Legislation establishing two new State funds published

Legislation establishing two new State funds published

Michael McGrath

Legislation providing for the establishment of two new funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, has been published.

The Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 follows the announcement of the two funds in Budget 2024.

The Future Ireland Fund will help deal with future expenditure pressures including ageing, climate, digitalisation and other fiscal and economic challenges.

Its purpose is to support in a consistent and sustainable manner, State expenditure from 2041 onwards. It is intended that it will support expenditure in areas that have been identified as likely demands on the public finances.

Annual contributions will be made to the Future Ireland Fund from 2024 until 2035, after which further contributions can be provided through a Dáil resolution. There is no limit on the potential size of the fund.

For each year from 2024 to 2035, 0.8 per cent of GDP will be invested in the fund. Approximately €4.1 billion will also be transferred from the dissolution of the National Reserve Fund in 2024.

Taking account of annual contributions, growth in GDP and potential return from investments, the government says the fund has the capacity to grow to €100 billion by 2035.

The Infrastructure, Climate and Nature Fund will seek to deal with the pro-cyclicality of public spending and to assist with climate change objectives and nature, water quality and biodiversity issues. The fund will provide for resources for spending in a future downturn to support expenditure through the economic and fiscal cycle and to support designated environmental projects.

It is intended that €2 billion will be invested in this fund each year from 2024 to 2030. That €14 billion contribution equates to the average annual amount of capital expenditure under the National Development Plan over 2023-2028.

Finance minister Michael McGrath said: “Ireland’s public finances are currently in a strong position, underpinned by record corporation tax receipts, which last year reached nearly €24 billion. It is essential that we take action now to secure the public finances over the long term to ensure we can meet the future expenditure requirements we know will arise.

“This landmark bill will establish the Future Ireland Fund. The bill provides for an annual Exchequer contribution from 2024-2035 to the Future Ireland Fund which will ultimately provide a revenue stream to help meet demands posed by a wider range of issues including demographic changes, digitalisation, de-carbonisation and de-globalisation.

“With annual contributions, GDP growth and potential return from investments, there is a potential for the fund to grow to around €100 billion by 2035, which will give the State substantial firepower to manage the increased demands on expenditure in the decades ahead.

“In addition, the Bill will establish the Infrastructure, Climate and Nature Fund, which will provide an essential buffer for expenditure by the State during an economic downturn. This will help smoothen the investment cycle and help support employment at a critical time of economic distress. The fund will also provide support to designated environmental projects that will contribute to a range of climate, water and biodiversity objectives.”

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