Mr. Fergal O'Brien:

I thank the Deputy for his observations and questions. I will comment on some of the tax issues Mr. Reidy has raised but be more specific on the costs of doing business. Ms Ahern-Flynn might comment on some of the housing issues.

I was a member of the Commission on Taxation and Welfare with Dr. McDonnell and we were a pretty sober bunch. I fully agree with the main thrust of Mr. Reidy's point that it is a missed opportunity in terms of taking long-term structural reform decisions around our taxation system. I go back to my earlier point to Deputy Conway-Walsh on the reliance we now have on our corporation tax base. We would be running a very significant deficit in the economy if it was not for that surge of €5 billion to €25 billion, essentially, in our tax base. None of us can have any certainty about how that is going to evolve over the coming years. Part of it is income tax. We must have a broader income tax base, but other parts of our tax system matter as well. We are not building a tax system that is going to sustain us into the future with the costs of ageing, future health provision and probably decarbonisation to a degree as well, although we welcome the opportunity to put some of that once-off money aside in the form of the infrastructure and climate fund. I am not going to get into the details of taxation save to say there is broad agreement our overall taxation system needs very significant structural reform and we should not be allowing the once-off surge of the current corporation tax glut to postpone those decisions.

I wish to talk about the costs for small businesses the Deputy raised. We are sleepwalking into a real issue here. IBEC has not opposed the concept of a living wage. We have not opposed the concept of auto-enrolment in pensions. We see the merit of statutory sick pay. We now have an new earnings-related social welfare payment. All these things make sense in isolation, but there is an absolute cascade of cost coming onto business. Sometimes when we talk about the minimum wage costs on an hourly basis we lose sight as to the overall cost base we are going for in the economy. Within two years we are going to have a wage floor of €30,000 full-time equivalent when we benchmark to our 60% of median earnings with respect the aspirations of where we want to take a statutory minimum wage, also known as the living wage. I do not think the agencies of the State have in any way done an impact assessment of what the €30,000 floor is going to mean for employment structures across the State with regard to social care, home care and all these sectors where many workers are probably currently earning less than that €30,000 threshold. This is not about workers on minimum wage, but about the whole relativity and ratchet effect we are going to see across the economy. This is a transition we support over time, but as for doing this in a period of three years, to our members doing the costings on this it looks like a 25% to 30% cost increase over three years. I am worried, given the margins at which some businesses are operating, about their capacity to be able to cope with that. We are going to see a lot of this back in inflation. Obviously, firms in the domestic economy are going to have no choice other than to put this back in the form of higher prices to consumers, so we are going to see inflationary impacts as a result of it.

I already know about this from some of our direct engagement with companies in probably labour-intensive manufacturing sectors.

Many of them would be trade unionised employments where they genuinely fear that they will not be able to sustain that employment going forward because they are operating in a global environment where a cost base such as that, particularly in such a short transition period, without effective Government support, will ultimately mean that their Irish operations will not be viable. In particular, I would worry about some of those employments across rural and regional Ireland. We are directly aware of a number of employers that will struggle with a cost base that is this much higher.

I reiterate that jumping to a €30,000 wage floor across the economy and all the relativity impacts of that would have a serious competitiveness shock for the Irish economy and probably at a time when it looks to us like we are at the top of the economic cycle, given the geopolitical issues, the normalisation of interest rates and the inflation that we have come through. I would encourage the committee to look at that. What impact will this have on agencies of the State, care services and other related sectors, and their ability to deliver services when that cost base starts to impact? I will hand over to Ms Ahern-Flynn to address the housing issues that the Deputy raised.