Mr. Michael Tutty:

We certainly support the rainy day fund. However, we have put forward our own proposals as to how it should work and would prefer our methodology to what the Minister has proposed. We would prefer it to be a countercyclical fund rather than just a contingency fund for exceptional circumstances. We would see it working not by putting in a fixed amount every year for a few years and then stopping. Instead, we would base it on growing our expenditure in line with the long-term growth in the economy, while any more space beyond that would be put into the rainy day fund.

We should also be looking for mechanisms which will allow the fund to be used in a way that will be in line with the fiscal rules. Currently, the fiscal rules are not designed for a rainy day fund. There need to be tweaks to allow moneys going into the rainy day fund to be classed in some way as expenditure and then not classed as such when they come out the other end.

There are differences between what we see the rainy day fund being and what the Minister and the Department see it as being. We would certainly prefer to see a rainy day fund, even on the Minister's basis, than no such fund. We have let ourselves walk into spending more and more money at various stages in our cycles over the past 20 and 30 years. This is because we think the economy will continue to grow strongly and we keep spending all the money which comes in, as opposed to limiting the expenditure in the good times in order that more is available in the bad times to avoid having cutbacks.

We have published a paper on our website with our proposals as to how the rainy day fund should work. We would certainly like our proposals to be talked about with the other member states to see a change in the fiscal rules which would allow a rainy day fund to operate properly.