Dáil Éireann Debate, Wednesday - 19 December 2018
164. Deputy Michael McGrath asked the Minister for Finance when he plans to advance the legislation to establish the rainy day fund in 2019; when the fund will be fully up and running; and if he will make a statement on the matter. [53962/18]
View answerFollowing Government approval, the "National Surplus (Reserve Fund for Exceptional Contingencies) Bill 2018" was published on 23 October 2018 and subsequently circulated to Deputies. If enacted, this Bill will provide the legislative underpinning for the Rainy Day Fund, which will formally be known as the "National Surplus (Exceptional Contingencies) Reserve Fund". However, the timing of commencement is contingent on the Bill's passage through the Oireachtas.
The Rainy Day Fund is part of a suite of measures to help increase the State's resilience to external economic shocks. In particular, it will provide an economic buffer which can be drawn on in the event of a sharp downturn and mitigate its effects.
My intention, as outlined in Budget 2019, is to seed the Fund with an initial transfer of €1.5 billion from the assets of the Ireland Strategic Investment Fund. I have provided for Exchequer transfers of €500 million per annum from 2019 to 2023. This will see the Fund grow to around €4 billion by end 2023.
In addition, the Bill will provide the possibility of placing windfall tax or other receipts in the Fund, where the Dáil by resolution so authorises. The projection of €4 billion by the end of 2023 is contingent on a number of assumptions such as that there is no event requiring a draw-down over the period; that there are no windfall receipts placed in the Fund over the period; and that there is no significant event during the period requiring use of the in-year contingency reserve.
I should explain that the in-year contingency reserve is intended to operate as a potential carve-out from the annual €500 million allocation to the Fund. Where, as a result of a natural or other disaster, Government incurs unforeseeable additional expenditure to mitigate the effects of that event, the payment into the Rainy Day Fund in that year may be reduced by an amount of up to that additional expenditure. This is not intended to replace or substitute for prudent budgeting by central and local government and their agencies: it is an additional facility to provide flexibility to mitigate a significant event or consequences in excess of those which can be dealt with under prudent contingency planning and budgeting.
Subject to Dáil and Seanad scheduling, I hope it will be possible to establish the Fund as early as possible in 2019, and to make the initial transfer from the assets of the Ireland Strategic Investment Fund shortly thereafter. In order to ensure meaningful availability of the in-year contingency reserve, I intend that the annual transfers to the Fund will not as a rule be made until close to the end of the financial year. This will ensure that the transfer is not made until after the in-year financial consequences of a serious event have crystallised.
I look forward to debating my detailed proposals at Second Stage in the Dáil in the coming months.
