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Tuesday, December 05, 2006

A story like Xerox can spoil the Budget Party

Irish tax revenues are expected to rise by 16% in 2006 and the Exchequer is awash with cash as confirmed by the detail on the public finances that was published on Tuesday.

The reliance on a property boom that provides 17% of annual tax revenues, up from 4% a decade ago plus tax revenues from sectors benefiting from property related spending that may well put the revenue reliance in the range 25%-30%, is a clear vulnerability.

The other pillar of our prosperity is US investment and today, one of our big US employers Xerox, confirmed that it is reviewing the future of its 1,300 person workforce at Ballycoolin, near Blanchardsown, Dublin.

So as some marvel at the unprecedented flows of funds into the Exchequer, there is no urgency to undertake reforms in governance structures and removing the privileges of vested interests. It's a depressing situation and there cannot be much hope of change.

The following is from a 2006 OECD paper:

A combination of entry restrictions and price regulations has resulted in an uncompetitive, distorted and expensive retail pharmacy sector. Ireland is the fourth most expensive country in the euro area for medicines (Department of Health, 2003). Pharmaceutical prices at all levels of the distribution chain are set by government-industry agreement. Wholesale prices are set by comparing UK prices and an average of five other countries, taking the lower of the two.

The retail margin depends on who is paying. For medical card holders, the government fully reimburses the patient and pays a fixed disbursement fee of around 3 per item to the retailer; other prescriptions and non-prescription medicines have a 50% markup. Overall, the retail margin is around 33%, which is one of the highest in the European Union (Purcell, 2004).

Moreover, unlike in many other countries, pharmacists are not permitted to reduce costs to the consumer and insurer by substituting a cheaper generic equivalent.

The two pharmacists in the Oireachtas - Junior Minister Tim O'Malley and Senator John Minihan are members of the Progressive Democrats.

Remember in October, when competition in aviation became an issue of admiration or lip-service by politicians and trade unionists?

Why would politicians take on vested interests when they are part of the system themselves?

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