The House was informed at Second Stage that the intention behind Subsection 5 of Section 5 of the National Surplus (Reserve Fund for Exceptional Contingencies) Bill 2018 was to allow for a reduction in the planned €500 million payment into the Fund in any of the years 2019 to 2023.
Such a reduction would be justified on the basis of a serious and unforeseen event during the year requiring substantial unanticipated expenditure. The reduction would not exceed the amount of additional expenditure actually incurred. The Bill deliberately does not describe such an event in greater detail than “a natural or other disaster”. This is because it is intended to refer to the type of events which are unpredictable and create an immediate cost.
I envision this contingency being activated if, for example, there is an exceptionally severe weather event causing enormous damage, or a major health or disease risk such as a significant outbreak of a contagious disease. This facility is not intended to substitute for prudent contingency budgeting by public authorities – it is only for events that are inherently exceptional, or exceptionally repeated in a given year. That might arise if there are repeated storms, for example. If this facility is used, any payment made will be directly from the Exchequer under the normal public financial procedures. In addition, the Minister for Finance will make a report to this House, in accordance with Section 5, subsection 7, as to the reasons for reducing the payment being made into the Fund.
Under the Bill the proposed “Rainy Day Fund” can be drawn on contingent on Government and Oireachtas approval being received for one of the criteria set out under section 9(2) of the Bill. Brexit is not in itself an exceptional contingency as it has been confirmed since 2016 and it has been at the core of policy making during that time. There are obvious external risks to the Irish economy including Brexit but these are known risks for which we are undertaking extensive preparedness planning, including for a no deal scenario. The Government has worked hard at national and European level to build support for Irish positions and the Government's budgetary policies have worked to ensure fiscal resilience and a balanced tax base. We are now in a far better position to weather the storm when a future crisis hits. Setting reserves aside now through the Rainy Day Fund will further strengthen our position.