Tuesday, 9 November 2021
National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019: Motion
That Dáil Éireann authorises the Minister for Finance, pursuant to section 6(1) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019 (the ‘Act’), not to pay the prescribed amount (€500,000,000) under section 5(2) of the Act into the National Surplus (Exceptional Contingencies) Reserve Fund for the year 2021 having regard to the fact that in accordance with section 6(3) of the Act the Minister is satisfied that, by reason of the exceptional circumstances posed by the public expenditure undertaken to remedy or mitigate the impact of the COVID-19 virus, the payment of the prescribed amount would place an undue burden on the public finances.
The motion relates to section 6 of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019, which established the National Surplus (Exceptional Contingencies) Reserve Fund, more commonly referred to as the rainy day fund. The Act was commenced on 31 October 2019 and the fund was subsequently seeded with €1.5 billion transferred from the Ireland Strategic Investment Fund, ISIF, on 15 November 2019.
Today, I am seeking the Dáil's endorsement for a motion not to transfer the €500 million contribution for 2021 into the National Surplus (Exceptional Contingencies) Reserve Fund. Deputies will be aware that, under section 5(2) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019, the Minister for Finance is required to make a payment from the Exchequer of €500 million to the rainy day fund every year from 2019 to 2023. The Act also provides, under section 6, that in any given year the Minister for Finance may make a proposal to the Dáil not to transfer the €500 million contribution into the fund. I am proposing the motion that the Minister for Finance not transfer €500 million into the rainy day fund in 2021, following Cabinet approval on Wednesday, 27 October last.
The motion is before the House because the Minister for Finance is satisfied that, by reason of the continuation of the exceptional circumstances posed by the pandemic and the consequential public expenditure undertaken to remedy or mitigate the impact of Covid-19, the making of the payment of the prescribed amount would place an undue burden on the public finances. As everyone in the Chamber is aware, 2021 has seen the continuation of unprecedented challenges to the State in terms of the Covid-19 pandemic. As anyone would expect, the Irish people and, for its part, the Government acting in their name, have continued to respond to these challenges with steadfast resolve while deploying massive resources. The last one and a half years have been extraordinarily difficult for all, with disruption to family life, the pain of losing loved ones and the impact of successive, but necessary, public health restrictions all hindering, in an unprecedented way, normal economic and social life.
Despite this, throughout the pandemic, we have all witnessed the incredible resilience of the Irish people. Ordinary people, business owners and especially our front-line workers have risen to the challenge in an extraordinary way. In particular, I am sure that everyone in the Chamber will join me in acknowledging all those who supported and partook in our vaccination programme. It gives me an enormous sense of pride to say that this vaccine programme has been one of the most successful in the world. It is the key reason we are returning to greater degrees of normality. Given these facts, we all owe a huge debt of gratitude to the staff and volunteers involved across the relevant agencies.
The Covid-19 pandemic has clearly highlighted the role of Government in supporting both our economy and society. While the response from the Government was unparalleled, with over €48 billion provided over three years, it was also completely necessary. Approximately €41 billion of this, or nearly one fifth of national income as measured by GNI*, was made available in 2020 and 2021. This included direct public expenditure, tax expenditures and “below the line” supports such as loans and guarantees, including funds allocated for 2022. Through the pandemic unemployment payment, PUP, the employment wage subsidy scheme, EWSS, and the Covid restrictions support scheme, CRSS, approximately €17.5 billion has been directed to individuals, families and businesses. These supports worked and showed that we responded in the right way and at the right time. Ireland's ability to respond was strengthened by the solidarity of our European Union partners. We must also acknowledge that our ability to respond was made possible because we managed our affairs well in better times in order to be able to give support at a time of great national difficulty.
Thankfully, we have now entered a new phase where we intend to recover from the pandemic, restore our public services and living standards and repair our public finances. Earlier this year, and very positively, we passed a crucial milestone with the return of many people to workplaces. In many cases, they were doing so for the first time in 18 months. As the recovery increasingly takes hold and citizens get back to some level of normality, the Government must remain focused on our elevated debt levels. At the end of 2020, the stock of Government national debt stood at €217.9 billion, an increase of almost €14 billion. General Government debt as a share of GDP increased to 58.4% of GDP in 2020, an increase of 1.2%. For 2021, it is projected to be 55.2%. General Government debt to GNI*, which is viewed as a more appropriate indicator of the repayment capacity of the economy, increased to 104.7% in 2020. This is an increase of 10% and it is expected to increase again in 2021, reaching 106.2% in 2021.
Public finances can absorb this shock, letting debt rise in order to provide support to the economy, but the debt-to-income ratio must be put on a downward trajectory once circumstances allow. Market participants have given Ireland the benefit of the doubt as a result of the prudent fiscal policies implemented in recent years. Nonetheless, Ireland's public debt-to-income ratio is among the highest in the developed world. By 2024, our stock of public debt will reach just under €240 billion, or a quarter of a trillion euro.
The summer economic statement set out a pathway to meet the core objectives set out in the programme for Government. The strategy was reaffirmed by budget 2022 in October and involves investing in the economy and society and reducing the deficit in order to underpin the sustainability of the public finances. In general terms, the pandemic has entered a new phase, so fiscal strategy must evolve along with it.
The strategy involves three strands: pandemic-related supports will be unwound as appropriate over the course of the remainder of 2021 and during 2022; expenditure will be targeted in priority areas such as capital expenditure in support of climate action; and budgetary policy will be anchored within a medium-term framework via an expenditure rule. The expenditure rule involves limiting core spending growth to around the same level of trend growth in the economy via fixed expenditure ceilings. The headline deficit will be allowed to fluctuate while keeping the ceilings fixed. The strategy will allow the Government to return the public finances to a stable path, while maintaining key investment in public services, particularly public capital investment. Vitally, by next year, the country will only be borrowing for capital expenditure purposes.
The most recent Exchequer returns show a deficit of €7.4 billion was recorded in October, representing an improvement of some €4.2 billion on the same period last year, driven by increases in tax revenue. On a 12-month rolling basis, which is a better indicator of the trend, the Exchequer recorded a deficit of just under €8.1 billion. Tax revenues of €50.9 billion were collected to the end of October, ahead of target by €3.8 billion, or 8.1%, and up by €8.3 billion, or 19.6%, on the same period last year. Income tax and corporation tax continue to perform well, driven respectively by the reduction in unemployment and rising wages, as well as high corporate profitability. Moreover, VAT receipts and, to a lesser extent, excise duties have recovered strongly as the economy opened up.
Total gross voted expenditure stood at €67.5 billion to end-October, which was €2.5 billion, or 3.5%, below profile. The majority of this relates to an underspend in capital expenditure, driven by the extended shutdown of the construction industry in the first few months of this year. Nevertheless, total gross voted expenditure to the end of October was €2 billion ahead of the same period last year, driven by increased spending in the Department of Social Protection, primarily due to the ongoing cost of the PUP and EWSS pandemic support schemes.
The summer economic statement projected that the general Government deficit would be around €20 billion this year. Given the significant over-performance in taxes and the underspend in voted expenditure versus profile, this projection was revised downwards in budget 2022 to around €13 billion, or just under 6% of GNI*, or 3% of GDP, this year.
In conclusion, given the likely continuing impact of Covid-19 on the public finances, it was clear from earlier this year that the making of the planned €500 million annual contribution to the rainy day fund was unlikely and this was signalled in the April 2021 stability programme update and the summer economic statement. As Deputies will know, the rationale behind establishing the rainy day fund in 2019, which was the subject of broad support across the political system, was to accumulate funding that could be deployed in the event of an adverse shock to the economy.
The establishment of this fund and its availability for drawdown in support of budget 2021 in October 2020 have proven to be correct decisions. The drawdown receipt by the Exchequer was used to offset funding requirements arising from budget 2021 and the need to support the increase in Covid-19 related expenditure. It was important that the fund was there to support the Government's Covid response. Crucially, using the rainy day fund meant that the State was able to provide for additional Covid-19 measures without having to borrow more, saving the burden of repayment or refinancing costs on future generations. This motion not to pay the annual €500 million contribution into the rainy day fund, while not preferable, is necessary in order to ensure that the Exchequer has access to funds when they are most needed. The Minister for Finance wants to be in a position to add funds to the rainy day fund at some point in the future in order to be in a position to deal with potential future economic crises but to do so as the public financial impact of the pandemic continues does not make sense. I commend the motion to the House.
This motion authorises the Minister for Finance, in accordance with section 6(1) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019, not to pay the prescribed amount of €500 million into the national surplus reserve fund for 2021. This relates to the so-called rainy day fund which was established by Fine Gael to burnish its image as a prudent manager of the public finances and which was championed by Fianna Fáil in an attempt to restore trust in its ability to manage the public finances after it torpedoed the Irish economy a decade ago. I support the motion. It would be foolish to divert resources into the fund when we still face the challenges posed by the pandemic, while our hospitals and patients suffer unacceptable waiting lists, while the housing crisis deepens and while climate breakdown confronts us. Sinn Féin will support the motion.
It should be noted that despite being established in June 2019 this fund never really got off the ground and it lies empty. Some €1.5 billion was transferred from the Irish Strategic Investment Fund, ISIF, in 2019 and spent in response to the pandemic. We should not fool ourselves or anyone else for that matter; that money could have been spent directly from the ISIF without being pit-stopped into the so-called rainy day fund. Under the legislation, €500 million was to be transferred into the fund each year from the Exchequer, including in 2019, 2020, 2021 and 2022. No money was transferred from the Exchequer in 2019, 2020 or 2021. There has always been something more pressing for which the €500 million of resources has been needed and so the fund is empty.
When the legislation was first debated I said that it was already raining. We have a housing crisis that is damaging the fabric of our society and the competitiveness of our economy. It is also burning, with a climate crisis that requires significant supply side investment to provide alternatives for low and middle income households. It was always my suspicion that the rainy day fund was more of an electoral gimmick than a serious innovation in fiscal policy. It was established shortly before a general election and was often touted as a great example of prudence together with a budget surplus in 2019. Every time we have debated these motions since then the two have been mentioned together by the Minister for Finance or by Government Deputies. The surplus that year was achieved due to an unexpected bumper receipt of corporate taxes, not as a result of budget policy. Boasting of a surplus at a time when the housing crisis was deepening is not an example of sound fiscal policy but of poor economic management. The housing crisis is after all a result of the fiscal and economic policy of this and previous Governments.
Sinn Féin will support this motion. We suspect that the Minister for Finance will ask us to do the exact same thing as in this motion next year and that the fund will still lie empty and idle. Given the debate this allows, I mention fiscal policy more broadly. The object of same should not just be to reach a certain number to one or two decimal places and then to wave that number around to the electorate in the hope of admiration. The object of fiscal policy must be to achieve economic and social outcomes. In too many areas the economy is failing. The housing crisis is damaging lives as well as our competitiveness. Childcare costs are hurting families as well as female participation in the workforce. A neglect of research, innovation and higher education has not only restricted employment opportunities but it has hampered the productivity of indigenous enterprises. In those areas we must do better and we can do so provided we have the right Government.
Given the exceptional circumstances in which we find ourselves arising from the Covid pandemic, as my colleague, Deputy Doherty, outlined, Sinn Féin will be supporting the motion. A large volume of public expenditure was required to ameliorate the impact of Covid-19 and this was necessary to prevent the worst. This means that the €500 million annual contribution for transfer from the Exchequer to the national surplus reserve fund, or the so-called rainy day fund, to be made this year will place an unnecessary burden on the public finances and as per section 6(1) of the Act the Minister for Finance is allowed to make this proposal to avoid making the annual €500 million contribution into the national reserve fund. The Minister for Finance is right to do that. It is obvious that it would be inappropriate and irresponsible to divert badly needed resources away from fighting the pandemic and it would be a needless risk to do such a thing, especially when case numbers are rising in our hospitals and when our public services are under huge pressure.
It is worth mentioning that when this so called rainy day fund came into existence Sinn Féin voiced concerns on it. When it was proposed and introduced in 2019 my party submitted amendments so that the fund could be used for the purposes of investing in housing, infrastructure and climate actions. At that time our amendments were either ruled out of order or opposed. It is said that hindsight is 20/20 but it should be obvious that the then Government was wrong to do that at the time. The housing crisis has become worse, our public infrastructure has fallen further into disrepair and our climate targets seem further out of reach.
We were so vulnerable going into this pandemic because of our infrastructural deficit which is due to years of underinvestment. The Government's national development plan clearly acknowledges that we need to make a massive infrastructural investment, particularly in the area of green investment. From our current vantage point it seems that these funds should be allowed to be used for these purposes. When this legislation was introduced the then Government also allowed the fund to be used for the purpose of a capital injection into the banking sector, something we found objectionable. Given the amount of losses the banks could carry forward, meaning they would be paying tax for decades, this seemed like a poor use of funds. Moreover we are seeing an exodus of banks and the Government continues to sit on its hands in this regard.
We know the rainy day fund is empty. The money that had been transferred to it from the ISIF had been spent fighting the pandemic but it was not applicable for the other crises we face. Our housing is in a worse state than it was when the fund was set up, we have longer waiting lists and in recent weeks we have seen over 700 people on trolleys in our hospitals in the western region after the Government told us time and again last year that it was putting huge investment into our hospitals. What has changed for those people who see family members lying on trolleys night after night and day after day? We need to make a serious investment if we want to reach our climate targets. That means we need investment in our public infrastructure and that we cannot continue in a situation whereby the Government is cutting the number of buses. We need more buses and more public infrastructure. People are struggling to buy a house or to cover the cost of rent and thousands are languishing on waiting lists. It seems that for those people when it rains it pours but it has been pouring for a hell of a long time and it continues to do so. We need to ensure that the necessary investment is made in all aspects of our infrastructure.
I welcome the opportunity to speak on the motion. The so-called rainy day fund was established in 2018 and for reasons that are fairly obvious at this point in time, only one instalment of €500 million was paid into the fund. That was in 2019. The right thing to do was to use that €500 million to help fight the pandemic and to support jobs and business through the most difficult of years. We are, again, as the House knows only too well, in very dangerous territory and it is right that no money is paid into the fund this year either. We are all agreed, at least for this year, that there are better ways to allocate this money in 2022 and, indeed, more urgent matters that we need to address as a society as we battle through this difficult time.
When the legislation to establish the fund was taken by this House, the Labour Party opposed it. We opposed also the motion to direct the first tranche of €500 million into the fund in the first year of its operation in 2019, not because we do not believe that we should budget responsibly and organise our economic affairs sensibly. We opposed the rationale of the fund in the first place because we believe there should be no need for it if the economy is managed well, sustainably and productively.
It would be wrong-headed and unconscionable to set aside in one year the kind of money that could build several thousand homes when so many of our citizens need the security of a decent long-term roof over their heads. I appreciate the view of the Minister of State, Deputy Fleming, and the Minister, Deputy Donohoe, that the idea of a rainy day fund is in the interests of the prudent management of the economy. That is their perspective and they are entitled to hold that perspective, but let us put the experience of 2018 and 2019, when the fund first came into being, in some kind of context. That was a time when €500 million was being funnelled into the fund yet the 2016-2020 Government, supported by the Minister of State, Deputy Fleming's party, was paying for cost overruns in the HSE with corporation tax windfalls. Similarly, massive sums of money not budgeted for had to be found to fund cost overruns in the national children's hospital project. Protecting the economy and our citizens from black swan moments is in the long run better achieved by making investment in public goods such as housing, education, childcare, training and primary healthcare now, not by putting half a billion euro of taxpayers' money a year into an account no matter what the weather. It is public investment, first and foremost, that will prime our economy for the kind of sustainable growth that can make our society more resilient to the kind of shocks we experienced in 2020 and 2021. The idea that we pumped half a billion euro into a fund for the future while at the same time seeing cost overruns get out of control before our very eyes on many high profile public projects did not sit well with me or with the general public. Quite rightly, it drives people mad to see how the State is constantly on the hook, low-balled and taken for a ride by big contractors for overruns on big projects such as the children's hospital.
If this Government really wants to see the State better insulated and better prepared for all eventualities, a good place to start is by ensuring better value for money and oversight in real time of public spending - something that we do not seem able to achieve in this country. The Minister of State could also agree to raise additional sustained revenue to build up our public services through targeted wealth and asset taxes on those who can most afford it. Tax seems to be a dirty word for this Government but we need to talk about tax. Mark my words, this is something we will have to return to very soon. This would bring real sustainability to the public finances and make Ireland fairer and better prepared to withstand any future shocks than any rainy day fund might.
I appreciate the opportunity to contribute to this important motion. I thank the Minister of State, Deputy Fleming, for his introductory remarks. I appreciate the contributions of all Deputies opposite, as we repeat a discussion that was held 12 months ago. At the time, I stated my concern that while this is an understandable move, it is a disappointing one because I fundamentally believe the creation of the rainy day fund was sensible even though we did not get the full chance to see the worth of it before, unfortunately, that rainy day fund was drawn down. We have seen how important it was to have.
When initially this was thought up, the main threat envisaged was a no-deal Brexit and the impact that would have on our economy. No one would have dreamed back in 2018 of the impact of a once-in-a-century global pandemic the likes of which we are still living with. If we look at the response to that global pandemic, what has been achieved and what has been put in place over the past 18 months, it is testament to the sound financial footing that the State was in. We see the co-ordinated efforts between European Union member states to realise new capital through the formation of eurobonds to pool together in order to procure vaccines at the best possible price was downright good decent sense about economic planning. We look at the State's commitment to tackling the Covid response and the fact it was able to draw on various financial tools and the sound economic footing the State's coffers had been brought back into. It is something for which the Government, and particularly the Minister, Deputy Donohoe, who cannot be here with us, deserves credit.
With regard to the preparation for Brexit and the response that we have seen on a domestic level in preparing for Brexit in terms of investing and diversifying, and the collective European Union approach in the Brexit adjustment reserve fund of which Ireland has achieved the lion's share, there are practical implications for this. We see one of those practical implications today, of all days, with €70 million announced by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Varadkar, and the Minister for Agriculture, Food and the Marine, Deputy McConalogue, directly for the agrifood sector to allow our producers to diversify in markets. I remember, way back when, talking about Brexit debates. We realised that 86% of our cheddar cheese exports were going to Great Britain and how that simply would not be sustainable if we were trading less and less with the British economy. That is why we are seeing this diversification announced today and are seeing it being realised. Government talked about it but Government actually backed-up and is providing the supports for industry to make sure industry can continue to produce high-quality diversified goods for new markets. We are looking at new markets within, but also through, the European Union.
I suppose we have to remember that Brexit, despite the assertions of the current British Prime Minister, is not done. Brexit is not done based on one treaty. Brexit is not done based on one Act. Brexit and its ramifications will be with us for at least a generation. We see, even this week, how that continues to play out.
Much like Brexit is far from done, and it will be with us for many years to come, we understand that the Covid pandemic is far from over. That is not only based on rising infection rates or the pressures on our public health system. If we look at the impact on the economy, so many areas of the economy and, indeed, society simply have not got back to where they want to be. They will not necessarily get back to where they were before and perhaps they can go to a better model. The supports that have been provided for by this Government working with stakeholders and with European Union partners have been so important in keeping those aspects of the economy and society going and ensuring that businesses were able to reopen and get back into the workplace in due course. When discussing this fund and the motion it is important to state that we look to the future. I am heartened by the Minister of State, Deputy Fleming's comments in relation to the overall budgetary and financial outlook for the Irish economy in the coming months and, indeed, years. It apes many of the statements that were made by the Ministers, Deputies Donohoe and Michael McGrath, when we debated the budget last week.
When we are talking about the potential and likely economic growth of the State, it is important we state that although no funds are being put into the so-called rainy day fund by way of this motion, we maintain the option to do that going forward and maintain the commitment that we will work back up the rainy day fund because, despite assertions of others opposite, this is not some sort of image. This is real money that had a real impact on so many lives. This is real money that is needed. It is simply good management. Any household always has a reserve. It is no different with an economy or a society. It is the responsibility of every legislator in this House to make sure that we have a rainy day fund and that when circumstances allow it the appropriate funds are put into this account because it is raining at present and it will be raining again.
Having this sort of sensible economic outlook will underline everything that can be done in every sector of life. It does not take away from capital or current expenditure on the maintenance of our economy and the betterment of society. This is something that provides that guarantee or level of insurance that all of us deem so important. That is why it is not good enough to say that we are deferring payment and bringing this motion to the House, following it being passed by the Cabinet.
We need to hear the commitment in the Minister of State's summing up remarks that the Government will build the rainy day fund back up and prepare for future eventualities.
I welcome the opportunity to speak on this motion. The National Surplus Act came into force in June 2019 to establish the contingency reserve for exceptional circumstances, or rainy day fund. We all agree we are living in exceptional circumstances. It is most definitely raining. The housing crisis this Government is presiding over is evidence of that. In fact, it is a torrential downpour as we can see from the state of the health service. Operations are being cancelled and Covid is not being used as an excuse this time. Waiting lists are getting longer and medical cards, GP and dental appointments cannot be got for love nor money. The health service is in disarray and it is not by accident. The public health service was deliberately run down by successive Governments to make the private health service more attractive. Sinn Féin in government will abolish the two-tier health system favoured by the parties that make up this Government and by the Labour Party. We will put patients first and give our healthcare workers an all-Ireland health service that everyone can be proud of. As Deputy Mairéad Farrell said earlier, when this legislation originally came through the House, Sinn Féin submitted amendments so that the fund will be used to invest in housing infrastructure and climate action. These amendments were ruled out of order or were opposed. Instead, the Government included a section that allowed the fund to be used for a capital injection into the banking sector. Sinn Féin in government will put ordinary workers and families ahead of profits or private companies.
The rainy day fund has turned out to be a bit of a damp squib. By now, we should have €3 billion in it, but it is empty. We need to spend this money wisely. We need to stop funding an over-heated private rental market with HAP and start building public homes on public land. We need to stop pouring money into private hospitals through the National Treatment Purchase fund and start reforming our health system to ensure that it is fit for the 21st century. I sincerely hope that is what happens.
I am happy to contribute to this debate. I do not have any difficulty with the motion in front of us. It would not make sense in the present exceptional circumstances to allocate €500 million to a rainy day fund but it has not made a lot of sense up to now either. Deputy Richmond said that any sensible household puts money away in a rainy day fund but you do not do that when there is a hole in the roof and you need to replace the roof. Essentially for several years now there has been the equivalent of a hole in the roof, whether that is the health crisis, in terms of the capacity of our health service, the housing crisis or many other aspects of the dysfunction within our country. It is not the case that everyone was in favour of this from the beginning.
I notice the Minister of State did not speak at all about his thinking or the Government's thinking about the future of the rainy day fund and what the intention is. To have such a fund is very well where a country has sorted out its public services and its economy is in a very healthy state and its people are all doing well and prospering. In circumstances like that, where there is a surplus, it makes sense but we have not been in that position in this country and it is hard to see us being in that position for the foreseeable future. That is not only as a result of the exceptional circumstances that we are in now. Obviously, the big issue now is the hugely negative impact of Covid on the country and that is the immediate reason for not proceeding with the allocation of €500 million, but we have to ask what questions have been learned from Covid.
I echo the Minister of State’s comments on what has happened in this country over the last two years in terms of the huge level of personal family tragedies and the very significant number of people who have passed away. I echo the condolences to them. There have been more than 500,000 cases now. We think of all those whose lives have been damaged in so many ways. We recognise the huge efforts that have been made by everyone working within the health service, and by those in other front-line jobs in areas such as retail, deliveries and in so many other areas of our society. We think of all those who kept things going, who kept the show on the road, sometimes at huge cost to themselves. It is important to acknowledge that.
However, it is also important to acknowledge the fact that the experience of Covid over almost two years has shown up huge weaknesses in the way we run our country and the Government’s approach to the economy generally and the neglect of so many aspects of our public services right across the board. Some of us have been committed to proper levels of investment in public services throughout our political careers. You have to ask what lessons this Government has learned by the very substantial weaknesses in things such as capacity within our health service, our dysfunctional housing system, the dysfunctional childcare system and the way in which we fund, or under-fund, all levels of our education system. What lessons have been learned? It was very clear that if the country was to survive at all over the last two years that there had to be very significant intervention by the Government in taking over the use of private hospitals, for example, or taking on the payment of salaries for childcare workers. All these things were exposed as being dysfunctional in an emergency situation. There seems to be an attitude that when we get over all of this, we will go back to the old ways of doing things. Clearly that is not sustainable. I would be much more reassured if I heard the Minister of State and other Ministers speak of the lessons that have been learned.
The figure of €500 million is coincidentally the same figure as the Government decided to spend on tax cuts, which are in the main regressive cuts in the recent budget and which was not a very wise way of spending money. I support the motion but let us hear about the lessons that have been learned over the last couple of years.
I thank the Minister of State and his officials for bringing forward this motion. I welcome the opportunity to examine it. I will be supporting the motion which will authorise the Minister for Finance to not allocate €500 million to the rainy day fund for 2021. The action is prudent given the very exceptional circumstances created by the Covid-19 pandemic. A similar motion under section 6 of the National Surplus Act 2019 was proposed last year in the context of the pandemic and in 2019 because of Brexit. Given the international economic environment, returns on investments are minimal and the €500 million will be better spent being invested here in Ireland. That said, the medium-term benefits of building a counter-cyclical fund remain. The macro economic outlook for next year is very positive and in those circumstances I would like to see the payments resume in the future. It is important we prudently set aside funds during the good times for future challenges. We have mentioned challenge of Brexit. Who was to know that something would surpass Brexit? It was the issue of the time, and remains a significant challenge for this country, but then along came the pandemic and really put us to the test. However, the Government moved quickly, and rightly so, at the outset of the pandemic to provide funds. The Minister of State said it required €48 billion to deal with the pandemic and to fund front-line Departments, local authorities and agencies to ensure the continuity of public services, protect incomes and re-imagine the public realm.
The work of officials and staff at the Department of Social Protection in particular should be noted. They reacted overnight, ensuring more than half a million workers had access to pandemic unemployment payment. I also want to acknowledge the actions of Revenue in dealing with companies and all their queries about employees and themselves.
The response of the Revenue Commissioners was exemplary, especially in the early and middle parts of last year, and should be acknowledged. Local authorities also moved quickly to improve the public realm, installing public toilets, bins, outdoor seating, etc., and providing all sorts of other services. I encourage local authorities to retain improvements that have worked and engage in meaningful public consultation, which is key in this regard.
However, now the acute phase of the pandemic has passed - I hope it is behind us - it is important we resume normal procurement practices to ensure taxpayers' money is spent prudently. This is particularly important given the increase in costs for construction projects and services. I join the Minister of State in expressing condolences to those who passed away during the pandemic. This is not all about money. This is about the impact it has had on society, families, workers and businesses across the country. We must remember that when we are discussing finance in this House. I thank the Minister of State and his officials for their attendance today and for their assistance over the past 20 months.
As has already been stated, Sinn Féin will support this motion. As Deputies will know, we rejected the Act after our proposals on housing, for example, were rejected and it was decided the capital injection could be used for banking, the most over-injected, overindulged, perennially pampered sector in the State and one that still pays no tax. Given that we are dealing with a full-blown and unprecedented public health emergency, we need to ensure our hospitals and other public services are as well funded as possible.
We can all see the crisis in our hospitals. At Naas General Hospital, healthcare workers are out on their feet but they keep going. The HSE, in a reply to a parliamentary question, indicated there are over 100 vacancies at Naas General Hospital. From speaking to nurses, it seems the only thing keeping doctors, nurses and healthcare workers going at the moment is the solidarity they show each other. When it comes to the rainy day fund we absolutely agree it is already bucketing down but when it comes to housing, childcare, carers, ventilating schools, supporting people through a just transition and the climate crisis, the monsoon arrived a long time ago. There is a huge amount of work to be done so that we do not create a divide between the climate haves and have-nots. The Minister for Finance took umbrage at the mention of words "undermining democracy" but I can tell the Government that if it allows inequality to take hold, it will present a real danger to social cohesion. People cannot be excluded from transitioning well and comfortably simply due to money.
To return to the issue of housing, instead of looking after the vulture funds and planning punitive roadshows to entice more of them to come here, we should be looking after their prey, the workers in this State who are despairing of ever being able to either rent or buy an affordable home. With all the talk of biodiversity, the vulture is in no fear of extinction in this country. While the vulture funds are allowed a clean sweep, the biodiversity of ordinary people trying to buy houses has collapsed. This biodiversity and habitats disaster is unlikely to be addressed by the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, at COP26 but it is true all the same.
I am equally concerned about our carers, who have suffered hugely throughout the pandemic. Sinn Féin has set a clear path for recognising and assist them. I am all for pupils, teachers and the wider school staff. The State has signed up to the EU buildings directive which would vastly improve ventilation in our schools for health and safety reasons. It is beyond me that this fund is not being used to fast-track funding for investment in design, which is desperately needed. Covid might not be a problem for a rainy day but a rainy season. As a result of diversion, funds are not available for what is essential for the people as opposed to essential for the Government and its preferred projects and sectors. The issue with the rainy day fund is not just money but the priorities for spending that money. That is the difference between the Government and the Opposition. It is about priorities and choices and I hope the Government will make some of the right choices.
Sinn Féin supports the motion. Obviously, the rainy day fund needed to be used for the rainy day we found ourselves in with the Covid crisis. It goes without saying that we are far from through this period. We are still in a very difficult situation. We need to look at the entire way our financing operation works. We need to look at our health system from a point of view of doing all that can be done at this point in time. That entails the use of booster vaccines and ensuring a best-case scenario for contact tracing. I welcome that we finally have some sort of movement on the use of antigen testing. All these tools need to be put in place. We are in a period of living with Covid so we need to do all that is necessary.
Major issues still need to be dealt with, especially from a capital expenditure point of view. It goes without saying we are in the middle of a housing crisis and the only way to get to the crux of the problem is to address the supply of affordable housing. That means providing rental properties, mortgages and council houses. We need to facilitate that provision in any way possible. Unfortunately, there has been insufficient planning to provide what is necessary for people who are suffering.
Sinn Féin accepts that as well as the pandemic, we are also dealing with a climate crisis, an energy crisis and a cost of living crisis. As I have said previously, we need the Government to address those parts of these crises that it can address. The European Union and other bigger players have greater wriggle room than we have for dealing with some of these issues. Turning off the tap in Russia cannot be sorted out by this State. I also accept that we are not sure of what the implications will be if the British Government triggers Article 16 or if doing so would be just another means of negotiating. We do not know to what the end result will be but we need to take action in relation to what we can.
We are talking about huge expenditure on the national development plan and necessary works. I am worried and perturbed that of the €5.1 billion to be spent on roads over a decade, €1 billion will be spent in the first five years. This means the business end will be in the second five years of the decade. However, we have all accepted that we action at the business end on climate change and carbon budgets will also come in the second half of this decade. For this reason, we need to have a more realistic conversation on what needs to be done.
I welcome the opportunity to speak on this motion, which I support. The Government should not transfer €500 million into the national surplus reserve fund in 2021. We are in a period of great crisis. Society, including the business community, has suffered great financial hardship because of Covid-19. Unfortunately, I fear we will feel the effects of this pandemic for a long time to come. In times like this, we need to invest in infrastructure and services. This is not a time for investing in rainy day funds. We invest in rainy day funds so that we will have funds and resources in times of great need. Now is a time of great need. We need to invest in our infrastructure and services. I am calling on the Government not only to suspend payments into the national surplus reserve fund but to use the funds to invest in our infrastructure and services.
Last week in the House, I highlighted the fact that the most recent GeoView report, in 2020, showed there were 92,251 vacant addresses in Ireland. This represents a staggering 4.6% of all housing stock. Surely I am not the only person who sees this both as a problem and a major opportunity.
Many, if not all, of those homes are situated in established residential areas where there are existing services, such as schools, shops, playgrounds and doctors. We are in the midst of a housing crisis.
The Government has continually stated that housing is one of its top priorities. It has also stated that it is willing to listen to all suggestions. This is an immediate answer to many of the housing issues and I just cannot understand why this Government is not looking at it more closely.
This situation requires one thing and one thing only - funding. What better way to use the national surplus fund than to invest it in bringing vacant homes back into the housing stock? Many of these homes just need cosmetic upgrading that will not cost as much as building from scratch and can be brought on stream much quicker. The longer we leave these houses vacant, the longer it will take to bring them back onto the market. From my experience in Dundalk, I know that many vacant homes exist. If you walk through any established residential area, I am sure you will find vacant homes, not only in Dundalk and Drogheda, but in many towns throughout Ireland.
The housing crisis is not going away. Once we emerge from this pandemic, the demand for housing will still be there. The effects of the housing crisis are clear to be seen and it affects us in many ways. First and foremost, we must not leave anybody homeless. As a society, we must be able to provide housing for everyone. Young families starting out on their journey are finding it nearly impossible to secure their first home. When we look at this more closely, I fear that unless we solve the housing crisis we will eventually lose out in investment from many of the large companies already situated in Ireland. They will look elsewhere when expanding, if it is the case that their workforce cannot secure suitable housing. I know from dealing with constituents in Dundalk that many of the big employers in the area have concerns about the lack of suitable accommodation for their employees.
On the motion, I once again voice my support for the suspension of the payment for 2021, but I also ask the Government to use the fund for housing. As I have said many times in this House, Louth County Council has been to the forefront in bringing vacant houses back into the housing stock. It has identified many vacant homes and upgraded them so they could be used as homes again. From speaking to officials in the council, the only thing holding them back is funding, which I am sure is the case for every other county council in the country. I am sure that with a little effort by the Government the vacant homes issue could be resolved, which in turn will go a long way to solving the overall housing crisis. As I said, the Government has continually asked for solutions; this is a ready-made solution. It is a no-brainer. The Government needs to listen. This is not about political point-scoring, but about real solutions to real problems.
The rainy day fund should be used to bring vacant homes back into the housing stock. Why build new homes in an area if homes already exist in it that are vacant? This does not make any sense. We need to think outside the box. If we target even a third of vacant homes as ones to be brought back into the housing stock, it will mean in excess of 30,000 homes could be brought on stream over the next 12 months. Surely, the Government can see this is a solution to a major problem. I will repeat that there are 92,251 vacant addresses in Ireland. That is one in every 20 houses situated in established areas, with schools, shops, playgrounds and doctors. I ask the Minister of State please to listen. I call on the Government to have an open and honest debate on the housing crisis and to discuss my proposal that the rainy day fund should be used to bring vacant homes back into the housing stock.
Last week, I raised an issue with the Taoiseach during Leaders' Questions. He told me he would contact the Minister of State's office which, in fairness, has contacted me. It concerns a company in Dundalk, Air Bound Trampoline Park, which looks after people with disabilities and is doing a fantastic job. The problem is it cannot get insurance. The Minister of State's office gave me a contact name but when we contacted the company concerned it stated that all it would look after is outdoor activities. The trampoline park is an indoor facility. I again plead with the Minister of State, whose Department kept its word, as did the Taoiseach, to help us keep this trampoline park open. This is only one of many such facilities and if we can help this one, I am sure we can help the rest. I thank the Minister of State for his support.
The rainy day fund, known as the national surplus exceptional contingencies reserve fund, is supposed to be an economic buffer. There is currently no money in the country's rainy day fund because it was raided last year due to pandemic expenses. Let us not forget, pensioners in this country did not receive one extra cent from this so-called rainy day fund.
There are far more needs now than there will be years down the line, for example, the fishing crisis. This Government gave away 25% of our pelagic quota on Christmas Eve last year. That was a real happy Christmas to every fisherman, fisherwoman and child in our country's coastal communities. They did not get a brown cent. Where was the rainy day fund for the fishermen at that time? They are since counting their severe losses.
Farmers are in desperate need and will have a very bleak-looking future if the Government continues in the way it is going at the moment. It kicked the can down the road on the issue of giving any funding to farmers in this year's budget. That is fine if people can afford to have the can kicked down the road but the farming sector, which got no funding, certainly cannot.
I cannot understand why we are talking about rainy day funds when urgent projects need funding in our country. I have continually pleaded with the Minister for Transport, Deputy Ryan, the Tánaiste and the Taoiseach, when they have been before the House over the past number of months, for funds for roads in west Cork. They do not believe or understand that there is a need for that. There is nothing for bypasses in Innishannon and Bandon, the northern-southern relief road, Bantry, the N71 and the R586. The Minister, Deputy Ryan, was honest enough to state that it would possibly take eight to 13 years. There needs to be investment in transport in rural Ireland. There are now some talks about such investment, which is needed urgently.
The cost of energy is rising rapidly leaving every person, including the most vulnerable, yet again, in debt. Funding needs to be put aside and invested immediately in this as people are in fuel poverty.
There are no special needs assistants, SNAs, in our country. Last week, I asked the Minister for Finance, Paschal Donohue, about that and he said that they would be available next year. That is no good for people who need SNAs in schools this year. There is no funding available for that. People in schools all over west Cork are telling me they are short of SNAs, whereas the capital seems to have no problem getting them. We also need funding for CoAction, which is closing its centre in west Cork this week because there is no pay parity. That is another project that needs funding immediately.
I am glad to get the opportunity to talk on this issue. While I do not blame the Minister of State, I certainly understand why we cannot put any money into the so-called rainy day fund when the Taoiseach went to COP26 in Scotland and gave away €225 million this year, with a promise of more over the next ten years. How could we have any money to put into the rainy day fund?
While I acknowledge the Covid pandemic has been a savage strain on the coffers of the Department of Finance, this is not the thing to do. We are not a country rolling in money such that we can give away €225 million when it is raining for many already. People cannot get proper healthcare or a proper service. It is pouring down on top of working people, including those in the transport business. The farming community did not get a bob in the budget and, on top of that, the cost of diesel is savage now. It is raining down on top of farmers every day because they cannot move without diesel and it is an extra cost.
People are struggling on waiting lists, many of whom are homeless, suffering and wondering where they will finish up. Many people with families are being told to get out of the house they are renting. It is raining for people because of high rents, especially in towns like Killarney, Kenmare and Dingle. There are 676 applications on our local improvement schemes list, only 31 of which were completed over the past two years. At the rate we are going, it will be 80 years before that list is exhausted. I ask the Minister of State to look at that matter. Surely, we will not give away money next year when things like that have to be dealt with.
Can the Minister of State imagine that people on benefit payments will not get any fuel allowance? People on illness benefit and even all those who paid stamps would not get those benefit payments otherwise. Someone on a benefit payment such as illness benefit who is living with a pensioner with cancer will not get the fuel allowance. Can the Minister of State imagine that? The Taoiseach then went and gave away €225 million last week. It is absolutely ridiculous giving it away like that when it is raining on a lot of other people in our country.
I do not disagree with the terms of the motion regarding a rainy day fund. However, and maybe this is just my disposition, I am not quite as optimistic for the Irish economy as the Minister of State is. I welcome the image he has portrayed. He has no alternative but to portray that image, at least in public, although perhaps it is a belief he shares in private as well. It is not just that we are not replenishing a rainy day fund, which I do not have a problem with because if ever there was a rainy day, it would be during a pandemic, but the amount of debt we are incurring, and the amount of spending and how little we have to show for it, are what concern me. Obviously, we are not putting money away now because we need to spend money.
The general message I am hearing from economists, even to ordinary people, is that now is not the time to save money but the time to spend it because it might not be worth nearly what it is worth now in a year or two or in ten years' time if they saved it. That is because the only way we can deal with the kind of moneys being borrowed by almost every country, but especially this country, is inflation. I asked the Minister for Finance, who, more importantly from the point of view of any influence on monetary policy, is also the chair of the eurozone group of finance ministers, if he had any issue with inflation. I asked that because of the effect it is having on ordinary people, which I will come to in a moment. He said he did not. That is understandable because if we enter a period of quantitative tightening, one of the first things that will be impacted will be the ability to sell Government bonds. The fact that they are very attractive to international financiers should not necessarily be taken as a compliment because what else are they going to spend their money on in the current climate?
The Minister for Finance made an interesting speech at the end of the debate on the Finance Bill and it is one I would like to take up with him in person. He talked about the use of language and said we needed to be able to have a reasonable, rational debate. That is something I would agree with but in the same week, the Minister for Health, who is the Minister of State's party colleague, albeit a relatively new-found one, sat exactly where he is now and sent out a tweet saying that everybody who opposed his view was reckless. We do not live in a system of eine Stimme. It is not our way. It is not democracy and it never should be. We cannot label people who question things. We had a Minister for Finance who sat where the Minister of State is now and spoke about "pinkos". I notice, by the way, that the Minister of State is wearing a nice pink shirt and red tie. He referred to the pinkos and liberals who were questioning the orthodoxy of the Ahern years and the economic approach of Bertie Ahern. I am not here to vilify the man. There were achievements during his reign, particularly the Good Friday Agreement.
To question and debate is a good thing in any democracy. I have questioned and will continue to question the value that we are getting for the money we are spending on Covid response. Our expenditure increased by 20% last year. The European average was about 10% and the expenditure of countries like France and Denmark only increased by about 6%, in comparison with their infection rates, if we want to use that as the metric. I do not think we can measure a society by infection rates or start to look at fellow human beings as mere carriers of pathogens. It is a very sad state of affairs if there is no "I" or "You" in society but mere carriers of pathogens. We are not getting value for money. Nor, by the way, are we getting value for the relatively paltry infrastructural investment we are making at the moment. Over €100 million has been spent on the national broadband scheme to date and only 2,700 premises have been connected. We have no idea what the overrun on the national children's hospital will be.
We need to look at how this State spends money. Interest rates, most assuredly, will not always be where they are now. Money will not always be as available as it is now. That is what the rainy day fund was about. I do not have a problem with the fact that the Government is not putting money into it now but I do have a problem with running a Department of Finance on the basis that cheap money will always be available in abundance because that is simply not the case.
I have listened with interest to the contributions of Deputies to the debate on this motion. I will respond to some of the points and issues raised. First, I acknowledge that every person who spoke was supportive of the motion not to make the contribution to the rainy day fund, in view of the costs involved with Covid-19 and because there are other priorities at this particular point in time. As I mentioned in my opening statement, fiscal support of over €41 billion, which is nearly one fifth of the national income as measured by GNI*, was made available in 2020 and 2021 in the form of direct public expenditure, tax expenditures and below-the-line supports such as loans and guarantees. Given the continuing presence of the pandemic and the economic disruption it continues to cause, when we include the funds allocated for 2022 the total amount provided for stands at approximately €48 billion.
The total value of payments made to date under the Government's three main support schemes, namely, the pandemic unemployment payment, PUP, the employment wage subsidy scheme, EWSS, or its predecessor, the temporary wage subsidy scheme, TWSS, and the Covid restrictions support scheme, CRSS, is over €17.5 billion. Over €8 billion has been paid to households through the PUP and over €6.5 billion has been paid to employees through the EWSS and its precursor, the TWSS. Approximately €650 million has been paid to businesses through the CRSS.
The Government is steadfast in its commitment to there being no cliff edge to the EWSS. It has been an extremely successful policy instrument during these challenging times, one which has greatly assisted us in maintaining the link between employers and employees. As announced on budget day, the EWSS will remain in place in a graduated form until 30 April 2022. That is six months after the lifting of most public health restrictions and two months after the PUP ceases. The revised arrangements for the EWSS strike a balance between helping those businesses that continue to need support while recalibrating the scheme in light of the wider economic recovery.
Public spending next year will amount to €87.6 billion. The Government has been steadfast in its commitment to keeping this amount below the ceiling laid out in the summer economic statement. Our medium-term strategy sets out that over the next two budgets we will restore our public finances, phase out temporary Covid-related spending and repair our public finances. This strategy strikes the appropriate balance between tapering supports and investing in the domestic economy. In budget 2022, core expenditure will grow by 4.6% in line with the trend of growth in our economy and by 2022, we will only be borrowing for capital spending.
It is worth recalling how dramatically the budget landscape has transformed over the last two years and, in particular, how we entered the crisis with a budgetary surplus of €2 billion. While in the 2021 summer economic statement my Department forecast a combined deficit of just €34.5 billion for 2021 and 2022, by budget day this had been revised to €21.5 billion for both years, a reduction of approximately 40%.
Critically, this means our deficit this year in terms of the national income is falling significantly. As such, it is clear that we are reducing our overall borrowing this year and next year. Budget 2022 will bring our overall national debt to just under €240 billion. That means a debt of €50,000 for every man, woman and child in the country. This is not where we want to be when interest rates start to rise again. That is why we need to repair our public finances and put them back on a sustainable footing.
A number of Deputies spoke about housing. As everybody in this Chamber is well aware, a core, if not the core, challenge facing the country in the coming years is housing. The Government is determined to build more homes and total housing expenditure has more than doubled since 2016. As of 2021, it will be more than 40% above the peak level in 2008. The Government's Housing for All strategy targets delivery of, on average, 33,000 new homes per annum up to 2030. Housing construction has already rebounded rapidly this year and there have been almost 30,000 housing commencements in the 12 months to August of this year.
As part of the Housing for All strategy, under the Finance Bill 2021, the Minister for Finance is introducing a zoned land tax to encourage the use of land for building homes. The primary objective of the measure is to increase the supply of residential accommodation, rather than to raise revenue. Ensuring that people have access to home ownership in this country is a priority for the Government. Focusing directly on those trying to access the housing market, the help to buy scheme has been a significant support for first-time buyers of new homes. From 2022 onwards, the scheme is being continued at its current rates. Following the recent tax strategy group recommendation, the Minister has also announced a full review of the scheme will be carried out in the course of next year.
Also, on housing, as part of budget 2022, the Minister proposes to extend the relief for pre-letting expenses for landlords for a further three years. This will continue to encourage landlords into the residential rental sector to return empty properties to the market as quickly as possible. Deputies mentioned the importance of bringing vacant houses back into use. That is important not only in the private sector but especially in the public sector through our local authorities.
Given the likely continuing impact of Covid-19 on the public finances, it was clear from early 2021 that the making of the planned €500 million annual contribution to the rainy day fund was unlikely. Consequently, this was signalled in April 2021 in the stability programme update and the summer economic statement. The Act which established the rainy day fund requires the Minister for Finance to bring forward such a motion when he decides not to pay the €500 million to the rainy day fund from the Exchequer in any of the years from 2019 to 2023. As I said, we commend this motion to the House.
A number of issues were mentioned regarding the commitment to build back up the fund. I make clear in my opening contribution that the Minister for Finance wants to be in a position to add to the funds in the rainy day fund at some point into the future in order to be in a position to deal with any potential future economic crisis but to do so at this point in time does not make economic sense. I was also asked about the future of the rainy day fund. The Minister has made it clear that we are committed to adding to it as soon as resources permit.
I was asked about the lessons to be learned from the rainy day fund. The first lesson was not only learned but implemented. There was €1.5 billion in the fund at the end of 2019. That was used during the Covid crisis. Had we not that money in the fund at that time we would have had to borrow another €1.5 billion, which would have placed an extra burden on future taxpayers. I mentioned the national debt can be equated to a debt of €50,000 on the head of every man, woman and child in the country. Having that money in the fund has alleviated to some extent an increase in our debt.
Farming was mentioned by Deputies in the Cork region. I confirm an announcement made earlier today of €70 million to food producers and processors in the meat and dairy sector to help them deliver, diversify and win new markets and customers post Brexit. One of the Deputies from Cork said the Government is doing nothing for farmers. However, €28 million of that of €70 million was allocated to meat and beef and dairy processing facilities in County Cork. That is a commitment to Irish agriculture and to suppliers and farmers and suppliers, who will have modern processing facilities for their products, and will help win new customers abroad.
On behalf of the Minister for Finance, I commend the motion to the House.