Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

A rainy day fund gives the impression that times are so good that we can begin saving for a rainy day. It is to pretend that the rainy day is something off out there in the future that may or may not come to pass. It is to pretend that we are easily able to afford to save significant sums of money because we are financially stable. We cannot equate a state to a household but in normal households, paying the bills is prioritised and putting matters right before investment is made for the future. Yet Ireland's house is not in order. On paper, the Government might point to cold statistics such as GDP, GNP and so on but the health of our country cannot simply be measured this way. That is very much a bookkeeper's exercise. In the past, Fine Gael governments have been accused of carrying out bookkeeping exercises rather than looking at the social component of issues.

Homelessness among adults and children is at unprecedented levels, housing lists continue to grow beyond all reality, public services are crying out for strategic investment and we are still under the unbelievable debt burden left to us mainly, although not exclusively, by the financial institutions and the bondholders in the wake of the banking collapse. Make no mistake, we are still very much experiencing a rainy day in terms of what needs to be done. I am conscious of the looming impact of Brexit and its potential fallout. How could we not be? We have to shield and prepare ourselves for what could be an unprecedented blow to our economy but there are other considerations as well.

The State will be forced to pay cold hard cash in fines to the EU very soon because we will have failed to meet our 2020 climate targets. We will have to put money into meeting the targets. Instead of committing the funds to key infrastructural improvements that would help us to reach those targets, we are putting it into a rainy day fund. By missing the 2020 targets, we set ourselves much further back from reaching the 2030 targets and we will face even more fines. I asked at the Committee of Public Accounts how much we would be looking at in terms of fines and the economist from the Department of Finance told us that from 2021, we are looking at €600 million a year. Over ten years that will be €6 billion. When we start to look at what we could invest in, that money would reduce the prospect of us paying fines. It makes sense for us to invest in that and it is financially prudent to do so if we look at it in the round.

Ireland has a significant infrastructural deficit and it is holding the country back. If we look at the Nordic countries, why is an equivalent investment being made by foreign direct investment in those countries? They do not have a low corporation tax rate so what do they have that is attractive? They have good education and training, they have fantastic services and they have excellent infrastructure. It can be done in a different way but investment must be made. Our continued lack of investment in basic services means that our people are constantly waiting. They are waiting on hospital trolleys, never-ending housing and health waiting lists and waiting at bus stops and train stations.

I am also a member of the Joint Committee on Transport, Tourism and Sport and transport is one of the components that will contribute to the bill we could end up with for failing to meet our climate targets. It takes five years of a lead-in time to order and have a train delivered. We now have overcrowded trains which makes it unattractive for people to use them at peak times when we need to get them to use them. We have to make it an attractive proposition because there are more people in cars. Instead of making that kind of investment, which not only makes sense in terms of the cost of congestion, productivity, accident rates and all of the rest of it, but it also makes sense in terms of these fines. That kind of investment brings a return.

On a purely theoretical level, an emergency fund makes sense. It can be set aside with boom-time taxes such as we experienced last year with the large extra amount that came in from corporation taxes. It was not set aside for capital projects, it actually just went into the health budget. That is the very opposite of what the Government preaches to the rest of us about the kind of economics that it sees as not being very prudent, but that is exactly what happened. The reality is that such a theoretical view fails to take account of the value of spending now to save in the short, medium and long term.

For example, in excess of 40,000 households are being supported with the housing assistance payment, HAP. Private landlords are getting the benefit of that because the Government has not made the investment to build houses. Some of that money could have come from the European Investment Bank; it does not always have to come from national coffers. There was a lot more money in that fund that we could have leveraged, even during the tough times straight after the crash. If there had been more investment in more direct builds, that would have had an impact on the cost of rents generally because the capacity issue would have been dealt with. That feeds directly into the cost of living, which is unsustainably high. In parts of Dublin, for example, it is just not possible for people on ordinary or reasonably good wages to live in rented properties because rents are constantly increasing. That is because there is a capacity issue. While there is a role for the private sector in building houses, there is also a much greater role for public sector involvement and it has a direct bearing on the price of rents. I cannot get my head around why there has been such resistance to that. The cost of living continues to rise because of the lack of investment.

A useful topic to mention is Sláintecare if we take the example of the health service. By investing in the infrastructure that allows for primary healthcare centres, the demand on public hospitals can be reduced, which is a much more expensive way of delivering healthcare.

Spending now to save in the long term is the approach that we believe is needed. In the absence of such a system in terms of healthcare, people find they have to fork out for private health insurance. I come across pensioners who are struggling to pay their private health insurance, terrified that they will get sick. If there was a primary healthcare centre in their area, they may only need to be monitored for, say, diabetes or other such illnesses. That would be a much more efficient, cheaper and satisfactory way to deal with healthcare provision for some cohorts of illnesses.

If we view matters with a colder economic eye, it is clear that the higher cost of living in Ireland is making it unattractive for investment, whether it be domestic or foreign direct investment, and it will continue to be unattractive. As I said, the Nordic countries are a very good example of the where the type of investment needed has been made to benefit sustainable growth into the future.

We have expressed serious concerns as to whether this fund could ever be used. The Minister of State has linked the fund to a catastrophic event, making it more like a very expensive insurance policy as opposed to a fund for perhaps capital investment as the need arises. It can be very useful in the event of a downturn to have a fund for capital investment and thereby keep people employed and add to growth in the economy. We accept it is prudent not to rely on corporation tax receipts or development levies, resulting from a one-off boom, for ongoing revenue but that does not mean that revenue from a boom in the form of those taxes could not be used to fund infrastructural projects, as the need arises.

We do not believe a rainy day fund is an appropriate approach and instead the Social Democrats have proposed the creation of an infrastructure contingency fund, which at least is descriptive about what it can be used for rather than having a fund for a catastrophic event. It is not clear how this fund could be leveraged. The fund we proposed would be held in reserve for key infrastructural projects and made available for capital projects in such areas such as health, housing, energy and transport on the principle that if we invest now we will save in terms of climate change obligations, housing or programmes such as Sláintecare, which I have highlighted.

We have an opportunity to address key infrastructural deficits and, in so doing, save significant costs in the medium and long term and reduce the cost of living for people. The more the cost of living rises, the more demand there will be for wage increases. That would give rise to an never-ending round of problems if that were the case.

We had the National Pensions Reserve Fund in the past. There was €67 million in that fund or it may have been much more than that. We had a very significant amount in it because we have pensions time bomb. That was raided predominantly to bail out the banks. We have a national debt that is realm of the stratosphere. It is more than €200 billion. Essentially, if we are going to sustain that debt and pay it off, we must have a vibrant economy. A vibrant economic depends on us having housing that people can afford, not raising our cost of living to a level that is unsustainable and not incurring debts such as those we will incur if we do not invest to ensure we do not have debt on foot of our climate obligations. It is prudent to look at proposal in the round. We believe it has been looked at in a silo-based way. This fund will be put out of reach when it could be used in a way that we would end up with a much more sustainable country and economy.

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