Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

What is intended with ISIF is that €2 billion has been set aside for the fund to invest in Irish companies that run into trouble in order to save them from failing and, most importantly, to save the jobs of the people working in those companies. That will be done through equity investments. We would expect companies to pursue all other options first - to look to their own shareholders, loans and other such options before coming to the taxpayer to invest. However, other governments are doing it and we may need to do it too. We will treat our own public companies differently. The investments the Deputy talks about are wise investments the Government could make but perhaps they would come from a different fund or a different source.

In terms of appropriate fiscal policy, I have always been of the view that the right fiscal policy is a countercyclical one. When the economy is growing fast, one tries to keep public spending under control and one reduces debt, if not in cash terms at least as a percentage of GDP. When the economy is in recession, one is then able to increase public spending to cushion the blow of the recession on people's incomes, to stimulate the economy so it can grow again and to allow one's debt to rise. That is the policy that this outgoing Government has pursued. For many years in this House we resisted the demands of people that we should spend more and borrow more – €22 billion more in one case – at a time when the economy was growing fast and overheating. We were right to resist those demands, and because we resisted those demands we are now in a position to do what could not be done ten or 12 years ago, and that is a countercyclical response to this crisis, namely, increasing spending and increasing debt. However, as IFAC points out, that does come to an end. It suggests that in or around 2023, we may need to take measures to reduce the deficit, but between now and then we should try to make the economy grow as fast as possible so that the deficit that is there in 2023 is closer to €6 billion or less rather than the €14 billion it put at its upper end, because any retrenchment that will happen when the economy returns to sustained growth should be as minimal as possible. That is why we need to go for growth and opt for pro-growth policies in the next year or two.

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