Mattie McGrath criticises rainy day fund plan, fears raids

The primary purpose of the National Surplus Reserved Fund for Exception and Contingencies Act 2019, as we know, is to provide a legislative basis for the establishment of a rainy day fund. The fund will be formally known as the National Surplus Exception and Contingencies Reserved Fund. It's principle that the Act is fine. It is sensible and prudent. I also accept that this represents an institutional reform in Ireland's fiscal policy framework, and that it is a bill whose primary purpose is to mitigate severe economic shocks. I am concerned about some issues raised by the regulatory impact analysis of the bill. It is very important to be listening to those impact analyses. For instance, we know that the fund was ceded by an initial transfer of cash, or near cash assets, from the ISIF up to a maximum of £2 billion, with further exchequer transfers of £8.5 billion per annum from 2019 to 2023, inclusive. Provisions are also made for periodic transfers from the exchequer, subject to the Dáil's approval, thankfully, where, for example, there are above exceptionary tax receipts. I think this is something that the people are having a huge difficulty with Minister. Most people would probably prefer that the above expectation of tax receipts be used to improve services infrastructure such as schools, health crisis and the roads, and especially housing, or any number of other projects that require cash injections, and there are many. We need to be clear that there is flexibility in this matter, and that an automatic transfer of tax to the fund would not occur. I also think we need far more clarity and clear guarantees around the specified purposes of the fund. We do not want it to operate as a kind of mini bailout facility for any government, and plans to win the stray. I am thinking here, of course, of the massive disgrace of the National Children's Hospital. That is total project, a runaway train. The disastrous oversight of the project, which has been described as awe-inspiring incompetence, by Professor Anthony Staines, has created not just a rainy day, but a thunderstorm of financial embarrassment, Minister. If you could be embarrassed, but you can't be embarrassed, but you will be embarrassed very shortly when the people get a chance to embarrass you and have their verdict on you. What assurance can we get that the fund would not be raided by government to try and cover the losses for disastrous decisions such as that? The greatest waffler was ever in here, in Taylor. The best ever. You were better than poor old Jim Mitchell, or Gay Mitchell at the time. I also note that the Committee on Budgetary Oversight, having examined the proposals, the Committee identified a number of areas where there is need for greater detail on the purpose and design of the rainy day fund. You said, Minister Ross, you'd have to get an umbrella, the sun was shining, and you'd probably have, I don't know what, you'd have a raincoat on the beach. That's what you think. In particular, the Committee was in the opinion that greater flexibility will be needed at EU level, to ensure that monies committed to the rainy day fund would be spent when needed to counter the future economic shock. What was alarming, however, was that the Committee also found that the Department of Finance consultation paper on the rainy day fund was unclear on its purpose. I think that is very alarming. So, Minister, we need, I'm not opposed to the concept, but I won't have a discussion for you to bail yourself out or dig yourself out of holes, and I will not support that. Minister, to respond. Thank you very much. Thank you very much. Thank you very much. I just want to thank all deputies for their contributions. I'm not sure if Deputy McGrath there used the phrase Gay Mitchell as a term of abuse or a term of endearment. But I want to thank all colleagues for the contributions that they've made, and just say a word back in relation to the different points that were just offered there. In relation to what Deputy McGrath said, Deputy McGrath is right in what he said, in that there are now many, many other risks that are out there apart from just the risk of a no-deal Brexit in 2019. And I think what is most likely, last year I'm calling it, is that the risk of a no-deal Brexit is there, but it has just shifted in timing. And we can see of the events over the last day that, as the new government in the United Kingdom takes shape, that does remind us that many of the risks in relation to Brexit have not gone away, but the timing of them has clearly changed since the budget was introduced. In relation to what Deputy Kenny said there, Deputy Kenny did make the point that if you look at where we are with other changes that are taking place across the world, we can see that while Brexit continues to be a big risk, there are other ones that are there. He pointed to the changes that are taking place in relation to global trade, in relation to the tone of global trade. He is right in acknowledging that. I think what is also important to acknowledge is, to date, the Irish economic performance and the diversity that we now have in our exports, does mean that despite the shift in tone in relation to global trade, that we have still managed to deliver a reasonably strong performance across 2019. And while I do expect to see an effect on our export performance in 2020 and beyond, there is still every prospect of the Irish economy continuing to be able to grow across the coming years, if we are successful in avoiding a no-deal Brexit. In relation to what Deputy Burton said, if I just deal with the three charges that she made. Firstly, that in any way the Irish Strategic Investment Fund was raided. I think I would recoil from that language as much as I am sure Deputy Burton would have recoiled from accusations that she had raided private pension funds. Of course, neither claim would be true. What I have done, as she would do and has done, is make choices in relation to where the country's assets should sit and how we can make better use of them. She made a point to me regarding why don't we use a movement of funding from ISAF to respond back to that great housing difficulties that all deputies have touched on. But we did do that by moving only €2 billion from ISAF into seeding the Land Development Agency and into seeding HIPFI. So we have moved funding from both from the Irish Strategic Investment Fund into responding back to the housing, great, great housing challenges that we still have, that we still need to make much more progress on. In relation to what Deputy Bruin said, the particular question that you raised there Deputy is where are we from a cash balance point of view. At the end of November, the state has €24 billion of reserves available to us. And of those €24 billion, 60% of us is in short term funding instruments. So that is money that the state would be able to access quite quickly if it did need us. And, you know, you and your own contribution there touched on the intellectual, I guess, rationale for a rainy day fund, but did go on to make the case that you don't believe this particular one is needed, because we should be spending all our resources on where we are today. And while I absolutely understand the need to invest and respond back to all of the challenges of today, the balance that I am simply trying to strike is to get ready for the challenges of tomorrow as well. And I do believe that the creation of a fund like this would be of help, particularly in dealing with the reliance on corporate tax receipts, which we are now making significant progress on moving away from by virtue of the surplus that we will deliver at the end of this year. In relation to what Deputy Collins and Deputy McGrath have said, just to go back to what Deputy McGrath said that touched on what Deputy Burton said, nowhere in my Budget Day speech did I say that the role of the rainy day fund was to recapitalise banks. Never said that anywhere. And as I have said in a number of Oireachtas debates on this, I'm absolutely certain that the rainy day fund would be available to the state if we had to deal with very extreme consequences as a result of a no deal Brexit happening. And it is one of the reasons why we'd have it in place. Many have claimed it would not be available to help us deal with the harsher and more unpredictable consequences if a no deal Brexit were to occur. I am confident that it would. So I want to thank all deputies for the contributions they've made. It does appear that there are some parties and deputies here that will support this motion because they believe there is a need for a rainy day fund, but they also accept the wisdom of not making a deposit now. Now, it does believe there are other deputies who would support this motion because they don't believe in the rainy day fund at all. But in either circumstances, I do believe this motion, being required to bring this motion to the House is the right thing to do. And I believe in this circumstance, it's the right thing not to make the deposit. But of course, it is open to the government and future governments to decide when to resume it and indeed if they want to make a larger deposit in 2020. Thank you. Thank you.