The Taoiseach, Mr Ahern, has pledged to curb high inflation by tackling opportunistic profit-taking and promoting competition.
Acknowledging the "immediate concerns" that inflation was running above the levels of our euro-zone partners, Mr Ahern said domestic inflation must now be targeted by competition and a regulatory regime which puts the consumer first.
Mr Ahern said we could not allow a situation where there was excessive profit taking, especially through anti-competitive practices. There was evidence of opportunistic profit-taking in the prices of services, food and drink, he said. "We rightly espouse the benefits of a vigorous market economy. We must also recognise that vigorous policies to support competition are a characteristic of the most dynamic economies, including the United States," Mr Ahern told the IBEC biennial dinner in Dublin.
In his speech, IBEC outgoing president Mr Richard Burrows said increased "real competition" and deregulation were the best ways of dealing with inflation.
While the Taoiseach said he was not suggesting controlling inflation by preventing businesses from making a fair profit, the Government could not allow excessive profit-taking, especially though anti-competitive activity.
Everyone needed to heed the message that businesses, as well as consumers, were damaged by anti-competitive practices.
"I think you will agree that we need to act firmly to stamp out anti-competitive behaviour which has been estimated to cost between 1 and 2 per cent of GNP. This would represent up to £1 billion (€1.27 billion) per annum in our economy.
"Domestic inflation in previously sheltered sectors must now be targeted by competition and a regulatory regime which puts the consumer first. The reduction in telecoms costs as a result of liberalisation shows what can be done," he said.
Mr Ahern said the Government had committed new resources to the Competition Authority to help its work and was confident that this would greatly strengthen its ability to protect consumers and businesses alike.
He said maximising prices because of a lack of consumer resistance was not sensible. It weakened the solidarity on which social partnership was based and could ultimately threaten the framework which had contributed so much to our economic and social success.
It was critical, said the Taoiseach, that the challenges faced by inflation were faced together with the social partners and the Government.
The Taoiseach said he was confident that the problem of inflation would be solved together. "We will do so, confident in the knowledge that throughout the period of social partnership, increases in real take-home pay have far outstripped inflation."
Mr Burrows, said IBEC recognised that inflation was higher than predicted and was a matter of concern. However, he warned that IBEC "regards the commitments in the Programme for Prosperity and Fairness (PPF) and adherence to its terms as absolutely fundamental and an area where absolutely no fudging is acceptable."
"We have no room for complacency but we should not minimise what we have achieved. We have to recognise success if we want to protect it and expand it. If I have one message tonight it is this - let's not blow it," said Mr Ahern.
In relation to labour supply, the Taoiseach pledged that the Government would continue to do all it could to develop the workforce. He said not enough employers had recognised the new reality of a highly mobile and skilled labour market.
Meanwhile, the introduction of price controls in pubs through the use of ministerial price orders was under active consideration, the Minister of State for labour and consumer affairs, Mr Tom Kitt, said yesterday in Brussels.
Mr Kitt said the Taoiseach and several ministers were co-ordinating a package of measures to tackle aspects of inflation. He was concerned that profiteering by some publicans was contributing to the 1.2 per cent share in the inflation figures attributable to drink alone.
A prices order would allow a minister to freeze prices at current or even below current levels.
