Mr. Neil McDonnell:

I will take those questions in two parts, starting with decarbonisation and then regional imbalances and falling behind. Decarbonisation is a significant issue for both businesses and consumers because there is no low-cost route to this; certainly no one has identified it yet. We do not expect governments - Irish or British - to hand out free money to do this but on the other hand, Ireland will find itself in trouble within the EU if it does not decarbonise more quickly. We summarise this as what we call the "capex problem", which is that it will cost a lot of money to reduce energy consumption by deep retrofitting insulation and to come up with alternative sources of power, whether that is putting photovoltaic panels on roofs or anything like that. I have had this discussion domestically with our two daughters. I told them I am not going to do a deep retrofit because they are the only ones who will benefit. It is north of €35,000 or €40,000 to do a standard semi-detached house in the Republic. With elevated prices, it still takes seven to ten years to get payback, at a time when increased energy prices reduce your net income. While we do not suggest it will be free money, the only way to do this will be long-dated and cheap money. We understand that, for example, the Italian Government is giving that sort of assistance to businesses. It is, effectively, state-provided debt at low coupon. I make that point in an increasing interest rate environment. Even as energy prices decline a bit at the moment, interest rates are going up, making the cost of finance is becoming more burdensome. In the long run, the State will have to take an equity pitch in this and assist homeowners in decarbonising and deep retrofitting. We do something similar in the Republic that has nothing to do with decarbonisation, which is called a fair deal scheme for nursing homes. The State looks after nursing care and there is a charge put on the domestic dwelling up to a maximum of 22% of the value of the dwelling. In other words, the State is on the hook for the money upfront but recovers the money later on down the road. Unless there are imaginative alternative solutions to what we call the "capex problem", an SME cannot do it because, as covered in company law, a business must generate a profit. If it becomes insolvent, it is meant to take one of several routes out of insolvency, including liquidation. That will be up to the legislators like the committee. I am not passing the buck back but I am passing the buck back.

The regional imbalance issue is a very significant one here, which we put in our pre-budget submission. I am glad to say that our Civil Service has in some remarks to us stated that it has recognised some of these signs of what they call in macroeconomic terms "Dutch disease", in other words, the social impacts of finding oil. Many people think that you find oil and everyone gets wealthier but that does not happen. Certain professional services like law and medicine make loads of money and people further down the service supply chain actually lose money. Their wages drop because they see an influx of other labour into the economy and the price of accommodation goes up and so on. We cited a much more recent paper in our pre-budget submission, which I encourage everyone on this committee to look at. It is an economic paper that came out of the United States called "Silicon Valley Syndrome". Members have probably seen it in the news from California - there are massive substance abuse problems, massive increases in the cost of housing and a huge affordability issue for ordinary workers. Although Ireland benefits from huge amounts of corporation tax at the moment, while we do not wish to be a downer on our economic policy, we are saying that there is a price to pay for having concentrations of really high-earning professionals in one place, all of whom work for a foreign company that could go in the morning. We have been saying for a long time that this is why we want a body in the Republic that just looks after small and medium enterprises. To be fair, the Minister for Enterprise, Trade and Employment, Deputy Coveney, conceded yesterday at the enterprise group that in the past few years, only single-digit figures of businesses have listed on the Irish Stock Exchange. In Norway, which has a population only half a million bigger than ours, in 2021, 68 businesses listed on its stock exchange. In the same year, two businesses listed down here. They are domestic businesses that are scaling. We do not see that in the Republic. A business gets to a certain size and it sells. When it sells, it does not sell to Irish buyers and the intellectual property in that business exits the State, even if the business remains here. We think that must change. This is not a criticism of non-Irish companies but Irish businesses are more likely to regionally base themselves than are foreign multinationals. Many Irish businesses will locate in rural or non-densely-populated areas and are a huge anchor for the local community. You tend not to see that in American pharmaceuticals or American IT.

I mean no criticism of those businesses in saying that. It is just a commercial reality and we would like to see it change.