Sean Barrett on the transport bill

In today’s Irish Times, Sean is underwhelmed by the transport bill.

In my understanding, the new National Transport Authority merges a number of state bodies and has at least the potential to cut costs and create synergies. I probably disagree with Sean on that point.

I agree with most of the rest. I would have argued, though, that privatising the state-owned transport companies and cutting their subsidies would be welcome news for the budget. Dismantling the transport monopolies would bring welcome cuts in costs for households and businesses.

Draft submission to Innovation Task Force

The Innovation Task Force was appointed to advise the government on how to turn Ireland into an international innovation hub and to support the development of a smart economy. It’s easy to be cynical but better to be constructive. The ITF has issued a call for submissions on its terms of references:

  • to examine options to increase levels of innovation and the rates of commercialisation of research and development on a national basis with a view to accelerating the growth and scale-up of indigenous enterprise and to attract new knowledge-intensive direct investment;
  • to bring forward proposals for enhancing the linkages between institutions, agencies and organisations in the public and private sectors to ensure a cohesive innovation and commercialisation ecosystem;
  • to identify any specific policy measures which might be necessary to support the concept of Ireland as an International Innovation Development Hub including in the areas of legislation, educational policy, intellectual property arrangements, venture capital and immigration policy.

Here is my draft submission. All comments welcome. I’ll acknowledge your input by something like “A draft of this submission was posted at and substantially improved as a result of the discussion there. Comments by Malle Appie were particularly helpful.”

High wages require high labour productivity. High productivity requires excellent skills and creativity. Ireland can only maintain its position at the forefront of economic development if it fosters innovation and commercialization. Innovation is a creative process, however, and therefore cannot be mandated by government policy. The government can only create the conditions under which innovation and commercialization are likely.

Milk market transparency and competition

The EU Commission today published a report on the EU dairy market. It is mainly concerned with setting out the portfolio of measures available to alleviate the very difficult milk market situation. Demand for milk products, particularly the higher value products such as cheese and fresh products which account for 70 per cent of EU production, has been adversely affected by the economic downturn. At the same time, there has been a collapse in world market prices, due to a combination of production increases by other suppliers (New Zealand, Australia, Argentina, Brazil) responding to the dramatic increase in dairy product prices in 2007-08 and a drop in global demand due to the economic crisis.

The report also deals with the widening gap between the price paid to farmers for milk and the prices charged to consumers for milk products. The figures for Ireland are particularly startling, even if the pattern for other EU countries is broadly similar. Between Q4 2007 and Q1 2009, the price paid to farmers for raw milk in Ireland fell by 43%, with corresponding reductions in the wholesale prices paid for butter and skim milk powder of 44% and 41%, respectively. However, the CPI for the product category ‘milk, cheese, eggs’ (which includes other milk products but excludes butter) actually increased by 9% over the same period, compared to a 4% increase for food products generally. From the CSO databank, I calculated that the corresponding increase for butter was 2%, which while smaller, is still extraordinary in the light of the 44% decrease in the wholesale price of butter over the same period.

The Commission report underlines that this is not just an Irish problem. However, the Competition Authority’s recent investigation into grocery prices which recommended a relaxation of planning restrictions to encourage greater competition in the retail trade does not seem an adequate response to this total absence of price transmission in the dairy supply chain. At a minimum, we need much greater transparency in how margins are distributed between producers, processors and retailers.