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This afternoon's engagement is on demographics and long-term fiscal pressures. I welcome: Professor Martina Lawless, director; Dr. Paul Egan, research officer; and Dr. Adele Bergin, associate research professor, Economic and Social Research Institute, ESRI; Dr. Larry O'Connell, director; Dr. Gráinne Collins, policy analyst; and Mr. Noel Cahill, economist, National Economic and Social Council, NESC; and Mr John McGeady, chief executive officer, and Ms Michelle Murphy research and policy analyst, Social Justice Ireland, SJI. The committee welcomes the opportunity to engage with the witnesses and I thank them for being here today.

I invite Dr. Lawless to make her opening statement.

I thank the Chair for the invitation to the ESRI to appear before the committee and for the opportunity to discuss ESRI work on demographics and long-term fiscal pressures. I am director of the ESRI and I am joined by my colleagues Dr. Adele Bergin and Dr. Paul Egan.

Ireland is entering a period of significant demographic change that will have far-reaching consequences for the economy and the public finances. While the overall population is projected to continue growing over the coming decades, the age structure of the population will change profoundly. This matters because the balance between people of working age and those who are retired is a key determinant of economic growth, tax revenues and demand for public services. I will briefly summarise findings from ESRI research that uses our population projections, macroeconomic and healthcare-demand models to bring together how population ageing is likely to affect Ireland’s macroeconomy and public finances over the period to 2050.

ESRI analysis shows that, in a baseline scenario, Ireland’s population is projected to increase by around 1.2 million between 2022 and 2050, reaching more than 6.4 million people. However, this growth will be accompanied by rapid ageing.

The share of the population aged 65 and over is expected to rise from about 15% in 2022 to approximately 25% by 2050. At the same time, the proportion of the population of working age, which is generally defined as those aged between 15 and 64, is projected to decline from 65% to about 59%. As a result, the old-age dependency ratio almost doubles over the period, meaning there will be far fewer workers supporting each older person by mid-century.

These demographic changes reflect longer life expectancy, persistently low fertility rates and continued net inward migration. People in Ireland are living longer than ever before, increasing the size of the older population. Fertility rates remain below replacement level and are assumed to remain broadly stable over the projection horizon. Net inward migration continues to play an important role in supporting population growth and moderating the pace of ageing as migrants tend to be of working age, but it does not fully offset the underlying shift in the age structure of the population.

Population ageing has important implications for the performance of the economy. As the share of the population of working age declines, labour supply growth slows, reducing the pace at which employment can expand. Our modelling suggests that this demographic effect will lead to a gradual slowdown in underlying economic growth from the 2030s onwards. Growth in modified gross national income, GNI*, which better reflects domestic economic activity, is projected to be lower in the period from 2040 to 2050 than in the previous decade. Slower employment growth feeds through to weaker growth in personal disposable incomes and household consumption even though the economy continues to expand overall.

As population ageing reduces the contribution of labour to economic growth, productivity growth and investment will need to play a much larger role in sustaining medium and long-term economic performance. ESRI research finds that recent contributions from total factor productivity, a measure of how efficiently labour and capital are used together in the production process, and from investment have been relatively modest in recent years. Lower rates of investment in the domestic economy can, in part, be traced back to the fiscal challenges that followed the global financial crisis, which led to a significant and prolonged contraction in investment. The resulting infrastructural deficits have since been identified as a possible constraint on Ireland’s long-term growth potential. There is a risk that these existing deficits will be exacerbated by population ageing, which will require increased investment in areas such as healthcare services, long-term care and sustainable pension systems to maintain long-term economic stability.

Population ageing brings some significant consequences for the public finances. Our research links government spending to the size of different age cohorts, allowing age related pressures to be analysed. Government consumption is broken down into spending on education, health and other public services, while transfers to households are separated into pensions and other old-age payments, family and child supports, unemployment-related payments and other transfers. Per capita spending in each category is assumed to broadly keep up with inflation, while total spending changes in line with demographic developments.

Under current policy settings, the analysis shows that government revenues will increase modestly as a share of the economy over the long term, while government expenditure will rise much more sharply. By 2050, non-interest government spending is projected to be almost seven percentage points of GNI* higher than its level in 2030, while revenues will rise by less than two percentage points. This creates a large and widening gap between spending and revenue, reaching approximately five to five and a half percentage points of GNI* by mid-century. Even before accounting for debt interest costs, this trajectory points to significant and growing fiscal pressures in the absence of policy change.

This increase in public spending is driven primarily by age-related expenditure. Spending on health rises substantially as the population ages because demand for healthcare increases at older ages. Expenditure on pensions and other old-age income supports also grows strongly as the number of older people increases. Other areas of public spending, such as education and family-related supports, remain broadly stable as a share of the economy over time. This highlights that the long-term fiscal challenge is concentrated in health and ageing-related transfers rather than across public spending as a whole.

In 2025, the health team at the ESRI completed a body of work projecting demand and capacity requirements for a range of health and social care services to 2040. For each service examined, demand is projected to increase by at least 20%. However, due to the ageing of our population, demand for services used predominantly by older people will experience significantly higher increases. For example, hospital admissions are projected to increase by between 22% and 39% by 2040, necessitating an additional 4,400 to 6,800 hospital beds.

Demand for home-support hours is projected to increase by between 57% and 91%, and demand for nursing home beds is projected to increase by between 61% and 80%, resulting in a need for up to 23,600 additional beds. Existing policy measures, including the Future Ireland Fund will pay an important role in managing long-term fiscal pressures arising from population aging. The fund is intended to support government expenditure in the 2040s and beyond, helping to address spending pressures linked to ageing and other structural challenges. While this is expected to grow to a substantial size by the mid-2030s, such measures alone are unlikely to fully offset the additional expenditure associated with an older population and should be considered as part of a broader policy approach. Policy choices more broadly can also have a significant impact on the long-term fiscal outlook. Measures that expand labour supply such as extending working lives, increasing labour market participation, supporting higher employment rates and sustaining inward migration can materially strengthen public finances. By increasing total hours worked and productivity, these measures can boost government revenues while having a relatively limited effect on expenditure growth, helping to narrow the gap between spending and revenue over time. This highlights the importance of labour market and productivity focused policies in mitigating the fiscal pressures associated with population aging. Overall, ESRI research indicates that population aging will be one of the defining economic and fiscal challenges facing Ireland over the coming decades. While population growth remains strong by international standards, the changing age structure of the population will slow economic growth and place increasing pressure on the public finances, particularly through health spending and pensions. Addressing these challenges will require early and sustained policy action as gradual adjustments are likely to be more effective and less disruptive than delayed responses.

I thank the Chair and members of the committee for inviting us today. We set out the role of NESC in the opening statement so I will not go into that now if that is okay. I am here as director and joined by my colleagues Dr. Collins and Mr. Cahill as members of the secretariat. Our statement is focused on a report we just published called Building a Virtuous Demographic Cycle. I will cover three areas in our opening remarks. Why is NESC interested in demographics at this point? What is this idea of a virtuous demographic cycle? Dr. Collins will go into that in more detail. What do we feel are useful levers at this point?

NESC is focused on demographics because, as Dr. Lawless outlined, across Europe and the world countries are grappling with the question of demographic decline. At the moment Ireland continues to record one of the fastest rates of population growth in Europe. However, that should not obscure that we face a long-term challenge. Ireland will have a declining population, a shrinking workforce and a larger retired population. We have already passed a number of what we consider the key peaks. In 2010, we had the most babies at 77,000. That is now down to 55,000. In 2024, the number of children peaked at 1.2 million. Again, that will decline. Most projections estimated that we will pass what we call peak population sometime around 2053. That means the age pyramid is being rapidly redrawn. The key question, as Dr. Lawless also alluded to, is when peak dependency will fall. We feel that is due to fall within the decade. The precise timing of future demographic peaks will depend on policy choices we make today. Those policy choices are about fiscal sustainability but are also about creating a country where people want to remain and want to return to.

The council is acutely aware, when we have legitimate concerns about housing shortages, infrastructure restraints and gaps in public services, that there is a risk that we revert to a mindset that regards lower rates of population growth as desirable. We believe, and the council has argued for, a clear and evidence-based alternative to that view, which Dr. Collins will take us through.

What is a virtuous demographic cycle and what does the council mean by this? The council argues that demographic growth should be seen not as a problem to be managed, but as an opportunity to be shaped and invested in. In a virtuous demographic cycle, policies align with higher population projections. That alignment signals confidence and builds the capacity we need to meet future demand.

When this works well, the population age structure becomes more balanced and participation in the workforce increases. That in turn will ease fiscal pressures, which in turn will create greater capacity for public investment. The result is lower infrastructure strain, a better quality of life and stronger integration and retention of people across society. A younger, more balanced population supports fiscal sustainability and sustains the labour force that underpins long-term economic well-being, as Dr. Lawless outlined.

Migration plays a central role in this virtuous demographic cycle. The council makes five important observations about migration. First, in the public debate, migration is often strongly associated with international protection but, in reality, most people arriving in Ireland do not require official permission at all. They are returning Irish nationals or citizens of the UK and the European Union. Second, migration is typically driven by a very specific demographic group: people in their 20s with high levels of education. This group will become increasingly in demand across other ageing societies, intensifying global competition for that talent. Third, Ireland performs poorly in retaining migrants. A high proportion leave again within five years of coming to Ireland. Fourth, migration flows are extremely difficult to predict. Current data suggest that Ireland passed what we might call peak migration in 2007, when just over 100,000 people were added to the population. Fifth, more research is needed not only on why people come to Ireland but also on why migrants and young Irish people choose to leave.

This brings us to the question of levers. The council identifies six that can shape and reinforce a virtuous demographical cycle. First is fiscal preparedness. Additional savings must be built up now to meet the demographic pressures ahead. As Dr. Lawless has outlined, the Future Ireland Fund is a welcome first step but its scale remains insufficient. A review of the State pension age is also required. Second is strategic family supports. Fertility can be stabilised through stronger family supports, affordable childcare and housing, adequate parental leave and income and welfare policies that make it safer and more feasible for people to form families. Third is a proactive migration policy. Migration can help replenish the workforce, enrich communities and offset population ageing but only if it is actually managed and supported. Fourth is better work and increased participation. High participation and productivity across the life course depend on access to secure, flexible and rewarding employment, including for people with a disability. Fifth is healthcare and ageing. The focus must be on expanding healthy life expectancy, strengthening prevention across the life course and embedding responsive, community-based care. Finally, we need balanced regional development. Demographic trends suggest this requires much more policy attention. We are seeing distinct geographical patterns emerging. Some communities are growing and becoming more diverse, while others are shrinking and ageing. This poses a significant challenge for balanced regional development.

The council emphasises the need for stronger data and demographic research. We need better evidence on migration flows and motivations but we also need a deeper understanding of how people think about fertility and the barriers that might be shaping or constraining their choices. I thank the committee for its attention and we look forward to engaging with members' questions.

Gabhaim buíochas leis an gCathaoirleach agus an coiste as ucht an chuiridh.

The infrastructure, services and policies that a country develops are determined in large part by the make-up of its population. The profile of Ireland’s population is changing, as members have heard, and is projected to reach between 5.7 million and 7 million by 2057. The proportion of the population aged over 65 years is also set to increase significantly, as members have also heard.

We must now begin planning for the changes to our demography, ensuring that housing, education, healthcare, work and transport take account of the ageing population. A significant increase in investment will be required to meet the challenges ahead and it is essential to develop sustainable and appropriate revenue streams to do so.

Alongside the fiscal pressures that demographic change will bring, there will also be governance pressures. Every person should have a say in how and where infrastructure and services are delivered.

Effective social dialogue would facilitate communities and sectors to come to terms with the coming change and to build consensus about how best to manage that change.

Social Justice Ireland welcomed the programme for Government commitment to establish a unit for future planning. This unit should start with a discussion around the types of services and infrastructure people need and expect in the future, the associated costs and how to fund this. The unit should be informed by the Future Forty project and the work of the Commission on Taxation and Welfare. Over the period from 2022 to 2050, the older population aged 65 plus will rise from 773,000 people in 2022 to 1.5 million in 2050. Over the same period, the proportion of those of working age will decline as a percentage of the population and the old age dependency ratio will increase. These demands will inevitably require an overall higher level of taxation to be collected.

In European terms, Ireland collects very low levels of social insurance. For most employers, the PRSI contribution rate is 11.25% of weekly earnings, compared to an EU average of 21%. Most employees pay 4.2% compared with an EU average of 14.5%. While we welcome the increases in the PRSI rate introduced in recent budgets, these increases do not adequately address the anticipated future shortfalls in the Social Insurance Fund. Government decisions to raise or reduce overall taxation revenue need to be linked to the demand on resources.

Budget 2026 signalled that the Exchequer will record a substantial budget surplus of €5.1 billion, equivalent to 1.4% of national income as measured by modified GNI. However, when expected windfall revenues are removed, the Government is expected to record a significant budget deficit of €7.3 billion in 2025, and €13.5 billion in 2026. At a time of full employment and continued growth, the existence of an underlying deficit is a major concern. In 2023, the average tax take in the EU was 37.1% of GDP.

Of the EU 27 states, the highest tax ratios can be found in France, Belgium and Denmark. As a percentage of GDP, Ireland's total tax take is the lowest in Europe at 22.5%, and as a percentage of both GNP and GNDI, 29.6% and 30%, respectively, Ireland remains well below the EU average. The question therefore needs to be asked: if we continue to expect our economic and social infrastructure to catch up with the of the rest of Europe and meet the future needs of a growing and ageing population, how can we do this while simultaneously gathering less tax revenue than it takes to run the infrastructure already in place in most of those other European countries? Social Justice Ireland proposes a new tax-take target set on a per capita basis. Ireland's overall tax level should reach a level equivalent to €26,866 per capita in 2025 terms, and this target should increase each year in line with the growth in nominal modified GNI.

Suggesting that any country's tax take should increase is often unpopular. People think first of increases in income tax, rather than more broadly of reforms to the tax base. It is also often suggested increases would undermine economic growth. However, looking to the World Economic Forum's Global Competitiveness Report, we find that almost all other leading competitive economies collect a notably greater proportion of national income and taxation than Ireland does. As a policy objective, Ireland can remain a low-tax economy but it should not be incapable of adequately supporting the economic, social and infrastructural requirements necessary to support our society and complete our convergence with the rest of Europe.

Adequate tax revenue is the foundation of our social infrastructure. An increase in Ireland's overall level of taxation is unavoidable in the years to come. It is a question of how, rather than if. We believe it should be of a scale appropriate to maintain current public service provisions while providing the resources to build a better society and meet future population needs. A vital first step in this regard is a move towards a tax take target set on a per capita basis, linking resources to population size and moving our tax take closer to the European average.

I thank Mr. McGeady. I now open it up to members for questions. I call Deputy Timmins.

I thank the Cathaoirleach. There is a lot to cover in seven minutes. At the outset, I noticed The Economist magazine ranked Ireland as the second most successful economy on the world on a number of measures, and overall as the second most successful economy recently. It was just a week or two ago. Given how successful we are, it does not even make the headlines. I would say most people were not even aware of it.

Going back to the contributions, I will start with the ESRI. I agree with a lot of the statements. We have often discussed the demographic challenge here, especially in health and pensions. I will start with a quick question. I have a good few of them. Percentages were mentioned and the changing ratio of pensioners to workers, etc. Have figures been put on the costs? For example, the Department of Health has a budget of whatever it is, €25 billion or so. Has the ESRI plugged in numbers for the situation going forward? Does it put in actual figures in terms of euro based on estimated inflation, etc?

Are there more questions or will we start with that?

No, start with that. I will ask the question and then come back.

Reflecting first on the Deputy's comment about Ireland ranking very highly in The Economist magazine, one of the things we did not mention already today is that life expectancy in Ireland has been improving over the past 100 years. We are living longer and this is something to be celebrated. It is a real success. It is probably one of the indicators that went into that story. This is something to be celebrated. Over the next 20 years or so, Ireland will be ageing. We have heard some of those figures. From 2030 on, on an unchanged policy basis, this will put this gap between revenue as a percentage of GNI* and expenditure. If we do not change anything, this wedge will continue to grow over time. In our work, we said this wedge between non-interest expenditure and tax ends up being around 5% or 5.5% of GNI* by 2050. That is about €18 billion in today's money, and this gives a sense of the annual additional spending needed to keep things as they are, solely just taking account of demographic pressures.

Okay. That is fine. A lot of the problem here is the ratio of retired people to working people. Does the ESRI see ways of older people having the option of working longer? I am especially thinking of them working part-time and without having negative impacts on their pensions. We know a lot of pensions are based on an average of the last three years of salary or whatever or even on lump sums based on that as well. Is the possibility of people working part-time something the ESRI would encourage? I am referring to that cliff edge a lot of people face when retiring at 65 or even 70. Can that age be extended for people with no penalties regarding their pensions or lump sums?

I think there are a lot of measures on the labour market side that we could look at, including extending working lives, how to increase participation rates at older ages and so on. We cannot just take policy from another country and transplant it here, but if we were to look abroad at a country like Germany, for example, it now has a thing where retirees can earn a certain amount per month tax-free to incentivise them to continue on in the labour market. Other countries, like Denmark, have been incredibly ambitious in this respect. They have just increased the retirement age for people born after a certain year. I think anyone born after 1970 can only claim their pension at the age of 70. They are really trying to get at linking eligibility for a pension to improvements in life expectancy. There are, therefore, measures out there.

That is fine. I am just conscious of my time because I have questions for the other witnesses too. I may not get to them in the seven minutes. Would the ESRI suggest we should be putting more money away into the Future Ireland Fund and the other savings accounts, or rainy day funds as they are commonly known as? Would the ESRI suggest we should be putting in more than we are now?

The Future Ireland Fund will start supporting the Exchequer from the 2040s on. To the best of my knowledge, the current estimate is that the fund will be approximately €100 billion by 2035. It is a large amount. It is very helpful, but by itself it is not sufficient to deal with the cost pressures associated with population ageing. As other speakers referenced today, one option that we could have is looking at putting more of the excess corporation tax, CT, receipts away now. We know that these excess CT receipts are volatile. They could disappear at some point. We do not want to be making long-term commitments based on them.

Does Dr. Bergin suggest increasing taxes anywhere? If so, where?

Ultimately, that is a choice for policymakers.

Is Dr. Bergin suggesting anywhere?

No. We are saying that the Government can change taxes, change expenditure if it wants and-or it can look to labour market policies.

I get that. Dr. Bergin said at the outset there are positives as well. A lot of these reports focus on the negative. It is not all negative. As Dr. Bergin said, it is a good story with old people living healthily and for long years. Are there any positives that would help our future fiscal pressures? All the analyses that the witnesses have presented are negatives. For example, will the use of AI reduce fiscal pressures? It expected that we will have low energy bills because we will have a much more renewable base like how China is moving, for example. That will reduce energy costs on households. I do not see any focus on any positives. Does Dr. Bergin see any positives?

The way we did our analysis on this would be quite common. It is on unchanged policy, steady as she goes basis. You can imagine areas where, if you were to see big productivity improvements, that would help narrow the gap.

We did a bit of work last year examining the demographic drag, which is a negative, but we also highlighted things that might offset productivity gains. Increasing productivity improvements would also be a part of that.

Go raibh míle maith agaibh. I thank the witnesses for appearing in front of the committee. I have two sections of questions. It is interesting to have this conversational thinking about what is going to happen in the long term. At present, we have a high-wage economy whereby high wages are driven by a growing services sector. However, at the same time, we have significant labour shortages when it comes to other areas of the economy, including the health and care economy. Given demographic changes, that is an area of interest. I have three questions on that. I will group them and let whoever wants to respond to come in on that. I have specific questions for NESC as well.

Do the witnesses consider our labour market to be unbalanced with potentially too many people at the moment where the high wages are in the service sector and given the challenges we have in terms of the ageing population? Regarding the obstacles that we have for our preparedness when it comes to challenges associated with an ageing population, do the witnesses believe the issues of low pay, insecure work and poor working conditions in the health and social care sector are impacting on that? What other policy interventions would they suggest could be useful to rebalance that labour market so that the health and care sectors comprise of a greater proportion of workers?

Certainly, a lot of our migration has been high-skilled migrants. Particularly in the health sector, we have imported a lot of doctors. We need to continue to grow our own.

Also, what we need to do, if we are going to increase productivity as the labour market shrinks, is upskill everybody in the country. That means moving them up the skill chain. It is about bringing in people across-----

In which sectors? Is Dr. Collins saying this is in all sectors or in specific sectors?

Pretty much in all sectors, I would say. I do not know how AI will affect the future but we will need high-skilled workers in health, social care, IT, and across the board. I cannot see any particular area we can say is just a low-skills area and we cut it off. We also have to be careful that we do not just import high-skilled workers. As we move people up the skill chain, that is going to leave skills gaps behind and we need those people there so that other people can move up the skill chain. This is particularly the case in the area of care. If people does not have someone to care for their children or their older relatives, then they might not enter the labour force. They need that support there to do that.

The Deputy asked how we can be more prepared. Perhaps one of my colleagues would like to talk to preparedness.

In terms of preparedness, obviously if we have an older, ageing population we are going to need more people working in care and in health, for example. At the moment, they are areas that are under pressure. If we want to be prepared going forward into the future and be able to service that demographic, what are the challenges there?

There is a couple of things. First, we really have to concentrate on improving life across the life cycle and that really starts from pregnancy. We need to do things like concentrate on home visiting and all of those actions that we know have a positive health effect in the long term. We must also make sure that the participation rate, because people are healthier, is as high as possible. It is also about reformulating the healthcare system so that it is more community based. We need to think about those longer term transformations such that healthcare is not all based in the acute system. It goes right across the life cycle.

To support Dr. Collin's point, when we did the work on future demands for the health sector, there were some quite broad ranges there in terms of expected growth in capacity. A lot of that range comes from different projections of population size but also different projections of efficiency and policy use. Policies where we reduce the number of people in acute hospitals are useful in terms of reducing spending pressures because hospital care is the most expensive form of care. However, that has knock on impacts on community care, the need for home visits from GPs and so on. That is all part of the Sláintecare model, which is about keeping people healthy and not in need of hospital care or long-term care.

I take the Deputy's point that when we are looking at these projections of costs into the future, there is essentially an assumption that the wage structure stays more or less the same, whereas in the future if we have much higher demands in one sector of the economy, obviously health and care in this case, there may need to be some shift in resourcing. That brings in the whole question of balance in the tax and welfare system in terms of making sure those jobs continue to be attractive because those are the jobs that are going to be crucial to be filled-----

They have to be more attractive.

It is also about balanced regional development.

Absolutely, yes. I am sorry but I only have two minutes left and I want to ask about building a virtuous demographic cycle. I apologise for shifting direction. I totally agree with the point about regional development. I have four offshore islands in my constituency and I understand the difficulties and challenges there.

I note that in its recent report, Building a Virtuous Demographic Cycle, the NESC makes reference to post-growth economics in the context of ensuring that demographic change and population growth within the virtuous cycle remains consistent with planetary boundaries. I have three questions which I will pose together in the interests of time. Do the witnesses think that this moment of demographic shift demands that economists and policymakers reconsider and redefine concepts such as economic prosperity? Do they think that in years to come, prosperity of the economy would be better characterised by the health of our population rather than by national aggregate output statistics?

Specifically, given the content of the recent report, are the witnesses suggesting a post-growth economy centred on care could deliver high employment, low carbon emissions and a high standard of living? I realise that is a lot of questions for a minute.

I will take the last one. It is too easy to see care as a cost or something that must be borne, when care across the whole of the life cycle will support labour productivity and the increase in the size of the workforce. It is a strength. One of the reasons our population has grown is because of life expectancy and that is care across the life cycle. Successful countries are not necessarily just about high GDP growth; it is also about the well-being of the population.

The second one on the health of the population I did not quite get.

Do the witnesses think the prosperity of our economy would be better characterised in terms of health, rather than just output?

We might come back to that one.

The excitement of it.

I thank the witness and the Deputy for that. We will probably come across that later.

Go raibh maith agaibh agus fáilte go léir. I have the same question for all three organisations. As regards what they have said to the committee today in their opening statements, if the witnesses had one key ask or priority, what would that be? I might ask Social Justice Ireland first and then the NESC and the ESRI can come in.

Our key ask would be to recognise we have a growing and ageing population with a changing dependency ratio. There are increased demands on resources and we are going to have to increase our overall tax take as an economy. We are going to have to move towards that and it will obviously have to be a gradual, measured move, but that is what we are going to have to do. That is the message we are bringing in today. In order to fund services and infrastructure going into the future, not just at current levels but to create a better society and a more socially just and equitable society, we are going to need to raise greater revenues. Those revenues are going to have to be sustainable, so we cannot rely on windfall taxes. We are going to have to have sustainable, long-term revenue streams to fund service infrastructure into the future.

The key takeaway is the economy is in a very strong position at present. The public finances are in a strong position but we are drawing the committee's attention to some substantial challenges coming further down the road. It is obviously a political decision as to which policies are put in place to address those but our key message would be putting the policies in place now to build the foundation for these services that need to be provided in the future is best done while we are in a strong position and while we have the fiscal resources available to us to essentially future-proof these demands we can see coming down the path.

I agree with the above. There are some big changes happening and we have to start thinking about those that are going to affect our economy and our society, even our geography, and start planning for them now. That is, putting the infrastructures in place so that people want to stay in and come to Ireland, to help with all the demographic challenges that are coming down the road.

I agree with all of that. However, the other thing we are trying to push is you can forecast the future by taking it as it is and saying what it will look like. Colleagues in the ESRI have been very clear that this is what you do. They have said that therefore, currently in 20 years, there will be bigger gaps, etc. and that might be the future we face. However, what we are trying to argue is if you have the imagination to say the future could be different from now, you could have much more innovative approaches, as Deputy Timmins said, to think about work participation, people having retired and things like that, as well as much more imagination on care, the use of AI, etc. Maybe some of the links which currently exist will have changed. In other words, it is more dynamic.

We are trying to argue the demographic changes are a huge opportunity. We have not framed them as being challenges; we have said there is an enormous opportunity if we get ahead of some of this.

We see countries in Europe that are already there. Japan is already there. They get caught in a very vicious cycle whereby houses are not being used and so on. We should get out ahead of it now and make sure we attract people in, create new working relationships and make work better, for example, so that in 20 years' time we are not just talking about low-skill jobs that are not impacted by AI, and we upscale all work. The vision NESC is arguing for is that the future might look very different, not that it should look the same. That would be my take. Where is the leadership, then, to bring that vision into practice?

We have been here before. In the 1980s, one of the most important pieces of policy research was done when a person called Lars Mjøset came to Ireland. I hope the Cathaoirleach will indulge me for one minute. He came to Ireland and argued that the way we were thinking about investment in young people and migration was fuelling this negative picture of people who get to a certain level of skills and go abroad. He argued that we needed to look at investment in skills as being the basis of a real innovation cycle. That was a pioneering, ambitious view at the time. We are asking to think about demographics in a new way.

This is the key challenge. I do not disagree about the importance of future planning, putting in place measures now that are going to help us in 20 or 30 years' time. The difficulty I and other public representatives have is when we knock on a person's door. Some people, to give them their due, are talking about the future in 20 or 30 years, but most people have very pressing needs that they want addressed and they want action on now, such as access to housing, public transport, infrastructural crisis, disability services or whatever. What Dr. O'Connell is saying is important because if we can link how we address our current challenges to improve people's lives in a way that will also improve where the country will be in five, ten, 15 or 20 years' time, then we have potential to get public buy-in from the political system on that. If the discussion is too detached, such that we need to do this now because otherwise we are going to be in an awful place in 20 years' time, far too few people will engage with that because they need us to engage with the here and now. Are there any other views on that point as to how we link the need to do this with the current pressures that people have?

There is not necessarily a contradiction between addressing the issues now or those in the future. A lot of the issues the Deputy raised, housing in particular, will be crucial to get right for a growing and ageing population, making sure that what is built now will still be appropriate in 20 or 30 years as the population ages and that there is enough range of housing built for people at different stages of life and for different needs. The transport decisions that are made must be accessible to a changing demographic. It is not entirely a trade-off between addressing the issues now and later. A lot of the infrastructural issues that we have now in housing, the healthcare sector, transport, electricity and water are all part of the fundamental building blocks that will need to be in place to have the economy and society ready for the older age group. In making those infrastructural decisions now, there is a need to also have an eye that they are future-proofed.

I will give the last word to Social Justice Ireland.

On issues such as income certainty and adequacy, introducing an indexing system now to index welfare rates against wages would allow for fiscal planning but would also give older people economic certainty in terms of their purchasing power. On housing, addressing regional imbalances now means we will have thriving regional communities in the future. We are not going to be able to attract people to rural areas if they do not have the social and physical infrastructure that might be required. There is the issue around wages in different parts of the economy. There is only a certain level of productivity we are ever going to get out of care because we need people to provide the care, it is time-consuming and so on. We need to consider how we rebalance wages and make it attractive. If we are competing for migrant labour for care, how do we compare with our EU peers and how do we make that an attractive career for somebody now and for somebody in ten years' time?

Fórsa was in the audiovisual room today giving a presentation on low morale among health and social care workers.

Dr. Lawless stated that between now and 2040, demand for home support hours could increase by between 57% and 91%, while an additional 4,500 to 6,800 hospital beds will be needed. The issue is with morale in the workforce at the moment, whereby people are leaving in their droves because of the burden of being overworked. Would the witnesses all agree that this needs to be dealt with by looking at the retention crisis in this sector? As regards policy changes, the Social Justice Ireland representatives stated that its policy would be increasing taxation. What would the ESRI or the National Economic and Social Council suggest as policy changes to make up the finance that is going to cover this between now and 2040 or whenever?

On the first question, yes, when we are looking at the future projections of healthcare demand, it is very important that we are not in any way suggesting that the level of healthcare service that is there right now in many of these areas across the country is starting at the perfect level. There are shortfalls already. The report on acute hospital care looks at the current level of overcapacity in the uses of hospital beds and includes as one of the desired scenarios getting that down from hospitals having people on trolleys to a bed capacity rate of more like 85% so that there is always a little bit of surge capacity in the hospital care. That is important.

It is also important that when we talk about these projections, they require trained people to work in the area. That is not something we have put policies in place for, but making healthcare an attractive, skilled area and not somewhere people are leaving because of low morale is all part of the policy mix that is needed, alongside the more physical infrastructure needs as the population ages.

On that gap in revenues versus expenditures as the population ages and more is needed to provide the healthcare and pension requirements, we do not have a specific policy proposal there. There is a mix of increasing revenues through greater labour market participation through greater productivity growth. It is not all about reducing the cost. Some of it is about increasing the revenues so that they catch up. Some of it is also about delivering the services in a more efficient way. Again, on the healthcare side, it is about moving the demand from acute hospitals, where care is very expensive to deliver, into a community setting. It would not bridge all of the gap but it would reduce some of the cost pressures there.

There is a very long and detailed report from the Commission on Taxation and Welfare, making some suggestions, not necessarily about increasing specific taxes but about broadening the tax base to move away from our current structure. We have raised many times the risks of the current reliance on corporation tax in particular and the very narrow base it is built on. That is another area in which the sustainability of the public finances and the delivery of these services could be supported.

On the low morale among health and social care workers, there are issues with how the job is organised and so on. The ESRI has shown that quite often, our migrant workers' reward for their skill level is not as high as it should be. There are also issues related to how welcome they are. Increasingly, we are seeing reports of migrant workers facing racism. There are also issues about how well the income they get in that job can allow them to afford a good life. Can they afford rent, a mortgage and so on? That is not in the healthcare sector's control, but it very much determines how sticky those jobs are and how we can retain migrants working in those areas.

We do not have a definitive position right now on tax increases, although I know that was part of the Deputy's question. We would be quite aligned with what Dr. Lawless outlined. We see lots of levers and that is what we outlined in the report. If you can get more people back into the workforce, that is a source of revenue.

If you can get people working longer, and in ways that they want, that is also a source of revenue. All of those are levers, as we would say. For a long time, we have pushed the whole agenda on better work and good jobs. We want all of the jobs brought up and made more high skilled. That is a key way in the future that I think we need to look at.

Are there figures for the cost, or any idea of the cost, between now and 2040? That seems to be the figure most people are talking about. I refer to the figure for what it would cost between here and there.

On the issue of nursing home beds, it costs an awful lot less to keep people in their own homes. More money should be invested in adaptation grants for older people or people with disabilities to try to keep people at home. Also, people would be an awful lot happier if they could remain at home. I forget the figures but the cost would probably only be a quarter of the amount it costs to keep people in nursing home beds.

Yes, it is both a cheaper and often a better solution to invest in care in the community rather than an acute bed. Not only are we going to have more older people, but we are going to have more older people who live alone because the rise in the number of single-person households will add more strain. If people who are not living with anybody to care for them fall ill, this in turn will add more strain and more need for care in the community to avoid acute beds.

Earlier Professor Lawless asked whether our housing is appropriate for an ageing community. We need universal design of housing for people who are ageing and might be single. We are also seeing an increase in the number of people who are renting in older age. We have not quite worked out the implications of that. A homeowner might be able to rejig their house and put in building work but somebody who is renting might not have the capacity to do that. That is something we are going to have to work out in the policy area.

On care in the community, an issue that has been raised here before is the fact that home care involves the public sector, the private sector and the community and voluntary sector. They compete for the same labour force and that is a real problem. That is why so many of those allocated home support hours cannot be delivered. We need to look at pay and conditions.

Yes.

We need to look at the flexibility of the work, how to make the work attractive and how to ensure the three key providers are not competing against each other to deliver care.

Yes.

If we address those matters now, in the longer term it will have knock-on social and economic benefits for the population.

The projections are based on an increase in population of 1.2 million between 2022 and 2050. How old is that data? I ask because in the last five years the population has increased by nearly 1 million people. Are the witnesses saying the population will only increase by another 200,000 people between now and 2050 or was inaccurate data given on the first day? To me, one and one makes two. However, stating that the population will increase by 1.2 million people when the population has already increased by 1 million means that the data is well out of date.

We did population projections towards the end of 2023. They relied very much on census 2022 data, which showed a population of 5.2 million, so it was an increase on that figure. In the short term, especially in the past couple of years, we have seen quite high net migration flows of close to 80,000 and then close to 60,000 last year. Overall, we would have the population growing from 2022 to 2050 at a rate of around 1% per annum. Over the period from 2001 to 2022, the Irish population grew at a rate of 1.3% per annum. It is a little bit lower than our historical average, in a baseline scenario, whereas in a hybrid scenario it would be more.

Another thing we are looking at - the witnesses have mentioned it as one of the things they would like to see to keep all the different services in place, is a rise in taxation. Before I go on, I want to mention that I am self-employed and have been in business all my life. We now have massive inflation costs. I agreed with the recent introduction of pension auto-enrolment. When something is increased in a sector where employment is needed - the recent increase in the minimum wage to €14.15 means that there have been three minimum wage increases in the last two years - we can see what it causes. The person who got the minimum wage increase is no better off. They are worse off, if anything, because of the inflationary cost which is affecting everything down to the price of a cup of coffee. We can keep raising the minimum wage but if we are not getting value for money, it is just creating inflation on top of inflation on top of inflation.

If we look at the funding that goes into public nursing home care, and compare that with the cost of private nursing home care, we see that it is costs twice as much to have public care done. We are still giving funding to nursing homes under the fair deal system and saying that this is what it should be costing to have nursing home care. However, the public sector cannot do it itself.

If we look at all what all the Departments get - based on their own salaries and their own time off - and base that into standard businesses at the moment, we see that it is costing an awful lot more. We need to look at the Departments and the time they get off. As a business person who has to make ends meet at the end of every week, every month and every tax year, a lot of what witnesses are saying makes great sense. However, putting it into practice, by raising taxes for a person who wants to get on the ladder, is not as easy as what they are trying to portray.

We have spoken about the fertility rate and about children coming into this world for the future. Those who are living at home with their parents are not getting a chance to cohabitate, to have a life or to do exactly what witnesses are saying, and it is being driven by inflation. Raising taxes is going to cause further inflation. We need to get it right. How can we encourage people not to wait until their mid-30s or 40s to settle down to have a family? When we look at the age at which people are settling down or at which people are having children outside of marriage, or even at the age at which they are considering doing this, we see that it is all down to the cost of living, the lack of housing and inflation. That is what it is down to. We must target that. We must look at how our tax money is being spent and ensure it is being spent correctly. When I look at the children's hospital, I see that we are €1 billion over budget. If somebody running a business went €100,000 over budget tomorrow morning, would they still be in business? Departments are allowed to go €1 billion over budget. We are saying it is okay, but we are going to raise taxes. We need to spend our money properly. We also need to invest in the people who are working hard at a lower cost and delivering a better service than the service that is being paid for by the taxpayers of this country.

How would witnesses improve this without raising taxes? How are they going to stop inflation without raising taxes? How are they going to fix this problem of an ageing population? How are they going to fix the problem of people feeling unable to have children and settle down? All I am hearing is increases, increases, increases. Has anyone got an answer for me that will fix this problem?

Taxes were one of the policy levers that we mentioned. I think something like auto-enrolment, where people are encouraged to invest in their own pensions as early as possible, is a positive thing. However, it is true that a range of new costs like the increase in the minimum wage and the increase in PRSI were brought in on small businesses. Even the Department of enterprise said they were individually all well-motivated schemes but having so many come in at once mounted up for businesses.

There are other levers and policies that we have discussed, specifically in relation to ageing. Keeping people working and active in the labour market for longer is an important one, as are increasing overall labour market participation, increases in the efficiency and productivity of the economy as a whole, which increases revenues without increasing any tax rates, but also the one the Chair drew attention to, which is increasing the efficiency with which the public finances are actually spent so there is more efficiency in the delivery of day-to-day services and in the delivery of large infrastructural services. The large infrastructural services are of even higher importance when we are talking about the need for a lot of infrastructural investment. Housing is key for the population now, to addressing population in the future and the extra increases in bed capacity in hospitals if they need

I will let Dr. Lawless come back in but I have other speakers to come in. I will make one final point. We will have a second round so people can come in. I have been a building contractor all my life. The cost of a house has gone up €80 per square foot in five years. Out of that, regarding the tax purse and VAT rate alone, 23% on €100,000 and 23% on the same product that now cost €200,000 represents an increase in taxes already. People need to be given a chance to get on the ladder. Raising taxes is not the answer. Delivery of affordable services across all sectors is an answer we need to look at.

I apologise that I was not here for initial contributions but I had to speak in the Dáil. I did have a look at some of the ideas that were put across but I must be honest, I have not had a chance to read it all. I get some of the ideas and I understand that the basic problem is the population and that the proportion of people who are dependent because they are older is growing. That is going to cost more in terms of health, social welfare, pensions and other things. We have to address that issue.

We live in an integrated world these days and there are 20 million to 30 million people claiming Irish descent in America and millions more elsewhere. On a global level, is this ageing population issue happening? Do we have an older population everywhere in the world or is it just Ireland? I think some of the papers submitted pointed to this. If we have young people migrating into this country that can help address the problem. Migration has become a very incendiary issue and I think the targeting of migrants is disgraceful when we were migrants all over the world and when the people coming here are contributing. Are there measurements, not just for Ireland but globally, for the added value of migrants coming in? We all say it, and it is absolutely true, that the Irish helped build England and America. Currently, people from eastern Europe, Africa, Pakistan and Brazil are building Ireland for us. They are helping make it function. Are there measurements for that? It would be quite useful to have an evidence-based debate and a rational debate. I am pretty certain it would show that migrants into this country and every country bring in and add far more than they subtract. I am sure that is the case but I wonder whether it is being measured.

To the Deputy's first point, 55% of countries across the world now have a total fertility rate which is below replacement.

That is the R-number.

Yes. That means 55% of countries are not replacing themselves. The world total fertility rate is down to 2.3 according to the UN. It is predicting the population of the world will peak around 2060.

Consequently, we will be competing across the world for a smaller cohort of migrants who are aged 20 to 30. Across Europe we are one of the very few that are still growing. We are in a minority. They are already facing depopulation. Across the world, it is really quite severe in some countries. In South Korea the total fertility rate is now below one. It is not a very pleasant future we are staring at if we do not take action now.

There is lots of research about the added value of migrants across Europe. I do not know any of it based in Ireland. The Deputy probably should talk to the European Migration Network, which has been based in the ESRI, for actual references. They show that high skilled migrants bring a lot to the country. Low skilled migrants are still net positive contributors to the countries they migrate to. The evidence in that area is quite consistent.

To supplement that slightly, the issues with the ageing population are very common across Europe and more developed countries. Fertility rate tends to fall in countries where there are higher levels of income. Most of the younger population of the globe is coming from poor areas and particularly in Africa, where fertility rates are still high. There is a shift in balance across the world in terms of populations. The ageing population in Ireland is very much in common with a lot of the other countries across Europe. In fact, we are somewhat younger overall than the rest of Europe, partly because our population, through inward migration, has been growing more rapidly than other countries in Europe.

That is keeping us young.

That is keeping us young. Essentially, migrants are more likely to be in the 20 to 40 year-old age group as a very broad point. It is pushing against the ageing of the Irish population. I do not think there is any specific research on Ireland yet. There may be some in progress on the overall fiscal contribution of migrants but is almost always positive.

I would suggest it is something for this committee to consider; to actually quantify it. I think it would help. I do not know if witnesses would agree with that. I cannot help but say that, despite the population growth we are seeing, which is significant and is a positive when looking at this issue, we are still at a significantly lower population than we had in 1800. Unless people subscribe to the view that the Great Hunger was a good thing, which there may be a few crazy people who think that, we still have a way to go just to get back to where we were 200 years ago before what was a horrible campaign of starvation of the Irish people by a colonial power. I thought I would just make that statement to get at the far right.

Noted.

Tax was previously discussed. One of the elephants in the room around all of this is the inequality in wealth distribution globally. Getting older and living longer is a good thing and is a sign of progress in many regards. It becomes a problem because of the inequality in the distribution of wealth. To give one example, in Ireland a lot of young people do not have bigger families because they cannot afford the houses to put them in. If they could afford a bigger house they would probably have bigger families. I suspect that is a feature in a lot of western Europe. Wealth is now increasingly concentrated in the hands of big corporations which pay very low levels of tax on a historical basis as it is now 20%, 10%, 5%, 2%, whatever the effective figures are, compared with it being, in the post-war period, 50%, 60% or 70% in some cases. If there was a bigger redistribution of wealth we would have the money to provide housing, and bigger housing, so people might want to have more kids. Is that a reasonable argument?

We have very little research on what is shaping fertility in Ireland. It is one of the reasons we make a big call in this paper for demographic research to be established in Ireland, both in respect of the data and the motivation for why people have babies or do not have babies and why they delay fertility.

The evidence does not exist. Regarding education, looking across the globe, the more educated women are, then the less likely they are to want a large number of children. The later women have their first child, the smaller number of children they go on to have. It is fairly established but we do need that research here. What is driving it and, whatever number of children a woman wants, what is interfering with her achieving that fertility? If a woman wants two children, why is she only having one? If a woman wants three children, why is she only having two, and so on? We do not have sight of that for Ireland.

When I last checked the data, Ireland has a 1.54 fertility rate and it needs to be 2.1 to keep the population as it is. Clearly, the fertility rate is going down but it is a problem in all the western world regardless of whether there is a housing shortage.

I have a few questions for Social Justice Ireland on its graphs. On page 11, there is talk about the effective tax rates in Ireland and it is tried to demonstrate that the tax rates have reduced from what was, on the face of it, a whopping 30% or 35% in 1997. For an earner of €40,000, the graph is very misleading because it does not adjust for inflation. An income of €40,000 in 1997 was considered a well above average salary, particularly at a time when an average salary was €20,000. Now, a salary of €40,000 is probably below average. Therefore, to say that the tax rate has reduced in that time is completely misleading. Would the witnesses agree with that?

No. I understand the point the Deputy has made but the tax rate still has come down. For those who are on those earnings, it is indisputable that the effective rate of tax has fallen.

If someone earned €40,000 in 1997, the equivalent person today would earn €100,000 or €120,000, adjusted for inflation and wage inflation, and their effective tax rate today would be of the order of 35% to 40%, which is very similar to what it was in 1996.

I do take that point that inflation has an impact.

I am just making the point that it should be adjusted for inflation. Otherwise it is misleading.

It has been demonstrated that the total tax revenues in Ireland are on the low side. The graph on page 13 shows that, over the decades, the rate has been consistently between 28% and 32%. It is low but it has been quite surprisingly consistent over the period. The rate has been adjusted for GNI in the last few years and not for GDP, which is a misleading percentage to show. To me, it is a good thing that the rate has remained stable between 28% and 32%.

Earlier, Mr. McGeady and the Chairman mentioned the low PRSI rates in Ireland vis-à-vis other countries. We are at 11.25% and the average is 21%. We could say that a low rate is a good thing as it encourages employment. Some countries in Europe have an employers' PRSI rate of 30%, which is an impediment to taking on staff. Spain and some other countries have a higher rate of unemployment than us but Ireland has a very low rate of unemployment. I would have thought it a positive thing for Ireland to have a very low rate of unemployment and high employment. One of the things that supports high employment is a low rate of employers' PRSI.

Also, the employees' PRSI levy in Ireland is a little over 4% on average whereas the rate is much higher in other countries. If a higher rate of PRSI is imposed on employees, and I know auto-enrolment has been introduced, which is a step in that direction, but ultimately it is effectively an extra income tax.

My colleague here mentioned different income distributions. Ireland probably has the most progressive income tax system in the world. In other words, if a person earns a low salary of between €20,000 and €30,000, then he or she pays a lower proportion of income tax. As demonstrated in the graph, the rate is down around 5% and 10%, so it is very low. The measure is very supportive of people who earn low wages, and as salaries rise, the rate starts to increase fairly rapidly.

My last point is on one of the tables that suggests the tax take and the gap is about €30 billion. Is Social Justice Ireland suggesting any area where we should increase taxes?

Yes, it is good we are stable. The point we are trying to make is that the base is narrow and likely to narrow further. As the age dependency ratio changes we need to look at broadening the base and how that might be done.

The point we are trying to make in terms of PRSI is that the Government needs to look at ways to bolster the Social Insurance Fund now as that is what will pay the pensions and disability payments. At the moment it is pay in and pay out, so what are we going to do about that? That is why it is really important that this committee examines this matter. It is really positive to be looking at inflation, wages, how you attract people into the country but also how you pay for things. These are options and things that need to be considered. Obviously it is not going to be done overnight, but if you do not start that discussion and planning now, then when are you going to start it?

The Deputy pointed out a gap. We did suggest a target. We discussed some of these issues in front of this committee last November. In terms of the break, the obvious place you would start is looking at tax expenditures, for example, and go from there. I think we gave a submission to the committee with a list of issues. You need to start from somewhere and we are not suggesting that you look at the labour force again. The point is, and as Deputy O'Donoghue pointed out, you need to look beyond that. Also, as we age, and as people require home care, home adaptation grants and all of those kind of things, how are you going to support them to do it, how do you make the labour market supportive for older workers, how do you make it progressive, and how do we rethink the future for people while addressing some of the current imbalances that we face?

I totally agree that we need to plan now, create budgets for ten, 20 and 30 years ahead and plugging in numbers earlier for pensions and health. Percentages are a bit nebulous. Maybe it is my accountancy background but I believe numbers speak louder and people can see the actual costs in black and white.

I have a few questions for the NESC. I am slightly puzzled by one of the council's points that Ireland performs poorly in terms of retaining migrants, with high proportions leaving within five years. Is that correct given that 20% of Ireland's population were born outside of Ireland? I would say we probably have the highest rate in the world and yet, at the same time, a lot of people are leaving. Obviously that means the volume of people coming here is very high. We have the highest number of people living here yet we have a high number of people who leave. Is there data to back-up the figure?

The figure comes from the Department of Finance when it drilled down and looked at the skills visas and how many of those people who had a visa were still here five years later. The Department made the point that it is incredibly difficult to track people once they come into this country, but when the Department looked at certain categories, it found that 60% of them were not in the country five years later. We know, for instance, with research on nursing, we have a very high turnover of migrant nurses in this country and far higher than some of our European comparators such as Germany.

More research needs to be done but could a reason for that be that Ireland is a small country so we have higher migration. So Ireland is small, the world is big and we are English speakers so nurses look to America and Australia. Invariably, if the figure is based on the population, you would expect a small country to have a lot of outward migration.

That would not be surprising.

It needs a lot more research to drill down. The Deputy accused us of coming with negative messages. We have done a few things really well. The CSO in 2019 predicted that certain parts of the country would be depopulated. That has not come to bear, mostly because of increased migration but also due to the spread of regional development. It has worked, although it has not worked as we would like and we need to push on, but that is a success story.

The other big success story is that, quite often when we talk about labour participation we talk about the number of people aged over 15 and under 65 to the total population and that is heading to the rocks, as we have outlined. However, if we look at the number of workers to the number of non-workers, we have done really well. That is because we have increased female participation and we have slightly increased participation among people with disabilities. We have also increased the participation of people over 65.

That is my whole point. It is positive. The one to focus on is disability, as we are only at 32%. We should be trying to up that. We are one of the lowest-----

I am sorry but I have other speakers.

We need to work on all of those categories.

I am sorry but I must allow other speakers to come in. We can come back around again. I have been very fair.

Maybe I did not hear the answer or we ran out of time earlier. I want to focus on wealth inequality and where all of this fits in. I am interested in hearing what people think. To what extent can that be addressed? Tax was mentioned. Again, I have not studied it very closely but a lot of the emphasis seems to be on income tax and increasing the proportion of it. Is that not the case?

No.

I will just make this point and then I will hear the response. I was doing some quick calculations. There are approximately 2.3 million people employed in this country. Is that roughly right? Gross pay is €108 billion a year. That group of people pays roughly €39 billion in tax. The gross profits of companies in this country are about €350 billion, more than three times what every worker in this country earns. How much do they pay in tax? The same amount - €39 billion. Proportionately, incredibly profitable corporations - mostly a very small number at the top - are making treble the profits. They are doing three times as well as workers and paying the same amount of tax. Is that not the elephant in the room? What if we did something about that on the corporate tax end? I know there is an argument - we can get into it - about whether they would flood out of the country, but they did not when we put up corporation tax to 15% and when we closed the double Irish relief. Maybe they are here because they need a labour force that speaks English and is in the European Union. If everything the witnesses are saying is true, which I think it is, even more labour is the thing they are looking for. They are looking for people. I do not buy the idea that they are going to flood out. There is an inequality in the distribution of wealth. We know it is increasingly going to a tiny number of billionaires on a global level. Surely we have to start saying globally, as well as whatever we do domestically and whatever arguments there are domestically that this is just not viable. It is not sustainable for that much profit to be going to a tiny number of corporations and them paying so little of their income in tax compared to what working people are paying.

We will let the witnesses answer.

I will make a few points in response to the Deputy. It is good to get clarity as well. The Cathaoirleach also asked about raising taxes. We need to be clear about the difference between raising taxes and raising our tax take - the overall amount of revenue that we generate. Those two things are linked. There is no doubt about that. Our key point is about the question: if we have a tax take - the overall amount of revenue generated by the Exchequer in any given year - and that is linked on a per capita basis, how much tax, broadly speaking, should be collected per person? That would mean that as the population grows and there is a changing population, we can then make projections based on population and therefore make projections based on those numbers on how much tax overall we should be collecting. If the population increases, the demand on resources is going to increase and that has to be paid for in some way, shape or other.

I totally take the point the Deputy makes about the impact that has on small businesses or whatever it might be, but as my colleague Ms Murphy said, our point really is more about broadening the tax base, finding ways to generate that revenue, and finding ways that are sensible and that do not hurt business but that, nonetheless, raise the revenue to ensure that funding is there to pay for the things we need to pay for. Therefore, it is not necessarily income tax.

In response to Deputy Timmins, we put that example in our submission to give a picture of how income tax has changed. It is one example. The emphasis here is not on increases in income tax per se, but on broadening the tax base. That is where some of the things the Deputy mentioned do come in. We suggest that the Commission on Taxation and Welfare is the place to go, as it provides a whole range of recommendations as to how we can increase our overall tax take, increase the taxes that are sustainable, and to do so in a way that is fair and equitable. Undoubtedly, there is a question about the level of sustainable taxation that is paid by corporations and, for example, with the minimum effective tax on certain corporations over a certain size that have been brought in through OECD reforms. We in Social Justice Ireland recommend that there should be a minimum effective corporation tax introduced for all corporations operating in Ireland at a reduced rate initially of 6% and then rising to 10%. There is an argument to be made for looking at how wealth can be taxed in addition to income because obviously the more income and business are taxed, the more it has an impact. Fundamentally, our core point is about broadening the tax base to ensure that we are able to bring in the resources in a sustainable way so that we can fund all of the demands there will be in the future. We should welcome the demands - it is because we are living longer and we have a growing population, which is positive but it has to be paid for.

I have a round of questions now. What I am looking for is a level playing field. We must look across the base when we are doing a taxation system. Let us look at the minimum wage. I spoke on this earlier. The increase to the minimum wage in the past two years created not only a knock-on effect on the minimum wage, it created a problem for the businesses and the people who were on that rate. It had a domino effect all along the line. They all wanted certain increases, which put pressure on small businesses.

To take the point Deputy Boyd Barrett made, multinationals have a percentage rate that they work on but it is different for small businesses. Auto-enrolment affects 800,000 people. The auto-enrolment system has an effect on small businesses in this country. Skillnet Ireland is looking at this. Auto-enrolment costs a person 1.5% and there is also 1.5% charge on the business. That is going to increase, percentage-wise, over the next two or three years to get it up to 4%, which the Government is hoping to do. If we look at a person on the minimum wage, he or she has to pay €882.96 a year, as does the employer. A person who is working there can say: "Sorry, I am going to go down the road and get a job, and I am going to get a bit more, and I do not have to pay that." That then creates a problem for small businesses, which have to pay 3% this year themselves because of the problems they are having with employees.

We also have a problem with people in their 60s at the moment who do not want to auto-enrol, but they all have to auto-enrol for six months. After six months they can opt out. Nobody would have an issue with auto-enrolment if there was a benefit at the end of it. Anyone in their 50s or 60s who auto-enrols will get nothing extra in their statutory pension entitlements. If an incentive is given to those who auto-enrol, no matter what age they are, and they get something extra at the end of it, they would not have a problem, but there is no incentive. Someone who is 65 or 66 at the moment gets nothing extra for paying for auto-enrolment.

If they are 50, they are getting nothing else. For people who are 20 years of age and earning over €20,000, there is an incentive. That is the correct way of doing things. People who are already on the ladder have to start somewhere. We need to give an incentive to people such that there is a final outcome.

Deputy Boyd Barrett mentioned international companies, the tax they pay and the buildings they construct. He is right, but they also bear the cost of creating infrastructure that is giving rise to jobs in the first place. Many people who are in employment and who are on good salaries can afford houses on foot of those salaries. Houses that previously cost €300,000 now cost €500,000. Those on lower wages cannot get on the housing ladder. I come from a family of 11. I have four children and two grandchildren. We can go over the bases in that regard. The Government needs to look at incentivising downsizing, even in the context of half-acre sites. It should allow for downsizing in order that the parents can move out and let one of their family move in. That could help a family to get on the ladder. They could have their children earlier because a lot of the financial pressure would no longer be there. It would allow for the older generation to step back and give a chance to the younger generation. That is not happening under the planning laws.

We have a massive problem with infrastructure. I have been saying that since I was first elected. Construction is my game. Infrastructure in this country has never been invested in. We give it out to the likes of Uisce Éireann to deliver, when it should have been developer led and delivered on budget and on time. Then we would not have overruns in Departments because projects are coming in over budget. We would have delivery on budget and on time, which would mean accountability. What is needed in the context of budgets, regardless of the Department is involved, is that someone from business should be asked to give officials a model that delivers but that also provides accountability. If people do not deliver in respect of infrastructure projects within their Departments, they should be moved on and somebody who is accountable should be brought in. If they make a mistake, they will pay for it; they will be accountable.

This has been a problem for successive Governments across decades. There is no accountability. and less and less is getting done. We should treat government like a business. If someone cannot do the job, they should be moved out and somebody who can deliver should be moved in. We should not reward people within Departments who have been responsible for failure upon failure. We should not be promoting such people; we should demote them and let someone else do the job. That is how we will fix a lot of our problems, get value for money and put infrastructure in place on time. Departments and bodies that are delivering should be given more to allow them to deliver more. The ones that are not delivering should be given less, and we should get those responsible out. We should incentivise matters that way throughout the public sector. That is how I think we will deliver. It is a business model.

In the past 12 months, we asked the Minister for housing for a simple design for housing to be delivered on budget and on time. There was a four-part system in respect of delivery. What did he announce earlier? He announced that we are going to bring it down to one system to deliver housing because that is common sense. We should pick a design and use it. It should not be a case of getting different designs all the time and creating delays. Those involved in projects should get a model to planning and development units and say, "These types of houses we are building. This is the design we are using. Let us build a lot of them." If we did that, we could build a lot more houses on budget and on time. That is one way of delivering different infrastructure.

Does Deputy Timmins want to come back in? No. Deputy Boyd Barrett is next.

In my earlier contribution, I focused on corporation tax. Social Justice Ireland would definitely prefer a wealth tax. What are the views on wealth taxes more generally? I am not referring to profits. Corporation tax relates to profits. The Central Bank publishes figures on wealth each year. A lot of that wealth relates to property, but 45% or nearly 50% of it is financial in nature. Even property gives you leverage, as they say.

Once you have an asset, you can make more money. Has the ESRI any opinions on wealth tax? We have particular proposals. Some countries have started to introduce wealth taxes. Do the witnesses think that the concentration of wealth inequality is growing all the time and that this is a problem that a wealth tax could used to try to help to address?

Obviously, this is an issue in Ireland. A lot of it is in housing. There is a section in the Commission on Taxation and Welfare's report on this, and there are recommendations to be implemented. It was one of the European Commission's country-specific recommendations last year to increase the revenue from wealth and capital taxes. We have not really made progress on that. There are a lot of options, they just have not been implemented. That is the point. It is one way of broadening things but it is not going to resolve everything. The returns would not be enormous but there are options there to do it.

I did some research on this about ten years ago, so the numbers are well out of date. The general pattern of wealth holdings in Ireland is that the vast majority are in the form of property. We already have a local property tax that brings in very small amounts of revenue because it was designed to be a very small, local charge, and applies at rates that were not increased as asset prices increased over the past ten or 15 years. There is a specific way we could increase revenues there without designing a whole new tax. The difficulty with a more general wealth tax is not a difficulty of principle; it is more a difficulty of how it would work in practice. If people are holding wealth in financial assets, cars, etc., it is very difficult to value those assets. There was a wealth tax in Ireland very briefly in the 1970s which was abandoned after about two years because it was so enormously complex and because there were exemptions in respect of things like farmland, housing and so on.

I take that point. I have heard it before. I do not mean to cut across Dr. Lawless, but I would like to put this point to her. As she probably knows, I would not be in favour of increasing the tax on people's principal private residences because that would be an imposition. However, the information that is gathered by Revenue about the ownership of property also gives us information about people who own multiple properties that are not their principal private residences. I think there are about 1.2 million principal private residences in this country. It is probably less than that. Does anybody know how many there are? Whatever the figure is, it is obvious that a lot of the wealth involved does not relate to principal private residences. Rather, it relates to the assets, namely multiple properties, that people own and that are generating revenue for them. Would it not be fairer to tackle that aspect of it rather than loading taxes onto people's principal private residences?

It would. If those properties are part of the private rental sector, however, then we run the risk of taxes being passed on in the form of increased rents.

Not if we freeze rents.

It is very difficult to get a perfect solution in this case without it having unintended consequences in other areas of the economy. The local property tax was preceded by a tax that was only paid on non-principal private residences. Again, that was very narrowly focused and related to a much smaller base. A decision was then made to broaden the base and impose a tax on all properties in the country on the basis that everybody uses the local amenities that it was supposed to fund.

To follow up on what Deputy Boyd Barrett is saying, people who own second, third, fourth or more properties that are in the rental market, have to pay tax at 40% on the profits they make. Maybe it is 50%. It is. That is what they pay on the profits they make from providing homes for other people. On the other hand, if someone inherits a house, capital gains tax of 33% applies on the overall amount they get for the property.

Inherited.

They pay 33% capital gains tax. I look at myself as someone who is creating employment. Everyone pays their taxes. If multiple companies make extra profits and reinvest them in Ireland and in new infrastructure and we employ more people, that has to be profitable. Otherwise, there is no circular economy. I am an employer. The cost of staying in employment has increased over recent years. It is harder and harder each time because you still only have the same percentage model you use when you are an employer. Also, an employer takes all the risk. If something goes wrong tomorrow morning, the employer has to pay. The employer takes all the risk-----

We can take this another time.

Yes, but it is something we can do. I have been self-employed all my life, and I employ people. The small businesses do not sleep sometimes because they want to be sure about the employee's wage packet. The multinationals may have something that we may have to offer, but if we do not encourage them in here, we may have no employment either. Members said in contributions they made that other countries at the moment are in the same position we are in from the point of view of a skill network, saying they will run out of here. If they get a different tax break somewhere else, they will run out of here because it is a lot cheaper to run something somewhere where there is a lower tax base. As a result, we have to try to increase what we have here, but to do so we have to make affordable housing and infrastructure available, which includes transport for people outside of the major cities. We should rebuild our towns and villages and reinvest in our transport networks from there. You can work anywhere in this country if you have a proper transport network, and you can probably afford to live in an area where you might have grown up and work two days from home. Also, if we put in a proper transport network, you can go to and from work easily, like they do in other European countries where they have the proper infrastructure put in place. Ireland has a lot to offer.

We have had a very interesting discussion. I wish everyone present a very happy new year, and I wish them health. Once we have health, we have everything. That concludes our session. I thank everyone for attending.