Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank Senators Horkan, Boyhan, Kieran O'Donnell, Conway-Walsh and Lawlor for raising these issues. I will deal with the questions raised. Senator O'Donnell asked about the liquidity of the fund. I am proposing a highly liquid fund which will be held as a near cash fund so that it can be accessed very quickly if required. Senator Lawlor asked the same question. This would distinguish it from longer-term investment funds such as the Ireland Strategic Investment Fund or sovereign wealth funds. It will ensure that when we need the rainy day fund it can be drawn on without having to crystallise losses, potentially in adverse market conditions. I intend the funds' assets to be kept as cash deposits or fixed income financial instruments or products. There are carry costs associated with maintaining a near cash fund and in the current interest environment, it suggests a near zero return. With interest rates expected to normalise over the coming years, I expect in the medium term the fund should have low but positive rates of return.

Regarding whether the fund is part of the national debt, it would be part of the national debt because it will be cash on hand. Our national debt is what we owe, what we have borrowed, what the sovereign owes, but there are cash balances that will form part of what will be our net debt rather than our gross debt.

Senator Kieran O'Donnell asked if the fund be replenished. That would be decided by another Dáil. We are putting in the initial tranche of €2 billion and between 2019 and 2023 the legislation states we will put in €500 million per year each year. Subsequent to that, if the Oireachtas chooses to add to that or continue that policy, the law can be changed. However, this legislation provides that we will put €500 million per year into the fund. If there is change of Government next year, it can change that provision if it sees fit. That is a matter for different parties with their respective views and their different ideologies.

In terms of a windfall tax, we are passing the legislation to ensure that €500 million per year will be put into the fund plus €2 billion at the start of the process. If there is a windfall tax, that is a matter for the Oireachtas to decide on in the future. If we get an enormous amount of money from some entity somewhere that we have not predicted, it can be put into the fund but we would question putting in more than €8 billion into a near cash fund. We do not believe that would be prudent. If we put it into a near cash fund, it may cost us a small amount of money or we may earn a very small amount of interest on it. Why would we do that while at the same time potentially continue to borrow in the future? Last year we had a surplus and we are not borrowing for the likes of this fund. We hope we will have a surplus this year but who knows what will happen in two or four years' time, depending on the economic markets and the economic cycle that we potentially may or may not be in? We believe €8 billion is enough to have in a near cash fund. We do not believe it is prudent to go beyond that amount.

Only the Minister for Finance can present to the Dáil in respect of the fund. Senator Kieran O'Donnell asked in the current context, where we have a minority Government, whether a finance spokesperson could present a measure in Dáil to access the fund and be successful in a vote in the Dáil for the money in the fund to be spent on something else. The answer to that question is "No". Only the Minister for Finance can present in that respect.

Senator Kieran O'Donnell also asked whether it appropriate to prescribe the type of event for which the fund could be used. We do not believe it is appropriate. We want to leave it broad and general so that the law does not prohibit the potential allocation of funding via the Minister for Finance to the Dáil. A flexible open arrangement is in place in terms of the legislation rather than it being more prescriptive. If we were more prescriptive an event could occur that nobody would had thought about and because the use of the fund for that purpose has not been prescribed, we would not be able to allocate funding towards it.

I thank Senator Conway-Walsh for her question. Her view is that we should be spending the money in this fund now.