Dr. Tom McDonnell:

With regard to those winners and losers, Mr. O'Brien is right in that, obviously, the digital economy and pharmaceutical companies benefited enormously from the Covid crisis with regard to their bottom line. Ireland, as a European hub for many of those companies, likewise benefited from corporation tax receipts. The energy sector is not a strength for the Irish economy. We import much of our energy and I agree that the solution of windfall taxes or similar is probably best done at a European level.

Yes, the cost of living is very high. Ireland and Denmark are usually at the very top of that list. We are a high-income country, but we have very unequal market incomes, which is why our tax and welfare system has to and should continue to work as hard as it does in being redistributive.

Why is the cost of housing so high? The first reason is that supply has not been able to match demand for 13 or 14 years now. Obviously, many of the roots of that go back to the financial crash. There is a lack of workers in the sector and there are issues with financing. The State also stepped away from its responsibilities.

With regard to education, childcare and housing across the board, in Ireland our Government revenue as a proportion of income is low which means that we underfund many of these areas relative to other countries in western Europe. Therefore, the cost of living in those countries with regard to these types of expenses tends to be lower. They have a much stronger set of universal public services or universal basic services. One of the things we have emphasised in our opening statement and in our general commentary has been that the budget should focus on reducing the cost of those services. This type of spending by the Government would be disinflationary for labour costs for businesses and in the economy overall. We see that as a possible win area with the Government effectively reducing its appropriations-in-aid, thereby reducing the costs of education, healthcare and childcare in particular. There is scope in all of those areas to boost real or take-home incomes after all of the necessities; to reduce the cost of business, ultimately, in the sense that labour demands will be less of a feature; to be disinflationary; and to deal with fundamental problems in the economy such as the cost of childcare, which removes vast swathes of workers in their 30s and 40s from the labour force. Principally, those are the people with the very highest human capital, including women in their 20s, 30s and 40s. They often never come back to the same sector.

The point was made earlier about us being in full employment but that does not mean we have the right composition of employment. It does not mean people are working in the right sectors. In keeping with Mr. O'Brien's point about productivity, retraining and upskilling, we need to continually shift towards higher value-added sectors. Construction is not an especially higher value-added sector but we will need more people in those sectors, which means increasing participation rates by removing barriers related to childcare, disability, issues around working from home, flexibility and bringing people back to Ireland, which is a housing issue, and by dealing with a digital skills-type issues which allow us to move towards higher added value. We can affect the composition of employment over the medium to long term through proper policy measures. It is not that there is a rump of 2.5 million people who work. There are winners and losers.

I would respond to the Deputy's question about the point at which we are not willing to help people by saying it is tapered; it is about degree.

People on fixed incomes at the bottom are probably most in danger, which is why we emphasise that, but that does not mean there is no scope for dealing with cost-of-living issues to do with childcare, education, healthcare and so forth. For lower to middle groups, things like the working family payment can be improved for lower-income workers. Yes, there is scope for increasing USC thresholds and tax credits, and even the standard rate cut-off point can perhaps be not fully but partially indexed. There is scope in those areas to help those groups, albeit to a lesser amount than those who are really in trouble as the winter kicks in.