Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank Senators from across the political divide who have contributed to this very important debate. I acknowledge the array of points raised and I will go through them individually in due course.The Minister, Deputy McGrath, and I look forward to engaging further with Senators, as has been flagged, on Committee and Report Stages on the issues raised this afternoon. As the Minister stated, the Bill legislates for two new funds, the future Ireland fund and the infrastructure, climate and nature fund. This is an important step towards ensuring the continuing resilience of the public finances. By setting aside part of our tax receipts now, we can deal with foreseen and unforeseen challenges in the future.

Ireland's public finances are currently in a strong position underpinned by record corporation tax receipts, which last year reached nearly €24 billion. The strong performance of corporation tax in recent years has increased the risk of relying on these volatile and unpredictable receipts to fund permanent increases in expenditure. We also know changes to the international tax regime in the coming years could negatively impact corporation tax receipts. The best way to mitigate the risk of an over-reliance on corporation tax is to keep public expenditure growth at sustainable levels, which will be achieved by continuing to follow the appropriate budgetary strategy. These funds will take advantage of Ireland's current favourable conditions, while acknowledging the assumption that a large proportion of the increase in corporation tax in recent years is windfall in nature.

This is a common sense decision. It is the sort of thing everyone should be able to relate to and consider sensible. Those from political entities not represented in the Chamber who said we need to spend while we have it are running a serious risk, not just to the budgetary status quobut to the future of the people we are trying to safeguard in this State.

I will address points raised by a number of Senators. Senators Byrne and Currie raised the purpose of the funds. As has been laid out, the future Ireland fund will help to deal with future expenditure pressures, including ageing, climate, digitalisation and other fiscal and economic challenges. Other actions are likely to be taken to deal with these pressures, yet this fund should be of enormous benefit in resolving these issues. Its purpose is to support State expenditure in a consistent and sustainable manner. The legislation does not provide for these resources to be directed at any specific expenditure, as the use of resources from the fund is a matter for the government of the day. It would be impractical and imprudent for the Government now to determine the priorities of a government in the 2040s and beyond. I am sure that sentiment is shared by those in opposition who aspire to be in government.

The infrastructure, climate and nature fund will seek to deal with the cyclicality of public spending and to assist with climate change objectives and with nature, water quality and biodiversity issues that no one is running away from. The fund will provide resources for spending in a future downturn to support expenditure through economic and fiscal cycles. It has been raised consistently that we cannot have the situation we had before of a boom-and-bust cycle with huge amounts of spending. When economic storm clouds gathered, all of a sudden it had to be turned off. That is something we have to move away from.

I will address the point made by Senator O'Hara. We have not engaged in this Chamber yet. I congratulate him on his elevation to the Upper House and look forward to having more discussion with him and ensuring his voice is heard as the voice of the entirety of this island and of the globe. I welcome his perspective and agree with him that this is an extremely ambitious undertaking by the Government. The process outlined in the Bill provides for the designation of projects as environmental projects where a relevant Minister is satisfied the project contributes, directly or indirectly, or is likely to contribute to a reduction in greenhouse gas emissions; the achievement of environmental objectives derived from a number of EU water regulations; the achievement of conservation objectives; the implementation of conservation measures or of administrative or contractual measures established under the birds and habitats directives; or the implementation of a planned programme or strategy, the national biodiversity action plan or guidelines under the Wildlife Act 2000. Some examples of projects that may be provided under this are the expansion of the national barriers mitigation plan; the delivery of the nature restoration plan for Ireland; the decarbonisation of industry; and increased deployment of renewable energy generation and strengthening of the grid.

The allocation of funding for designated environmental projects will be overseen by the Minister for Public Expenditure, NDP Delivery and Reform in consultation with the relevant Ministers, in line with the normal Estimates process. The fund will also be subject to a formal review in 2031, so we can see the lessons to be learned from use of the fund.

Senator Byrne also raised the important issue of maintaining investment in housing and health, as well as infrastructure more generally.There are significant existing commitments under the national development plan over the coming years. Capital expenditure has increased from €3.7 billion in 2015, when the Senator and I were still councillors as was the Acting Chairperson, to almost €13 billion in 2023 when thankfully all three of us are back in the Oireachtas. The overall level of capital funding is now at an all-time high, including expenditure on social housing, roads, bridges, hospitals, schools and public transport projects.

On top of that, we must bear in mind that there are capacity constraints in our ability to use significantly more resources for expenditure projects in terms of current expenditure given that we have a concentration of corporation tax receipts and nearly half those receipts are estimated as being windfall in nature. It would be unwise to embed permanent expenditure measures on the back of these receipts.

We all acknowledge that housing is the biggest challenge facing us domestically. We need to allow people the opportunity to have their own home, to be able to rent their own home, to be able to own their own home or to be able to engage with their local authority in securing a social home. That is why it is so welcome that in the first four months of this year more than 30,000 homes have commenced construction in the State. That means that every working day, 337 new homes are started to be built in this State. That is massive progress compared with 2015 or when our party came into government back in 2011. Much more needs to be done. When I talk about the lessons being learned from the last time, we need to remember the importance of the State continuing to build homes, the importance of the continuation of the delivery of social and indeed affordable housing regardless of the economic climate. That did not happen in the last decade or so. With more social homes being delivered now than 50 years ago, we must continue that momentum. We cannot allow that absolute social and community requirement of providing homes be jeopardised by a downturn in global economic trends.

I wish to address a point made by my dear friend Senator Warfield when I entered the Chamber. I congratulate St. Patrick's Athletic on its new manager, which I know is a particular delight for the Senator. I move from the glamour of St. Pat's to GDP. Regarding the use of GDP as the basis for contributions to the funds, it is important to note that there is no perfect metric on which to base contributions and there will always be trade-offs. Regarding the Future Ireland Fund, GDP has a strong correlation with windfall corporation tax receipts in particular. The Senator asked why we did not use GNI as is used in other bases. It is because the correlation between corporation tax and GDP is stronger than the correlation between corporation tax receipts and GNI. We need to use the same bases and metrics; we cannot keep moving the goalposts.

I wish to make a slightly more general comment based on points made by a number of Senators. Senator Higgins made what I would have definitely termed a brief intervention on an array of points which I am aware she raised during pre-legislative scrutiny as well. I look forward to debating her amendments when they come to the House in due course. It is a really good opportunity. She and I will generally disagree on ideology seven days out of seven, but I think we can agree on the need for and importance of these funds. I share the Senator's concerns beyond that ideology. The strategy that funds be invested on a commercial basis so as to seek to secure the optimal total financial return is basic common sense. These are not spending measures; they are investment measures. These are investments that can allow us to continue current or capital spending in an era when our corporation tax receipts might dry up to an extent or we find more difficult economic times as inevitably we will. We are creating these funds to ensure we can manage them as best as possible so that we can maintain that level of societal investment from the Government as a whole.

I will touch on one or two areas that Senator Higgins raised which I think are fair. It is our job as the Government to ensure that we provide her with assurance over her concerns. In areas where we disagree with her, we need to say that. That is fair and is why we are all here. We need to achieve that level of balance and commercial return which we believe is intrinsic to this. We need a strong balance to make sure that the level of risky assets, including any risk posed by environmental, social or governance matters, is fully taken into account.I acknowledge the Senator's points on making sure that these investments are climate-proofed. I understand his criticism of the Government and EU. The Senator will recall we had the debate at various stages in Strasbourg, in and out of the chamber, at the Conference on the Future of Europe but under the proposed legislation, there will be an extensive ESG approach, not only for these two funds but also for the ISIF. That is a clear undertaking by the Government, acknowledging the concerns the Senator raised. This is not only about a commercial return; this about that level of societal return by making sure these investments invest in better outcomes for everyone in society and genuinely investing in a true just transition and to make it much quicker for us to meet our legally binding targets under climate action legislation brought in by this Government.

I understand that the world is on fire and we have to use these funds to make sure we can mitigate that as much as possible and move Ireland into a much better place in our collective response. The NTMA will be required to consult with the Ministers for Finance and Public Expenditure, NDP Delivery and Reform in preparing the investment strategies. As I outlined in reply to Senator O’Hara, bringing in the specific line managers will also be crucially important to ensure that we have that level of political oversight and to ensure that this is not a separate entity but one of the government by the government of the day. It will ensure a return for Ireland to make sure that we can maintain our daily levels of expenditure, both current and capital, and that those investments give that level of societal return that Senator Higgins so eloquently laid out. I share that and everyone should be able to share those goals regardless of where they sit on the political spectrum. We all sit on different parts of the political spectrum depending on the issue.

The Minister and I look forward to engaging further with Senators on Committee and Report Stages. I appreciate the Acting Chairman’s chairing of this part of the debate and all the contributions this afternoon.