Friday 20 January 2017

'The Poor Ould Fellas' aren't throwing back many bottles of Dom Perignon

The argument for a price floor on alcohol is noble, but it is ordinary citizens who will feel the pinch, writes Marc Coleman

Published 22/01/2012 | 05:00

In their book of the same name, Declan Lynch and Arthur Matthews lament the exile of "The Poor Ould Fellas" from pubs, friends and social lives by the smoking ban and public transport famine. The cost of drinking in pubs hasn't helped either.

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But if plans to impose a floor on the cost of alcohol proceed, pensioners are about to get poorer, as are hundreds of thousands of alcohol consumers who -- through being unemployed or on low incomes and not through any desire to abuse alcohol -- are now forced to depend on retail sales for the few drinks they have at the end of the week.

For one unemployed person I know, the eight cans of beer he gets for €10 -- his entirely weekly consumption -- is one of the few comforts he has left.

While it might not be noticeable for well-paid government ministers or civil servants planning to raise alcohol prices -- or the media commentators cheering them on -- for the quarter of households who now, according to the Irish League of Credit Unions, have €20 or less per week in disposable income after all bills have been settled -- and the vast majority of whom don't abuse alcohol -- further increases in alcohol prices would be another blow.

In November of 2010, Joe Duffy argued that alcohol prices were too low and that they should be further taxed. But, if like Joe, you earn over €400,000 a year, a bottle of Dom Perignon at the Shelbourne is probably cheap. For the Poor Ould Fellas, and for the many of our citizens scraping to get by, a deal on a six pack of beer or bottle of wine is the last comfort they have left.

Highly paid advisers and ministers may not earn the same kind of money as Joe Duffy. But their six-figure salaries and secure pensions do remove them from the reality of trying to get by in what is still one of Europe's most expensive places to live.

As Eurostat data shows this applies to drink prices. Tobacco and alcohol prices are not just the highest in the eurozone but a staggering 70 per cent above the EU average. Nor have they significantly dropped as suggested: Since 2001 alcohol prices are up 24 per cent.

Does that mean we don't have a serious teenage drinking problem? Or that Roisin Shortall's initiatives on this are not laudable and a credit to her? Of course not.

The minister is also right to point out that drinking in pubs is socially healthier. But the vast majority of mature citizens know what they are doing when they buy drink in a retail outlet.

Judging or constraining their behaviour because of a minority is patronising. Did we eliminate interference and moralising from the Catholic Church only to replace it with moralising from a secular nanny state?

The minister is spot on in almost everything she is doing as regards education and culture and deserves our full support.

But as she admitted on my show recently, there is considerable lobbying to persuade the Government to set a floor for alcohol prices and confusing this noble effort with a response to lobbying will induce cynicism. Retail alcohol prices are understandably seen as a threat by the pub trade. But from a consumer point of view they are anything but low.

If big multiples are -- as the pub trade claims -- using bulk buying power to set alcohol prices below cost this is a matter for competition policy and the Competition Authority, not Roisin Shortall's department. And as Torlach Denihan of IBEC pointed out, we have one of Europe's highest cost bases.

Even at 'below cost' prices, our alcohol prices remain well above EU levels and as long as that remains so the Government is on very dangerous ground in mixing its policy motives and policy methods.

The real problem facing both the food and drink sector is not low prices, but high costs. High labour costs, caused in turn by high living costs, high insurance costs, local authority rates and electricity costs are all factors that undermine Ireland's competitiveness.

Given their higher overheads, these are also costs that hit pubs much harder than retailers. Instead of setting anti-competitive price floors that raise the cost of living for the vast majority of consumers who don't abuse alcohol, the Government should be reducing the costs imposed on pubs by the sheltered sector of the economy.

The simple fact is that we can't afford to take any measure now which might raise the cost of living. As Friday's inflation figures show, the European Central Bank and the private sector is working hard to restore Ireland's competitiveness by lowering interest rates and prices respectively. For four years Ireland's HICP inflation has run at less than the EU rate, restoring badly needed competitiveness and lowering wage pressures.

This process is absolutely crucial to job creation and needs to continue. But the State has so far been working against it; compared to an overall price level rise of 22.5 per cent, prices in the State-dominated health, education and transport sectors rose by 56.6, 69.5 and 28 per cent respectively.

As mentioned above, were alcohol prices here below the EU average there would be an argument for a price floor. But unless your tipple of reference is a bottle of Dom Perignon at the Shelbourne, they aren't. So there isn't.

Finally a word on privatisation. Depending on your point of view, it reared its lovely/ugly head last week. Troika member Istvan Szekely was spot on last week when he said that the purpose of privatisation should not be to rake in revenue for the exchequer. This should be nothing more than a positive side effect. The real reason he said we should privatise is to enhance competition, reduce prices and raise productivity and growth. Government, please take note.

Follow @marcpcoleman on twitter and listen to 'Coleman at Large' each Tuesday and Wednesday from 10pm on Newstalk 106-108fm

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