Mr. Seamus Coffey:

I will begin by speaking about the merits of indexation as a means of maintaining the purchasing power of various payments in real terms, taking account of inflation. I believe it is a legitimate approach to take. During his speech at last year's national economic dialogue, the Taoiseach suggested that a policy of indexation would be considered, particularly in respect of State pensions. It is something that has a role to play. Although we are not necessarily advocating the introduction of indexation as a policy for making changes to payments, we believe it could be introduced at the forecast stage as a sort of guide or principle when considering where it is expected that payments will go in overall aggregate terms. If this were done on the basis of forecasts of inflation, it might be a useful addition because it would give an indication of the level of payments and the overall amounts. It is something that should form part of the overall policy debate. The Taoiseach has indicated that it will. It remains to be seen whether we decide to formalise the linking of payments to expectations of inflation. We agree with the view that there are merits to considering indexation in various areas of the public finances.

The Deputy also asked about the impact on Border packages of issues like climate change and excise duty differences. Yesterday, we saw the impact that decisions taken elsewhere can have on trade and on prices. I refer to the UK's decision to return to duty-free shopping for international travellers who leave the jurisdiction by passing through an airport or ferry port check into some sort of free zone where goods will be available free of duty. Of course, Ireland will reciprocate that. A person who uses some form of transport to travel from Ireland to the UK through an airport or ferry port - I do not refer to someone who drives across a land border - will be able to make duty-free purchases up to certain limits. It is possible that this will have a revenue hit for Ireland and could lead to a change in behaviour. Equally, if Ireland increases excise duty on fuel beyond the level seen in the UK and if there are continued exchange rate changes, it could become more attractive to purchase fuel in sterling than in euro. Factors such as the exchange rate and the level of excise duty should be taken into consideration. I do not know whether we have the capacity to assess the effects of these important considerations in an ever-changing environment.