Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on the Second Stage of what I would call the rainy day fund Bill. I thank my colleague, Deputy Michael McGrath, who proposed this in 2015. It was included as part negotiations of the confidence and supply agreement with Fine Gael in early 2016. I am quite sure that had he not proposed that with the support of the Fianna Fáil Parliamentary Party at that stage, it would not have been in the confidence and supply agreement and we would not be here today.

The technical name for this legislation is the National Surplus Reserve Fund for Exceptional Contingency Bill 2018. It will in time be known in layman's English as the rainy day fund. It is very good that we are getting to this point. Considerable pressure had to be put on the Government to get to this point. It had to be dragged on different occasions.

There was a commitment to put €1 billion per annum into the fund; the Government has rowed back on that substantially and the proposal now is for only half of that amount. The Taoiseach proposed raiding the fund even before it was set up. Given all the talk about this since the last general election, it has come as a surprise to many people that there is not a single bob in the fund yet. The intention is I presume at least to put something into the fund by 31 December this year. I know the legislation had to be set up, but we really took our time. We would be in a better place if this fund had been operational at an earlier date.

That said, it is good it is happening now. Items like this, which are not overly contentious, should be able to move through the House quickly. I know that on Committee Stage, my colleague, Deputy Michael McGrath, will have positive and constructive amendments. I ask the Minister to consider each to them carefully because they come from a genuine interest in the need for such a fund for whenever the rainy day might come. Let us hope it does not come for many a long year. However, if it comes, as sure as night follows day we need to have something in that fund.

This year things are somewhat clearer in that the ECB plan for quantitative easing is coming to an end. That will put pressure on interest on the national debt which has been reducing dramatically in recent years. We might see a slight increase in that as a result of the change in the ECB policy. With so many unknown factors relating to Brexit, none of us can speculate tonight how that will work. There are definitely risks attached to that, which is all the more reason for having a fund such as this.

Why is there an €8 billion limit on the fund? It should be open ended. In some years with a surplus, there should be a case for putting in an additional amount. Some time ago when we started the debate on this and corporation tax was yielding €4.5 billion to €5 billion per annum and it was then heading to €6 billion, our side of the House proposed that a significant portion of anything more than €6 billion in corporation tax, which was beyond our wildest dreams just a few years ago, should go into this fund. However, the Government has not done that. Because it suits up to ten major multinationals to pay a bit of tax in Ireland rather than a bigger amount somewhere else, the Government has got a this windfall tax. It does not know precisely why we are getting it or why the companies are paying so much. The Government is not able to anticipate it, but it is using that windfall tax to fund day-to-day expenditure in many Departments and especially in the health services.

The Government is running a severe risk in its prudential management of our receipts. We are enjoying these windfall receipts from corporation tax now but next year or the following year it could as easily go some other way. If some other country decides to have a more attractive regime for corporation tax than Ireland, those multinationals will just up sticks and move their corporate headquarters. All of a sudden there would be a big hole in our finances and then we would be in almighty trouble with day-to-day funding. Health services, educational services and social protection funding would be seriously compromised because the Government has not been prudent in its management up to now.

Years ago we had the old National Pension Reserve Fund which was great. It provided a big buffer when it was called on. We still have quite an investment in that fund. Even though in some of those years the country was not as well off as we are now, the investment per annum was 1% of GNP, which probably would be closer to €2 billion per annum now. People might think that is unthinkable, but that is an example of a really ambitions plan. The Government's proposal to put in €500 million is a modest start and let us hope the figures increase.

Some Opposition parties have taken what I would call the lazy approach of getting all the money, spending it all and not investing anything into the future. We need it now and I accept there is a crisis now. However, the crisis is not due to lack of money; it is due to attitudes of Government to spending decisions, prioritisation, getting efficiency for the money we are actually spending and how it is spent. We are not short of spending money at the moment. There is an issue with where the Government is directing that spending and in particular ensuring that we get value for money for what we are spending. While that is the job of the Government, it should not throw the additional corporation tax receipts that are coming in now into day-to-day funding of public services, albeit they are very important.

I know the Irish Strategic Investment Fund can invest up to €2 billion. The Minister has indicated he is putting in only €1.5 billion. He is being prudent; I would say excessively prudent. He should try to invest the maximum amount in this fund. I know it is being managed by the National Treasury Management Agency and it is good that it will be audited by the Comptroller and Auditor General. As Chairman of the Committee of Public Accounts for the moment anyway during this Dáil for as long as it lasts, I believe that is a welcome development. It is important to have public scrutiny of such a fund and a proper Dáil debate on the use and investment of those funds every year.

I share the concerns of my colleague, Deputy Michael McGrath, over holding most of the fund in cash or near cash. As the Acting Chairman, Deputy Connolly, will verify, the Committee of Public Accounts has seen many Departments coming in with a charge in their accounts for negative interest. There was a time when a State organisation was able to earn interest on amounts that could be €5 million, €10 million or €50 million. Now they are being charged interest for putting it on deposit with the Central Bank or through the National Treasury Management Agency. Leaving money as cash in a bank is a way of losing money. We would probably pay many people millions of euro to advise us to do that and lose money. We should not spend money on consultants to do a job that the NTMA is well capable of doing.

The Dáil must give consent to extract money from this fund, which is very important. The reasons have been set out there, but they are rather loose. I would hope there will be strong Dáil control on a Minister doing that or making a proposal. It is proposed that he might be able to act to some extent even when the Dáil is not sitting. I do not think a Minister over a couple of weeks of a Dáil recess could find himself in an emergency that he did not know about on the day the Dáil broke up such that it would be necessary to give that extra power. I am concerned when Ministers get extra power over payments through the Central Fund because it never comes back for discussion here in the Dáil Chamber.

Regarding the Central Fund, all the payments for interest on the national debt are paid through the Central Fund. They never come through the Committee on Finance, Public Expenditure and Reform and Taoiseach or any line committee as part of the Estimates. They never come to the floor of the Dáil for a debate. I am not suggesting we should not pay the interest and pay back our national debt - there should be a debate here in the House every year - but when the Minister has discretion to do something without having to report to the Dáil, that is the way things happen. Also our payments of about €2 billion to the European Union every year are never discussed in totoin this House or at any line committee. Again it is paid through the Central Fund where a Minister has total discretion. When a Minister has total discretion eventually over a period of time the Dáil never gets to debate the matter. That is why I do not believe a Minister should have that discretion. Government is answerable to the Dáil and any withdrawal from the fund should be approved by the Dáil in advance and not noting it after the fact.

We support the Bill, which is long overdue. We look forward to a detailed report coming back after Committee Stage. Any suggestions coming from our side of the House will be positive and constructive and I hope the Minister will take them into account.

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