Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I thank the witnesses from IFAC for their contribution and work. They are making pretty much the same arguments as the Central Bank, representatives of which we were talking to earlier in front of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, and I think all the economists are looking at the same general picture. I accept they will not go into their views on policy choices.

Nevertheless, when there is a concern about spending that may encourage further inflation by injecting demand into the economy, as the argument goes, that is often translated in popular parlance into meaning it would be inadvisable to compensate people fully for the impact of inflation and the cost of living with budgetary measures that would do that. Against a background where, while there are various estimates, it is generally accepted that the majority of working people on average incomes, pensioners, social welfare recipients, people on fixed incomes and so on have seen a significant net loss in their income, that is a big problem for them because the message being sent, whereby we cannot use all the money we have, despite having a big surplus, to protect them against a crippling cost-of-living and accommodation crisis because it could be damaging to the wider economy, does not sit very well with huge numbers of people.

Do they not have a point, given it is not their spending or their demand, to use the economic terminology, that has caused inflation? Do we not need to disentangle what we are talking about when we talk about excess demand or excess spending? In fact, what is happening to that cohort, who are the majority of people, is that there is less spending and demand from them. In some cases, they do not have enough money to put food on the table or pay the rent. They are not guilty of overstimulating the economy. Do we not need to be a little more specific about saying where spending would be inadvisable and where it would be advisable from that point of view? I do not see how compensating people for, say, a 10% or 15% loss in income could be inflationary, but I can see how not compensating them would be deflationary. They are paying the price for something that is happening on the other side of the equation. Is it not fair to say the net effect of the inflated prices is that the majority of people are losing out, whereas someone who owns bank shares or shares in an energy company, a fossil fuel company or certain industries that are doing very well is doing very well out of this. Is that not the picture?