Bernard Durkan (Kildare North, Fine Gael) | Oireachtas source

I thank our guests for coming before the committee and for their presentations. I have a number of questions. The witnesses from the NERI mentioned tax cuts and their effect. This is an issue on which a debate is taking place in the country at present. The theory is that there should be no tax cuts. I do not think this applies to all sectors. There are groups of people, in the lower to middle income group and in the higher to middle income group, converging from both sides. They find themselves in a rather difficult position and will continue to do so in the present economic climate, which is being caused by inflation and international events. These cohorts of people need to have some recognition that we realise what is happening to them.

Earlier I mentioned that some time ago we had calls for a wealth tax. We used to have a wealth tax in this country but it was discontinued for a reason, which was that it scared a lot of people out of the country. Worse still, it created a movement out of the country and a tendency by those with foreign direct investments to think again and either stay out of the country or move out of the country. We must be very cautious about whatever policies were followed in Venezuela, which has much bigger economy than ours, because unfortunately they did not work. It is a country with all of the resources in the world. It has massive resources in comparison to ours. I am not arguing with anybody; I am just stating it as it is. This is a fact.

We realise with regard to the retail sector, the economy in general and those on the front line that costs are increasing and this is challenging. Energy costs are the main cause of this. As I mentioned previously, it is frightening to look at the type of increases people are facing in the UK, which has independent means of producing its own energy. We do not. We are hanging out there. When we had an opportunity some years ago to upgrade the indigenous and renewable fuel industries through wind farms, some parts of the country took the opportunity but others did not. Other parts of the country spent their time objecting to them for various reasons, such as that they were bad for people's health, or due to electromagnetic pulses and white noise. The fact of the matter is that turbines are turbines and it does not make any difference whether they are on a river, at ground level or up on a pole. There are no more emissions coming out of them than there were from the old-fashioned hydroelectric schemes.

We need to recognise, and I fully appreciate, what IBEC is doing and has done to generate enthusiasm and urgency about our economy. This applies to the unions also over the past ten to 15 years. If we did not have the ability to borrow in the face of Covid, which has just gone out, can we imagine what it would have been like? A total of €48 billion was spent and it was possible to borrow to address these issues and help out in so far as this amount could. It did not solve all of the problems but it was certainly a help. Imagine what it would have been like if there had not been this capacity to borrow. We have been told over recent years that we should have had two bailouts, which we would have been paying back forevermore so far as I can see. We were told we would eventually have to do this and I am glad that we did not. When the crunch came, the urgent issue arose and Covid arrived on the scene, which nobody predicted, it was possible for the Government to borrow fairly extensively. The €48 billion to which I referred was a lot of money. It was necessary to do what had to be done at a particular time.

In the measures we take from here on, we must keep an eye on the target, ensuring that we leave capacity to borrow in the event of something else coming down the tracks. Remember that a war is a war and it has the ability to do an awful lot of damage over a longer period of time and we could find ourselves having to dip into that well once again. I hope that we will not have to do that.

One thing that has contributed to inflation in this country is house price inflation. That is serious. It is year-on-year. From time to time, people will say that it is only at a specific time, that it is unusual, that it is a hiccup, etc., but that is all rubbish. It is a consistent increase and there is inflation all the time. I am told, and this is subject to verification, that investment funds have to provide the greater amount of the money invested in house building. If that is the case, it is a serious issue. If the pillar banks are not doing so, and if investment funds are getting in between the two customers, that is, the developer or the builder and the customer, that results in an increase. There has to be an increase. The investment fund is not going to come in out of the goodness of its heart and provide the money needed to build. It will be at 2.5%, 4%, 4.8% or 10%, more than likely. That is inflation at a serious level. We have a serious housing shortage that must be tackled one way or another because it is a burden on our backs and on the backs of the people. It will continue to be so until we find the means of puncturing that particular balloon.