Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I very much welcome the opportunity to speak on the proposed future Ireland fund. I will be sharing my time with Deputy Whitmore, who will focus on the infrastructure, climate and nature fund. In principle, the Social Democrats support the creation of a fund to address the future costs associated with an ageing population. However, I think we would have to question the wisdom of setting aside such a significant amount of public funds for the future without adequately addressing the country's current service and infrastructure deficits. Surely this should be considered on an equal basis with future needs; after all, failing to address these issues now will have major implications for future costs. There is no doubt that a sustainable funding stream is needed for future pension costs, but so, too, are increased homeownership rates, yet this Government is found wanting in that regard. Both of these things - pension income and housing status - are connected. Research conducted by the ESRI found that only 65% of those currently aged 35 to 44 are likely to be homeowners by retirement, compared to 90% of those currently aged 65 and over. This presents a major problem for future retirees as well as for the State. According to the ESRI, reductions in homeownership of this magnitude could increase the proportion of older people living in income poverty on an after-housing-cost basis from 14% at present to as high as 31% in the future, meaning almost a third of pensioners living in poverty. Inevitably, this would create the need for greater income and rental supports, placing a huge burden on the Exchequer. That is why a radically different approach to housing is needed now. By continuing with failed housing policies, this Government is just storing up problems for the future.

The affordability issue relates to the current disproportionately high cost of buying a home and also, of course, the lack of affordable rental homes with security of tenure. For every home bought by investment funds, another household is denied the security of homeownership. Considering the lack of security of tenure for those renting, that will all result in a higher dependency levels on the State.

I am equally concerned about the commodification and financialisation of health and social care. Increasingly, we are seeing wealth extraction being facilitated, and even encouraged, by the State in the provision of health and social care services. International investment funds own large swathes not only of our housing stock but also, increasingly, our health infrastructure. This is a very dangerous position to place the State in now and into the future. Ultimately, this outsourcing to private providers weakens the public sector and puts a squeeze on the quality and quantity of services. This is particularly evident in regard to social care services which will face huge increases in demand as our population ages. At a time when we should accelerate Sláintecare reforms, the Government is instead knowingly underfunding the health service. This has seen the return of the HSE recruitment embargo, which will pave the way for further outsourcing. That is inevitable. Even the State's fiscal watchdog, the Irish Fiscal Advisory Council, said that this year's health budget was not sufficient to adequately meet entirely predictable demographic and inflationary pressures. Outsourcing, of course, leads to lower incomes for employees as it depresses wages, job security and, clearly, pension entitlements. When decisions are being taken about outsourcing so many of our public services, there is a short-term benefit in terms of cost but, inevitably, there are significant long-term costs as there is more dependence on the State.

In terms of fiscal policy, the continued erosion of our tax base is deeply concerning. Given the volatile and uncertain nature of corporation tax receipts, Ireland simply cannot continue to narrow the tax base, not least if we are to meet the demands of an ageing population in the future. The Ireland future fund, while welcome, is no substitute for a sustainable and progressive tax base. Of course, the Minister knows this. In 2022, the Commission on Taxation and Welfare's key message was that Ireland faces major fiscal sustainability challenges and the overall level of taxation as a share of national income will have to increase. When will this reality be faced up to by the Government? It will certainly have to be faced up to by the next government.

I would like to turn to pensions, an issue which is central to this debate. While the proposed fund seeks to assist in funding future pensions, we should not overlook the impact of planned pension reforms which are already in the pipeline. In particular, there are concerns about the proposed phasing out of the yearly average approach to calculating pension entitlements, a system which has existed alongside the total contributions approach since 2019. While the current approach is not perfect, the likely repercussions of solely using the total contributions approach are very concerning. Currently, those falling short of 48 weeks of contributions get a lower pension, but the reduction is not proportional to how short they fall in terms of contributions. This more generous tiering reflects the understanding that a heavy penalty for falling short of PRSI contributions could have severe repercussions for workers, especially those who are entirely dependent on the State pension. An approach based solely on total contributions results in reduced pension levels because it is strictly pro rata. This can only lead to increased levels of pensioner poverty in the future. The Social Democrats call on the Government to amend the planned reforms by adjusting the total contributions approach. In my view, 40 years is simply not achievable for a huge cohort of workers, even with the prospect of credited contributions. We know that the State pension is the single greatest reliever of old age poverty in Irish society and that should be the primary consideration in this debate. We need to bear in mind that in 2019 the CSO estimated that 85% of people aged 65 and older would be living below the poverty line if it were not for the social welfare system.

I want to speak briefly about the kinds of investments which will be made from these enormous funds. It is important to state that it is not sufficient to merely have a framework for the kinds of investments which the NTMA will be allowed to make. I urge the Minister to set down in the Bill the kinds of investments which would not be acceptable from a public point of view. I refer to those in unethical industries, including those which threaten human rights, damage the environment and are injurious to public health. Given the huge pressure from commercial interests, it is important that those precluded areas for investment are set down in the Bill.

Before I conclude, I reiterate the call from the Social Democrats for increased investment in what are undoubtedly inadequate public services. Without this, the State will not be fully prepared to meet the funding pressures linked to demographic changes now and in the years up to 2040. We need a twin-track approach which deals with the shortcomings in services now and puts aside those elements of corporation tax which can be classified as windfall for the future. Those approaches are desperately needed for the future.

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