Report urges merger to create single regulatory body

The Enterprise Strategy Group report, which will be published today, is expected to recommend a merging of the gas, electricity, telecoms and broadcasting regulators.

The proposals to combine the four "network" regulators is contained in a late draft of the report. Sources familiar with the draft say the regulatory regime was reviewed as part of the wider study on cost competitiveness.

It notes the number, cost and lack of co-ordination between the four regulators and also the increase in prices that have occurred in regulated sectors, particularly the electricity market.

The report also points out the lack of co-ordination between the regulators and Competition Authority as well their failure to achieve objectives set out in the National Development Plan in their areas of responsibility.

The group argues that there might be a strong case for a single body to replace the four existing organisations. The benefits would include a common and predictable approach to regulation across the economy.

The new regulator would also be in a better position to deal with emerging technologies that, under the current set up, would fall between two regulators.

There would be cost savings with a single regulator and it would be in a better position to develop specialist skills in areas such as regulatory law and economics. The report also notes that a powerful single regulator would also be better placed to deal with legal and political challenges to its authority.

The telecoms sector is currently regulated by the Commission for Communications Regulation, chaired by Mr John Doherty. The Broadcasting Commission of Ireland, chaired by Mr Conor Maguire, deals with radio and television. The Commission for Energy Regulation under Mr Tom Reeves regulates the gas and electricity market. The Enterprise Strategy Group, chaired by business consultant Mr Eoin O'Driscoll, has taken over 11 months to prepare its 150-page report.

The study will provide a basis for re-shaping industrial policy, according to the Tánaiste, Ms Harney, who commissioned it.

The overall thrust of the report is that the State must reduce its reliance on low tax rates as a driver of economic growth and must invest more in training and research if it wishes to remain competitive.

It says that the Government needs to invest in infrastructure "ahead of demand" rather than responding to events. Infrastructural investment should be prioritised in line with the national spatial strategy.

The report does not deal with the issue of decentralisation, but says there is a need for the six key economic ministries to operate more closely, including finance, education and science, and enterprise, trade and employment. Opponents of decentralisation will argue that relocating the departments outside Dublin will have the opposite effect. They will also point out that the decentralisation plan effectively ignores the national spatial strategy.

The report says Government should support indigenous firms by funding more research and focusing on training and "upskilling" existing workers.

The State's capacity to provide grants to industry will be curtailed after 2006, as the Republic is not expected to receive any funds under the next EU structural funds programme. To compensate for this, it advocates a shift from a company-based grants to the funding of clusters of companies in the same sectors.

The report also argues that there is a need for more state support for applied research along the same lines of the funding provided for basic research via Science Foundation Ireland and other bodies.