Mr. Fergal O'Brien:

It is very different from the kind of pressures that we have seen in the past. We are not seeing a credit bubble emerge that will infect the financial system like we witnessed a decade or more ago. It is a pressure around our competitiveness position. There is probably a significant lag in the data relating to the cost of doing business. The tightness in the labour market is something we are observing on a weekly basis in terms of the practical decisions that businesses now have to make their operations viable. Some businesses are reducing shifts, for example, while others are curtailing opening hours, because there is not the capacity in the economy on the supply side. We have a supply side problem which is leading to some overheating but it is very different from what we experienced ten or 15 years ago, but it leads us to the same place - competitiveness is being eroded quite rapidly. We should not have an expansionary budget. The main issue of difference is how we would take some of that money out of the economy, and not use the full budgetary space available. Instead of putting it into a rainy day fund that will bring complexity, as the Deputy rightly said, in terms of how it will be utilised - it should be invested in a specific ring-fenced purpose in the short term, that is, to address this crisis in higher education funding. We see that as impacting on Ireland's competitiveness at the moment, and our ability to attract labour and investment projects. The perceptions of those international university rankings become the reality. When our reputation is eroded, it will be hard to repair it.

We cannot wait another two or three years before we have a solution to the funding of higher education; we want that addressed immediately. We could buy something significant if we were to use the money that is being earmarked for the rainy day fund now for a ring-fenced fund for higher education. It would make a meaningful difference in the resourcing, staffing, quality and the ecosystem for indigenous business to engage with the Higher Education Research Centre.