Tuesday, 10 February 2004

Ceisteanna (49, 50, 51)

Joan Burton


120 Ms Burton asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the findings in the recent annual report of the National Competitiveness Council that Ireland is now one of the most expensive countries in the euro zone for consumer goods and among the most expensive for key utilities; the steps being taken to address these issues in view of the serious threat to the competitive position of Ireland; and if she will make a statement on the matter. [30080/03]

Amharc ar fhreagra

Joe Costello


151 Mr. Costello asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the findings of the recent report of the National Competitiveness Council that Ireland, along with Finland, is the most expensive country in the euro zone; the steps she intends to take arising from the report; and if she will make a statement on the matter. [3781/04]

Amharc ar fhreagra

Bernard J. Durkan


191 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she or her Department has identified the most serious obstacles to Irish competitiveness; and if she will make a statement on the matter. [4011/04]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Minister for Enterprise)

I propose to take Questions Nos. 120, 151 and 191 together.

At a meeting on 25 November 2003, the Government discussed the contents of the National Competitiveness Council's annual competitiveness report 2003, and the competitiveness challenge 2003. It was agreed that the Government would consider Ireland's competitiveness status every six months and that this discussion would also cover the recommendations in both National Competitiveness Council reports. The Government also agreed to set up a monitoring process to consider and track progress on the implementation of the council's recommendations. My Department is currently following up on this with a view to making a first report to the Government in June of this year.

The National Competitiveness Council stated in both reports that Ireland's immediate priority must be to slow the growth of prices and costs. The Government is committed to providing a positive business environment, which will enhance the competitiveness of the Irish economy. A business environment with low inflation will stabilise firms' costs and provide them with a solid competitive business environment from which they can successfully compete on both domestic and international markets. In budget 2004, the Government demonstrated that keeping inflation low was a key priority. The Government has avoided inflation-fuelling taxes in line with the requests of the National Competitiveness Council.

The most recent inflation figures from the consumer price index show an inflation rate of 1.9% in December 2003. This is significantly lower than the 5.1% rate of increase recorded in February 2003. During 2003 prices for consumer goods such as clothing and footwear decreased by 2.8% and key utilities such as housing, water, electricity, gas and other fuels decreased by 3%. However, we cannot afford to become complacent as many of our EU partners and other competitors are experiencing similar downward inflationary trends. The Government is committed to continuing to reduce the inflation differential between Irish and euro area inflation, which currently stands at 0.9%, the lowest level in more than four years.

A key element of the social partnership programme, Sustaining Progress, was the establishment of an anti-inflation initiative. As part of this initiative a group was created to examine ways of addressing domestic inflationary pressures, including inadequate competition in certain sectors, excessive pricing and insurance costs. The group published its first progress report in November 2003. The report stated that to exert downward pressure on inflation there is a need to control public expenditure, increase competition, support small business and increase consumer price awareness. In response to these recommendations, the Government agreed new management and control arrangements designed to keep public expenditure on target. The resources of the Competition Authority have been substantially increased to combat anti-competitive practice in the economy. Enterprise Ireland has introduced a competitiveness fund for companies, including SMEs, to assist them in increasing their productivity. The Government also earmarked €500,000 for the information campaign, Price Awareness Pays, which was undertaken by the Office of the Director of Consumer Affairs on behalf of the anti-inflation group.

The most important and sustainable method for reducing costs and ensuring they are maintained at an acceptable level is to facilitate increased competition in all sectors of the economy. We can not afford to have sheltered sectors of the Irish economy immune from price competition. The Government is committed to encouraging competition in all sectors to ensure goods and services are provided at an efficient and affordable price thereby enhancing Ireland's competitiveness, providing a benign business environment and enhancing the interests of consumers.