I think this was because RS sets a basement price below which private rent has no incentive to go. Lowering RS influences the wider rental market (in times of supply) and so lowers a cost of living for many.
I'm not sure that's quite accurate.
In the case where there is more renter demand than rental stock, and assuming neither is elastic, there has to be a mechanism (like cost of rent!) for allocating the scare resource.
As the supply/demand picture worsens, RS claimants lose access to the market - their proportion goes down. This is bad if you believe in social stability, e.g. people not having to move area when their rents are pushed out of their reach. They might not be able to find accommodation within reach of employment (whether or not they're in employment currently), or available schools, so they might just exit the workforce and dedicate themselves full time to claiming welfare. That is unarguably bad.
In theory, moving RS up corrects for this. The problem is that all the arguments for helping RS claimants to compete must equally fuck over the non-RS claimants at the same time.
The only solution is to increase supply. When there is a choice between spending money on RS vs spending money on direct provision of housing, it makes no sense to increase RS across the board. Using increasing rents as a transmission channel for housing supply is FG's failed policy for the past few years (and calling it a policy is being generous).
Dan O'Brien made exactly this point yesterday on Claire Byrne's show, but was drowned out by politicians whingeing about something immediate being necessary because they're getting shit from constituents. Even Stephen Donnelly was moaning, and he's usually the least idiotic in the room.
There are already case-by-case exceptions being made. I don't see the argument for across-the-board rises.