Peadar Tóibín (Meath West, Aontú) | Oireachtas source

Interest rates are at the highest level since 2019. By any reasonable projection we are going to see that spiral increase over the next while. The ECB has increased its lending rate six times since January 2022 and more increases are coming in the next week. Increasing the interest rate is a good tool commonly used to deal with inflation, and in fairness it often works in the case of demand-pull inflation. When there is too much money washing around the system chasing a limited supply, interest rates cool down that demand, for sure. However, most of the inflation we have at this moment is cost-push inflation. It does not behave in the same way as demand-pull inflation at all. It has been caused by the constriction of the supply chains. This type of inflation is far more resistant to interest rate hikes than demand-pull inflation. A high interest rate is less effective in dealing with cost-push inflation such as we have now. Anybody doing first year economics in the local university will tell us that is the case. The EU is using a tool currently to try to control inflation that is not suited to the inflation we have.

It is using a hammer to crack a nut.

It is important to analyse why we have such high inflation in this State and the type of inflation we have. One of the major reasons is that the construction and supply chain was severely affected by the Covid restrictions. That was an international factor but it was more acute here because Ireland was an outlier in terms of the severity and length of the Covid restrictions. No other country in Europe closed down as severely or for as long as Ireland. No other country in Europe closed down the building of houses. It is amazing the country with the biggest housing crisis was the only country to close building sites during the Covid crisis. In many ways, the actions of the Government have engineered a significant level of the inflation with which we are dealing in this State. Of course, the Government does not admit that. It blames international factors for the inflation. I put the issue of inflation to the Taoiseach today and mentioned that, in the past 12 months, the OECD has stated that Ireland's standard of living has fallen in real terms. A report published today states that the cost of electricity in Ireland is the highest in Europe. The per-unit cost of electricity in this State is double the European average. I put that to the Taoiseach but he said inflation is due to international factors. Let us think about the logic of that. How is that we have the highest rate of electricity if it is because of international factors? If it was because of international factors, we would have the same electricity prices as the rest of Europe. That is clearly not the case. Domestic policy has significantly pushed inflation in recent years and that is not by accident. The Green Party has a policy objective of having high fuel costs. It wishes for fuel to be expensive because high fuel costs reduce the consumption of fuel and that reduces greenhouse gas emissions. In many ways, the Government is not dealing with the massive inflation we have, especially in the energy sector, because it does not wish to do so. It is not in its in interests or objectives to do it.

Irish people are trapped in this inflationary cycle. In the context of housing, 60,000 people are in the clutches of vulture funds. Those 60,000 customers - I use the word "customers" loosely because they did not choose to be customers of the vulture funds - are paying interest rates as high as 8%. The Minister of State, Deputy Richmond, who is present, was, along with me, a member of the finance committee. It is immoral that the Government has created a two-tier mortgage market where the vast majority are experiencing rates of between 3% and 4% but a particular sector has been left out in the cold, exposed to vulture funds that are literally milking the system and charging mortgage holders 8%. If the Government were to do one decent thing to help, it should be to bring those vulture funds into the regulations so that, at least, those interest rates could be reduced to the market average.

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