John Paul Phelan (Fine Gael)

The European average is just over 2%. The rate of inflation was 4.5% in the month of August and has been hovering around the 4% mark for most of this year.

The Government's amendment also fails to acknowledge that the Government has had a distinct role to play in increasing inflation in the past couple of years. This debate was held three years ago when inflation was running at approximately 3% annually and was slightly more for a period of time. This followed on from the Government's decision, in the aftermath of the splurge at the general election of 2002, to increase VAT in the budget that took place immediately following that election. There was also a substantial increase in excise duty on diesel which was enacted by the previous Minister for Finance, Charlie McCreevy, before he left office. The Government has played a significant role in ensuring there are problems with regard to inflation in the economy. It is high time the House heard some explanations. I am interested to hear the Minister of State's response to the debate.

The House should have debates on such subjects more frequently. The rate of inflation is the clearest indication of the overall increase in the cost of living. There have been significant increases in the cost of living in the past few years. I disagree with Senator O'Toole in regard to Ireland not being the most expensive country although he gave some examples of where this is not the case. It is acknowledged by most people that we have become a very expensive country. Studies of prices from across the European Union would indicate that Ireland is——