixing, collusion and abuse of dominant position. The authority has the clout to act independently or following a complaint from a competitor. A number of prosecutions dealing with those issues are pending.
We must be more proactive in identifying areas which need regulatory reform. Senator Quinn said there is a tendency to enact legislation which remains on the Statute Book when it has become redundant. We must go further. The new Attorney General intends to ensure that we codify and consolidate legislation so people can see clearly as we amend it what the law is in a particular area. This is done in other countries but it is not generally done here, except in Finance Acts. It is his intention that will happen but it will take a long time to reach a stage where we will have a fully codified set of laws. If we were to do that, gaps such as the one with which we are dealing here would come to light more readily than would be the case otherwise. I am certain that many people in the House would not have known of this licensing requirement.
We hope that there will be new entrants into the market. Regulation is often used as an excuse to block market entry. Taxis were referred to. Taxis were not regulated until the late 1970s. They were regulated with a view to improving standards, but the effect of the regulation was to deny market entry to others. Senator Ryan referred to the review of the programme for Government. There are two parties in Government subscribe to the view that we should not regulate market entry for taxis, we should only regulate standards and quality. We should not regulate pubs either. Until I am in a position to achieve an overall majority my views will not win every battle. I am pleased, however, that between now and Christmas the number of taxis in Dublin will increase substantially. This power was devolved to the local authority and, unfortunately, sometimes when power is devolved the result is that local authority members do not have the capacity to stand up to vested interests. That is a comment which applies to all parties. Regulation should apply to quality and standards and the market, within reason, should regulate itself.
CRH has 80 per cent of the Irish market. A further 15 per cent is supplied by Seán Quinn of Derrylinn in County Fermanagh, who has now received planning approval to move to Ballyconnell in County Cavan, where there will be a cement manufacturing facility. The final 5 per cent is imported. So little is imported because cement is a bulk product. The Lagan Group has also applied for planning permission to build a manufacturing facility in Clonard in County Meath.
Harrington's was refused permission for a facility in County Mayo for environmental reasons, although from a market point of view this was unfortunate. That company has now withdrawn its application.
This small gesture will encourage new entrants to the market, increase competition and reduce prices. In 1997 Ireland had the fifth highest cement prices in Europe. There is a huge link between competition, price and value for money.
Senator Costello was concerned about unregulated industries. Environmental regulations are clearly necessary and planning laws cover this and most other areas of activity. The media is one of the most powerful industries but, while there is a need for a ministerial licence for two newspapers to merge, there is no need for a ministerial licence to print a newspaper. The two cannot be confused. We also need competition legislation which can be enforced on an even-handed basis and planning and environmental protection laws to deal with carbon dioxide emissions and similar requirements. We should also have standards-related regulation where appropriate.
Senator Ryan will see in the programme for Government that it is the intention to establish a review group to look at competition and regulation of the economy. Some of the things we did in the past have acted as a barrier to market entry. Since the early 1990s pharmacies have been licensed, not in terms of the necessary qualifications, but in terms of the distance between pharmacies. We must look at all of these issues to ensure that the new regulations do not prevent competition. If a bank or telecommunications company wants to establish an Internet service, it must go to several regulatory bodies to get approval, and not all these bodies would have the same perspective. We need to stand back and ensure that regulation and enforcement of competition will not cause problems in the future.
I was not aware of the monopoly in the explosives industry but I will come back to Senator Ross on this subject. He also asked why Roadstone was allowed to take over Irish Cement. Until the 1970s there was no legislation dealing with monopolies and mergers. There would not have been any ministerial power in the years in question to deal with a merger or acquisition.
The cement certification scheme was related to standards, not company certification in the sense Senator Ross meant. It dealt with the quality of the product.
The Moriarty tribunal is already looking at the issue raised by Senator Costello. Counsel for the Attorney General, representing the public interest, made a submission two weeks ago. The Attorney General consulted all party leaders and they agreed the tribunal should look at that issue. That is the most appropriate way to deal with that matter.
I do not know how much Structural Funding CRH received – whether it was Deputy Albert Reynolds's £8 billion or Deputy Spring's somewhat smaller sum. I am not in a position to say who got what.
