Gerald Nash (Louth, Labour) | Oireachtas source

I welcome the opportunity to contribute to the debate. Last year, the Government took the opportunity not to pay €500 million into the rainy day fund due to the threat we faced of a no-trade deal Brexit. We are conscious that this threat is still with us. To a degree that partly informs the Minister's consideration of the approach that we are taking with the rainy day fund this year and the motion before us.

My party's concerns over the concept of the fund, how and why it was established and the fact that seed funding for it was obtained from the Ireland Strategic Investment Fund, ISIF, at a time when, in our view, that funding might have been better deployed in investment in public housing and public infrastructure, have been well rehearsed. The Minister will recall those points being made by our then finance spokesperson, Joan Burton, when the enabling legislation was brought to the House several years ago. We shared the concerns expressed by Sinn Féin colleagues opposite about the potential for moneys in the rainy day fund being allocated to the banking sector in the context of any difficulties that may arise on that front.

Nobody could have predicted that the world would stop turning in 2020 as a result of a global pandemic. Nobody could have foreseen the scale and the nature of the international response with the massive investment of borrowed, cheap money to keep businesses alive, services open and people out of penury, as well as to keep people safe. Everything has changed. The debates which took place here just a year ago may as well have taken place 20 years ago, such is the immense scale of change and uncertainty over the past ten months.

Today at the budgetary oversight committee, the Irish Fiscal Advisory Council welcomed the fact that some of the economic strain of Covid-19 will be taken up by contingency and recovery funds. The council is concerned, as am I, that up to €8.5 billion of Covid spending, if one includes non-Exchequer funding this year, may end up in the base to be repeated year on year with no indication as to how the Government plans to foot the bill. Additional spending on health, for example, is required because the pandemic has certainly exposed and indeed exacerbated some of the existing deficiencies in our public health system. Sláintecare will also need to be paid for.

It is all well and good speaking of rainy day funds. However, when those who are charged with critiquing fiscal policy express their alarm at the transparency in government spending and how we pay for the kinds of services most of us in this House want to see evolve in the coming years, we should all take note. The over-reliance on volatile corporation tax receipts is extremely problematic. The Government needs to plan for how we meet this challenge on how we diversify our tax base.

The Irish Fiscal Advisory Council reminded the budgetary oversight committee this morning that the programme for Government commits to service improvements, while, at the same time, ruling out any changes to income taxes. That is a third of the total tax system, in terms of value, ruled out of financing our recovery and development in the coming years. We know economic growth will do some of the heavy lifting but not enough to deliver even on the existing service delivery commitments in health, education and so on that the Government has agreed, let alone any future commitments that might arise over the next couple of years.

A grown-up conversation needs to be had on tax and PRSI. Even organisations like IBEC, the primary representative of employers and business, is up for that debate. This is a debate, however, that the Government is incapable of having and certainly unwilling to have. Refusal to take this on, along with the question of designing effective wealth and asset taxes, will come back to haunt this country. It will also lead to questions over the sustainability of the Government's own plans for economic management and social investment going forward.

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