Wednesday, 29 June 2005
Seanad Eireann Debate
—welcomes the publication of the report of the consumer strategy group and is in agreement with the group that in order to ensure the needs of the modern consumer are met, it is essential that a new agency with an expanded remit be established;
—supports the establishment of the board of the new national consumer agency on an interim basis until such time as the necessary legislation can be enacted to establish the agency on a statutory footing;
—believes the new agency will act as a forceful advocate for the consumer and that it will have the necessary powers, functions and support to challenge vested interests and to ensure that the consumers voice is heard;
—notes the comprehensive nature of the entire consumer strategy group report which contains over 30 separate recommendations and welcomes the decision to establish a high level interdepartmental committee to examine all the group’s recommendations and to report back to Government with a detailed implementation plan within three months;
—and urges the Minister to continue to bring forward initiatives in the area of consumer awareness, advocacy and education which will help to demonstrate to consumers that further progress can be achieved.
Mr. Leyden: When I conclude I presume there will be somebody here to second the motion. We will allay the fears of Senator Hayes. I know he is very concerned about this matter but we are well aware of the procedures here and we intend to adopt them.
I recognise the publication of the report of the consumer strategy group entitled Making Consumers Count: A New Direction for Irish Consumers. I welcome the Minister, Deputy Martin, to the House and wish him well in his extensive Ministry. It is an enormous responsibility. Having served in the Department of Enterprise, Trade and Employment as Minister of State with responsibility for trade I am aware of his overall responsibility and the enormous effort involved with Enterprise Ireland, the IDA and all the other aspects of trade and regulations. I congratulate the Minister on his new Employment Permits Bill, which is a worthwhile proposal.
The report of the consumer strategy group is a milestone in Irish public policy. It is the first inclusive report written entirely from the consumer’s point of view. Current consumer policy was not effective in meeting the needs of the modern consumer. Therefore, it is essential a new agency with an expanded remit be established.
Fianna Fáil is committed to making consumers count, so the change is in their pockets after purchasing goods. We are committed to making consumers count just how much value for money they are getting. This is evident from the establishment of the consumer strategy group by the Tánaiste and then Minister for Enterprise, Trade and Employment, Deputy Harney, in March 2004, in response to widespread public concern and reaction to what was termed rip-off Ireland.
The brief of the consumer strategy group was to make a proposal for development of a national consumer strategy for Ireland. At that stage, I also launched a name and shame campaign because I was concerned a serious problem in regard to prices existed, an issue I raised on numerous occasions in the House. The consumer strategy group in its report states that the Irish consumer needs to be rationalised and given support and encouragement to trigger a cycle in which well-informed consumers are not only more willing to spend their money but more likely to favour progressive suppliers who offer more choice, better quality, superior services and innovative products and services at fair prices.
Enhancing the position of consumers within society is not just a matter of lowering prices. There should be a marriage of strong legislation and informed consumers for policy to work. Consumer power in Ireland is currently weak. It is widely accepted that informed and empowered consumers are a powerful social and economic force. This Government policy should strengthen and empower the consumer, enabling individuals to make better choices and be better able to obtain their rights.
Ireland’s social partnership model provides an additional channel through which different groups can influence a programme for economic and social development. However, there is no direct consumer input into the social partnership process. The Government has, therefore, taken the steps to ensure consumers have a direct input into policy formulation and into decisions that have a major consumer impact. This is clearly evidenced by the decision of the Minister to engage in a public consultation process on the future of the groceries order.
The members of the Joint Committee on Enterprise and Small Business have already considered the groceries order. We are deeply concerned with any proposals to remove the ban on below cost selling, a matter the Minister is also considering. The committee has had numerous meetings, some attended by the Minister. We urge caution in regard to the removal of the order because it has proved very successful and its removal would be dangerous.
When the committee discussed the issue last week, the Chairman stated he was aware of a multiple selling items at more than 20% below cost. At that meeting, I stated I was concerned that the consumer strategy group was another semi-State organisation. I appeal to the Minister to make the group effective and efficient in its work. In the past we have tended to consolidate and amalgamate semi-State organisations. In that regard, this organisation is a new departure.
I hope the Minister will indicate to the House the projected cost of the consumer strategy group and the benefits that will accrue to the economy due to its establishment. A voluntary organisation is currently in operation, the Consumers Association of Ireland, which is neither well funded nor supported. I understand from my dealings with it that it is a small organisation, which has worked exceedingly hard in difficult circumstances but has not received the support of Irish consumers. Its funding is approximately €60,000 per annum. The Minister and his officials might consider the matter. If he cannot provide the information today, he might do so in the future. While the Consumers Association of Ireland was well-intentioned, it was not in a position to deliver a strong consumer organisation for the State or the consumer. In a sense, I understand the Minister’s rationale in establishing the consumer strategy group.
The Joint Committee on Enterprise and Small Business met Ms Ann Fitzgerald, chairperson of the consumer strategy group, on Wednesday, 22 June last. The committee was concerned with certain aspects of her report, including the compilation of the basket of goods used as a comparison to, in a sense, question costs in this economy. We questioned the inclusion in that basket of items such as an electric toothbrush, Bacardi rum and other items. From a press statement reported in The Irish Times on 23 June last, I believe Ms Fitzgerald is now having second thoughts on the recommendations she made to the Minister in this regard. We should compare like with like. This economy has a minimum wage of some €7.65 compared to one of approximately €3.50 in Spain. It is not fair to compare these. The article in The Irish Times stated: “The chairwoman of the Consumer Strategy Group (CSG) has called for a compromise on the question of abolishing the Groceries Order to give both consumers and retailers a ‘fair deal’.” I welcome that statement.
The Minister comes to his Department with a fresh approach. While he may feel it is of no benefit to consumers to retain the groceries order, the general consensus of the Joint Committee of Enterprise and Small Business was that we should retain the order as a cornerstone of the industry. We see no benefit in tampering with the order, which has served the consumer well. To remove it might sound the death knell for small rural shops, which are under major threat at present.
Concern about the order was expressed by the Minister for the Environment, Heritage and Local Government, Deputy Roche, with regard to the size of hardware stores. However, that did not apply to groceries. The Minister might indicate that the present structure and size of stores are generally accepted in the State and have proven quite successful. There is no reason to increase the size of stores, a point the Minister should consider.
Small shops in rural areas are under pressure and have been so for a long time. In my area of County Roscommon, Donamon has only a small shop left. The post office is gone and two other shops are closing. Small shops in places such as Ballinaheglish are gone and many rural areas are devoid of small shops. If the Minister removes the order at this time, it will signal the end of stores which have been successful in fighting competition from the multinationals.
Roscommon town is an interesting example of what is happening in the grocery industry. Tesco has arrived in the town and is being followed by Dunnes Stores, which will probably be followed by Aldi and Lidl. It is undoubted that this is a boost to the town and has created much-needed employment, as well as giving consumers choice. Where consumers were travelling to Athlone, Longford and Galway, they are now shopping in the town and customers are being attracted from the surrounding areas. To my knowledge, this has not to date caused any closures in the locality and local shops are quite happy to compete with those organisations provided the groceries order is retained.
The Minister is establishing the consumer strategy group on a non-statutory basis but a statutory framework will be provided in due course. The combined wisdom of the Joint Committee on Enterprise and Small Business believed that the groceries order should be retained. The members had no vested interests, other than the interests of consumers and those in rural areas. If the Minister changes the current position, it will be to the detriment of small businesses. The national consumer agency will act as a powerful resource for consumers and as a strong voice on their behalf. It will have ready access to information on goods and services, and on prices and quality.
Mr. Hanafin: I second the motion. The consumer strategy group is very important and I commend the Minister on his work in this regard. This agency ensures that, for the first time, the interests of consumers will be brought to the forefront of national and local decision-making in Ireland. The Minister announced that the board of the consumer strategy agency would be established immediately on an interim basis, until the necessary legislation could be enacted to establish it on a statutory footing. The interim board is chaired by Ann Fitzgerald, CEO of the Irish Association of Investment Managers, who also chairs the consumer strategy group. Membership also included the existing Director of Consumer Affairs, Ms Carmel Foley, whose powers and functions are to be incorporated into the new agency. Paying tribute to the contributions of successive directors of consumer affairs, the Minister stated:
I reiterate and support the words of the Minister. Other members of the interim board who were announced subsequent to the launch of the consumer strategy group will add significantly to the work done. The Minister stated that he was “determined that the new agency will act as a forceful advocate for the consumer and that it will have the necessary powers, functions and support to challenge vested interests and to ensure that the consumer’s voice is heard”. In acknowledging that legislation to formally establish the new agency could not be produced overnight the Minister stated it is important that the momentum on the consumer strategy group be maintained and he expects the interim board to immediately begin planning for the final structure and operations of the new consumer agency.
The Minister expects that the interim board would carry out some initial work in the area of consumer awareness, advocacy and education which would help to demonstrate to consumers that real change is under way. We should also applaud the strategy group for the comprehensive nature of its report. The report contains over 30 separate recommendations and clearly demonstrates the extent to which the consumers’ interests are entwined with every facet of economic, political and social life. The extent of the consumer strategy group recommendations required a co-ordinated response and the Minister established a high level interdepartmental committee to examine all the group’s recommendations.
On the groceries order, the Minister said “the consumer strategy group has recommended that the order be revoked in its entirety. However, the report acknowledges that there are strong arguments to be made on either side of the debate”. I have given an opinion on the groceries order, namely, that if there is any change it should assist the lower paid. In other words, it should apply to foods that are in every basket. Naturally this will assist those who earn €100,000 per year as well as those on the minimum wage. The same is true of social welfare payments, which assist those who need them, even if there is also abuse of the system. Any changes in the groceries order should specifically include food items from which the less well-off can benefit. If supermarkets wish to use these as loss leaders, so be it. If we must make changes it must be with the purpose of assisting the less well-off.
The position in Ireland in 2005 is as follows. Two years ago the Government promised to keep down personal and business taxes in order to strengthen and maintain the competitive position of the Irish economy. In the following two years it implemented 34 stealth tax increases which cost the average family €1,800 per year. The average tax contribution per household last year was up €2,800.
Between 2001 and 2002, Ireland overtook the UK and Sweden to become the third most expensive country in the EU for consumer goods and services. By 2003 Ireland was almost on a par with Finland as the most expensive country within the euro zone, both countries being significantly more expensive than the next group of euro zone countries. Dublin is now the 21st most expensive city in the world. The capital is more expensive than Los Angeles, Paris, Miami, Singapore, Honolulu, Vienna, Helsinki and Abu Dhabi. Dublin is the fourth most expensive capital in the EU, behind only London, Paris and Copenhagen.
Ireland has gone from fourth in 2000 to 30th this year in the World Economic Forum’s global competitiveness report, due mainly to the Government’s failure to control prices. The National Competitiveness Council states Irish prices rose 22% more than those in other EU countries in the years 1999-2003. Economic consultants Compecon state the lack of competition in the banking sector is costing small business €500 million. The National Competitiveness Council states in its 2004 annual report that the need to recover cost competitiveness is crucial to the country’s medium-term economic future.
lreland came 14th of 15 countries in terms of broadband penetration in a survey by the European Competitive Telecommunications Association. Ireland has only 63,610 broadband telephone lines while Denmark, a country of similar size, has 839,170. It is against this background that the Fianna Fáil Members have decided to pat themselves on the back and congratulate the Minister on commissioning a report. He is not being congratulated for doing anything, just for commissioning a report. Let us get real here.
The findings of the consumer strategy group and the recent publication of the Investment Funds, Companies and Miscellaneous Provisions Bill, which will increase fines for breaches of consumer law, show that some in Government are finally listening to what Fine Gael has been saying for some time. However, it is a great shame that it has taken this long for the Government to take an interest in the plight of consumers.
In the Dáil last November, it voted down Fine Gael’s Consumer Rights Enforcer Bill which the consumer strategy group now appears to be recommending. At the time, Minister of State at the Department of Enterprise, Trade and Employment, Deputy Tony Killeen, referred to “comprehensive measures and policies already in place and envisaged, both domestically and internationally, to protect and represent consumer interests” and instructed Fianna Fáil and Progressive Democrat Deputies to vote down our proposals. Our Bill would also have increased fines for breaches of consumer law, such as failing to display proper price lists, which are far too low at present. The Government should now move to adopt Fine Gael’s entire agenda to ensure consumers get the voice they need, a consumers’ rights enforcer, increases in penalties across the board, consumer representation at social partnership talks, the removal of local price cartels through action by local authorities, regular price league tables to give them information needed to make an informed choice, and an end to stealth taxes that have done so much to create an image of Ireland as overly expensive. However, given the Government’s reluctance to act on our Bill before Christmas, I strongly suspect the consumer strategy group’s recently published report will gather dust.
I regret the decision not to appoint a representative of the Consumers Association of Ireland to the interim board of the national consumer agency. This omission implies that none of the association’s good work has been recognised.
Senator Leyden referred to last week’s meeting of the Joint Committee on Enterprise and Small Business. That meeting established that there is a strong feeling that the analysis by the consumer strategy group was deeply flawed. The report failed to provide any analysis of food price inflation, which undermines its conclusions. The prices of internationally branded products were incorrect because of the inclusion of products such as Bacardi rum and electric toothbrushes. Senator Leyden’s annoyance in this regard was quite explosive. The price comparison in the report did not take excise duty into account.
Food prices at retail level are falling. Since 1994, inflation on goods not covered in the groceries order is 15% higher than on goods covered by the ban. The CSG report stated that France had announced that it would remove its ban on below-cost selling, but this is not the case according to what we heard last week from Mr. Ciaran Fitzgerald of IBEC. Prices are higher in Ireland because costs are higher here. Pay costs have increased at a far higher rate than equivalent rates for the rest of the European Union. These costs must be tackled if the price of goods is to fall.
The groceries order stops large retailers pricing smaller players out of the market before upping prices. Predatory pricing campaigns will lead to the closure of smaller entities. Britain, as we know, does not have a ban on below-cost selling and as a result of predatory pricing there, 42% of its villages no longer have a local shop. The abolition of the groceries order will give more power to the larger retailers and enable them to squeeze the smaller shops out of the market and put a tighter squeeze on food producers. We would not want to see our producers abused if this were to happen here. The removal of the order would threaten thousands of jobs in the food producing sector. Additional jobs in servicing the food sector and in farming would also be seriously affected. At stake is a potential €12 billion shift in the balance of payments.
There was no evidence in the report of the consumer strategy group that abolishing the ban would bring about a sustained level of lower prices. It was conceded at the committee meeting that meat, fruit and vegetable products, which are not covered by the order, are rising at a higher rate than groceries order goods. The groceries order has not prevented Aldi, Lidl, Tesco or anyone else from competing in the Irish market. Last week’s committee meeting exposed the flawed thinking and analysis with regard to the conclusions reached in the CSG report.
The motion put forward tonight is somewhat arrogant. No consumers will thank the Government for commissioning a report. Neither will they thank the Senators on the Government side of the House for droning on about it. It is time to act.
Mr. J. Phelan: I second the amendment. The usual nature of a Government motion on Private Members’ time is to be self-congratulatory, but tonight’s motion takes the biscuit. If the first paragraph were published in any national media, the jaws of the public would drop as low as the ground. The public would be amazed that the Seanad, after eight years of a Fianna Fáil-Progressive Democrats Government, would welcome the publication of a report on consumer awareness. If that is the level at which the Government is tackling the issue, it is completely out of touch with the reality of the costs faced by households, businesses and consumers in general.
I could, possibly, be persuaded to agree with some of the points made in the motion, but the general tone of welcome for a report is pathetic. This Government is continually one step away from making progress because it is always moving towards another report. One of the points of the motion urges the House to welcome the fact that a high level implementation committee will be set up that will report back to Government within the next three months. Therefore, we must wait another three months for a further report to see whether the recommendations of the group that was set up will be put in place and before action is taken. This is pathetic.
The main reason I find the motion somewhat strange and disturbing is that it welcomes and supports the establishment of the board of the new national consumer agency. I cannot understand why the board is being established, but everything else is being left until later. Why is it that the quango that will be packed with the usual suspects will be up and running first, whether for just three or six months? It will float along on its own before the necessary regulations, legislation or powers necessary for successful enforcement by the agency are introduced.
This Government has been in office for eight years. I do not want to single out the Minister as he is relatively new in his position as Minister for Enterprise, Trade and Employment, but he sat around the Cabinet table with his predecessor who held his portfolio for seven years, but did virtually nothing for consumers. Her advice to them was to shop around. She may feel she got away with that, but, to borrow a phrase, the people are waiting in the long grass for the next opportunity. We will have to wait and see what happens when the opportunity comes.
My colleague, Senator Coghlan, outlined the different stealth taxes and increased costs for which this Government is responsible. I will not rehash that list. The amount is substantial. Over €2,000 in extra taxes were collected from every household in the country last year as a direct result of Government policy. If this Minister is to do something during his term in office, he should usefully address some of the charges that have been introduced. They affect a variety of areas. Local authority charges such as development charges directly impact on people trying to provide themselves with a home and have a further detrimental effect on the cost of housing. As my colleague pointed out, Dublin and Ireland are among the most expensive places to live in the world. It is unacceptable that at this point in time we are waiting on the publication of another report before the Government will take any definitive action in the area of increased charges.
ISME recently conducted a survey of its members. One result of the survey was to show the abject failure of the Government to protect our international competitiveness thereby placing approximately 35,000 small firm jobs in danger. The same survey showed that most small business people consider the Government acts as a regulator with regard to small business rather than a facilitator. Mr. Jim Power, an often quoted individual on economic issues, said recently:
There have been some improvements in that regard in recent years, but it is clear from today’s media reports about the projected cost over-runs in respect of an infrastructural project in Limerick city that a great deal remains to be done. It is difficult for Ministers and politicians to tell the public to “shop around”, to use the Tánaiste’s phrase, when Government agencies and bodies often fail to make the best use of public resources. It seems that the contractor in the Limerick case will have to be given substantial compensation from central or local government. There is a great deal of room of improvement in this regard.
The Minister is aware that my colleague, Deputy Hogan, has been highlighting this issue for a number of years. He launched a Fine Gael website, www.ripoff.ie, as part of his campaign. The Government denied the existence of rip-off Ireland for the first couple of years of the campaign. A Minister said the same thing recently. The reality for most people is that rip-off Ireland very firmly exists. People are talking about it tonight almost as much as they are talking about the fine evening we are having. I would like to give a couple of examples of rip-off Ireland before I conclude. A consumer was charged almost €19 for a small organic chicken in a local supermarket.
Mr. J. Phelan: I think it is too high. A new homeowner who e-mailed www.ripoff.ie complained that the builder of the house asked for €70 to install a doorbell after he had paid the actual cost of the house in the first place. I could give numerous other examples, but I do not wish to get bogged down.
We need to do more than back-slapping. I am conscious that the Minister, Deputy Martin, has not been in his post for very long. It is time for action — it is not just about appointing boards or asking for further reports to be commissioned. The Minister can carve out a bit of a niche for himself on this issue by tackling it head-on. There is genuine and real concern in this regard. We can all give examples of people being ripped off on a daily basis in this country.
Mr. Martin: I thank Senators for their contributions to this debate so far. I thank Senator Leyden for moving the motion and Senator Hanafin for seconding it. I also thank Senators Coghlan and John Paul Phelan for their contributions. It is interesting that a congratulatory motion has evoked such a negative response. Some people are fed up of the overly condemnatory motions which have been part and parcel of adversarial politics for a long time.
Mr. Martin: One could argue about the futility of such motions. All Senators should welcome the opportunity the motion before the House has given them to discuss consumer issues. Before I speak about the details of the proposed consumer agency, I would like to introduce a sense of perspective to this debate. Senator John Paul Phelan spoke about the “abject failure of the Government”. The bottom line is that the economy has been powering ahead. It has been transformed over the last decade. Those who come to this country consistently comment on the Government’s significant pro-business and pro-enterprise attitude, which has been maintained over a period of time. Such people compare our attitude favourably to that of other governments in Europe. They have spoken about the agile nature of our systems and their responsiveness to the enterprise and business agenda. Over 450,000 additional jobs have been created since 1997.
Mr. Martin: This country’s unemployment rate has decreased to 4.2%, based on the number of people on the live register. That is action, not procrastination. It is not the case that we have been waiting for reports — we have been taking action. There are more people in work than ever before in the history of the State.
Mr. Martin: We need to introduce a sense of perspective to this debate. I acknowledge that wages have increased, as Senator Coghlan said, as we have moved into a high-value economy. We have signed up to social partnership, about which various people have different views. I know that Fine Gael has big problems with social partnership — it opposed benchmarking, for example.
Mr. Martin: That is fair enough. Fine Gael is entitled to its position on such matters, but it cannot play both sides of the fence, as it is increasingly attempting to do. Its key point relates to charges. I would be the first to acknowledge that difficulties are being caused by high electricity, utilities and energy charges. Such costs are out of line with those being charged in our competitors abroad, particularly in the UK. The Senators opposite need to bear in mind that they control a significant number of local authorities. They have been boasting about that for some time.
Mr. Martin: They have not introduced a development charge, or whatever one likes to call it. One can talk about macro-policy all one likes, but I know from my experience as a former member of a local authority that the instinct of certain parties on local authorities — I refer to parties with which Senator Phelan’s party is anxious to coalesce — has always been to increase expenditure. They have never voted for a cut in local authority expenditure. They keep shouting and roaring for services here and there, but they have never made tough decisions on local authorities. Such decisions have always been left to the current Government parties.
Mr. Martin: Many businesses throughout the country are keen to ensure that they are not disproportionately hammered in terms of either the commercial rate or other charges, which can be seen as a soft options by members of local authorities. As Minister for Enterprise, Trade and Employment, I have travelled the country to meet various interested parties. I am aware that there are strong views. If Senators from every political party are sincere about what has been said in the House this evening, they are obliged to get the message across at local level, as I have been doing.
The consumer strategy group was appointed by the Tánaiste in March 2004 to advise and make recommendations for the development of a national consumer policy strategy. It is important that we should have an in-depth and informed perspective on this matter. The catalyst for the establishment of the group was the increase in concern about the core issue, which is the position of the consumer in the decision-making process in this country. The group considered whether Irish consumers are getting a fair deal. The group’s report, which was published on 18 May last, contains over 30 recommendations relating to a variety of Departments and State agencies. It covers practically every facet of consumer activity. The motion rightly notes the comprehensive nature of the group’s report. I wish to express my gratitude to the members of the group for their work. In particular, I thank its chairperson, Ms Ann Fitzgerald, for her enormous contribution.
As I have said, the question of whether Irish consumers are getting a fair deal has been the subject of much recent debate. Those who have read the report of the consumer strategy group are aware that on the basis of its research and analysis, the group has found that Irish consumers are not getting a fair deal in many areas. The analysis in the group’s report of the price of a range of consumer goods and services found Ireland to be among the most expensive countries in the euro zone, if not the most expensive. It is a very persuasive and compelling analysis. Senators on the other side who complain about stealth charges contend that the report is flawed because it suggests that Irish consumers are being charged too much. There is no coherent or clear view emerging from the Opposition. I accept that the group’s survey of prices in various European countries is compelling. We cannot dismiss this issue.
When I listened to “Morning Ireland” this morning, I heard visitors to this country talking about their perceptions of Ireland. Some them said that restaurants and pubs are quite expensive. A lady from Munich said she though that meals in Ireland were more expensive than those in Munich. She said she thought bed and breakfasts were excellent value for money, however, so it was not all one-way traffic. Value for money is offered in those areas in which competition is found. The communications sector is far more competitive than the energy sector, for example. We need to have a certain sense of balance as we approach this issue. In this regard it was interesting to listen to the anecdotal and random survey that was conducted by an RTE reporter this morning. Four or five holidaymakers in the west were asked about the cost of eating out and consuming alcohol. The principal factor in this is that current consumer policy is seriously deficient and does not adequately meet the needs of modern consumers. It analyses current policy and finds that one of the main reasons for the deficit in policy stems from the group’s belief that the consumer agenda and consumer protection is not embedded in our economic model. The report stresses the need for the balance of power to be shifted towards consumers and the need to awaken consumers to the potential economic and social power they can wield. People should not pay €11.50 to go into an establishment to have a pint. We have a choice here. If people began to exercise that choice, businesses might operate differently in regard to charges and so on. The balance of power must be shifted, and consumers have power. This power must be structured so that it can be wielded effectively. The Bi-Annual Average Price Analysis, published last month by the CSO, demonstrated the value that can be obtained by informed consumers on different goods and services when they use that power.
Having analysed current policy, the group, as required by its terms of reference, has suggested a way forward. I welcome the fact that in mapping out its vision of the future, the group has eschewed the calls of some commentators for the reintroduction of price controls. I concur fully with the group that freely functioning competitive markets are more effective at setting fair prices than any form of price control. A look back at the history of price controls clearly demonstrates that they have not been an effective weapon for keeping prices down as experience has shown that the maximum price often tended to become the minimum price. I, therefore, welcome the fact that in framing its report the group concentrated on recommendations and initiatives to empower and strengthen the voice of consumers. The group rightly identifies the biggest challenge in this area as ensuring that consumers are well-informed, empowered and confident so that they can act for themselves, that they can and will insist on good value for money, that they will expect to be treated fairly and that they will know where to go for support.
The group has made a number of specific recommendations as to how this challenge should be met. The core recommendation is that a new national consumer agency be established. The group has outlined in detail in its report its vision as to how the new agency should operate. The group envisages that the NCA will incorporate the existing functions of the Office of the Director of Consumer Affairs but it will also have an expanded role and additional statutory functions. The group, in recommending the establishment of a new agency, is adamant that in order to be able to provide the services consumers need, the NCA must undertake functions of consumer advocacy, research, information, enforcement, education and awareness.
In the area of advocacy, the group recommends that the NCA must have a statutory function to act as a forceful advocate for the consumer in public debate and in the preparation of legislation and also that the agency be empowered to advocate the consumer’s case with regulated industries and individual regulators. In the matter of research, the group is of the view that the credibility of any advocacy, information, awareness campaigns on which the NCA might embark must be grounded in well-founded research and that without the ability to carry out such research the NCA could not hope to challenge vested interests who invariably spend considerable amounts of money in this area. On the question of information, the group is strongly of the view that consumers only benefit from competition in the marketplace when they are informed and that the NCA has a pivotal role in providing information to consumers.
In regard to enforcement, the CSG found that enforcement of consumer protection rights and ready access to redress for consumers with complaints are most important in gaining and maintaining the confidence of consumers. The CSG recommended that the NCA builds upon the enforcement work currently being carried out by the ODCA. Another important support which the CSG recommends the new agency should provide to consumers is in the area of education and awareness. The group is of the view that mandating the agency to educate and raise consumer awareness will develop greater confidence among consumers to help them feel secure in the choices they make. The group made a very strong case that any new agency, to be fully effective as a robust champion of the consumer, must be statutorily mandated to undertake the specific functions detailed above. I support fully the views of the group on this matter.
Senators will be aware that the Government has agreed in principle to the establishment of a new national consumer agency. I appreciate the support for that decision in the motion. My Department has already commenced the necessary preparatory and organisational work to ensure that the NCA is established as soon as possible — this is one report that will not be left on a shelf — and that the recommendations of the group as regards the structure, scope and functions of the new agency, including those to which I have already referred, will be taken fully into account in that work.
Notwithstanding my determination to ensure that the new agency is up and running as soon as practicable, I am conscious that this may take some time. I am anxious that the consumer momentum, which has built up through the valuable work of the group and the publication of its report, should not be dissipated. For that reason, I recently appointed a board for the new agency to act in an interim capacity until such time as the NCA is established on a statutory basis. I am pleased the chairperson of the consumer strategy group, Ms Ann Fitzgerald, has agreed to act as the chairperson to the interim board and also that the board will have the benefit of the valuable experience of the current Director of Consumer Affairs, Ms Carmel Foley.
Mention has been made of the Consumers Association of Ireland. I deliberately set out not to make the agency a representative-type body, as in picking a nominee from different organisations. I want to get a cross-section of disciplines, from ordinary people on the street who would be representative of people who go shopping every day, to columnists and people who have a particular interest in consumer affairs. I believe we have struck the right balance. We will continue to support the Consumers Association of Ireland in its work through funding. We will work with the association to see what more we can do. Sometimes some agencies do not lend themselves to a representative nominee-type approach. This may not always result in the kind of cross-discipline model or composition one would like. This is the reason I took a particular line. While one could argue that the Consumers Association of Ireland is not formally represented, the personnel include people who have also been members of the association. One member is on the board because of his personal characteristics, abilities and interests as opposed to having been a member of the association.
I have requested the interim board to immediately begin planning for the final structure and organisation of the fully-fledged national consumer agency. I also hope the interim board will start to develop some initiatives in the area of consumer advocacy, research, awareness, etc., as envisaged by the CSG and as urged in the motion. I am confident that the establishment of an interim board and the work undertaken by that board will be an important and tangible demonstration to consumers that real change is underway and that the focus will firmly be on the needs of consumers. I am also certain that the interim board, through its work, will enable the national consumer agency to hit the ground running once it is established in law.
In conjunction with setting up the interim board and preparing the legislative and other work to establish the NCA, consumer policy continues to develop. Many developments and protections in this area emanate at European level. It is not surprising given the commitment in the Amsterdam treaty that consumer protection requirements be taken fully into account in all future Community policies and activities. An example of a recent EU consumer protection policy development is the adoption last month by the EU Council of Ministers of the directive on unfair commercial practices. This important directive, which will establish a legal framework for the regulation of unfair business to consumer practices across the European Union, is an illustration of the concrete benefits which membership of the EU is bringing to Irish consumers.
In addition to developments in European consumer law, it is vital that domestic legislation in the area of consumer protection is attuned to the needs of modem consumers as advocated by the group in its report. In this regard, my Department is currently engaged in a comprehensive review of all existing consumer protection legislation. As the extant code of consumer protection law is spread over a considerable number of different statutes, some of which date from over a century ago, it is vital that the code of law be reviewed and codified to ensure that consumers fully understand their rights and that traders understand the obligations placed on them by those rights. I intend to ensure that this review is completed as quickly as possible as recommended by the CSG in its report.
In addition to the issues I have already mentioned, the CSG report deals with a whole range of other issues-sectors which affect the quality of life for Irish consumers. In total, the report contains more than 30 different recommendations involving a variety of different Departments and Government agencies whose activities directly impact on the interests of consumers. The extent to which consumer interests are entwined with practically every facet of economic, political and social life can only be appreciated by reading the full report of the CSG. It is not surprising, therefore, that the report’s findings and recommendations cover such diverse area and sectors as health, planning, utilities, transport, food and drink, etc. Given the scope and breadth of the CSG’s recommendations, it is clear they will require a co-ordinated response from Government. To that end, my Department has established a high level interdepartmental committee to examine and advance the various recommendations in the CSG report. I have asked the committee, which has already commenced its deliberations, to report back with a detailed implementation plan within three months.
While the establishment of a new national consumer agency is one of the core recommendations contained in the report, another significant recommendation, which has been the subject of much recent comment, relates to the future of the groceries order. It is no secret that there have been different and opposing views expressed by many parties and interests as to the future of the order. Undoubtedly, the group has come to a definitive view on the matter by calling for the order to be revoked in its entirety. I appreciate that notwithstanding its conclusions on this matter, the CSG reflects in its report that arguments can be made for retaining as well as revoking the order. It is my view that the arguments for and against the order are many and that given the importance of the matter they require serious and careful consideration. For that reason, I launched a public consultation process last month on the future of the order. I am aware that a number of parties have questioned the need for a consultation process on this matter and have expressed concerns that engaging in such a process could delay any decision on the future of the order. This is not the case. Senators should be aware that the Attorney General has advised that any amendment to the order, even its abolition, would require primary legislation. In any event, consultation is appropriate.
I have instructed my Department to conclude the consultation process on the order by the end of next month. Following the process I intend to bring proposals to Government on the future of the groceries order. I am glad the consultation process is supported in this evening’s motion and I am sure it will involve all parties, particularly groups like consumers whose voice has not yet been heard in this debate. In these circumstances, the consultation process will greatly assist the decision-making process on this issue.
I encourage all those who engage in the consultation process to give some lateral thought to it and I urge that they not confine themselves to merely considering the retention or revocation or the order. They should also give some thought to amending or replacing the order and to what such an amendment or replacement might be.
I am glad that this evening’s motion has provided the opportunity for me to outline to the House the policy initiatives being brought forward by the Government in the area of consumer protection. I welcome the support of the initiatives as expressed in this evening’s motion. The work of the consumer strategy group is undoubtedly of critical importance and its report will be a reference for future development of consumer protection policy. The report presents the opportunity to build a new environment of consumer protection and assist consumers in empowering themselves so that they can perform their daily activities with the confidence that they will receive a fair deal. We will seize the opportunity presented by the consumer strategy group’s report to shift the balance of power towards consumers.
A strong consumer ethos will benefit not only consumers of goods and services but will also benefit providers of such goods and services. A direct correlation between consumer power and thriving markets and businesses undoubtedly exists. It is therefore important to acknowledge that the group’s work will not only benefit every consumer but valuably contribute to the continued development and success of our economy and society. I thank the Senators for facilitating the opportunity for this evening’s debate.
Senator Coghlan stated that prices are high in Ireland because costs are higher. However, prices are higher in Ireland in similar areas because sufficient competition does not exist. Taking the example of what happened in the airline business ten or 15 years ago, we used to pay £239, if I remember correctly, to fly to London. Two airlines could be used and both charged the same price, agreed between them. Competition was introduced, and a person can now travel to the same destination for a far lower price.
The decision on the groceries order is a difficult one that I know will not be popular no matter which way it is decided. With the decision being made, the Fianna Fáil and Government spokesman talks about urging caution, even after all these years of debate. On the other side, Fine Gael puts down an amendment which does not refer to the groceries order. It is possible that people do not want to make decisions. The Minister will have to make a decision and he has done the right thing in putting a deadline on making the decision, which I see is only four or five weeks away at the end of July.
When I started in business in 1960 no groceries order existed. I wanted to compete and I had the choice of either taking out a £10,000 advertisement in the Irish Independent or selling 100,000 items at 10p less than cost price. I decided that the latter was a much better way to do business. It was more in the interest of the consumer, who got something at a lower price. I sold butter, sugar or whatever the popular item in those days was at 10p below cost. This aggravated the competitors but customers loved it. This strategy was not advertised because word of mouth was a better advertisement. Below-cost selling is a benefit to the consumer.
Legislation was then introduced which prohibited such a sales strategy because it was deemed not to be fair on others. In those days, a buyer would ask a supplier for a lower price on bulk orders. However, more legislation was introduced prohibiting the bullying of suppliers. The supplier was then not expected to give the buyer a lower price because it was not fair on the suppliers. We have made illegal things that actually created lower prices. Disadvantages did exist, and competitors, who may have been used to meeting each other to fix prices, felt such practices were unfair. In those days, a concept called retail price maintenance existed. In the 1950s legislation was introduced to eliminate this, with the result of more competition, lower prices becoming evident and customers being able to decide what they wanted to do.
An alternative to the selling of materials below cost is to give customers a treat, such as a cup of coffee, a glass of wine, a massage or a lift home, for example. One would not get such things in a supermarket of course. However, giving such things is legal while selling below cost price is not. This is not logical. It is necessary to let market forces play their role. This is the objective of today’s debate, along with getting lower prices.
Disadvantages exist and Senator Coghlan has touched upon these. In Britain, when competition of that magnitude came about, Senator Coghlan indicated that 40% of towns and villages were without a local shop. The Minister would have to take this into account.
I have an answer to the below-cost selling rule. It should be abolished, but in doing so the Minister should introduce a stipulation that no limits can be placed on the amount that somebody can buy. I remember years ago I sold Zip firelighters at approximately 6p below cost. People came from all around to buy these. My competitor from up the street came in with wheelbarrows to load up ten cases of Zip firelighters. It cost my business money to sell them to the competitor. My business was unwilling to put a restriction on it, so the competitor told his friends who in turn bought more firelighters until the stock was sold out in a small amount of time. A restriction might have stipulated that only two boxes of firelighters be sold to every customer. If the groceries order were abolished and full competition was allowed, the big nasty supermarkets would be allowed to undercut everybody else, but they should not be allowed to place a limit on what people can buy. A local competitor can then go to the local supermarket, irrespective of whether it is a big international supermarket, and buy all the stock because it is being sold below cost. This is one way around below-cost selling that suits both the customers and smaller traders, but does not suit the big nasty supermarket selling below cost.
Mr. Quinn: My company may have been big and nasty because it did sell below cost. I would still sell below cost. This below-cost legislation is unfair as it does not apply to companies that are not based in Ireland. If a company’s headquarters is in Düsseldorf or London, the company can do as it likes. The Government can write to the company asking for invoices but a reply will not be forthcoming. A few years ago, the Irish Independent carried a story of a large chain in Ireland that was in breach of Irish legislation, but the Irish operator did not realise this because it happened in Britain. Legislation in Ireland stipulates that suppliers should not be squeezed for lower prices because the practice is not fair, but when the chain undertook a takeover it invoiced all its suppliers, requesting money to cover costs. This came about because such practice was not illegal in Britain. Although it was illegal here, the company did not break the law within the State.
These are a few reasons that if competition is to exist, it must be encouraged. Benefits will come with such competition. As Senator Coghlan pointed out, disadvantages will also come with such competition.
I have just returned from Hungary and I was recently at a grocery convention in the Czech Republic. Last year I spoke at an event in Thailand. In these countries, practically none of the grocery outlets is owned locally. All of them are big international companies. If that type of business in Ireland is desired, it will come about and we will have lower prices. Senator Coghlan will not be able to state that Ireland is the most expensive country in the world. Ireland will not be the most expensive country but the operators we deal with will not be based here. The Minister must make the decision. The groceries order should be abolished because competition will be created, as the grocery retailer will negotiate with the supplier, which will be good for customers. The voice of the customer has not been heard in this area clearly enough. While that would be beneficial, vested interests will howl about the disadvantages of abolishing the order, which is understandable.
The cap on the size of grocery stores is not mentioned in the motion. The limit on the size of stores is 3,000 sq. m. outside Dublin and 3,500 sq. m. in Dublin. The legislation probably makes sense because, as Senator Coghlan stated, in Britain the large stores have soaked up the grocery business in small towns. A choice must be made. If the Government wants to encourage lower prices in the grocery sector, it must abolish the groceries order. I have outlined a number of suggestions regarding how that can be done while protecting the smaller trader. It is the correct course of action because it will restrict international operators from breaking Irish law because they avoid breaking the law by buying abroad. The Minister has four weeks to make a decision. He will receive a report then and I hope he does not heed Senator Leyden’s urgings to be cautious after all these years. He should make a decision and put the issue to bed.
I support the motion, which covers many issues in the debate, including the consumer strategy group, the new national consumer agency, the national and local decision making process, consumer advocacy procedures, the high level interdepartmental committee and a public consultation process. However, the kernel of the debate is price, which determines a person’s disposable income and a company’s profits.
The only way to force prices down is through competition. For those of us who work in the marketplace, we have seen at first hand every day, especially over the past five to ten years, what has happened to prices in certain sectors of the economy. Where there is competition, prices fall. For example, prices are at the same level as ten or 15 years ago in a number of sectors because of competition. The process of establishing a consumer agency is being undertaken because of high prices. That is why the consumer strategy group was set up by the former Minister for Enterprise, Trade and Employment, Deputy Harney, and we await a further report from the group.
I propose a halfway house to address the issue of the groceries order. The invoice price does not take into account the bulk discounts offered by suppliers at the end of the year. The order could be retained on below cost selling but the bulk discounts given by suppliers to grocery stores could be passed on.
Mr. Morrissey: Uniquely, consumers believe the price they pay is too high as do suppliers who cannot pass on the bulk discounts. This issue of bulk discounts should be examined, given that competition has resulted in lower prices in many sectors of the economy.
The great detractors in the debate believe small stores will close if the order is abolished. I live in an expanding area in west Dublin, which used to be served by one small shop ten or 15 years ago. However, the community has sprawled and Spar, Centra and so on have opened stores while shops in the town centre remain open. The smaller stores are open until 10 p.m. but when people enter them, they do not know the prices of various products and many of them do not care because they are paying for convenience. They can shop around but they decide to shop locally because it is convenient, the shops have car parking and they are open late. They do not go to the town centre because of the traffic. For that reason, as the former Minister said, it is about shopping around. I do not have the same fears for small shops as heretofore. At the end of the day the consumer will decide. I ask the Minister to consider my halfway house proposal of retaining the order while ensuring discounts are passed on to the consumer.
Ms Ormonde: I welcome the opportunity to contribute to the debate. Anything to do with the consumer is important because the bottom line is the consumer has not had a voice for years. Ireland has developed a reputation for a rip-off culture and for overcharging. This has resulted from a buoyant economy and the significant amount of disposable income available to people. The standard of living has increased, wages are high but transport costs are extraordinarily high. One can analyse the overcharging to death and provide reasons but, at the end of the day, the consumer does not have a voice. The consumer strategy group report proposes the establishment of the national consumer agency to give power to the consumer.
Ms Ormonde: A representative will be appointed. The Minister has set up an interim board so that all the recommendations in the report will be implemented. This is the first stage and the Minister is moving towards consumer representation. What does the Senator want? Does he expect the Minister to snap his fingers and establish the agency overnight? The Senator knows better than me that is not the way to do business.
The Government has got its act together and is putting the agency in place. A redress mechanism will be provided for consumers. We were all overcharged in the past but we did not know how to complain because no mechanism was in place. However, procedures will be implemented, including access to the Small Claims Court. In the past nobody had confidence in lawyers and, therefore, they contacted the media to seek redress.
The consumer must be educated that he or she has choice. For example, Dublin has numerous restaurants, which are mushrooming in number. People need to be educated to question the price of meals and so on. I was surprised that the report found the price of clothes was low in Ireland. I do not agree because during sales 50% is knocked off the cost of a garment, which highlights that the mark-up is colossal. The report recommends that a regulator be appointed to deal with this issue.
The jury is out on whether the groceries order should be revisited. I am glad Senator Quinn has left the Chamber because I hate supermarkets. Small is beautiful. I would rather see small local shops in convenient locations. Maybe we should link up with development plans to ensure the infrastructure is in place to allow the local shops flourish. I do not want big supermarkets. I do not want the heavy guys to come in and destroy the fabric of society and rural communities.
Ms Ormonde: We are in a position to put this right. We must educate our consumers, give them choice and tell them how to spend their money. Many people spend without thinking because they have so much spending power. We have been ripped off because the retailers saw us coming. They were smarter than us — they saw money in our pockets and increased their prices accordingly. There was no regulation or system.
This new agency will give a voice to the consumer. I am delighted that voice will be heard in the future. I have often wanted to go to the media to call for redress for high prices. Even if we do nothing else the consumer will be very glad we have put new structures in place. I hope the Minister will implement this proposal. I remain cautious about how we will revisit the groceries order. I want to protect the small trader, because small is beautiful in this regard.
I never subscribed to the left-wing mantra that we should control prices. I never did and do not now believe it. Even at the high point of the early days of left-wing experiments it never succeeded in eliminating the impact of levels of supply and demand on the real world.
Mr. Ryan: I live in the real world and socialists are the ones who must deal with the realities and cruelties of that competitive world. That does not mean one can deny what happens. There is a fair amount of evidence now that many people got rich in Britain during the Second World War by ripping off both the state and their neighbours. They charged what the market would stand for goods and services even though it was supposed to be regulated and controlled. The account of this profiteering was omitted from the record of the glorious sense of common purpose which people recall from the Blitz.
The State’s role in the area of pricing is to ensure that consumers know before they reach the point from which they cannot retreat what something will cost them. We do not publicise prices adequately. The new agency could usefully produce at regular intervals a table of the best and worst prices in every town and city, and estimates of the margins operating on various products.
One can easily work out where the high margins are because one sees what proliferates. Margins on wine in off-licences must be high because every shop in the country seems to be getting a wine licence. This is in part a response to demand but that demand is for a product on which there is a substantial margin. If my local small shop is making a substantial margin on a bottle of wine it is hard to imagine what a restaurant is making on the same bottle. That is not to say we should control the price. We should empower consumers by giving them the maximum possible information.
The Internet is a flexible and easy way to provide that information. The lead price on many products can be extremely misleading. I am not complaining but recently I booked for myself and my family to fly to London in August. The lead price was €9 each way or €18 return. I ended up paying €350 for five of us. There were additional charges of €55 but nowhere on the Aer Lingus website could I find a breakdown of those extras.
I am not complaining because €70 for a return flight to London with Aer Lingus is not a bad price. However, the difference between the price of €18 return and the €70 I paid is difficult to explain. It does not empower consumers when they do not know for what they are paying and so cannot evaluate choices.
My view of this matter was considerably altered many years ago. I may have mentioned this before. I was in a restaurant with a national reputation in the west where the owner proclaimed loudly to some friends that it was hard to make a living in his business. It is true, running a restaurant is a tough business in principle and many do so only for love of the job.
This restaurant, however, which is in a tourist area, closed from October to May, and the owner made it clear because we all heard him, that he took off to the Canaries for those months while his children attended the most expensive boarding school in Ireland. That is not my definition of just making a living.
Many high quality restaurants provide a service and often just because people like the business. Restaurant reviews, however, suggest that there are more high price restaurants than high quality ones. It seems to be easy, particularly in this city, to get away with sloppy productions at outrageously high prices. I know this from reviews because I do not often eat out in Dublin for various reasons.
Let us by all means have competition and let that competition be based on consumer choice but let us remember that competition is not enough on its own. If one leaves pricing to competition in the marketplace gaps will appear. The groceries order, and surrounding arguments, is an example of this. I sympathise with Senator Quinn’s position that it is unenforceable. We could deal with that by a proper licensing procedure, according to which multinationals wanting to operate in Ireland must sign a licensing agreement to the effect that they will operate the spirit and the letter of Irish legislation or they cannot enter the market. That might solve Senator Quinn’s problem.
Until recently the Common Agricultural Policy was the most anti-consumer concept ever imposed on any section of suffering society. I recall being enlightened at a meeting of the Oireachtas Joint Committee on European Affairs some years ago at which a prominent member of the Irish Farmers Association familiar to Members of the Oireachtas, gave an erudite 45-minute description of the problem of food and agriculture without ever mentioning consumers or customers. According to him, agriculture did not involve customers, it involved producers.
If we allow producers, whether of agricultural products, banking services, or food in the retail area, dominate, the customer will be the victim. We must create a climate of information, fairness, proper regulation and reasonable local authority charges. These charges have run out of control because we have decided to reduce corporate, personal and capital taxes. The State’s revenue has been reduced and has left it to its customers, particularly in the areas of water services, refuse services, etc., to make up the gap between what the State provides and the customer needs. This imposes large charges in the same way as the insurance industry because the State allowed the unregulated legal profession to charge whatever it wanted. There was a cosy arrangement in place whereby there would be no complicated legal work and lawyers and any debt would be paid off while the consumer paid the overall price. There was no competition once this became the case. Hopefully, we are now turning this situation around.
Mr. MacSharry: I join with other Senators in welcoming the Minister of State, Deputy Killeen, to the House, as I welcome the opportunity to make a number of points concerning this motion, the consumer strategy group and its recommendations. I welcome the group’s strategies but, in supporting the motion, I will point out that some of the group’s findings are somewhat naïve and are not founded on the business reality on one hand and consumer reality on the other. It is one-sided in certain respects. This notwithstanding, the group’s recommendations are good. I welcome the establishment of an interdepartmental group to examine the recommendations and determine how they can best be implemented.
Historically, Ireland is a nation of people who settle too easily for mediocrity, not just in terms of quality of products but particularly in terms of price. We do not question prices. People buy petrol without knowing the cost. Unlike me, some of my friends are good in this respect and know where the cheapest petrol or diesel can be found. It is only when I run out of petrol or am about to, that I stop to get more without looking at the price. A consumer agency such as that proposed is welcome. Education is the key to this issue. If we can be made aware of how high and low prices are, we can become more educated as a people and will not just settle for whatever price is placed in front of us.
The groceries order has served us well since 1987 but it is timely to review it. I commend the Minister of State for the way in which he is doing so. The process is open, transparent, invites submissions and consults with all interested parties so they can give their views on the matter to allow a decision to be reached. I do not know whether it will be in late July as Senator Quinn has said but it will be at some stage in the near future. The consultation process will be finished in late July. We will have a definitive outcome that will be representative of the views of all the interested groups and consumers at large and can advance from that point.
I do not wish to pre-empt the decision based on the consultation process but Senator Quinn’s point of view is based on his significant business experience since 1960 and should be explored instead of simply abolishing the potential of below-cost selling, which would give consumers cheaper products. The idea of a limited number of items per person should be abolished. If it is below-cost selling, we should each be entitled to tell sellers we want everything they have. If the larger multiples wanted to sell a product at a below-cost price, the smaller RGDATA members throughout the country could buy all of that product.
Mr. MacSharry: I am sure she would not. Senator Coghlan is a personal friend of mine but the Fine Gael amendment to the motion is highly irresponsible. It does not deal with consumers’ interests or the groceries order and, rather than engaging in a meaningful debate about what consumers need, it is an attempt to slap Fianna Fáil even though there is no opportunity to do so. Consumers’ needs are the concern of the motion. I have heard about consumers’ needs from the Independent and Labour Party benches but Fine Gael’s amendment is not in this vein.
Mr. MacSharry: Senator Quinn’s opinions might be worth exploring in the consultation process. I am sure his submission has gone to the Minister of State in private as well as in this House and it should be examined in detail. When speaking of consumers, we too often consider the people who buy only one item over counters. As both Senators White and Coghlan are aware, business people are increasingly becoming consumers. Most businesses in Ireland are SMEs and have withstood unprecedented increased prices for utilities, electricity and commercial rates, which have risen by 80% in many counties in recent years. Smaller businesses have not been in a position to pass their costs on to the end consumer because they do not manufacture or trade their products. It is an unavoidable scenario that they must withstand these charges.
Any consumer agency should be cognisant of small businesses as consumers of semi-State products and services and local authority services. The various remunerations through benchmarking, particularly in local authorities, are not based on performance in the way they should be. Small businesses are entitled to this recognition. When the interdepartmental team has completed the implementation and establishment of the agency, I hope it is mindful of this fact.
While the agency will educate us in an attempt to take us away from the mediocrity we have settled for as consumers for so long, I hope it will have the teeth necessary to enforce regulations and to represent consumers in the way they have wished to be represented for many years, which we have failed to do. As I have often said, there are many reasons for failure but no there are no excuses. I am confident that the Minister of State and his colleagues, the Minister for Enterprise, Trade and Employment, Deputy Martin, and the Minister of State, Deputy Michael Ahern, will give this agency the teeth it requires to do its job in such a way as to be representative of individual and business consumers when following those recommendations of the consumer strategy group that can be implemented. SMEs and home-grown family businesses, for example, need this type of representation.
Mr. Ross: I am speaking at the request of Senator Leyden. It interests me that the Government proposes a motion in this House as I doubt there are any merits for the Government. It has all the time in the world to propose its own legislation and motions and I do not understand why we share time with it through this particular process, a point proven in this instance. It is another congratulatory motion by the Government for a so-called initiative that will come to nothing.
Mr. Ross: If one examines it closely, this motion is window-dressing in an attempt to champion the cause of the consumer. I am suspicious when I hear the word “strategy”. To me, this is a substitute for the word “action”. The Government is giving itself a pat on the back for establishing a consumer strategy group that has decided to recommend a new agency, which will apparently manifest as an interim board that must function with its hands behind its back while it waits for the recommendations of a high-level appointments group. A proper board may be set up but its purpose is unclear. Senator MacSharry said he hoped it would have teeth but the Minister of State’s speech indicates this will not be the case. The latter said he had “requested the interim board to immediately begin planning for the final structure and organisation of the fully fledged national consumer agency”. This means nothing.
I hope the interim board will begin to develop some initiatives in the area of consumer advocacy, research, awareness and so on, as envisaged by the CSG and as this motion urges. However, I see no evidence it will have teeth and be able to take effective action in this area. I see yet another State agency being set up with the intention of fooling consumers that the Government is doing something to protect their interests.
There are fundamental questions as to whether the Government can do anything for the consumer and whether it should do so. What is certain is that the Government is trying to give the impression it is doing something for the consumer while probably doing little.
Mr. Ross: ——to protect the power of the consumer. An example is the Office of the Director of Consumer Affairs. Does that satisfy Senator White to begin with? That body is now apparently irrelevant and will be subsumed, along with its director, into the new agency. This indicates that this office was a busted flush. It did not work and we all know that to be the case. The simple reason is that it did not have any powers.
Mr. Ross: The Office of the Director of Consumer Affairs found fault with many of the banks. Ms Carmel Foley is a wonderful woman who did a great job but when she found the banks had broken the law, she could do nothing about it. Those whom she found guilty of committing offences could not be prosecuted by her in the courts.
The Government could not put up with this any longer so it set up another quango. It is to be commended that there is at least an effort to include some representatives of consumers’ bodies on the board of the new agency. It is unusual for the Government to take such an approach. When the Pensions Board was established, only one representative of pensioners was included. The Government normally includes Senator O’Toole’s friends in the trade union movement, IBEC and elsewhere on such bodies. In this instance, it is at least the case that consumer representatives will be included.
However, they will not be able to do anything. The establishment of this agency is merely a more elaborate umbrella or smokescreen to give the impression that the Government will protect and promote the interests of consumers. The Government knows well that direct interference is dangerous and is something it cannot face. We need only consider that the abuses which go on in the business and financial arenas and elsewhere have not been tackled. What will this body do about the cartels that exist?
It is instructive to consider what has happened to another body whose effectiveness is becoming more questionable every day. One might have imagined the Competition Authority would be able to tackle the quasi-monopoly of CRH, the cartel of the banks, the extraordinary similarity in the prices of fund managers and the stockbrokers who charge almost uniform commissions. Nothing has happened. These areas of the so-called market have been neglected and allowed to run the same old price-fixing system as was always in place.
What are these Government agencies doing? They give an impression to the public that they are curtailing the worst excesses of business. I contend, however, that the worst excesses of the business world are flourishing unchecked by Government agencies and Government measures. Nor will they be checked or hindered in any way by an agency of the type now proposed. We have ombudsmen galore, such as those overseeing the insurance industry and the credit institutions. They make not even a dent on behalf of the consumer because big business still dominates. These types of fig leaf measures will do nothing except give an impression that some action is being taken.
I would like to see this particular agency immediately set about tackling specific problems rather than general awareness. It should not be a case of distributing information to the public about consumer issues. That will not work but will merely take the responsibility from the agency which can claim it put all this information into the public arena. This does not guarantee that anybody is listening. The agency should come out and say, for example, that auctioneers’ guide prices are unacceptable and the Government should respond to this immediately. No agency ever seems to do that.
The State agencies seem to publish aspirational, indicational ambitions on behalf of the consumer but achieve virtually nothing in the end. I cannot understand, for instance, what has happened to the commission on auctioneering which was set up some time ago thanks to efforts by Senator O’Toole and other Members of this House. This commission was set up to curb the worst excesses of auctioneers, estate agents and other property interests. It was due to issue a report by the end of June but that report will be late because the commission members are waffling on about particular problems which they cannot resolve among themselves.
That commission consists of three auctioneers and only one consumer representative and serves only to give the impression that it was set up to represent the interests of consumers. It will come out with some type of flimsy report which the Government will examine but probably ignore.
It is dangerous for the Government to set up agencies of this type to give the impression of action without giving them any teeth. This will be yet another piece of window-dressing which will have virtually no effect on behalf of the consumer.
Mr. O’Toole: I hope the consumer strategy group will look carefully at tonight’s motion and amendments and at the issues we have discussed. The most amazing aspect is that the motion makes only passing reference to the groceries order while the Fine Gael amendment makes no mention of it.
Mr. O’Toole: It is exactly correct. If the consumer strategy group expects action from the current or the possible next Government, forget it. It is not going to happen. This is political dynamite and one may read from tonight’s motion and amendment that neither of the two main parties wants to know anything about it. My friend and colleague, Senator Coghlan, has to represent a particular viewpoint. I know his viewpoint on this but his party is not taking action on the groceries order. That is one conflict. There is conflict in every aspect of this discussion. My colleague, Senator Ross, made some valid points but, while making them, became tied into his own philosophies and backed off immediately.
Mr. O’Toole: He thought that this new body will have no teeth. Even if it had, he suddenly thought to himself, it might begin to interfere with the market. From the point of view of Senator Ross, the last action we want to take is interfere with the market. He backed off that and began discussing quangos, trade unions and the absence of action. That is exactly what will happen here.
I tried to be fair minded and disinterested in looking at the groceries order with regard to what will and will not work. I examined the arguments of both sides and have to say that they balance out. The groceries order has existed for a number of years but it is patently not working. It is not doing what it is supposed to do. That is the reason people want to get rid of it.
If we get rid of it, we will eventually depend on the large supermarkets and, in particular, Tesco and the multinationals. We would then be trusting organisations such as Tesco. I know that Senator Ross tried on a number of occasions to establish the profit margins of Tesco in Ireland. The decent people in Tesco told any of us who sought this information to get lost, that it was none of our business and they would not inform us. We recognise that Tesco’s profit levels are higher in Ireland than in any other country in which it is based but we do not know how or why.
Mr. O’Toole: The eradication of the groceries order would leave us placing our trust in these people. I agree with Senator Ross on the issue of the cartels which operate all over the industry. I invite anybody, on their next 100 mile trip outside Dublin, to ascertain for me the number of small towns in Ireland where retail fuel outlets have differing prices on their boards. This does not exist unless somebody is trying to break into the local market. In some inspired way, apparently without conspiracies or the operation of a cartel, they suddenly come up with the magic figure of 102.9 cent. It is the same price down the road, yet nobody breaks the law.
It appears that we will not resolve this issue with the groceries order. However, from the point of view of the groceries order, it is important to ask the retail invoice price and what it means. Who determines the invoice price? In many ways, a groceries order which prohibits below cost selling allows somebody else to determine cost. Discounts, commissions, golden handshakes and hello money are considered when determining cost. None of these needs necessarily be taken into consideration. In effect, a situation obtains under the groceries order where the manufacturer can state the price of his or her product and nobody may sell below that price. That is anti-consumer. The consumer loses out whichever way we go on this. There will be a problem with or without the groceries order.
Earlier today, I remarked that we need to look at the way food is distributed. I have asked the IFA on numerous occasions why Irish lamb is cheaper in French supermarkets than in Irish ones. It is branded as Irish lamb and sells more cheaply per kilogramme. Why is that? This morning, I heard a farmer from Gorey say on Morning Ireland that he had returned to lamb production through his involvement in farmers’ markets. He pointed out that the income he derived from selling at local markets was quadruple what he would expect in farm gate prices from factories and wholesalers.
One of our problems is that we tied ourselves up in regulations attached to retail outlets. Many years ago, Senator Ross and I tried vainly to block an extraordinarily complex set of rules and regulations for the establishment of restaurants. We failed. The regulations were designed to make it impossible to get into the business. Many are still extant. They include ridiculous requirements, such as two or three toilets in restaurants. A counter may be required in some situations and not in others. They have to meet certain regulations which are not required in other parts of Europe. When I compare prices between Ireland and other European countries, I come across the problem of regulations attached to retail outlets. In many cases, they are utterly unfair. This does not happen in other European countries and the cost continuously rises. The hygiene requirements and the extraordinary level of VAT in the food and restaurant industries also brings up prices. We should also examine and take on board these issues and be careful about them.
The problem with the consumer strategy group report — and I listened to its explanation in a committee last week — is that it is almost impossible, despite its best efforts, to compare like with like across various countries in Europe. For example, excise duty is high in Ireland but low in other countries. If a bottle of wine is added to a basket of groceries, the comparison is immediately knocked off kilter. These issues become difficult.
I agree with Senator Ross that we are discussing tonight the establishment of a new agency. This agency will have the powers requested by the Director of Consumer Affairs, Ms Carmel Foley, including rights to advocate and impose serious penalties, increased legislative authority and the money to police the decisions it makes. That is where the difficulty will arise. The consumer agency will not make a significant difference unless we change the law in order to give it power.
I concur with the remark by Senator Ross that, against the odds, Ms Foley is doing a superb job in terms of drawing our attention to these matters. She has been frustrated repeatedly when, having drawn attention to overpricing in Landsdowne Road and by banks, restaurants and bed and breakfasts, taking action involves bringing them to court to incur absurdly low fines. That is the difficulty we face. We need to look carefully at how we reflect the needs of consumers.
We need to put another issue on the record. We constantly discuss the rights of consumers. It would be helpful if we had what Ms Foley calls proactive consumers. The fact is that most of us are happy to park our car with the engine running outside the local convenience store, walk through the door and pay well over the odds for being able to do so. We will continue to do so. Irish people appear content to pay more than other consumers around Europe. That is another part of the problem and is why education must also be included. People must begin to ask the price of items. Perhaps the more affluent we become, the more we hate losing money or being overcharged — consider U2’s court action today — and we will chase small amounts as well as others. It may well be that people question more what they are being charged, argue more and bring pressure to bear on that basis. I do not believe the consumer agency on its own, nor the groceries order, will bring about the changes we seek. The issue is how we get the product from manufacturer to consumer without the huge waste that occurs along the way.
In terms of my earlier reflection on farmers’ markets, the efforts by Europe to make it impossible to sell local product at local prices in local venues must be resisted. I welcome the Minister of State to the House and thank him for being here. I ask him to note that in markets all over Europe, particularly in France, almost 90% of the produce in the beautifully laid out displays of fresh vegetables and fruit is not acceptable under European legislation. I have taken photographs to prove it. The French ignore that legislation while we tend to abide by those rules. As a consequence if one goes to fruit farms, tomato or strawberry growers in the east of Ireland one finds they throw out produce every week because it does not meet the size and sorting requirements of the European Union. That is also driving up our prices.
Mr. Leyden: I thank all of the Senators who contributed to the debate. It was most stimulating to hear both Senators Ross and O’Toole who made good contributions. One of the first newspapers I read on Sundays is the business section of the Sunday Independent because it is one of the most informed Sunday publications, and is uncontested as such.
Mr. Leyden: I also welcome the Minister of State, Deputy Killeen, to the House. I received a letter from Mr. Tadgh O’Sullivan, chief executive of the Vintners’ Federation of Ireland. He casts serious doubts on the credibility of the consumer strategy group’s report. He makes serious comments; I will not use the word “allegations”.
Mr. Leyden: Mr. O’Sullivan states, “Clearly we would be concerned that the mistakes evident in this section are replicated in other sections of the report. If that is the case then the report must be consigned to the bin”. He is an expert on licensing law and picked out numerous flaws in the report. They should be seriously considered and investigated by the Department. If the report is flawed in this regard, where else might it be flawed? I hope Mr. Tadgh O’Sullivan will be in a position to attend a meeting of the Joint Committee on Enterprise and Small Business to put the author of the report to the test. I do not have time to go into the matter as the letter is dated 24 June and I have just had an opportunity to read it.
Mr. Leyden: I thank my opposite number, Senator Coghlan, for his worthwhile contribution. Some confusion exists, and Senator O’Toole put his finger on it. It is obvious the motion we put forward should be accepted without a vote. We welcome the publication of the report. This motion deals with the establishment of the organisation involved. It does not deal with the amendments put forward by the opposition. What confused me is that Senator Coghlan, who is not in a position to do so, criticised a section of the motion protecting the retention of the groceries order. I am flabbergasted.
Mr. Leyden: The motion supports the decision of the Minister to engage in a public consultation process on the future of the groceries order and notes the process is expected to be completed within two months. That is positive.
Mr. Leyden: Senator Coghlan is also aware of a statement by his colleague at our committee meeting when he clearly supported the retention of the groceries order. Deputy Hogan stated there was no evidence in the report that abolishing the ban would bring about a sustained level of lower prices, yet Senator Coghlan did not include his concerns in his motion. Deputy Hogan is the spokesperson for consumer affairs in the other House.
Mr. Leyden: I am trying to pick out the flaws of the Opposition’s argument. I am surprised and concerned by Senator O’Toole. He is getting weak at the knees about the retention of the groceries order.
Mr. Leyden: I wish the Senators well in its publication. I apologise for straying from the motion. I request the House to support our well-worded, detailed motion and avoid a vote. There is no reason to vote against the motion.
|Bradford, Paul.||Browne, Fergal.|
|Burke, Paddy.||Burke, Ulick.|
|Coghlan, Paul.||Coonan, Noel.|
|Cummins, Maurice.||Feighan, Frank.|
|Finucane, Michael.||Hayes, Brian.|
|Henry, Mary.||McHugh, Joe.|
|Norris, David.||O’Meara, Kathleen.|
|O’Toole, Joe.||Phelan, John.|
|Ross, Shane.||Ryan, Brendan.|
|Terry, Sheila.||Tuffy, Joanna.|
|Brady, Cyprian.||Brennan, Michael.|
|Callanan, Peter.||Cox, Margaret.|
|Daly, Brendan.||Dardis, John.|
|Dooley, Timmy.||Feeney, Geraldine.|
|Fitzgerald, Liam.||Glynn, Camillus.|
|Hanafin, John.||Hayes, Maurice.|
|Kenneally, Brendan.||Kitt, Michael P.|
|Leyden, Terry.||Lydon, Donal J.|
|MacSharry, Marc.||Mansergh, Martin.|
|Minihan, John.||Mooney, Paschal C.|
|Morrissey, Tom.||Moylan, Pat.|
|Ó Murchú, Labhrás.||O’Brien, Francis.|
|O’Rourke, Mary.||Ormonde, Ann.|
|Phelan, Kieran.||Scanlon, Eamon.|
|Walsh, Jim.||Walsh, Kate.|
|White, Mary M.||Wilson, Diarmuid.|
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