Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

My explanation does stand up. I am not putting this proposition forward with the direct objective of reducing our gross national debt. I never presented this proposition in such a way. As I have said on a number of occasions, this is about creating the capacity for the State to deal with an external shock in a way that avoids the need to borrow in the future at what would be a higher interest rate. That is the policy objective I am trying to address. A consequence of setting up such a fund is that it would reduce our net debt level, but not our gross debt level. However, I am not proposing that we set up a fund to affect our debt metrics because, as the Deputy is correct to say, if that was my objective, the simpler way to do it would be to reduce the national debt in the first instance and pay it off.

On the view of the rating agencies in this regard, one of the interesting things is that the external rating agencies, which made grave mistakes in the run-up to the financial crisis, were actually more alert to the difference between Ireland's gross debt position and our net debt position than many of the analysts and opponents at home who were predicting imminent default at every point as the country worked its way through grave difficulty. The other choices which the Deputy has outlined illustrate the scale of the choice involved in this because, if we decide to put money into the rainy day fund, it means that we are deciding not to put it into health expenditure. The Deputy is correct on that. That is why, before I move this into the legislative arena at all, I thought it valuable to have a discussion about the costs and benefits of the policy I am proposing.