Dr. Tom McDonnell:

The easier of those questions is the help to buy scheme. The problem in the property sector is clearly one of supply, not demand, so I would be extremely reluctant to support policies that would probably increase house prices and simply act as a subsidy to existing property owners.

The issues in the housing sector, particularly in Dublin, are fundamentally about supply. There is obviously a private sector dimension to that, whether it be access to credit or land, and regulation. However, there is also a public sector dimension to this. If one looks at the figures - I am sorry I did not include them in the submission - public provision of housing collapsed post 2010.

We need to start going back to those kinds of levels. Obviously, for approximately €1 billion per year, one gets approximately 5,000 units. Based on population, we are aiming for 25,000 or arguably 30,000 builds per year, because we have a housing waiting list and consequently must have more than 25,000 builds. There is a market failure in the private sector for various reasons and there is, therefore, a role for the Government to use its own capacities in a fiscal context to intervene directly and to start building houses. That would be where I would direct my energies and by increasing supply, we also will reduce rental costs, house prices and the cost of purchasing. This will help first-time buyers by reducing the debt they will take on in respect of mortgage costs and so on and that helps with macroprudential sustainability and so on. Consequently, in the housing sector, the policy response should be on the supply side, not the demand side.

As for tax breaks versus direct subsidies in child care, our view generally on tax expenditures is one should only go there when there is a proven case that subsidies or direct spending will not work and where there is clear evidence of a market failure. For example, one might give tax expenditures for research and development because there is a general market failure and there are knock-on benefits for the economy. In the case of child care, it probably is more complicated than simply talking about tax breaks versus direct subsidies. It ultimately is about bringing down child care costs for the parents and ensuring there is a quality of care. It is about educating and upskilling people to be able to fill those roles and making sure there are enough people. This is what I am talking about when I refer to child care, that is, they are in place, are providing good care and there are enough of them. In addition, it is about them being regulated by the State and that - possibly through the social security system - the State would be providing as a benefit a contribution as a direct subsidy to the pay and maintenance of those centres directly and that it would be a much more regulated sector. Unfortunately, there are too many stories about the child care sector. As this is not an issue or area on which I am particularly expert, my comments therefore are general from a macroeconomic point of view in respect of the cost of child care and from a macroeconomic perspective in terms of the deadweight losses that tend to be associated with tax expenditures. It is not a sector on which I would comment at a micro level.