Gerald Nash (Louth, Labour) | Oireachtas source

I am pleased to speak in support of the establishment and the principle of both the future Ireland fund and the infrastructure, climate and nature fund. It is a principle that we agree with the Government on. The fact we are establishing funds of this nature is something that would have seemed simply beyond us just a few short years ago. Fifteen years ago, the economy of our country was surrendered to the troika. It was a shameful time for this Republic and the scars of that experience still run very deep indeed. As a state, we were reduced, because of the recklessness of some of the Minister, Deputy McGrath's Fianna Fáil predecessors, to going cap in hand to funders of last resort. The wrong-headed neoliberal agenda then in serious vogue across the world sought to punish the Irish State and its citizens for the sins of the small governing class who governed us. The price attached to the bailouts, as we know, was stringent and it came at a societal cost, a cost from which the country has yet to truly recover.

Progressive parties like ours across Europe and the world roundly lost the argument on what should have been done at that time but was not done. The argument was for public investment to counter the fall-off in private investment, a countercyclical approach where money is pumped into economies to support jobs, business, consumption and public services or, in other words, the kind of response that multilateral organisations and governments across the world agreed on in terms of the response to the pandemic.

With the ongoing and precarious windfall corporation tax receipts, it is the responsible thing to create wealth funds and invest in addressing and preparing for the very obvious challenges of the future. The wealth we have generated now simply was not envisaged a few short years ago and, to a degree, a significant amount of it has all the hallmarks of windfall receipts. Those resources must be deployed sensibly, innovatively and in an evidence-based way. Of course, the idea that we secure a fund to ensure we have resources available to input into the economy in a countercyclical fashion is the right thing to do and our recent experience should tell us that.

I first want to speak about the challenges we have as a society and an economy, with a focus on several key transitions and how these transitions are funded and managed. It seems to me the idea that the future Ireland fund cannot be utilised until 2040 is absurd and, to a degree, irresponsible and deeply conservative given the challenges we have at the moment.

The Labour Party is unique among the Opposition parties in that last August we published a policy paper on the establishment of a national wealth fund for Ireland and how that fund could be best put to use to create an Ireland that works for all. We have one chance to get this right, and future generations will not thank us if we lack ambition or give in to short-termism and fail to address the three major transitions facing our population over the coming years. I mentioned three but there are more, and I will reflect on that later on my contribution.

I want to set out a positive argument for a national wealth fund and what it could it be used for, but I am concerned that the Government has, to a degree, framed the fund in a negative and passive way, as nothing but a fearful reaction to the potential drying up of the current boom in corporate and windfall tax receipts. The Labour Party's view is that we need to make a positive case for how a national wealth fund could benefit our people. Its potential to transform our society is boundless. If established and used correctly, a national wealth fund has the potential to seriously address the major transitions of climate change, an ageing population and the implications of these on pensions and healthcare, as well as the onward march of digitalisation that need to be addressed.

We can also use the fund to address regional imbalances in infrastructure and industrial development across the country, and ultimately pave the way to making sustainable progress towards a fairer and more prosperous Ireland. We in the Labour Party take a much longer term view than the Government is taking with this Bill in terms of the return on investment from the fund. The fund should be based on taking at least a medium-term, if not a long-term, view on the return on investment. The fund should at least envisage not only what it might achieve by 2030 but by 2050. These dates coincide with major commitments under Ireland's climate goals but will also see the other major transitions in the digital economy and demographics well advanced. The Labour Party advocates what we describe as a triple bottom-line approach to assessing the investments the fund will make, with each investment judged on its environmental and social impact alongside its financial performance. Seeking to maximise social and environmental outcomes should be a priority of fund investments, not just maximising returns. To a degree, the legislation that has been published address some of the concerns we have.

An immediate concern, which was mentioned earlier on, is Ireland's housing crisis and housing affordability crisis. An obvious use for resources from the fund would be to radically increase the supply of public housing over time. We know that housing is as much an economic challenge now as it is a social imperative. In the context of Ireland's binding obligations to reduce carbon emissions, we know the European Commission will impose annual fines of hundreds of millions of euro if Ireland fails to meet its climate targets. As such, investment in environmental outcomes should take account of these potential fines when it comes to the cost-benefit analysis being done in the Department. The fund management should adhere to high ethical values which should be rigorously enforced. It must not invest in fossil fuels, as the Minister outlined earlier on. It should not invest in the arms industry, in the occupied territories or other unethical activities. The Minister outlined earlier on the ESG principles along which the fund is anticipated to operate.

As climate change is a global issue, increasing investment in emerging countries should be examined as one role for the wealth fund, consistent with Ireland's overseas aid commitments and sustainable development goals. A regional development commission should be established with a clear and time-limited mandate to come up with recommendations for regional development in a sustainable fashion across different local authority areas. In our view, local authorities should be grouped together for the purpose of this exercise, with regional development investment being delivered via one authority in every three or four using the shared services approach. This is the framework within which the vision for this fund should be considered. The recommendations of the commission should include how to develop medium-sized enterprises within the regions as part of a move away from our famed over-reliance and overdependence on foreign direct investment. In that way, there are also potential benefits to the all-island economy.

On energy transition, measures such as upgrading the national grid, developing North-South energy links and building electricity storage facilities should be implemented to allow us to reach our commitment of a net zero energy generation capacity by 2050. The transitional period might require efficient power stations to fill the gap between the closure of the old and the building of the new, but all of this should be clearly timetabled, with an end date as well as a start date for the transitional arrangements. What the transition looks like, what it involves and when it will end is sometimes missing from the Government's narrative. By definition, a transitional arrangement does not last forever. We need to be clear regarding the timetable. There are areas for investment where Ireland can reduce carbon emissions faster, avoid climate fines and improve the quality of life, including solar roll-out, climate change adaptation measures like flood defences, and advanced construction techniques for house building.

Regarding the digital transition, one of the three important transitions we are dealing with, at present, there are 1.3 million adults in Ireland either not using the Internet or doing so with below basic digital skills, including 670,000 people under the age of 60 and 630,000 aged 60 or older. For the next 15 to 20 years, there will be a significant cohort of people not able to safely and confidently transact online with the State. We cannot leave anyone behind. As such, alongside investing to achieve the future plan of 90% of public service transactions to be done online, there is a need to invest in a transition phase where online and off-line transactions, including by phone, post and in person, must co-exist, with everyone able to access goods and services, including public services, on an equitable basis. To date, there is a lot of description of the planned future, but very little realistic depiction of how we get there and how we make that transition in a way that is credible and fair.

Regarding the demographic transition, the Government appears to assume that current costs for the State pension, healthcare and so on will simply be multiplied by a growing number of older persons. It also relies on the outdated and ageist dependency ratios to underpin its analysis, which are neither realistic nor justifiable, in our view. This is a counterproductive way to envisage the future. Instead, the future State must be one where unit costs for the healthcare of older persons are reduced, which is why there should be a detailed model of the transition, informed by the policy of Sláintecare that we all agreed on in this House a number of years ago. For example, during the next 15 to 20 years, we must achieve fully interoperable electronic patient records across the healthcare system, free of charge primary care, a significant reduction in reliance on hospitals for non-life-threatening injuries and ailments, a comprehensive system of home care provision so people can age well in their communities, the building of appropriate retirement village-type housing stock, supported stock within existing communities with older residents, and so on.

Measures to overcome the socioeconomic determinants of poor health and health inequalities must be addressed alongside individual behavioural interventions. For example, the terms of reference of the long-awaited commission on care should include a role for investment and measures to develop the transitional phase towards the future vision of healthy ageing, the option of a longer working life, and more equitable and inclusive longevity.

Based on all I have said, it should be obvious how a national wealth fund could achieve significant social and environmental outcomes, alongside significant financial returns, by investing in the transitions that must be developed and implemented between now and 2050. A national wealth fund can also be used to address market failure, such as in housing, by increasing the level of public housing. The energy transition can only happen if there is sustained investment and subsidy from the State to encourage the development of wind and solar energy and storage and other infrastructure for a low-carbon energy system, alongside structural changes to our transport system, such as investment in railways. This would mean the public and private sectors working together for the same aim. The digital transition will be held back for years or will deepen inequality unless there is investment in the development of digital skills in the population among consumers as well as workers, alongside improvements in access to broadband and the affordability of digital devices. The demographic transition will require the development of new hospitals and other health and care facilities. Even more, it will require a national transformation in health knowledge and healthy behaviours, which can only be achieved if the investment is in place to overcome structural and systemic factors that lead to poor health outcomes.

The national wealth fund is an opportunity to improve the quality of life for everyone. When I talk about everyone, I mean everyone on this island and the quality of life of all citizens on this island. Our aspiration held by most of us in this House is towards a united polity on this island, informed by the principles of John Hume. Last month, the Labour Party published a policy position on that very subject.

6 o’clock

We made the point that we need to make the appropriate preparations towards that goal. That is the responsible thing to do. There has been much debate in recent days about the cost of uniting this polity into one jurisdiction. In the policy document we published last month we set out very clearly how we would seed fund, if I can use that description, the reunification project in a responsible and prudent way, but also in a way that works, using and deploying our new-found wealth to do so.

When the outline proposal for a €3.15 billion climate component of the Government's proposed €14 billion infrastructure, climate and nature fund was published, I said that it needs to be markedly increased. There needs to be a renewed vision if we are to have any chance of meeting our climate targets. I stand over that and nothing in this Bill or the narrative around it tells me otherwise. Thankfully we have had significant emissions reductions in recent years but in truth, we have a very long way to go to get to net zero by 2050. We know from the Climate Change Advisory Council that so many ambitions simply have not been met by actual actions. As it stands, we have pretty much already reached 50% of our emissions ceiling out to 2030. The climate crisis is the existential threat of our time and the time for modest steps and incrementalism has long passed. In the Labour Party's policy document on a national wealth fund published last summer, to which I alluded earlier, we set out how our wealth should be used to fund the transition phase and how that phase should be time-limited. We outline how this form of State investment, allied with upgrading the national grid, the potential for direct State investment in solar and offshore wind, and a continued focus on advanced construction methods and climate change adaptation measures, should form the cornerstone of any Government initiative on how we deploy our windfall corporation tax gains. That would be transformational.

There are real questions for the Government to answer on the design of this fund. The legislation has been published, but I still have those very same questions around design and implementation. Why, for example, has the Minister set a maximum drawdown of €3.15 billion for climate and nature up to 2030 from a total fund of at least €14 billion? A sum of €14 billion was the original vision for the fund but that has now changed. There is now no limit in relation to the overall cumulative value of the fund. Where is the evidence to back up the decision on the €3.15 billion? Why was this figure decided before we knew what the review of the outdated 2018 adaptation plan, which is what it is based on, has to say? Why has the Government decided that the fund cannot be tapped until 2026 when the urgent demand for additional investment in mitigation measures is now? Ireland and the world simply cannot wait until 2026. The maximum of €3.15 billion set aside does not come close to meeting the extra expenditure of between €1.6 billion and €3 billion per year that the Fiscal Advisory Council, in a separate report last year, said is needed to assist farmers with the transition as well as for retrofitting and other critical supports. One thing that really troubles me is that it is still unclear that the fund, from a climate point of view, should only be used for additional climate and mitigation spending. The funding in general terms, on the current and capital side, should always be, first and foremost, organised in the normal way in terms of the fiscal and budget planning process, investment in climate and so on. The €3.15 billion on climate, ring-fenced in the context of the climate infrastructure fund, should very clearly be about additionality, not day-to-day spending. It should not be the case that it is being dipped into to make up for shortfalls in day-to-day spending and annual budget commitments.

The Labour Party has consistently argued that the focus for spending our excess corporation tax revenue should prioritise the transition steps we need to complete to get to our legally binding targets and a carbon-free Ireland. We were never under any illusion that this would not demand unprecedented levels of State investment, given the challenge that we face. We set that principle out in the document we published last year when we outlined our priorities as to how we would deploy additional windfall business tax resources. While it is welcome that this principle has, up to a point, been conceded by the very idea that this fund will be established, the relatively small amount of money made available to climate compared to the overall scale of the infrastructure fund and the future Ireland fund exposes a worrying misunderstanding of the scale of the action needed from the State.

Regarding section 14 of the Bill, we need to be careful about how we define "designated environmental project". This cannot be done at the behest or whim of the Minister of the day and the thresholds that are set down need to be very clear. Decisions need to be made in relation to the deployment of this fund and what "designated environmental project" actually means. It needs to be based on the very best scientific and environmental evidence. We cannot have Ministers in the future greenwashing pet projects with public money. The legislation is replete with provisions on the requirement for Dáil resolutions to draw money down from both funds or, indeed, to pause payments into the funds. There needs be proper parliamentary oversight of this, given the importance of these funds for our future. We need to avoid the funds being used as playthings of future governments of whatever composition. While it may be constitutionally difficult, does the Minister believe, given the significance of this and the amount of money involved, that a case could be made for a double-lock arrangement whereby decisions on the funds, in terms of Dáil resolutions, could only be approved by a supermajority of members, by 60% or 66%, for example? I appreciate that may be constitutionally difficult but it is worth exploring to ensure we do not undermine the fund or compromise it politically in any way. I am also hoping that the functions of the Fiscal Advisory Council, as laid out in Part 4 of the Bill, will be taken seriously when it comes to the obligation to be placed on future governments to seek the advice of the council on the extent to which fiscal deterioration informs decisions around reduced contributions to the funds.

We welcome the political decision that was taken to establish these funds. We understand the importance of them and support the principles underpinning them. The Labour Party looks forward to bringing forward amendments on Committee Stage to enhance the robustness of this legislation.

See this speech in context