Mr. John McGeady:

To echo what Dr. McDonnell said, again, the key thing is that the great advantage of indexation is that once we have reached the benchmark, which takes a bit of work, after that, we are only ever incrementing with wages increases or earnings increases, which are what they are, but it is not a huge jump. What it does is take the mountains and valleys out of the system. What we can see when doing a long-term analysis are waves of poverty and waves of inequality in our system. Very often, we will see that as we have economic growth, we will actually have an increase in poverty. What happens is that as wages increase, the social welfare rates do not keep pace. They fall behind. We end up with a situation where more people are below the 60% of the median income, which is the poverty line, and then the Government has to work to eventually play catch-up and bring them up. However, in that space in between them falling and that eventual catch-up, a huge amount of damage can be done. The thing about indexation is that it takes that damage out of the system because it allows us to maintain a consistent link with wages and with the broader economy. I felt it was very important to draw attention to that.

The Deputy mentioned people being fearful and anxious. The other thing about indexation is that it takes anxiety out of it because people will know they are not going to be waiting until budget day to find out whether their rate is going to go up by a tenner or €12 or whatever it is going to go up by. They will know that at a minimum it is going to keep pace or retain its value compared with wages. That is a really important point to make.