DÁIL SPEECH ON THE NATIONAL SURPLUS (RESERVE FUND) MOTION

I support the proposal not to pay €500 million into the rainy day fund for 2019 in the context of the ongoing exceptional circumstances of the UK’s proposed withdrawal from the EU. The Minister announced a €1.2 billion package, excluding EU funding for Brexit, in budget 2020. He said on that occasion that he was prepared to use resources that would otherwise go to the rainy day fund. The purpose of this was to address the possibility of an adverse shock to the economy. After the disastrous outcome of last week’s general election in the UK, many commentators immediately said that the result at least brought certainty. Although it is clear that the UK will leave the EU on 31 January 2020, the uncertainty associated with Brexit is surely destined to continue. It seems likely that we could again be facing a no-deal, cliff-edge, No Deal Brexit at the end of the transition period on 31 December 2020. We learned today from the UK Prime Minister that the House of Commons will shortly include this date in statute as the definitive date for the end of the UK’s transition into a future EU-UK trade agreement.

Even after the future customs and trade arrangements for Northern Ireland are made, uncertainty will continue. Most of all, there is a strong possibility that last week’s election was the last general election in the current United Kingdom as Scotland moves decisively to independence alongside Ireland within the EU. If the Scottish Labour Party and labour movement now throw their weight behind Scotland’s push for independence, Scottish freedom will be impossible to stop. It is timely, therefore, to hold the additional €500 million for the rainy day fund in the Exchequer this year. In his budget speech and again tonight, the Minister stated that the €1.5 billion would be transferred to the fund from the Ireland Strategic Investment Fund. I ask him for a report on how that proposal has worked out in the past month.

When we discussed the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2018 last January, I outlined my continuing opposition to the establishment of the rainy day fund. I believed then, and still believe, that all available current and capital resources should be allocated to addressing crucial needs of our constituents, especially in health, disability and home care services, housing, education, security and other services, and for the restoration of salaries for all public servants to pre-crash levels. We know the sad history of the National Pensions Reserve Fund from 2001 and how that fund was decimated by Fianna Fáil and the Green Party and later splurged on the outrageous blanket bank guarantee supported by Fine Gael and, tragically, the Labour Party.

I ask that the Minister update the House on the current cash and near cash reserves of the National Treasury Management Agency, NTMA, the current assets of the Ireland Strategic Investment Fund and the current estimated State shareholdings in the major pillar banks. Those shareholdings were originally earmarked to pay down part of our still huge national debt. The Irish Fiscal Advisory Council reminded a recent meeting of the Committee on Budgetary Oversight that the Government debt burden is the sixth highest in the OECD. This time last year, Ireland’s net debt burden was equivalent to 90% of GNI*. Only France, Portugal, Italy, Japan and Greece have higher net debt burdens in the OECD. The Economist’ 2020 world economy survey finds that Ireland’s per capita income is the highest of all the countries surveyed, surpassing that of states such as Singapore and Switzerland, although I note that no analysis of Luxembourg is provided. We know, however, that every Irish citizen has a national debt per capita burden equal to nearly half of these elevated per capita statistics, which are scarcely believable in light of foreign direct investment. IFAC and other commentators continue to urge that the rainy day fund and what IFAC describes as a prudence account should encompass so-called temporary receipts, including unexpected corporation tax receipts. Most people would feel that the opportunity cost of salting away another €500 million from current revenues in one year and the €1.5 billion from the strategic investment fund is vast and this money would be better used for much-needed productive capital investment in our economy.

It was the former Minister for Finance, Deputy Michael Noonan, who first came forward with the rainy day fund idea, which followed up on an original proposal by Deputy Michael McGrath. The rainy day fund is certainly part of the Fianna Fáil-Fine Gael joint policy.

I support the creation of a national wealth fund like the funds in place in Norway or China but only when the profound needs of our people in health, housing and other critical areas have been addressed by Government. It was not opportune or necessary to create this fund earlier this year. Now we see that within weeks, as Deputy Burton said, we will have to change our plans and put this €500 million back into the national account.