Michael McGrath (Cork South Central, Fianna Fail)
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I understand that we are taking amendments Nos. 5 to 7, inclusive, together. As I understand it, the intention of the Deputy’s amendments is that the resources of the future Ireland fund would be available to be drawn down in 2034. I will start by mentioning the fund’s interaction with the public finances around that time in the mid-2030s. In the Bill, as drafted, it is intended that contributions to the fund are made up to and including in 2035. There is, of course, the option for the Government to transfer funding should it so wish beyond that date, but that will be a decision for the Government of the day.

The absence of default contributions to the fund after 2035 frees up potential resources for use by the Exchequer - resources that would otherwise have been added to the fund. This is in recognition that there is likely to be additional demands on the Exchequer in or around this period. If the current level of contribution - approximately €4 billion in 2024 - was the same in 2036, this would be a significant amount to add to State expenditure. We also cannot predict the future. It is possible - and the Bill allows for it - that the full amount or, indeed, less resources may be provided to the fund depending on economic or fiscal circumstances. While it is intended that the fund will be fully resourced we cannot predict the future. It is important that as much revenues as possible are provided to it in order to deal with future costs and liabilities.

The level of contributions, along with the return on the fund and the compounding effect, requires a number of years in order for the fund to build to a sufficient scale. This is why the fund is intended to contribute up until 2035 and then reinvested in full each year until 2041.

By allowing drawdowns from the future Ireland fund to take place earlier, the value of all future drawdowns would be lower. Under this amendment, my Department estimates that the amount potentially available to be drawn down in 2034 would be approximately €2 billion. This compares with almost €3.5 billion if the first draw down does not happen until 2041. Drawing down earlier from the future Ireland fund would mean these drawdowns contribute less to offsetting the future fiscal challenges such as those relating to an ageing population and the climate transition. In addition, I note that the amendment is not consistent as annual transfers continue to the future Ireland fund until 2035. By accepting this amendment, it would put us in a situation where we are making contributions to the future Ireland fund in the same years are we area also drawing down from it.

The Bill provides for 12 years of contributions in order to build the fund. Under the Deputy’s proposals, we would begin drawing down from the fund before the 11th and 12th contributions were made in 2034 and 2035. I am conscious of the need to increase the value of the fund over time and I believe that because no further contributions are required to be made post-2035. This potentially frees up resources and the fund can increase its size through investment return and compounding. On that basis, I do not propose to accept the amendments.