The pace of deregulation in the Republic must be accelerated to foster productivity and economic growth, according to the Organisation for Economic Cooperation and Development. In a draft report on regulation in Ireland, the Paris-based economic think-tank said reform was needed to insulate the economy from "shocks" on the global markets.
The draft said reform was required in a number of sectors including retail pharmacies, the legal profession, the pub and taxi trades and in other markets such as energy and telecoms.
In the draft's executive summary, seen by The Irish Times, the OECD cited the Republic's "remarkable economic performance" in the 1990s but said few recent regulatory reforms appeared as yet to have contributed to such success.
On prospects for further gains, the OECD said the challenge was to move to growth based on productivity improvements.
"This shift in sources of growth requires a more nimble and dynamic economy rooted in a modern regulatory environment. "The current Irish regulatory environment is making progress, but does not yet meet that need. Large-scale change to competition is still necessary."
The capacity for further growth was also constrained by bottlenecks in housing and transport. It also cited labour shortages, particularly in the public service, which is struggling to tackle the infrastructure deficit. Weak competition in key sectors was another risk to future performance.
The report said competition policy continued to be a "key weakness" undermining the Republic's move to sustainable market-based growth. "Market reforms of utilities and infrastructure services still do not consistently apply competition principles, and anti-competitive licensing schemes survive," it said.
Of retail pharmacies, the report says more sensible regulation could bring down prices without endangering safety or accessibility. "The restriction on economic freedom of pharmacists educated in other EU countries should be eliminated, as should restrictions on the location and number of pharmacies."
Of the legal profession, it said the control of education and entry of lawyers should be moved from the self-governing bodies. Close ties should be maintained on the quality of entrants and the content of their education and training, it said.
On the pub and taxi trades, the OECD said lifting restrictions on the number of licences could produce significant one off reductions in prices.
On telecoms, the report said a number of steps were required to complete the regulatory framework and blamed the lack of supportive legislation for local loop unbundling for a "missed opportunity" to take the lead in reform of such deregulation.
It said reform of the energy sector was slow, though the potential benefits from such measures were large.
The OCED said: "Well resourced and independent regulation of the electricity and gas sectors should be ensured by shifting regulatory responsibility for tariffs, specific licence conditions and, for gas, transmission access to the electricity regulator authority, and by retaining enforcement of the competition law in the sectors with the Competition Authority."
Structured as peer review of the Republic's performance against international best practice, the final Regulatory Reform in Ireland report will be published next month.
