Does Government mean business on regulatory reform?

At first glance, observers may have thought there was something familiar about the Tanaiste Ms Harney's comments earlier this week when she promised to abolish restrictions on pubs and pharmacies within a year.

In December 1998, extensive coverage was given to comments Ms Harney made concerning the taxi industry. Dubliners had just walked their way through yet another Christmas that was, for all intents and purposes, devoid of a taxi service. As the New Year approached, Ms Harney told the newspapers: never again; this will be sorted by next Christmas. But it didn't quite work out that way.

Now Ms Harney and the Taoiseach, Mr Ahern, have put their credibility on the line regarding not just one strong interest group but several. Publicans, solicitors, barristers, accountants, pharmacists, hospital consultants and the State-run energy companies are among the likely targets.

The Cabinet has committed itself to providing backing to the various departments, agencies and regulatory authorities involved in introducing change to a number of key sectors, and to issuing reprimands to those found to be dragging their heels.

On Wednesday it agreed to establish a high-level committee, based in the Taoiseach's Department and chaired by a senior official from that department.

The committee is a direct response to the Organisation for Economic Co-operation and Development (OECD) report Regulatory Reform in Ireland. In particular, it is a response to the report's argument that the forces in favour of change need support to overcome the existing powerful lobby groups. "Current mechanisms to implement the regulatory reform system are too weak to change long-established habits and cultures, to protect the regulatory system from pressures from special interests, to offset perverse incentives within the ministries and agencies, and to co-ordinate the difficult agenda of regulatory reform," the report states when calling for the establishment of the high-level committee.

One of the committee's key jobs will be to get all the parties involved singing from the same hymn sheet - not an easy task. A critical player in the introduction of more competition should be the Competition Authority, yet, despite all that was heard this week, it is finding it difficult to get the resources it needs to conduct the work it currently has on hand. A report on the authority, which Deloitte & Touche prepared last year, recommended an immediate increase of staff from 29 to 44 to enable it to cope with its present workload.

Following this, the Tanaiste's Department asked the Department of Finance for more resources but is still awaiting a positive response. All Ms Harney could say this week is that she is confident of eventual success.

As part of the post-OECD report initiative, the authority is to examine what needs to be done in a range of sectors where some self-employed professionals - such as solicitors, barristers, accountants and doctors - are suspected of being involved in anti-competitive practices.

The professions that the authority will investigate are expected to be announced next week, with the public being invited to make submissions concerning these examinations prior to their commencement. However, unless the authority gets the required resources, this exercise will be severely undermined. The overall push announced this week involves high stakes. The OECD report, which was introduced by Mr Ahern, argues that greater efficiency through increased competition is a crucial requirement for the next phase in developing the economy.

The drinks trade will be one of the key sectors to watch. On the day the OECD report was being introduced with great fanfare in Government Buildings, the play involving the liquor licensing commission was closing the curtain on act one.

The commission was established late last year by the Minister for Justice, Mr O'Donoghue, and asked to report back to him by the end of 2002. On Tuesday the commission's first report, on the off-licence trade, was presented. While it recommended liberalising the trade, it also recommended that a charge be established for the new licences, the exact fee to be decided by the Minister, but it should be "meaningful". In other words, that a meaningful barrier to entry should be erected. The inclusion of this recommendation reflected the input of representatives of the status quo.

A commission member said its report was "a dog's dinner". The various interest groups represented on the commission have merely repeated their views, which are known and have been known for years, and no consensus has emerged. The chance of the experience being any different when it comes to address the issue of on-the-premises consumption is not considered to be very high.

"This isn't a job for the interest groups, this is a job for politicians," said the source. "The decisions which have to be made are political ones."

So why wait another year? Last year the Minister for Finance, Mr McCreevy, pointed out that many TDs hold their weekly clinics in pubs and that in many rural areas there is no option but to do so. The Taoiseach holds clinics in a pub and is reputedly of the view that bar staff influence the political views of their customers.

The Licensed Vintners Association and the Vintners Federation - which, respectively, represent publicans in and outside the Dublin area - are among the most powerful lobby groups in the State. The Tanaiste has said she is going to confront them in the run-up to the next general election.

As the OECD report was being introduced, Ms Harney said she saw no reason why the commission's review of the pub trade could not be completed within months. "It is not realistic to expect full agreement. Both pharmacies and pubs should be fully deregulated within the lifetime of this government." She was scathing about the fact that there is no pharmacy in Knock, Co Mayo. Pharmacies that wish to issue medicines under medical card prescriptions have to get permission from the local health board before they can open and must show that a population exists that is not being serviced. Knock is a small village but is visited by as many as two million pilgrims each year.

The rationale for the restriction is to create pressure on pharmacists to seek out populations that are not being serviced and the Irish Pharmaceutical Union says it has been successful in this. There are also regulations that prevent pharmacists educated in other EU states opening new pharmacies. The OECD report says the Republic has the highest retail margins for medicines in the EU.

Overall the OECD report and the support it received from the Government is part of the shift from protecting interest groups to protecting the consumer. The wind of change is undoubtedly in this direction but the interest groups will resist all the way. It is also true that, in many cases, the issues involved are not straightforward. The next 12 months should be interesting. Or then again, they may not be.