Dr. Kieran McQuinn:

I will touch on wealth redistribution. Professor Barrett alluded to measuring poverty in 1989. A part of the problem is that there was no wealth survey of the economy until recently, when the Household Finance and Consumption Survey, which was funded by the Central Bank, was published a little over a year ago by the Central Statistics Office. A part of our body of work with the Department of Finance involves examining that and the question of wealth taxes. Research will be forthcoming on the issue in the next three to four months. That will be interesting. If one is not measuring or estimating these factors, one cannot examine redistribution and its effects. I am sympathetic to the Piketty and Stiglitz perspective on this, namely, that inequality itself could be an engine of a lack of growth in an economy.

Regarding the overall point of view, we published a paper last year that critiqued European fiscal policy since the financial crisis of 2007 and 2008, in particular since 2010. One does not need a radical perspective to grasp the simple and mainstream economic principle that one should stimulate activity when economies underperform and remove pressure when they overheat. If so and in my opinion and that of many economists, what the appropriate fiscal response to the financial crisis should have been was clear. When economies are running large and negative output gaps by general acceptance, there are large elements of debt in the banking and household sectors and the private sector is essentially on its knees, there are compelling reasons for a government to intervene and provide a stimulus and aggregate demand. This was a major policy failure in the overall response of the EU institutions. It has led to turmoil in Greece and elsewhere where the outcomes are far from the original ideals of the European project. This is taking a mainstream economic perspective on the issue. All of this stresses the importance of having reliable and credible data sets that can be used to analyse and address these issues.

The distributional aspect of the crisis is interesting. It has been addressed in a number of ESRI papers, but we have mainly considered it from an income perspective because of the absence of a wealth survey. With the property-related impacts, it is an interesting issue, but it has never really been analysed.

The Deputy made a valid point about housing. Until 2007, Ireland was in a unique situation, in that prices and supply raged ahead. This was down to a number of reasons, but it mainly owed to a massive credit bubble in the economy. It led to the highly unusual situation of both prices and supply going off the scale and in turn fed property speculation, which was a key reason for the bizarre outcome.

From our analysis, it is clear on the basis of household formation and likely demographic movements that we need somewhere between 25,000 and 30,000 new houses per annum. One must accept that it is both a private and a public issue. The public sector cannot provide all of that housing, but there must be a strong Government involvement in providing social housing. I have articulated why I believe this to be important in terms of-----