Mr. Sebastian Barnes:

Let me take one or two of those questions. A very good question was asked on whether it would be justifiable to use the windfall corporation tax to fund capital expenditure. We have two concerns about that kind of strategy. There is a certain logic to it. The first concern is that, essentially, the increase in investment we are seeing is really an increase in the level from what was a very low one to a much higher one that would essentially be sustained over quite a long period. That really requires a matching revenue stream to go with it, which is why we are concerned about sustainability.

There is a second concern, which underlies some of our other answers, and it is associated with the extent to which the economy is able to produce and the risk of overheating. One of the constraints is that the unemployment rate is very low and the economy is pretty active. People are fully employed. Additional investment has to be met within that constraint because the economy just cannot produce that much more on a sustainable basis. That is another reason capital expenditure has to be thought of together with other forms of spending.

At present, we believe Government policy is probably fairly broadly balanced and that the overheating is not excessive. However, the Department of Finance's own projections show that the economy will be overheating increasingly over the next couple of years. That is a constraint on the ability to put more money into the economy. Of course, if one takes the money out somewhere else, one can allow for more investment but one cannot just keep adding it on because there is a limit to how much the economy can produce. That is different from the circumstances facing many countries. A number of continental European countries, for example, are experiencing relatively weak demand. For them, increasing investment would help to increase the level of output in a sustainable and good way but, in the Irish context, in an economy that is already quite close to full employment, there is a constraint on being able to accommodate future spending. The economy just cannot produce that amount.