Two Fianna Fail backbenchers last night criticised the deregulation of the taxi industry. They were speaking during the resumed debate on a Fine Gael private member's motion deploring the "worsening chaos" across all sectors of the public transport system.

Earlier, the Tanaiste, Ms Harney, warned that blockades by taxi-drivers "cannot and will not be tolerated". She added that those who broke the law "will have to suffer the consequences of lawbreaking".

Mr Ivor Callely (FF, Dublin North Central) said the Minister of State for the Environment, Mr Robert Molloy, should meet the representatives of the taxi industry and negotiate proposals for a compensation package.

"I am surprised, and somewhat disappointed, especially as a member of the Government benches, that Minister Molloy introduced his blunt instrument during last night's debate, without any dialogue or consultation with representatives of the taxi industry.

"It is a matter of regret that representatives of the industry, including SIPTU, one of the largest unions in the country, failed to achieve an audience with Minister Molloy today to discuss this very serious and important issue."

Mr Martin Brady (FF, Dublin North East) said: "As a former trade union official, I have reservations about any scheme which permits unrestricted access to the business, as the new scheme announced last night does. The Government has a duty to regulate, in the interests of operators and consumers, on matters such as the quality of service, standards, health and safety and so on."

But he believed, he said, that the taxi-operators were being "treated very shabbily", and the Government had a duty to deal with the issue. During Enterprise, Trade and Employment questions, Ms Harney said "those who break the law will have to suffer the consequences of lawbreaking". She appealed to people "to sit down and discuss the issues and not to engage in discommoding the travelling public. Some people seem content in bringing the country to a standstill."

She said the taxi industry should have been deregulated years ago, and the right decision had been taken by her party colleague Mr Molloy.

She was responding to Labour's Enterprise, Trade and Employment spokesman, Mr Pat Rabbitte, who asked about the number of work days lost in industrial action last year. During 1999, a total of 215,000 days were lost due to industrial action, of which 170,000 were due to the nurses' dispute.

Mr Rabbitte was concerned at the extent of industrial action. He said people could not get to work in the morning, to hospital, to the airport or get a taxi, could not get their children to school or, if they could, there was nobody to teach them, could not have planning applications approved in the area of local government.

He asked: "Is anybody's hand on the tiller?"

The Tanaiste agreed that "to put it at its mildest, I share the Deputy's concern at the public being discomfited and greatly inconvenienced as a result of the industrial disputes we have witnessed, many of which are in the public sector".

Mr Rabbitte asked if the Minister agreed that "the taxi-men have been led up the hill by the Taoiseach, in his capacity as Duke of York, acting in response to those who are lobbying for them on the backbenches, such as Deputies Ivor Callely and Noel Ahern?"

"The deregulation of taxis should have happened a long time ago," Ms Harney replied. "Until 1978 we did not regulate market entry. Regulation was brought in to improve the quality rather than to limit market access but it had the opposite effect. It is a Government decision. The Government is behind what the Minister, Deputy Molloy, did. He is right. He put the public interest and consumers first."