The Government is determined to tackle inflation by exposing previously sheltered sectors to competition, the Tanaiste, Ms Harney, told an IBEC conference yesterday.
Ms Harney said the Government would tackle domestic inflation by full market liberalisation or by a pro-competitive regulatory regime that put the consumer first.
She singled out both the transportation and business-service sectors as examples of industries that needed to be exposed to greater competition. "In the past decade, while productivity has grown prodigiously in the modern export-orientated sector, its growth in the sheltered domestic sector (both public and private) has been disappointing," said the Tanaiste.
Unless productivity could be raised in these sectors, the Republic's ability to achieve non-inflationary growth and maintain international competitiveness would be threatened, she added.
A spokesman for the Department of Enterprise, Trade and Employment confirmed yesterday that the current inflation rate for services was running at twice that for goods.
The Tanaiste said contributing factors to inflation, such as oil prices or the weakness of the euro, were outside of Government control but it would seek to use competition policy to reduce prices and increase productivity.
"The significant reduction in telecoms costs as a result of liberalisation shows what can be achieved," said Ms Harney, who was addressing the employers group's conference on Technology: Everybody's Business.
Ms Harney said she was currently reviewing the resources available to the Competition Authority regarding enforcement to ensure that infringements of competition were vigorously pursued.
Meanwhile, the conference also heard that Europe tended to have a more risk-averse entrepreneurial culture than the US - and Ireland even more so. Mr Brendan Tuohy, secretary general at the Department of Public Enterprise, said people in the USA involved with start-up companies were allowed to fail in business whereas, in Ireland, if you failed once you were finished. Mr Tuohy said the E-commerce Bill, which would go before Government next week, would give the Republic an advantage over other countries which hadn't advanced their regulatory systems.
He said the Bill would not legislating on the issue of security. Mr Tuohy said he was personally in favour of not imposing taxes on transactions made over the Internet but this would have to be debated with the Department of Finance at a later date.
