Professor Peter Clinch:

It is a good question. I should be clear that while the overall price level is low, part of our job is to ensure we do not just consider averages, as in the case of productivity. The main pinch points are in the areas of housing, traffic congestion, private transport, childcare and several others, which we have pointed out. The Deputy is correct that an enormous current challenge for policy is how to reduce the cost of living, which is difficult because the Government does not have control over all prices and markets are at work. The danger is that when one intervenes in the market and introduces subsidies, prices will be driven up further, meaning that the consumer will not benefit. We should always be careful, therefore, about the intervention we make to ensure that will not happen.

To control prices, we have considered measures where the Government can make a difference. It controls prices in areas such as water, postal services and road and rail transport. There is some control in that regard and they are mainly administered prices. There are also hidden areas of prices, such as in the planning system and so on, where the Government can make a difference. We tend to examine matters such as what reduces efficiencies. In the case of legal fees, for example, the evidence suggests that Ireland has higher prices relative to other jurisdictions. We recommended that the Government examine conflict resolution systems in countries with a similar judicial system to find whether there are ways to speed up tasks in commercial disputes. We have also recommended expediting the recommendations of the review of the administration of civil justice when it is released.

We spoke about insurance costs in 2016 and produced a bulletin on it. Establishing the cost of insurance working group and subsequent ones will make a difference, although we are still waiting for more recommendations to emerge. While access to credit is difficult, it is a big issue for business more than the consumer, although it is an issue for the consumer in respect of mortgages and loans. A significant hangover of the financial crisis affects access to credit. At one stage, access was difficult but now the cost of credit is much higher. We have pushed the Government hard to increase the range of financing options for small and medium enterprises, SMEs, and to create awareness of matters such as the Strategic Banking Corporation of Ireland, whose credit guarantee scheme can help. Ultimately, the only way to push prices down in areas such as housing is to increase the level of construction, of which Rebuilding Ireland is a major and important part. The council would not go as far as to recommend directly whether there should be more State intervention, but we must always bear in mind that some of those models and experiences have not always worked so well.

Overall, the Deputy is correct. As we have outlined repeatedly, to have a successful, sustainable economy, without such wage growth that it cannot be sustained in the economy, as happened in the run-up to the crisis, we must ensure that it is underpinned by productivity and keep the costs of living down. The Deputy is correct that housing costs are one of the major factors in driving wage rates.