Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The debate the Senator has initiated is very important and I am not criticising him in any way for asking the questions. That is what we should do in the Dáil and Seanad. That is why I am giving him as much information as I can, well beyond my briefing notes. Approximately €7 billion will be collected in corporation tax this year. That is approximately €3 billion more than estimated. Of that €3 billion, we spent approximately €1 billion additional at the end of 2015 in Supplementary Estimates, a big chunk of it for health. We also did county roads and replaced 30 or 40 Dublin Bus buses because the fleet was a bit clapped out. There was stuff for the Garda and so on. It was well within our capacity to pay for it and it was well within the expenditure benchmark. That left another €2 billion. We cut the deficit with that. Our obligation under the European rules was to get the deficit under 3% at the end of this year. On budget day, I said we would go down to 2.1%. We used some of the corporation tax that had come in at that stage to get down to 2.1%. We used other taxes as well. Now with the strong flow continuing to the end of the year, it looks as if the deficit will come in at 1.6% or 1.7%. That has consequences for next year.

Rather than putting money in some kind of investment fund, the priority is first of all to balance the budget and then get money to reduce the debt. That can be done directly or indirectly. As soon as we have a balanced budget and are running the country on what we collect in taxes, if additional funds come in, it opens up the possibility of investment and improving services. There is no doubt that after seven years of recession, there is economic and social depletion of infrastructural assets. The next phase of growth will have to be driven by investment. The private sector is investing very heavily and that is shown in this morning’s figures but the State has a role as well to invest in economic and social infrastructure.

Assume we balance the budget by 2018, in 2020 and 2021, we will have a lot of leeway and additional income, which we can use. My priority would be to improve the services but also to invest because if we do that we will keep the growth phase going. I do not disagree with the Senator. Putting in the fund might be an option in three years’ time. If there is a lot of excess tax at that stage, it might be a good idea to go back to the kind of pension reserve fund that the former Minister, Mr. McCreevy, brought in. It is too soon to do it now because if we are borrowing money on average at 3.5% or 4%, we would not get that return from an investment fund. If we take it off our borrowings, we will get the money in. That is the way I figure it out but everything has to be adjusted as new information comes in and as the annual cycle of budgets comes along.