More money for Dublin Bus, tax incentives for employee share ownership and a childcare package are part of a radical package of proposals to be considered by the Government next Tuesday in an effort to tackle inflation.
The provision of more pub licences to boost competition in the drinks industry is also on the agenda, as is a repeal of the Groceries Order which bans below-cost selling.
The measures will be outlined to employers when the Taoiseach and the Tanaiste meet IBEC this morning, following corresponding discussions with the ICTU earlier this week.
The Government is considering other measures, such as cuts in indirect taxation and price controls, to bring the headline rate of inflation down from its current rate of 5.2 per cent. Fears that this could accelerate towards 6 per cent have led the ICTU to demand action as pay increases of 5.5 per cent under Partnership for Prosperity and Fairness (PPF) are seen as being eroded.
However, the ESRI yesterday warned the Government that such measures could backfire and that a "knee-jerk reaction" could result in more inflation down the line.
Speaking after the publication of the ESRI quarterly review, its editor, Mr Danny McCoy, warned that cuts in indirect taxation such as duties on alcohol or petrol would only increase demand. They would need to be matched by increases in other areas, such as road and water charges, he said.
He added that cuts in excise duty on petrol should be completely ruled out as they would be contrary to environmental commitments and priorities.
"These measures are just messing with the thermometer and are not easing the overheating of the room," Mr McCoy said.
Other areas on which the Government is likely to take action include transport subsidies, particularly to CIE, which could make commuting to work cheaper and less stressful. It might also make some progress, or a guarantee of it, on childcare and move to make employee share options schemes more tax-efficient at the next Budget.
Neither of these will have a pronounced impact on consumer prices, but it is hoped they will make the public happier about waiting until the next Budget in December for a new tax package.
The measures to tackle the grocery and pub trades will be most contentious and should help bring inflation down. A repeal of the Groceries Order would allow below-cost selling and could lead to a supermarket price war. It would thus lead to a fall in inflation in the short term.
However, IBEC will be lobbying hard against any repeal. It has warned that it would do longterm damage to the retail sector and that small family-owned shops would be wiped out.
Mr Pat Delaney, director of the Small Firms Association, a part of IBEC, said removal of the order would also result in the closure of a number of small suppliers. He added that the ban on below-cost selling and the restrictions on "hello money" and payment of suppliers' accounts should be retained.
The Government is also considering freeing up the number of pub licences in the Dublin area to allow a greater level of competition. The Intoxicating Liquor Act currently before the Dail makes no reference to this, but observers say price controls would be absurd while the lack of competition in the market was retained.
The enforcement of a price order would also be difficult and possibly unconstitutional, with enforcers having to get incontrovertible proof of how much any pub charged for a certain drink on a set date in the past and then policing that.
According to Mr McCoy, price controls are temporary and enforceability has to be taken into account. "Price controls could keep a lid on prices for a short while but they would then just burst out," he said.