Mr. Michael Tutty:

We have argued in recent years that the excess unexpected income coming in should be put into a rainy day fund. I would not argue that we should go borrowing to put money into a rainy day fund, but given the strong growth in the economy, we should have been building up through something like a rainy day fund the ability to have money when the downturn comes so that we can spend it then. Instead, the excess revenue has been going out in unplanned expenditure on health and other areas every year. We argue that the whole rainy day fund should be available in a downturn to support economic activity. We are not saying it should be used now to do so because we are reaching full capacity as it is and the economy does not need a stimulus, although it will need it one day when the downturn comes.

Given that excess corporation tax was even announced yesterday, there could still be scope to put money into a rainy day fund if the Government wanted to do so. If the money is effectively going to the National Treasury Management Agency, NTMA, to reduce our debt, it is a good use of it as well.

There was mention of the dangers of putting any estimate of future pay deals into budget forecasts. That is undoubtedly an issue. If one publishes forecasts for the next three years on the basis there would be no pay increases beyond what is already agreed, with no provision for inflation - although there may be provision for demographics - one would not really be producing meaningful forecasts. It would just be a mechanical job of saying that on the basis of current pay and price levels, this is what will happen. Revenue would be done on a different basis, making assumptions about growth, inflation and wages in the economy. If we want a realistic forecast, there must be some provision for these factors. One might not announce a provision for a 5% pay increase and it might be made a little fuzzy. If something like that is not done, however, the forecast would not be realistic.

There is no use in saying the budget would be in surplus by X% in 2022 and 2023 when we know the figures behind that are just not realistic. We have been trying to say that forecasts should be based on realistic figures and not figures which do not take account of realities. I understand the problem of saying that a pay increase of X has been built in but a realistic forecast needs to build in something. Otherwise, the forecasts would be meaningless.