Lisa Chambers (Mayo, Fianna Fail) | Oireachtas source

I welcome the opportunity to engage with the Minister on this matter. It has certainly been a proposal of the Fianna Fáil Party for quite some time now that we would establish a rainy day fund. The consultation paper as published indicates that in an Irish context, it is envisaged the rainy day fund would primarily operate along the lines of a defined purpose instrument to address specific events and shocks. Following on from the crash in 2008, the fund is envisaged to be counter-cyclical, in that we would address cases of deep recession and we should also have the ability, when the economy is overheating, to withdraw funds from the economy and try to stabilise it.

We had an interesting discussion last week with the Parliamentary Budget Office. I agree with its view that a contingency reserve is probably of little benefit to the country in cases of deep recession or overheating. Flooding is an easy example to bring up but the various Departments should be robust enough to deal with those types or occurrences. There is an opportunity cost when we save money, such as the €500 million proposed for the rainy day fund, so if there is no real benefit in terms of counteracting a recession, is there really a purpose to a contingency reserve fund? Using it in a counter-cyclical way is probably the intention and we are all of the view that we are trying to avoid what happened ten years ago from happening again. A contingency reserve probably would not stop that happening.

The figure put to us last week from the parliamentary budget office was that we would probably need in the region of €20 billion to put a counter-cyclical fund in place. With €1.5 billion going in initially and €500 million going in thereafter up to 2021, it would take us nearly 40 years to put the fund in place with such a level of contribution. Is that sufficient or if it is not possible between now and 2021, will the Minister would ask for feedback on the contribution post-2021? If we are serious about putting in a counter-cyclical fund to deal with times of recession, the amount being put in must be greater. The Minister's Department and this committee would need to investigate the opportunity cost to the State were we to go that far.

On the design, operation and purpose of the fund, I agree that we have far too much in the Constitution as it is and there is no place in it for such matters. It is for the Parliament of the day to decide on this. The Minister is also correct in saying there should be defined criteria. I also suggest there should be parliamentary control and this should not just be down to the Department of Finance to decide when cases meet the criteria. I am not suggesting we need 100% agreement, as we will never have that, but some sort of parliamentary control would be desirable. I suggest a built-in review, perhaps every three or five years, to assess whether it is working and the ongoing opportunity cost to the country of putting aside substantial amounts of money on an annual basis. It should also assess whether the amount decided to be put aside would continue to be sufficient. Were that amount to be insufficient, we obviously would need to address that.

The Minister wanted feedback on the purpose of the fund and I believe its purpose must be counter-cyclical or else there is no point to it. I would welcome the Minister's view on that. I would also welcome his view on how we can go about assessing the opportunity cost and dealing with an ongoing review within the Parliament.