Dáil Éireann - Volume 545 - 27 November, 2001

Ceisteanna – Questions. - OECD Report on Regulatory Reform.

5. Mr. Noonan asked the Taoiseach if he will report on progress in the implementation of the OECD report on regulatory reform; and if he will make a statement on the matter. [24826/01]

6. Mr. Quinn asked the Taoiseach if he will make a statement on the progress of the implementation of the OECD report on regulatory reform; and if he will make a statement on the matter. [26415/01]

7. Mr. Sargent asked the Taoiseach the progress which has been made in implementing the OECD report on regulatory reform; and if he will make a statement on the matter. [27580/01]

The Taoiseach: I propose to take Questions Nos. 5 to 7, inclusive, together.

As I indicated in my reply to the House in May, the OECD report on “Regulatory Reform in Ireland” both records the good progress which has been made in certain areas of regulatory reform and highlights areas where further actions are needed. I am glad to report that considerable progress has been made in recent months in terms of implementation of the recommendations of the report. Last May, I told the House that a high level group on regulation was being established to give greater coherence in implementing “better regulation” measures across the full spectrum of Government activities. The group has met on five occasions so far this year, and is expected to make its first interim report to the Government in early January.

The group comprises representatives of key Departments, independent sectoral regulators and agencies and offices with a particular interest and role in regulation such as Forfás the Competition Authority and the Director of Consumer Affairs. The group has identified two major tasks. A public consultation document is being prepared which will be the starting point for a wide public consultation process which will promote dialogue, greater public awareness of regulatory reform and better regulation. The group hopes to finalise a consultation document in early January with a view to commencing the public consultation phase in February. It is intended that this process will lead to an over-arching policy statement on “Better Regulation”, perhaps ultimately in the form of a Government White Paper.

The policy statement will gather together the strands of the better regulation-regulatory reform agenda and set out the core principles which should govern what gets regulated and how areas of economic and social life are best regulated.

The second main issue identified by the group is the need to develop a system of regulatory impact assessment. The group's work in this area [13] is intended to address one of the main criticisms made by the OECD in its report – namely the need for a systematic, rigorous assessment of proposed regulations before they are enacted. In common with many other OECD and EU countries, this will mean developing a system of impact assessment to ensure that we properly consider alternatives to regulation and legislation and that, where legislation is necessary, we seek to quantify in a systematic way the likely economic and social impacts of regulatory proposals.

Any model of regulatory impact assessment that is developed for introduction in Departments must assist the quality of regulation and must not slow the legislative process. The ultimate benefit of impact analysis will be to avoid inappropriate regulations and to minimise both unintended effects and undue burdens of compliance on individual citizens and consumers, on businesses – especially small businesses – and on markets. There will need to be significant training for policy makers in respect of the application of whatever assessment model is developed.

In addition to these two major tasks, the group is also monitoring progress on particular regulatory issues, including the ongoing reviews of specific regulations in sectors such as pharmacy services and liquor licensing. The Competition Authority has also embarked on its own study of professional services. While these are the highlights of the group's work to date, all Departments have been asked to consider fully the implications of the OECD report within their respective areas of responsibility and, where appropriate, take action to ensure better regulation for their customers, for the economy and for society in general.

Mr. Noonan: The OECD report, which is the subject of these questions, was published in April last and the Government responded by setting up the implementation group. I put it to the Taoiseach that he is aware the OECD report included criticisms of pubs, pharmacies and the electricity and gas services. It strongly recommended that these areas should be subject to deregulation. Has the Taoiseach a view on the deregulation of the aforementioned bodies?

The Taoiseach: There has been Government action on a number of these areas. All of the sectoral areas mentioned by Deputy Noonan are in the first instance the concern of individual Ministers who have already answered specific questions on these issues.

The Minister for Health and Children has spoken on pharmacy deregulation. A working group on liquor licensing has published its first report and is shortly to publish its second report. Likewise with the issues of telecommunications, energy and transport.

I understand the terms of reference for the review of the pharmacy sector has been agreed and the first meeting of the group established by the Minister for Health and Children, chaired by [14] Dr. Mortell, formerly of UCC, has taken place. An advertisement was placed regarding his submissions on this issue and on the operation of the regulations, and the review is ongoing. The Minister for Justice, Equality and Law Reform has already set up a review on which he gave a detailed account on 25 October last.

With regard to telecommunications, Deputy Noonan will be aware that the regulatory functions were transferred to the Office of the Director of Telecommunications Regulations in June 1997. The OECD report on regulatory reform concluded that unbundling the local loop would be an important step in upgrading the telecommunications network. While the regulatory framework to do this is now in place, the take-up is still at a very early stage due to the cost related issues. In August, the Director of Telecommunications Regulations set out the minimum criteria for the handling of customer complaints by telecom operators.

Energy is a matter for the Minister for Public Enterprise and the issues relating to the Electricity Regulation Act, 1999, on the internal market and the various directives on the new regulatory regime have been established. The Electricity (Supply) Amendment Bill, 2001, provided for full liberalisation and the new bodies and structures operate under the Commission for Electricity Regulation. The Eirgrid energy transmission system is now designed to facilitate competition. On these areas as well as in transport and others, action is ongoing and the work of the committees will feed into them as they proceed. The committee hopes that, in addition to the areas about which Deputy Noonan has asked, it will address these areas simultaneously because they were mentioned by the OECD. It is also drafting a national policy statement on regulatory management for these and other areas.

As I said in my earlier reply, it is also setting up a regulatory impact analysis group. I attended a meeting of this group recently and its interim report should be available next January. It will take some time to do that work but this will not delay work on the more pressing issues that have been highlighted.

Mr. Quinn: Will the group address the issue of consistency of the various regulators within the offices in its interim report? In addition will it consider the merits of having an integrated office of regulation, having regard to the relatively small size of the economy and the need for consistency, both in procedures and in thinking, as well as the lack of resources and the delays being caused in certain sectors?

When will the group dealing with pharmacies, to which the Taoiseach referred in his reply, report?

The Taoiseach: The first matter has been discussed in the House a number of times. A number of regulators are sitting on the committee and it is their hope, on the basis of the meeting I [15] attended and briefing material I have read, that the committee will maintain standards and play a full role in this group, even though there are different EU regulations for the various sectors in terms of conducting a regulatory impact analysis. I cannot guarantee, given the different legislation and regulatory regimes, that the committee will achieve that. However, the committee is independent and while it has various remits, it will, I hope, help to achieve that.

On the issue of pharmacies, the committee chaired by Dr. Mortell set itself a target of one year to complete its work. I am not sure when it started but it was not long ago.

Mr. Sargent: Does the Taoiseach agree the current restrictions on the licensed trade and the pharmaceutical sector allow them to operate effectively as a cartel? Deregulation is required but, on the other hand, if the Groceries Order was abolished and the retail trade deregulated, many small shops and producers would suffer badly. Are those sectors to be dealt with in different ways?

Has the Government agreed a position in regard to the timescale for reporting on the implementation of deregulation of liquor licensing and pharmacies, in particular? The Tánaiste stated in April that the matter could be reported on within a few months or certainly by the end of the year, while the Taoiseach was reported as saying it would be reported on before the end of 2002. Has the Government a clear line on this issue as those two positions are at variance?

The Taoiseach: On the first question, there are difficulties. The Competition Authority is examining the professional services. Pharmacies, liquor licences, telecommunications, energy and transport are ones to which I have referred. The OECD report pointed out that Ireland is well advanced for a small country in many of these areas but once one touches any of them, there are difficulties because the implementation of deregulation creates difficulties for the sectors involved. That is why vested interests in these sectors must be given the opportunity to argue their case. The Deputy will be aware they do so trenchantly. They will outline how deregulation would affect them and work against the consumer. They appear to have good arguments in some cases but if one accepted all the arguments one would not do anything.

If one looks back over the past decade, an enormous amount of legislation has been passed by the House in the area of deregulation, which has set new ground rules and regulated new sectors. The work programme set down by the regulators, Forfás and the other agencies and Departments for the first five meetings is enormous and their work will go on for the next decade. None of these sectors will be dealt with easily.

The Oireachtas Joint Committee on Enterprise and Small Business issued an excellent report on the Groceries Order, which was laid before the [16] House, and it found favour with a majority outside the House.

With regard to pharmacies, the committee set a target of one year from the time work commenced. To the best of my knowledge it commenced last August.

On liquor licences, an interdepartmental group has been established to progress recommendations made in the report of the Commission on Liquor Licensing. It initially reported to the Government in June and is expected to report again by 31 January 2002.

Mr. Sargent: What is the timescale for implementing the deregulation of pubs and pharmacies?

The Taoiseach: Dr. Mortell's report will be published within a year.

Mr. Sargent: A year from when?

The Taoiseach: A year from when it commenced.

Mr. Sargent: So the Tánaiste is wrong?

The Taoiseach: It commenced during the last few months. The next report of the group on off-licensing will be published on 31 January.

Mr. Noonan: The deregulation of the taxi service has been less than a resounding success. If I had more time I would pursue some questions on the matter.

An Ceann Comhairle: That is a matter for the Minister for the Environment and Local Government.

Mr. Noonan: Yes, but deregulation has been proposed in the OECD report. Is the Taoiseach aware of the hardship visited on certain people, for example, widows of taxi drivers and people who must pay large mortgages because of the purchase of licence plates? These people had the asset value of their licences eroded as a result of deregulation. Does the Government propose to compensate these people?

The Taoiseach: I am aware of the problem. Like, I am sure other Members, on many occasions I met FAIR which represents these people. The Minister of State, Deputy Molloy, answered questions recently and he has met representatives of the Taxi Drivers' Federation and union.

Mr. Noonan: Are there any proposals?

The Taoiseach: I am not sure. It is an extremely complex matter because the different groups have made different suggestions. I understand the issue in relation to the hardship cases. The question of dealing with the asset was rejected in the Supreme Court case. It would be extremely diffi[17] cult to do anything in regard to the disposal of the asset in light of the Supreme Court case, which ruled that the asset is not for sale.

Mr. Stanton: Does the Taoiseach propose to appoint a regulator for the sugar beet industry given the difficulties that exist?

The Taoiseach: A case is being made in that regard and a case is also being made that it would not be a good idea. I have heard both sides of the argument in the past week. On the face of it, it does not seem that is the issue. It seems it is a case of trying to agree an arrangement that goes beyond one year. I do not think the appointment of a regulator will resolve the issue.