Colm Brophy (Dublin South West, Fine Gael)
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I thank the witnesses for attending. Economics is never neutral. That has been said before at meetings of this committee. The way in which an economist looks at an issue is as much dictated by the science of economics as the ideology that guides the science. I was interested by some of the witnesses' comments. I disagree that it is not correct to cut USC. We have a very high tax rate on employment. Many economists believe that USC can be reduced, in particular if employment is being generated. Ireland is a competitive open economy. That involves attracting inward investment into the country, which involves the labour cost base of that investment. That has been mentioned in discussions of other areas. People on very modest incomes are now reaching a taxation level which is completely disproportionate to that of our competitors in other EU states or the United Kingdom. I challenge the witnesses on that issue. I do not know anybody who is talking about a total and immediate abolition of USC. That would have a catastrophic impact on the budgetary situation. However, a phased reduction in USC and putting that benefit back into people’s pockets would be prudent and positive. It is interesting that the witness highlighted that.

I will not discuss water charges, which is ironic because I agree with 90 % of what the witness has said on the issue. However, having spent the past six months of my life buried in rooms such as this dealing with the minutiae of every aspect of water charges, I shall refrain from discussing the topic. That said, very little, if anything, of water charges is to do with economics, it is all to do with politics. I agree with the witness in that regard.

I appreciate that the witnesses must comment on the threats which the country is facing. However, it is worth noting that in recent years there has been a tremendous turnaround in employment. That unemployment has been reduced from 16% to 6% is one of the things which has enabled the Government to prudently finance certain things it wanted to finance. There has been a transformational change for the Department of Social Protection in terms of what it can do with its budget. I am not as dismissive as the witnesses of the achievement of reducing unemployment, although I recognise that challenges on a global basis and so on remain to be dealt with. However, the county deserves to be proud of the achievement of reducing unemployment and optimistic in terms of the potential that driving the employment figure up has for our overall economic strength and ability to fund programmes in the future.

The Government is looking at areas such as third-level funding. There is a process under way in that regard. I was disappointed by criticism of this area when a consultation process is in being. It is clear from the contributions of committee members that it will not be an easy process. However, it is a process in which the Government is solidly engaging.

The EU has done a great number of positive things to enable the economic development of this country and to strongly position it. There is no perfect system but it also has in recent years put in place a regulatory framework, and even though there are constraints at certain times on us and we would like more money for capital investment and so on, it was the lack of decently strong, robust guidelines at a European budgetary level that enabled Fianna Fáil to bankrupt the country through reckless policies and, therefore, we need to be careful when we examine how we address the future. Calls to blame Brexit or to use it to say we should get exemptions from the fiscal rules or to ditch them, or that we should be a special case and we should tax everything and try to spend our way out of this, or calls to make an attempt not to adhere to the moderate and sensible economic rules in place would be incredibly damaging to our economy. I am interested in Professor Barrett's views on that. While changes are needed in EU governance, in particular in respect of the capital budget, the overall fiscal rules are one of the keys underpinning stability in respect of long-term growth.