Dr. Tom McDonnell:

It is possible to target people at the bottom. It is not necessarily easy to target people at the middle. The emphasis, as it should have been for many years anyway, should be focusing on reducing the cost of living, which is very high in this country, while supporting the medium- to long-term strength of the economy. We regard childcare, education and housing as well as research and development as all being relevant to the cost of living. They are also all relevant in having a stronger productive and innovative capacity for the economy. All those areas can stand to benefit middle-income households.

Obviously, wages are a component of it. Certain types of tax cuts can also be a component of it. We need to find ways to reduce the cost of living in those pressure areas we have identified, which all of us around the table are well aware of in terms of childcare and housing but also education and healthcare costs. These are areas where the Government can directly intervene to reduce the costs to households and we see that as very important.

I agree with the points about having greater research and development linkages with the third level sector. We should develop what is often called a triple helix between Government, the higher education sector and business. We need to improve those linkages and attempt to develop a proper national innovation system. That is also a Scandinavian idea. It is really about the medium- to long-term development of the economy. At the moment public research and development spending is about €500 million. Probably €100 million is the most we could absorb in a single year. In the long term, or even in the medium term, we need to go significantly higher than that. For example, the Nordic countries spend well over €1 billion on research and development. We are not at the races there.

The strength of the US economy over the past 60 or 70 years has been based on spending on education and research and development, and those linkages with universities. In its case it is done through its military and industrial complex. Our focus, on the other hand, might be through the green transition, the digital economy or whatever it might be. The reality is that Ireland is probably too small to become a world leader in any one area, meaning it will also need collaboration outside Ireland. It is about Irish universities and businesses having those linkages with firms in other countries to get sufficient scale to allow us to be world class in multiple areas.

The Government having an equity stake at the start-up stage through the universities can also be part of that process. It does not necessarily need to have a controlling interest but just needs to be part of the process. It requires throwing a lot of darts. When it comes to innovation and new ideas, we do not necessarily know what will work, which means the risks to businesses are often enormous and in many cases they will not be able to yield all the benefits that ultimately accrue to that as technology diffuses through the economy. Therefore, it is very important for Government to take an active role in developing these high-potential startups based on ideas, knowing that most of them will fail, which is okay. However, they need to constantly try and try again while providing a safety net and funding for business.

Many of these are medium- to long-term reforms. I would agree with allocating €100 million in budget 2023. We would strongly support that.