Professor Alan Barrett:

I will try to act as sweeper on some of those issues. Both myself and Dr. Morgenroth came in here with an absolute commitment not to talk about water charges but, since members of the committee have started a discussion on them, I will just add a note. Dr. Morgenroth dealt with this to a certain degree but the Deputy asked the question in a narrower way, which was really about water charges in the context of the European semester. I took that to be a question about whether we will ultimately be in compliance with directives and so on. In a very narrow sense, the deal towards which the Oireachtas has meandered will almost certainly pass any European tests. It is, however, a very narrow definition of success. Many of the recommendations from the European Commission are around investment in infrastructure and a whole range of other things. The manner in which the whole debate has progressed has led to a situation in which there is an unfortunate interaction between the desire for investment and the economics associated with it on one hand and the fiscal rules of the EU on the other hand. We know that under the fiscal rules the scope for expenditure increases is somewhat limited. Had Irish Water ended up in a particular position, it would have been able to make the required investments. Now investment in water will be competing in the same pool with investment in education and some of the other things about which we have talked. The water issue has been put to bed in the context of European directives in a narrow sense but, as I said, the broader ambition in terms of investment more generally has been completely missed. There is this unfortunate interaction with the sort of constraints that EU rules put around us, which I think are quite proper and to which we can return later if the committee wishes.

Let me turn answering Senator Craughwell's questions, which had a number of strands. On the first issue about windfall taxes and whether they could have been used to deal with the housing situation, the answer is unambiguously yes. The argument here is that windfall taxes or highly-volatile taxes should not be used to fund elements of general current expenditure, especially in areas where it would be very hard to roll back. Regarding the housing situation, to the extent that these sort of windfall taxes could have been used for a very proactive investment in social housing, to be perfectly honest, that would have been a very appropriate way of dealing with this. In fairness to the Government, I know there is a lot of effort in that area anyway and the Government would say that is part of it, but certainly in principle I think that could have happened and it would have been a good thing.

On issues of temporary and part-time contracts, this is something we started thinking about in the institute about two years ago. A colleague of mine, Dr. Eilish Kelly, was the first to really start agonising about this. The context was that as the unemployment rate started to tumble, which was obviously a very good thing, we could have all sat around congratulating ourselves. At one level that would have been perfectly fine, but Dr. Kelly was linking literature from different areas. She noticed an observation across the OECD that there was a rise in what we refer to in economics literature as atypical work. Germany would have been an example of this. During the recession, and as countries were coming out of it, these part-time and temporary contracts were actually a very handy thing for economies. Obviously, they allowed for employment to grow much more rapidly than would otherwise have been the case.

We started to track new jobs, exploring the CSO data to try to get a handle not so much on just the aggregate jobs across the economy, but to focus on people who were getting new jobs and to ask whether these new jobs were more likely to be of an atypical nature, that is to say part-time or temporary. During the recession it can be seen that there was a very significant upswing in atypical jobs. We have seen a little bit of a decrease as the recovery has persisted but we are not back to where we were. The question for Ireland and for policy makers is whether we are entering a new equilibrium where there is simply a higher level of part-time and temporary jobs than was previously the case. Perhaps this sort of thing will work itself out. There is no doubt that at one level it is good and allows an economy to be flexible. At some level it is a bit like the minimum wage. We do not worry about people being on the minimum wage if they are on it for a period of time or as part of a transition path. We worry if people start getting stuck in these sorts of situations. That was one of the reasons we started to flag it and we think it is very important that we keep an eye on it, precisely for the sort of reasons that the Senator mentioned.

The Senator linked some of the things about which I was talking more cleverly than I did, because he then started talking about issues around third level education and linking them to what I had said about over-education and apprenticeships. Let us try to draw some of those strands together. There is a curious thing in Ireland that there seems to be a kind of snobbery - I will use that term though it is perhaps over simplistic - in the notion that one wants one's children to go to third level. Doing an apprenticeship does not seem to have the same social value. That is a tremendously unfortunate situation from a whole variety of perspectives. The Senator will note that there are references to the increase in apprenticeships in Ireland in either the Commission document or the national reform programme. That is a really positive development. The policy objective around getting 50%, 60% or 70% of the cohort into third level education is one of those sorts of targets about which it was worth asking the question - why do we want 70% of people to go onto third level?

As well as the general question of how well we are educating people in Ireland and what jobs they are doing when they finally get into the labour market, we also have a problem with third level funding, which is clearly observed in the Cassells report and elsewhere. We are talking about a reform programme and recommendations from the European Commission which are all about high-skilled jobs, investment, innovation, research and so on, yet our third level sector is really suffering. The problem has been diagnosed and some solutions have been proposed. My understanding is that the matter is under discussion by an Oireachtas committee in this very building. However, those of us observing from outside can see no sign that there will be a positive outcome.

As I said in my opening remarks, myself and Dr. Morgenroth are not going to pretend we are experts on everything. If we do not answer a question directly it is because we think it is on the edges of or beyond our knowledge. On the refugee crisis and the pressure it puts on the European Union, the EU has often had to deal with very complex issues. The Greek situation, for example, was very complex. However, there was more unity of purpose because there was a realisation that if Greece defaulted or left the EU, the whole edifice might be at risk. There was a common threat and a common purpose. In a short-term sense, however, the refugee crisis is just a cost on the European Union. There is a long-term argument, which Angela Merkel and others have made, that these are additional citizens bringing in skills. Although migration tends to be good for economies in the long term, the very rapid arrival of a group of people can put strain on economies in the short term. It is important to recognise that. The EU's response to the migration crisis is all about distributing the costs. Any benefits are ultimately going to be quite long term. It is a very strong and unusual challenge for the Union. I do not know how it will do.