The Minister for Finance, Mr McCreevy, should avoid inflation-fuelling increases in VAT and excise in tomorrow's Budget, the National Competitive Council (NCC) warned yesterday.
Launching the council's annual report, chairman Mr William Burgess said Budget 2004's overriding aim should be to cut inflation to less than 2 per cent. "The Minister should avoid any action in terms of increasing customs and excise or VAT," he said.
Mr Burgess welcomed the fact that the rate at which consumer prices were increasing was down to 2.3 per cent, but he stressed that it had to fall below the EU average of 2 per cent. Council member and Competition Authority chairman, Mr John Fingleton, said a lack of competition in the domestic economy was contributing to inflation.
The report recommends that the Government and the authority explore the feasibility of introducing civil sanctions for some competition law offences. Mr Fingleton explained that this would make it easier to prosecute offenders. He pointed out that the Republic was the only EU country that relied solely on criminal sanctions. He also said Government regulation created barriers to entry in sectors like retailing, pharmacies, pubs and the professions.
The report compares the State's performance against 15 other countries across 128 key competitiveness indicators. It shows that while the average Irish worker's productivity was second only to the US at $67,213 (€56,000) in 2002, a number of key business costs were high.
In the area of broadband, the report shows that of 13 countries,Ireland had the second highest broadband charges last year at €175 a month, and the highest for national broadband circuits (the lines leased by independent operators) at €34,108. It also shows that in 2002, the Republic trailed in 11 out of 12 for telecoms investment, 13 out of 14 for broadband access and 13 out of 13 for take-up.
However, Mr David McRedmond, commercial director of Eircom, which owns the State's largest broadband network, said last night that this year the company had cut the average retail cost of its standard service to €65 per month for rent and use. He also said it had reduced national leased line costs to the point where they were the fourth cheapest in the EU.
In the area of infrastructure, council member Ms Annette Hughes said the State ranked 15 of 16 for overall quality. The report calls for a specialised planning authority for national infrastructure projects and the appointment of a single High Court judge to deal with planning appeals and judicial reviews in this area.
Ms Hughes said the current method of calculating compensation for compulsory purchases of land for infrastructure projects should be reformed. She said that figures like the €161,900 per hectare paid last year for the land needed for the Kilcock/Kinnegad stretch of the Dublin Galway motorway could not be sustained. "The key issue is that we must ensure that we are getting value for money," she said.
