In the 2nd Stage debate in the Seanad on the Waste Management (Amendment) (No 2) Bill, on 4 April 2001, I said:

On the assumption colleagues on both sides of the House will pay adequate attention to the proposals regarding waste management plans, I will concentrate my thoughts on plastic bags.

As a chief executive of a supermarket company, this is something close to my heart, but it is an interest which is not hostile to the Minister's concerns and intentions. Although I plead guilty to being one of the conduits through which customers obtain plastic bags, I cannot claim to be happy with the position. The excessive use of plastic bags is bad from an environmental point of view.

To take my company as an example, we have engaged in many initiatives over the years to encourage customers to use fewer bags and use more eco-friendly alternatives.

Our embarrassment from an environmental point of view is strengthened by the fact that there are commercial realities relating to plastic bags. The cost of each individual bag is insignificant and is probably only about a halfpenny, but the aggregate cost to a supermarket or company is certainly not insignificant. At a rough guess, plastic bags account for about 0.5% of total sales. That may not appear very much, but in the supermarket business, margins are razor-thin. If we did not have that expense, it could be passed on to customers in meaningful savings. There is a benefit to the economy in this.

We are at one with the Minister in wanting to eliminate plastic bags. Having tried to do so by means of education and persuasion over the years, we must admit the reality that people will probably not change their attitudes and practices until they are given a strong financial incentive to do so. The levy proposed in the Bill is just such an incentive.

I mentioned that, in supermarket economics, the cost of the plastic bag of a halfpenny is quite significant. That being so, a levy on each bag of 15p would be devastating. The Minister has obviously aimed the levy at a level where it will have an impact and will be too large to be absorbed by retailers. The Minister is rightly interested in changing behaviour rather than raising revenue and a 15p levy will be certain to do just that.

It will change behaviour because neither the retailer nor the customer can afford to pay a levy at that level. If the retailer paid the levy at that level, he would typically pay more for each transaction than the profit the company makes from the transaction. There would have to be £10 worth of goods in each bag to break even, and that is clearly over the top. On the other hand, if the customer paid the levy, it would add dramatically to the cost of his or her shopping and to inflation. Even if people were prepared to put up with it, which I doubt, it would have an immediate negative effect on inflation, and a sizeable one at that. Some bags may only contain £1 worth of goods, and paying the 15p levy would add 15% inflation to the cost.

On the face of it, the measure is well designed to create the effect intended by the Minister. I congratulate him on the incentive and wish him success with it.

That said, the success of the initiative will depend on certain practicalities being addressed. They fall under two headings. The first practicality is that all retailers and all retail outlets must be treated equally under the law. If the working of the scheme gives a competitive advantage to one retailer over another, that will create an intolerable position which will fatally undermine the scheme. The second practicality is that a line must be drawn correctly and realistically between bags liable for the levy and those which are exempt. Clearly the Bill gives the Minister the right to do this, but I do not know that it has been thought through. The Bill provides for the Minister to make regulations exempting certain classes of bag from the levy. It is critical to the success of the scheme that the line between exemption and non-exemption is drawn correctly and realistically.

I will deal first with the issue of treating all retailers equally. This is important. There are certain retailers who use plastic bags unnecessarily but it does not matter a great deal. I think of shoe retailers, for example. A pair of shoes comes in a box and the box is then placed in a plastic bag for the customer to carry home. In an ideal world, the levy would be slapped on the bag and one would do one's best to collect it. However, in the real and practical world, it does not make much difference if shoe retailers are ignored or are left for another day. There are not that many of them. I would not object if shoe retailers were not subject to the levy.

However, there is another sense to the wording of the Bill which concerns me. Section 8(2) empowers the Minister to make regulations raising the levy on plastic bags "in or at a specified class or classes of supermarket, service station or other sales outlet".

The problem is that, as written, the subsection does more than empower the Minister to leave shoe shops out of the equation, which is fine and with which I do not have a problem. It also gives the Minister the power to discriminate between different classes of supermarket or different types of grocery shops. That is a recipe for disaster.

If the Minister lumps us all into the same boat, we will be happy to knuckle down and get on with the job of making the legislation work but if the effect of the regulations is to burden me with the levy while leaving exempt a smaller grocery outlet or a more specialised one, we are heading into major trouble.

Given the financial burden the levy will place on a shop's operations, it would be a major competitive advantage for a shop next door selling the same type of goods to be exempt from the levy. If that position were to apply, there would be immediate implications in terms of competitive legislation. There may also be constitutional implications. It is a law that would clearly discriminate between citizens doing the same type of business. I trust and hope the Minister will be as reluctant as I am to go that route.

There is a further problem I must highlight before moving on from this issue of inequality between different retailers, and that relates to the collection method. It is clear from the Bill that the Minister has in mind a collection system akin to the manner in which rate collectors work. Collection would be outsourced with payment on a commission basis. That is the way I understand it. We must consider the potential for unequal treatment between retailers arising from such a system.

A collector of levies will have a strong incentive to collect from large, highly visible firms and a much weaker incentive to collect much smaller amounts from smaller businesses from which it would be much more difficult to collect. In this way, the collection method could introduce a systematic bias against the larger retailer which could have the same effect as the Minister exempting smaller shops through the regulations he makes. If these measures apply to everyone with no opting out, they will work. It is completely unsustainable for a situation to pertain where the levy will apply only to large shops or certain types of shops.

On the issue of what bags will be covered by the levy and what bags will be exempt, we must not make the mistake of labelling all plastic bags as environmentally unfriendly.

For instance, we sell a thick-gauge bag that is clearly intended for reuse. Encouraging the use of such bags will obviously be part of any strategy we adopt, and one never sees this sort of bag littering bushes and highways. It would be counterproductive to put a levy on such bags, and I assume they would be automatically excluded.

Let me explain the distinction between bags used to pack goods at the checkout and those used to pack goods inside the shop. Bags packed at the checkout are self-explanatory. I will come back to those.

Bags packed inside the shop fall into two different categories. The first is bags used to pack what I call wet fresh foods - meat, fish, bacon, delicatessen items and a few others.

What they have in common is the need to put an effective barrier between them and other goods for health reasons.

In the case of some goods there is a major food safety issue involved. For instance, the Food Safety Authority will state that it is of primary importance to keep cooked and uncooked meats strictly apart to avoid cross-contamination between the two. That is a really serious food safety issue. Clearly, packaging plays a key role in avoiding cross-contamination. Hence, the case for exempting the bags needed for that is unanswerable.

There is a less strong but still compelling argument in regard to other wet fresh foods. On hygiene grounds, there needs to be a barrier between food that can seep blood, such as fresh meat, and anything else in the shopping bag. The same applies to fish, bacon and delicatessen items such as cheese.

There is a slightly different situation in relation to what I call dry fresh foods. Food safety is not involved, nor is hygiene. What is involved is a long-standing merchandising practice of allowing people to choose their own fruit and vegetables, put them into a bag, weigh them, have them priced, and bring the sealed bag to the checkout.

To change that set-up would cause an enormous amount of disruption to supermarkets and particularly to customers' choice. The disruption caused at checkouts will be more than enough to cope with, at least in the early stages. It would be unrealistic and impractical to expect supermarkets totally to revamp their way of selling fresh fruit and vegetables while they are focusing on the elimination of plastic bags at checkouts.

With this in mind I propose that, at least in the initial stages of implementing the Bill, the Minister should make regulations that impose the levy only on bags that are used to enclose goods that are already inside a package.

This would exempt, at least for the moment, all packaging that is used to enclose raw goods of any kind but penalise secondary packaging, that is, bags used to package things that are already packaged.

If we can eliminate plastic bags for secondary packaging, we will have removed most of the environmental problem that is the foundation of this Bill.

This Bill could be put into operation in such a way that all bags would be levied. That means that if a person buys cooked ham or raw meat, the bag used to pack it will be levied. That would create an impossible burden on inflation, on customers, and on food safety. My proposal is that if the product that is already in a package is put into another bag, tax is levied only on the other bag.

I welcome the Bill. It can be made to work. However, we will have to make sure it is well thought out.