That Dáil Éireann authorises the Minister for Finance, pursuant to section 6(1) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019, 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 2019 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 United Kingdom's proposed withdrawal from the European Union (Brexit), the making of the payment of the prescribed amount would place an undue burden on the public finances.
The motion arises on foot 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 last and the fund was subsequently seeded with a €1.5 billion transfer from the Ireland Strategic Investment Fund, ISIF, on 15 November.
Before dealing with the substance of and rationale behind the motion, I wish to reflect briefly on the fact that although we have made great strides in recent years as a country and an economy, this is no time be to be self-satisfied or complacent. New challenges emerging internationally have the potential to shape our economic prospects for years to come. I wish to touch briefly on one of those challenges, namely, Brexit. Deputies will be aware that our hope is that the withdrawal of the United Kingdom will take place based on the deal agreed between it and the EU at the European Council last October.
Despite the outcome of the general election in the UK, the ultimate outcome remains uncertain and a disorderly exit at the end of the transition period in 2020 remains a distinct possibility. No UK exit is good for Ireland. Anything that disrupts the ease of trade between Ireland and the UK will be bad for Ireland. Along with this, the loss of a large member state that has actively promoted free trade and liberal values will come at a considerable cost to a small country such as Ireland, where free and open trade has been the driving force behind the convergence of living standards to European norms. Brexit, in whatever form it takes, will soon be a reality and our economy must adapt. The Government can and will help to ease the transition but our economy will have to adjust to a new reality.
The motion is a consequence of the Government's Brexit stance. Under section 5(2) of the Act, the Minister for Finance is required to make a payment of €500 million from the Exchequer to the rainy day fund every year from 2019 to 2023, inclusive. The Act also provides, under section 6, that in any given year, the Minister may make a proposal to the House not to transfer the annual €500 million contribution to the fund. The proposal can be made when the Minister is satisfied on reasonable grounds that, by reason of the existence of exceptional circumstances, the making of the payment of the prescribed amount into the fund would place an undue burden on the public finances. In response to the Minister's proposal, such as that stated in the motion, Dáil Éireann may pass a resolution authorising the Minister not to pay the prescribed amount into the fund for that year.
The rationale behind the rainy day fund is to accumulate funding that can be deployed in the event of an adverse shock to the economy. Given the size and openness of the economy, the use of such funding is an important way to protect the economy in more challenging times. In his Budget Statement on 8 October, the Minister for Finance, Deputy Donohoe, stated that if the economic impact of a no-deal Brexit was more severe than forecast, he was prepared to use resources that would otherwise have been dedicated to the rainy day fund to address the impact. Given that a no-deal Brexit was seen as likely at the time of the budget's publication, the Minister announced his decision not to transfer €500 million from the Exchequer this year as part of his Budget Statement. Although the outcome of the UK election has reduced the probability of a no-deal Brexit in the short term, I reiterate that the ultimate outcome remains uncertain and that a disorderly exit at the end of the transition period in 2020 remains a possibility.
The motion is the statute-based follow-through on the Minister's announcement. Such action is the appropriate response to the more challenging economic environment we may face. It will help to ensure we have the right supports in place within the Exchequer to protect the economy from the impacts of Brexit and that the Government can continue to protect the funding of our public services in the immediate aftermath of a no-deal Brexit. I commend the motion to the House.