Before we begin, I wish to start by wishing the former Minister, Paschal Donohoe, well in his new role as chairman of the World Bank. He was an ex officio member of this committee. I wish him all the best in his future role.

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Before we begin, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentation they make to the committee. This means they have an absolute defence against any defamation action for anything they say at the meeting. However, witnesses are expected not to abuse this privilege and it is my duty as Chair to ensure that the privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with any such direction.

I remind members of the constitutional requirement that in order to participate in a public meeting, members must be physically present within the confines of the Leinster House complex. Members of the committee attending remotely must do so from within the precincts of Leinster House. This is due to the constitutional requirements that, in order to participate in a public meeting, members must be physically present within the confines of the place where Parliament has chosen to sit. In this regard I ask any members participating via MS Teams that, prior to making their contributions to the meeting, they confirm that they are on the grounds of the Leinster House campus. Members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any persons or entity by name or in such way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to identifiable persons or entities, I will direct them to discontinue their remarks.

It is imperative that they comply with any such direction.

This afternoon's engagement forms part of our post-budget 2026 scrutiny and engagements. I welcome Dr. Karina Doorley, associate research professor, Dr. Conor O'Toole, associate research professor, Dr. Paul Egan, senior research officer and Mr. Dónal O'Shea, research assistant. The committee welcomes the opportunity to engage with them and I welcome them here today.

I will take the opening statement as read and I now ask members to ask any questions. We will start with Deputy Guirke.

I thank the Cathoirleach and thank the witnesses for coming here today. I also wish Paschal Donohoe well.

How can we understand how a budget of €9.4 billion will result in a loss of disposable income to households averaging 2%? The withdrawal of temporary measures results in losses of 4.1% of disposable income for the lowest income households compared with losses of 0.3% for higher income households. When we are talking about lower income households we are talking about single parents with children, of whom 28% already live in child poverty.

There are 300,000 people already in energy arrears. Without the energy credits, many of those families, especially those on lower incomes, will struggle big time coming into the winter. How does the ESRI feel the withdrawal of the energy credit support will affect those households? How will the withdrawal of supports affect the standard of living over the next few years, not just next year, for those people?

How will the budget's measures affect different types of households such as those on lowest incomes if their incomes are down by 4.1% when the highest income households are only affected by 0.3%?

To give an idea of how we conducted the analysis, the figure of 2% income loss referenced by the Deputy is with reference to a budget that is indexed to income growth. What that means is we know incomes will grow next year, so wages will grow, and if you do not alter the parameters of the tax and welfare system that results in people paying a higher proportion of their income in tax or falling behind people who are in work if they are on welfare because their incomes are relatively lower. We compare what actually happened in budget 2026 to a situation in which the monetary parameters of the tax benefit system have evolved in line with forecast income growth for next year, keeping everyone on a level par. Compared to that benchmark, we project that incomes will fall by 2% on average across the income distribution and that those losses will be higher for low-income households than for high-income households. There are a couple of things feeding into that. The withdrawal of temporary measures is obviously a very big part of that. There were across-the-board energy credits, child benefit increases and one-off payments to people on welfare last year. Those have not been repeated this year. Part of the figure is certainly the withdrawal of these measures. That, to some extent, has been counteracted by increases to welfare parameters in budget 2026 which are above forecast income growth for next year but those increases have not been enough to fully compensate for the loss of cost-of-living measures. In fact, for higher-income households those losses have been exacerbated by the freeze to tax credits and bands. Therefore, higher-income households are feeling the withdrawal of the cost-of-living measures but also having a freeze to their tax bands and credits. Overall, that means we are looking at a fairly regressive pattern for budget 2026 that means that low-income households are losing slightly more than high-income households. It was a very large budget and there was a lot of expenditure but the way the expenditure was targeted means that in relation to direct tax and welfare policy, that expenditure will not be felt by households in terms of the standard of living in 2026 through the tax and welfare system.

The withdrawal of the cost-of-living measures will be felt more by the lower end of the income distribution because they represent a higher proportion of income for that group of the population compared with higher income households which also have other sources of income that they can use to compensate for that. If their energy bill goes up they have savings to draw down and so forth. For lower-income households the energy credits and cost-of-living packages is a large proportion of their overall disposable income. While the increases to welfare in 2026 will somewhat make up for that, they do not fully make up for it. The increases to the permanent welfare system last year and the year before were below forecast wage and price growth for those years.

There is an accumulation effect here with lower-income households feeling the effect of a couple of budgets where their permanent welfare payments did not keep pace with forecast wage and price growth and now they have the temporary measures withdrawn, which they became dependent on. In the past year or two, the temporary measures kept the bottom of the income distribution quite stable and prevented large increases in income poverty. For the next few years, beyond 2026, it is hard to say what is going to happen because we do not know how the tax and welfare system is likely to evolve. We are expecting incomes to grow but it is hard to say about Government policy. The expectation is that if we continue to see lower-income households being unable to afford thing like energy and necessities due to growing prices, adjustments would need to be made to the permanent welfare system rather than continuing to rely on one-off measures.

Where does Dr. Doorley see those 300,000 people already in energy poverty and behind on their bills going? While the Government spent €450 million on targeted measures last year, if it targeted even the 20% or 30% who needed it, it would not have cost that kind of money at all. I see many more people coming into my office every day who are under pressure and going into poverty than there have ever been since I got into this game. With a budget of €9.4 billion, we have left the people behind who need it the most. I do not know what Dr. Doorley's take on it is.

The energy credits were very untargeted. Many households that received them did not need them at all. They were a costly measure that did not-----

Time is up and we have a vote in the Dáil so I propose that we suspend the meeting for approximately 20 minutes.

Deputy Crowe is our next speaker.

I thank everyone from the ESRI for being here and for their opening statement, which I have read. I have a few questions. They made the contention that "the macroeconomy does not need strong government support". They went on to talk about "removing bottlenecks in infrastructure". We have had a debate in the Dáil in the past week, led by the Minister, Jack Chambers, where he has flagged that, probably between now and Christmas, he is going to start outlining how each Department can remove some of those bottlenecks. Has the ESRI made a submission to the Minister's Department on that?

I thank the Deputy. I will start with the context for what we have in the opening statement. Our view there is looking at the overall budgetary package at present and thinking about this concept of the fiscal stance, which is how much the Government is putting into the economy relative to how much it is taking out. Typically, when we have an economy like Ireland's, which is performing extremely robustly - a low unemployment rate, strong employment growth and a relatively well-performing domestic economy - that is the time we would be suggesting policies that would take more money out of the economy than support it. From a broad-based perspective, we felt that the budget was supporting the economy to an extent it should not be at this point in the economic cycle.

I will bring it back to the issues of infrastructure deficits and the bottlenecks. For very many years, we and others have highlighted the challenges Ireland faces in infrastructure constraints, particularly around housing, but also the supporting infrastructure that goes with unlocking housing. We also think about the infrastructure that will be needed for the climate transition, as well as issues around digitalisation and ageing. There are a large number of issues facing the Irish economy that need investment and considerable State support. This particular budget allocates a large amount to capital expenditure. It is a very large amount relative to historical standards. There has been a rapid escalation of investment in capital projects in recent years.

I am just watching the clock. Has the ESRI specifically advised on certain measures in advance of Christmas?

I have not. I am not sure about my colleagues. We do research on a range of topics. I co-ordinate housing research in the ESRI and we are doing a lot of work on various issues, including on supply, which relates to infrastructure or unlocking supply and understanding the timelines around moving from planning to completion, but we have not specifically-----

I will jump back in. I recently shared a public transport journey with someone sitting opposite me who identified himself as being senior in the Department. I did not know who he was but we got chatting. We had a little look over our shoulders to see whether we could chat properly. He was able to tell me that in the recession years there were a lot of gateways. That is the term the Department uses. It is not just the case of conceiving an idea, designing, funding and building it. There are staged gateways where the cost-benefit analysis is revalued. He said these were brought in as mechanisms to slow down projects, rather than kill them off. That is cutting to the chase. I am curious. Governments change and Ministers change, as we saw today, but the ESRI staff and departmental officials largely stay the same and their inputs are constant, so I was wondering if the ESRI had specific inputs on that.

Before I ask my final question, it has been remiss of me not to - I meant to say it at the outset, as others did - pay tribute to now former Minister, Deputy Donohoe. He was an outstanding parliamentarian. I said on local radio previously that as I looked around the Dáil Chamber in the past five or six years, I thought he and the former Minister, Michael McGrath, were two of the smartest Ministers and parliamentarians I have seen. It was great, at one stage, that the two of them led the financial Ministries during turbulent times. I wish the former Minister the best of luck, as I wish it to those who were elevated today.

In her opening statement, Professor Doorley referred to the temporary cost-of-living policies. They were great when they were brought in and we as TDs were quick to communicate how positive they were at constituency level. It was lauded, particularly during the Covid-19 pandemic, how agile the Government could be in devising quick interventions and getting out of them again and in helping people. Unfortunately, as the last budget has proved, it is not popular with the public when any of those measures are rescinded. The ESRI has undertaken research. Are there any other EU countries or jurisdictions that have brought in short-term measures and instituted them as permanent measures? Is Ireland unique in what it has done in the past three years? Is there an alternative way of managing these temporary cost-of-living measures? Does the ESRI have any research on that?

I am not aware of any other countries that have brought in things like temporary cost-of-living policies and then decided to stick with them. There are incidences of other countries bringing something in on a trial basis and then making it permanent, but that is probably different from what the Deputy is talking about. Our view is that a temporary cost-of-living policy is there to absorb the shock of a sharp rise in prices, but that there was time to make that adjustment in the following budget on a permanent basis and those cost-of-living policies should and now have been phased out. What is missing is whether the permanent changes have made up for the withdrawal of the cost-of-living policies and the answer to that at the moment is that they have not.

Home energy credits and the children's allowance were direct, into-the-pocket measures. However, the VAT rate in tourism and hospitality was a measure that got ingrained in the sector, which said it needed it to survive. What were the ESRI's views on that at the time and what are they on what happened in the last budget?

A measure like that is not a household support targeted to address a policy gap, like trying to alleviate poverty or manage household distress or something like that. As I understand it, it is targeted at supporting the sector and the fragility of firms in the sector. We try to think about whether it is a good idea to use particular tax measures to support economic activity. This was VAT on hospitality in the sectors that interface with household spending a lot. The broad economy was performing well. It was not necessary to support the economy through that type of taxation measure and alternatives could potentially have been used. However, I do not see that measure in the same light as the other measures the Deputy mentioned, such as the credits, which are shock absorbers, where households would otherwise get a big external shock and need protection against it.

Before I move on to Deputy Cian O'Callaghan, I welcome Deputy Boyd Barrett to the committee. He has not been here since I started. He is welcome. I wish him the best in his contributions here.

You are very kind, a Leas-Chathaoirligh. Thank you very much.

I also welcome Deputy Boyd Barrett to the committee. Often at meetings, committee members inquired how he was doing, for the duration.

I thank the ESRI for coming in. I will take up a point that was just made. Dr. O'Toole said the VAT rate reduction for hospitality was not necessary. I agree because the sector was already performing strongly. He said there were alternatives. What alternatives could have been looked at to address issues and concerns in that sector?

I was referring to the link the previous Deputy made between introducing the cost-of-living supports and then segueing into the VAT measures for hospitality. As I mentioned earlier, we think about that sector and how well it is performing and how well household spending is doing in the economy. The forecast we have for the domestic economy is for it to grow robustly this year and into next year, with strong household spending. When there is a low unemployment rate economy with growing incomes in real terms, it does not necessarily need the support that will come through a broad-based VAT reduction in the sectors that absorb domestic spending. As I understand it, that measure was targeted more at the fragility of or support for enterprises, rather than it being a broad-based economic measure. That is probably the best way to think about it.

In her opening statement, Professor Doorley noted that low income households, from the budget and the withdrawal of the energy credits, are proportionally losing significantly more of their disposable income compared with high income households. It is 4.1% compared with 0.3%. She went on to tell us that not only is that incredibly inequitable, but that low income households do not have room to deal with that, whereas high income households - even if the percentage were the same, which it is not - have savings and disposable income and can make discretionary choices. Low income households do not have those options. That is a stark finding. It is a stark statement. It has real impacts. We see it through our work in constituencies. We meet people who are afraid to turn the heating on and grandparents who say that, no matter what, they will get Christmas presents for their grandchildren, but then they cannot afford to do essential things like heat their homes or they cut back on food and other essentials. People who have contributed all their lives, worked hard and raised families should not be in a situation like that. If there is one thing about the budget overall that the ESRI thinks needs to be changed or highlighted, what is it?

Overall, we welcome the withdrawal of the temporary cost-of-living measures, simply because the fact that they were temporary brought a lot of uncertainty to budgeting and people's expectations of where they would be the following year. However, because they went on for a number of years, households became reliant on them.

In some senses, they papered over the fact that households on fixed incomes like pensions or social welfare payments were not seeing wage growth but were seeing price growth. Their social welfare payment - their core rate - was not keeping pace with that. That was all fine while they were receiving temporary cost-of-living measures but now that they are gone, it is probably becoming a bit more real that their permanent income is not keeping up with how prices have evolved over the past number of years. While the withdrawal is welcome and necessary, it paints a picture of how the permanent tax and welfare system has kept up with changes in the economy over the past couple of years. That is something to keep in mind for next year's budget. For the past number of years, we have been suggesting that some sort of benchmarking exercise should be carried out to see if social welfare payments are adequate for the expenses households face. Now would be a good time to think about an exercise like that when price growth is returning to normal but price levels are much more elevated than they were.

Who might conduct that benchmarking exercise to see if social welfare payments cover the necessities people have to pay for? Would it be done by the Department of Finance, the Department of Social Protection or a body like the ESRI? How does Dr. Doorley think it is best done?

From memory, I think the most recent exercise was carried out by the Department of Social Protection but I am not 100% sure. There is usually input from independent experts as well. That is the best way to make sure you get an independent outcome. A recommendation is made that certain payments may be adequate while others are not given the costs faced by certain types of households, such as those with disabilities or children or single-parent households. Once a benchmark is set, after that there is some sort of agreement about whether the payments will be indexed in line with something going forward or they will continue on a discretionary basis, which is the way it has been done up to now.

When was that benchmarking exercise?

It was a good few years ago.

It was done and it has not been done since. There is a strong case it should be done. Should it be done every year?

Not necessarily. Benchmarking would set the adequacy level and then a decision would be made about whether the nominal rate things are paid at should increase in line with price growth for the next ten years or in line with wage growth, or should we just think about adding a tenner or a fiver every year for the next ten years and then benchmark again. It is not necessary to do it every year but there should be a path forward for the years following that.

That is long overdue given the amount of price changes and the increased cost of living pressures.

I would think so, yes.

Has the ESRI looked at the costs faced by disabled people?

We had some research on that earlier this year or last year. We estimated the cost of disability. It is very hard to estimate the cost of disability for a number of reasons such data and methods, etc. Our best estimate of the extra costs households with a disability face was about 50% of disposable income. That means they require about 50% extra income to achieve the same standard of living as a household that does not have a disabled member.

Does Deputy Boyd Barnett want to come back in?

I have a couple of questions. I am reading the opening statement now. I apologise for not being here earlier as I was speaking in the Dáil. The ESRI was in favour of withdrawing the one-off cost-of-living measures but, if I understand correctly, it believes there should be some acknowledgement of the cost-of-living pressures the lowest income households are suffering. We see that underlined in the Society of St. Vincent de Paul's reports today of record number of people looking for assistance as we head into Christmas and the cold snap. Is it correct that the ESRI thinks that should be covered by index linking?

We are in favour of the withdrawal mostly because they were very untargeted. Some were targeted but that they were temporary meant there was uncertainty. There is no reason not to build that into the permanent system now that we know prices are going to remain at this elevated level. There is no reason to have them as one-offs every year if we know prices are not going to go down again. That amount should be built into the permanent system.

Should some be permanent more than others? Which should be permanent?

The payments made through the social welfare system that were intended to help low-income households with rising prices. A lot of those payments compensated for the fact that the permanent parameters of that payment were not going up in line with inflation. Instead of the payment increasing with price growth, there was an extra amount added on temporarily. We are in a period now where prices are remaining at this level. They may increase again in the future. Whatever it is thought that amount should be, it should be built into the system now. If one looks at the evolution of social welfare payments over the past six years, which we did in our most recent budget analysis, the very bottom income decile - the lowest-income tenth of households - is better off next year compared with 2020 if 2020 parameters had been indexed in line with price or wage growth. That is down to the increase in CSP - the child-targeted payment helping the lowest income decile. The rest of the bottom half of the income distribution has lost compared with 2020 when one only considers changes to the tax and welfare system. That reflects that those payments have not kept up with inflation over that time.

What does Dr. Doorley think of the estimate of some of the disability groups that they have lost overall about €1,000 on what they got last year? Is that a reasonable estimate?

I have not seen the numbers behind that so I cannot comment. Our estimates show the at-risk-of-poverty rate for disabled households is likely to increase next year compared with a scenario where their payments had kept up with inflation. There is something to that for sure - they are losing out.

Does the ESRI ever give consideration to the other side of the equation, what some of us might see as the profiteering, for example, of energy companies? We would say there should also be consideration given to controlling their ability to ratchet up energy costs in the way they have when for the past few years they have been recording record profits. Has the ESRI ever looked at that? Does Dr. Doorley think there is profiteering going on by energy companies or even in the area of rents, which is another huge issue? Some of the rents being charged bear no relationship to the cost a landlord might have. They are charging these rates because they can get away with it and make a lot of money.

There is a lot to unpick in that transition from the energy piece across to the housing and rental sector. To come back to the energy side, the catalyst for the major price spikes in energy markets over the past number of years was the Russian invasion of Ukraine, which had knock-on impacts on international prices that fed through into the domestic system through the importation of those price transmission channels. In that respect, the support at household level to absorb those shocks is entirely appropriate for that period of time of the exposure. On the overall market structure in the energy sector, it is not a market I have done much research on. We have a big energy team in the ESRI which works on it. In general, economists do not typically like price caps or controls on prices because of the side effects. If you bring in a price control, that distorts the market dynamics and then there are potential supply side effects. If prices are dampened by a cap or another measure, perhaps the investment needed does not come through or there is a withdrawal of investment. There are supply side effects that affect the ability to provide the services needed. That is typically why there is the move towards specific measures in that regard.

In cases where there are clear excess profits being earned, there can be other measures to address that, but I do not have any specific research that looks at that matter at present.

On the rental side, we have had a period with rent caps in place, particularly in rent pressure zone areas, in Ireland over the past number of years. We have done quite a bit of research on the rental sector over many years. In general, as I have said to this and other committees in the past, rent caps and those kinds of strict price cap are a trade-off. They are very good for tenants - they lower either the inflation rate or the level of rents - but they are not so good for the supply side. They have these negative effects on investment both in maintenance and in keeping the units in the market. That is borne out by lots of studies internationally that have looked at these particular dynamics. We have done some research on that in Ireland. One has to get the balance right. If we have a supply-restricted environment and we are trying to encourage supply, then that is a trade off with the impacts on the household.

There is a distinction between what price caps are used for and whether the prices in the market, through rents or purchase, affordable for households in that particular market. When we look at some of the market prices in the rental sector using traditional assessments of rent-to-income ratios or payment-to-income ratios, there are large pockets of the population that would find those rents unaffordable. You need alternative measures like a major expansion of cost-rental or social housing, which can provide that affordability alleviation for those households that are struggling with those rental costs. From my side, the challenges with rent controls in the private market could maybe be offset by increasing the supply of cost-rental and other alternative tenures that can directly deal with the affordability challenge.

Is there evidence in countries that have more robust rent controls that it produces problems on the supply side? Countries like Germany or places like New York have more robust rent controls, do they not? Dr. O'Toole is worried that, if there is too much demand injected into the economy via large expenditure, it could be problematic. I understand that, but if it was taken out in other areas through taxing wealth, for example, or not incentivising the building of hotels because building houses for people who need them is a bigger priority than boosting the hotel industry, would that deal with that concern? If we find other ways to take demand out of areas that are arguably of less benefit to society as a whole, we can still put the money we need into housing or into addressing poverty.

We give the advice that there is too much net stimulus from the Government going into the economy at this point in time. It is really that net position we are worried about and the degree of the fiscal stance. Is there more money being put into the economy at this present time relative to what is being taken out? The Government always has choices. If it feels like it wants to address a particular area that needs policy targeting and it wants to spend more money on it, the Government can raise revenues through increased taxation and other ways to take money out of the economy to offset that expenditure. From our point of view, that kind of advice is the broad-based totality of all of the expenditure going in relative to what is being taken out through the taxation system. Of course there are choices within that. It may want to raise revenues in one place to spend more in another, which is perfectly fine. That net bit is the balance we think is too strong at present.

I want to talk a little bit about the income tax thresholds and the tax bands. My understanding is that, by not indexing in this budget, the effective tax rate has gone from approximately 22.6% to about 23.1%. Obviously, that is countercyclical, which Dr. O'Toole looked for in his opening statement. I am interested in his thoughts on what is fair. I know that is a nebulous term. Wage growth is a little under 4%. Inflation is a little shy of 2%. Clearly, if the tax bands and tax credits are indexed by 2%, the Exchequer ends up better off. It gets more money and the taxpayer gets more take-home pay. That indexing would come in and form part of the €1.3 billion tax package, but in reality, it would not really be a tax giveaway. It would only be leaving the effective tax rate as is. I am interested on Dr. O'Toole's thoughts on what is fair. Should it be tracked against the inflation rate or the wage growth rate? What are his thoughts around that? It is false to say that the Government is giving away a tax package if it is just indexing in line with inflation. People are not paying any less tax. In fact, they would be paying slightly more tax if wage growth exceeds inflation.

I am happy to answer the broader question and Dr. Doorley can come in on some of the specifics on indexation. In general, if a Government does not fully inflation index the tax bands, that is going to take more money out of the economy than was previously the case.

It is a stealth tax effectively.

I would not call it a stealth tax - that is not the phrase I would use for it - but in a sense, that is kind of a revenue-raising measure. In the post-budget briefing we gave, I called that out as quite a positive thing at present because what it did was actually-----

It is countercyclical.

It is a countercyclical measure, in that it takes more money out than fully indexing would have done, because that would have been more stimulatory. In a sense, rather than think about this from a fairness perspective, it is really about the choices that the Government wants to make about how it allocates financing across the distribution.

What I am talking about is the broad-based macro picture. We are very concerned about the extent to which the Government is spending too much money, which could lead to these wage price spirals in the economy and overheating channels that might kick back in through inflation. We are worried about that net position. We wold say that any measure that takes more out of the economy than it puts in is working in line with that countercyclical ideology of deciding how to take money out of the economy when it is doing well and having the firepower available to support the economy in a downturn. That is the type of policy we want to be able to deploy in the long run for Ireland over the economic cycle.

What is the witnesses' view on the fact that there is no indexation for capital gains? It has not been in place for 25 years or more. Is that something to look at? It is effectively a stealth tax. If your gain matches inflation, you are no better off but you pay tax on it.

I have not done any research on that particular measure but, in general, where there is any sort of nominal anchor - a nominal-level figure - in a policy parameter, it is not changed over time and there has been a period of inflation, then that becomes a more restrictive threshold over time. If you have a nominal figure that is used as part of the calculation-----

I understand that, but does Dr. O'Toole have any view on the fact that it has not happened?

No. I have not done any specific research on that myself. I would not like to comment on it without having done work on it. Where you have that nominal anchor, though, that will act as more of a barrier over time to that particular measure.

Referring to the graph in Dr. O'Toole's submission, entitled "Decile of equivalised [that is a new word for me] disposable income". I presume that is divided into the 10% of the lowest income going in chronological order up to the highest 10%. I was trying to get my head around it. The bottom of the first paragraph reads, "The withdrawal of temporary measures results in losses of 4.1% [that appears to be the bottom left-hand figure] ... compared to losses of 0.3% for higher income households."

I could not pick that 0.3% out on the graph.

That should be in the tenth decile. You should be looking at the light-blue segment of the bar. That is the withdrawal of-----

My copy is in black and white. It is the lighter one just above the dot, is it?

Yes, exactly. It is that little sliver above the dot. That is the 0.3%.

Why do you call that "temporary"?

That is the withdrawal of the temporary measures. It shows the effect of the temporary measure withdrawal.

Yes. I get you now. That is okay.

A big topic, which you alluded to earlier, is energy costs and so on. The word out there is that the energy companies are making considerable profits and the consumers are not gaining. Has anyone done any deep research on that to understand whether we are being ripped off, to use a common phrase? There are many reasons energy costs are higher in this country than in other European countries, and I get that completely, but in terms of the profits of the energy-supplying companies, is there room for us to have lower energy costs?

This is not an area of my particular expertise. We have a large team in the ESRI that works on this specific area. I will have to consult it to see if there is any research that looks at that. I have not seen any that looks at the profitability of those companies. It is very complicated policy and market design that moves from, say, the international prices we would see going up and down, and we see these world price increases in oil and gas etc. When trying to understand how that affects consumers on the ground, it has to work through multiple markets to get there. I have not seen any research that looks at the profitability of companies across that supply chain, but I am happy to talk to my colleagues to see if they have any to pass on to the committee.

We hear about how China is massively invested in renewables, way more than Europe or the US, and is now able to produce really cheap electricity as regards manufacturing. It is proven that that is much cheaper than fossil fuels. We are on a good trajectory for renewables with solar and wind, and hopefully that will feed into lower prices in time with improved technology, but China is an example now of how renewables are actually very cheap.

We certainly have a huge investment requirement as a country to decarbonise our electricity production. When we think about how we will structure our economy going forward, we will orientate much more towards electricity. We will need it for heating residential and heating industrial but we will also need it for running the infrastructure around the digitalisation economy, such as the data centres etc. Electricity will therefore become a much more important component going forward, which is why a major investment in the infrastructure, the network, the grid and the production side will be needed. The State will have to play a major role in that to try to facilitate that transition.

Those are all my questions. That concludes the session. I thank the witnesses for attending the meeting.