Sun, May 20, 2012 - Page 8 News List

EDITORIAL: Government trashes its reputation

The government’s commodity price stabilization task force and Fair Trade Commission are trash. According to recent media reports, these two government bodies, which are tasked with tackling rising consumer prices, can both be discarded, precisely because they are virtually useless.

News that prices of freshly brewed coffee in Taiwan have risen by as much as 20 percent since the beginning of this year — in contrast to the price of coffee beans, which has dropped 22 percent over the same period — comes as little surprise. It is no wonder that people have found the news hard to swallow as they consider companies’ pricing calculations.

Meanwhile, wheat prices have fallen by as much as 11.4 percent this year on global markets because of the weakening world economy, but bread prices in Taiwan have failed to reflect the drop in costs. In fact, bread prices have increased by up to 22.2 percent. There have also been news reports highlighting that breakfasts served by local food vendors are increasingly being made with reduced portions of key ingredients, despite carrying the same price tag.

People have questioned whether costs are rising as much as companies are claiming and have accused food retailers of taking advantage of recent fuel price hikes and an impending electricity rate increase as an excuse to boost their revenues.

Lawmakers demanded that the government’s price stabilization task force conduct an investigation and ordered the Fair Trade Commission to check if basic commodity wholesalers were engaging in monopolistic practices, but guess what — the task force has said it needs time to understand the situation while the commission has said there are no regulations in the Fair Trade Act (公平交易法) allowing them to demand that retailers lower their prices.

To refute public criticism of its negligence of duty, the commission said in a statement on Friday that the Fair Trade Act was designed to regulate “restrictive competition practices.” The commission says its role is to ensure effective operation of market functions and added that it fined local businesses NT$500 million between August 2007 and May 6 of this year for activities that artificially manipulated the market.

All that aside, the commission has said that — based on the results of its latest round of inspections into retail prices — it found no concerted action by retailers to increase their prices.

Legally speaking, the commission’s explanation sounds reasonable. Unfortunately, its conclusions do not match the perceptions of many people who are now calling for a boycott of certain products to reflect their dissatisfaction with retailers. The failure of government bodies to report events in a way that tallies with public perceptions is just one of the many recent governmental messages that indicate it is ignoring them. All this will have serious implications for government accountability.

An example of how the public has demanded more meaningful economic data revolves around the consumer price index (CPI). The government’s statistics bureau recently reported the year-on-year growth in the CPI was 1.44 percent, but many people have questioned that figure and have asked whether the CPI really is a good measure of actual costs.

The accuracy of the CPI has a significant impact on the economy and is an important reference point for payment agreements that are pegged to inflation. Therefore, the government needs to look at the way it gathers its CPI statistics, because people feel they are losing out and want the government to adjust the key items it uses to calculate the figure.

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