On May 17th, this newspaper ran an editorial headed "Time to Deregulate", which dealt with the subject of the licensed bar trade. It set out a number of arguments made by some of the parties in this debate and, based on these, concluded that the case for deregulation was compelling.
There were a number of major flaws in taking this approach that contributed largely to the editorial arriving, in my opinion, at the wrong conclusion.
Firstly, in the final paragraph, the editorial states: "There is no basis for his [Mr Richard Dunne, Vintners' Federation of Ireland president's] assertion that deregulation would lead to a worsening level of alcohol abuse."
Unfortunately, there is a conclusive report from the Competition Authority which backs up Mr Dunne's claim. In this, two economists in the department of economics in University College Dublin, Dr Colm Harmon and Dr Anthony Murphy, found statistical evidence of a link between the number of licences and the demand for the product - i.e., an increase in the number of licences leads to an increase in demand for alcohol. And the more people drink, the more alcohol abuse occurs. Of course, the major alcohol-related problem in Ireland is not access to the product - it is a problem of over-access and overindulgence. Our adult drinkers are statistically number two in the world after Luxembourg in per capita alcohol consumption. But when we take into account the high proportion, in international terms, of our adult population who abstain (25 per cent), we undoubtedly are leading the world in consumption. Not forgetting that a recent survey showed that our 14/15-year-olds are Europe's leading binge drinkers.
These are not just cold statistical facts; they impinge on almost every aspect of Irish life. While this has had a significant effect on society and the economy through road fatalities, drownings, suicides, violence, crime, poverty, family disintegration and absenteeism, these fade into insignificance compared to the effect on our health services.
Dr Peter O'Connell, an accident and emergency consultant in the Mater Hospital, is reported as stating that, on average, 25 per cent of casualty admissions are for alcohol-related injuries, and that on some nights this can be as high as 50 per cent. Really sick people are being left unattended because our casualty departments are clogged up with alcohol-related admissions. The Minister for Health tells us the annual cost to the health service of alcohol-related illnesses is £1.5 billion.
Mr Martin sees an improved service at point of entry in our hospitals as imperative to solving the health crisis. Deregulation of the pubs he sees as exacerbating the problem and he is committed to opposing it. The views of the Minister, the medical profession and the gardai are important in this debate.
The second argument for deregulation in the editorial was that it would result in a reduction in the price of drink. There is no evidence to suggest this.
Considerable research shows that price is not an important factor in the consumer's choice of pub, just as it is not an important factor in the choice of restaurants. What are important are the staff, comfort, decoration, theme, crowd and overall ambience. In the last five years competition in the Dublin pub trade has increased substantially. A study on behalf of auctioneers Morrisseys indicates that in that period the number of licences in the city centre increased by 58 per cent while, more significantly, the square footage increased by 207 per cent. The increase in supply has far exceeded the increase in demand but this has not brought down prices. The experience in rural Ireland, where there is a glut of pubs and where competition in the pub trade is intense, indicates that deregulation would have no effect on prices.
What are the facts about the price of drink in Ireland?
A pint of beer costs considerably more in Paris, Copenhagen, Brussels, London, Amsterdam and Vienna than in Dublin. This despite the fact that the Government's take in Dublin is twice that in London. In Ireland, when the drinker pays £2.40 for a pint, roughly one-third goes to each of the three parties involved - the brewery/wholesaler, the Government and the publican.
Do the vintners' organisations try to operate a price-fixing cartel? If they do, they are not doing a very efficient job. The real hallmark of a cartel is that it controls supply and pricing. There is no indication that such a situation operates in Ireland.
The editorial referred to a raid some years ago on the offices of the vintners' organisations, seeking evidence of price-rigging. The Competition Authority has not, to my knowledge, processed the case, formulated charges or given any indication of evidence discovered.
This delay is either indicative of the authority being remarkably inefficient/remiss in its duty, or that it does not have a case. It also allows it to hide behind the sub judice excuse when pressed to explain its contention of price-fixing.
That said, John O'Donoghue effectively deregulated the licensed trade with his Liquor Licensing Act 2000. This freed up the transfer of licences, allowing the transfer of rural licences to Dublin.
The cost of a licence has fallen dramatically and one can now be obtained for a little over £50,000. This is minuscule in the context of the legal, planning and furnishing cost of opening a Dublin licensed premises. The only obstacles to opening a new pub in Dublin are the planning laws and Garda and resident opposition.
In February, a Lansdowne Market Research survey found that 95 per cent of adults in Ireland believed we had too many or a sufficient number of outlets selling alcohol. Who really is behind the drive for more pubs?
Of greater concern should be the question of enforcement. The courts have the power to close down licensed premises found supplying under-age drinkers. In a submission to the Commission on Licensing, the Pioneer Association recommended that a Garda undercover unit be established with the objective of stamping this out and of combating drunk driving. It also advocated the expansion of the age identity card scheme and the abolition of the £5 charge involved.
It agreed with your editorial regarding the excessive mark-up the licensed trade imposes on soft drinks and mixers. This is three to four times higher than the mark-up on alcoholic drinks and is unacceptable.
A final word to your columnist Kathryn Holmquist, who lamented on RTE's Questions & Answers that she could not get a gin and tonic in her favourite restaurant and blamed this on the licensing laws. The answer is that any Bord Failte-approved restaurant can easily get a full licence on payment of £3,000.
Could it be that the real reason many restaurants do not want a spirits licence is that the bar markup which could reasonably be applied to a gin and tonic would be unacceptable to them compared to the £30£40 they can charge for the bottle of wine they import at £5£8? Restaurants, of course, are not subject to regulation in the sense that pubs are. Who said deregulation and competition bring down prices?
Des Gilroy is an economist and marketing consultant with Summit Marketing Consultancy