Mr. Matthew McGann:

The Deputy is correct that there are several additional vulnerabilities to the public finances over the medium to long term. It is important to state that this corporation tax windfall represents a potential blind spot for public finances. It is not just about the potential to put them aside to pay for future expenditure pressures, it is also the danger, if they are transient in nature, that we potentially fund permanent expenditure commitments with non-structural or non-permanent tax receipts. We all know we had an unhappy experience of that in the lead-up to the financial crisis. That is a revenue vulnerability to public finances. Another potential revenue - I am not sure vulnerability is the right work - relates to climate change and decarbonisation. The revenue streams associated with carbon-related products or services or the excises we get from fuel, for example, are likely to diminish. That is the goal of the carbon tax and of public policy. Those revenue streams should phase out over the coming years, which must be factored into medium-term revenue projections. As I already mentioned, on the expenditure side, there are ageing costs, which are not just pensions - there are also healthcare and long-term care. There is a revenue risk associated with that as well because, as the population ages and there are fewer people at work, labour supply diminishes, which is a big contribution to growth and, therefore, revenue. While ageing-related costs increase, there is also a negative impact on the revenue stream.

On the climate front, to be honest, it is very difficult to estimate. I read Professor Kinsella's contribution to the committee in which he highlighted the costs associated with increased frequency of climate events such as flooding. There are even more difficult to quantify costs associated with the change in the climate if there are higher temperatures; that can negatively impact productivity and agricultural production. Those are hard to estimate. The digital transition is also quite hard to estimate because it will involve a change in the nature of work and has a big emphasis on education and skills to try to enable people to navigate it as smoothly as possible. A Department of Finance official will always say there are several long-term threats to the public finances, but we can identify some at the moment that are coming down the track.