Ibec seeks €10bn infrastructure fund in Budget 2024 

In its pre-budget submission, employers' group says such a fund would send a signal to investors that Ireland was addressing its infrastructure deficit

Ibec's Fergal O'Brien said member firms were voicing 'frustration' about capital projects failing to get the go-ahead, despite substantial exchequer funds. File picture

Ibec has put its weight behind the Government injecting billions of euro into a new infrastructure fund which the business group says will ensure much needed capital projects will get built, no matter how the economy performs in future years.

In a key part of a submission ahead of October’s budget, the employers’ body foresees the capital fund growing to around €10bn by the end of next year, boosted by the €6bn already in the National Reserve Fund, and increasing in size in future years.

Ibec’s proposal would ensure capacity constraints facing employers would be tackled by ringfencing spending for key infrastructure such as housing, healthcare, and transport, and would be completed through the “spectacular” amounts of tax revenues flowing into the exchequer, said Ibec executive director of lobbying and influence Fergal O’Brien.

Member firms were voicing “frustration” about capital projects failing to get the go-ahead, despite the substantial exchequer funds.

The huge tax flows were an “incredible opportunity” that would allow the Government to run huge budget surpluses, as long as the enormous funds from corporate tax receipts continue to flow, he said. An infrastructure fund would help send a signal to international companies that Ireland was on course to solve its infrastructure deficit. 

Ibec’s proposed infrastructure fund appears to chime with the thinking of Finance Minister Michael McGrath, who has also proposed setting up a second and separate savings fund or sovereign wealth fund.

However, the business group said that other huge future spending commitments, including on pensions as the population ages, and to prepare for a net-zero economy, will still require tax increases elsewhere.

Mr O’Brien said there was a real risk that a sovereign wealth fund “breeds complacency” over funding of future spending demands.

Ibec chief economist Gerard Brady said in the submission that the Government could plan to run a huge surplus of 4% of GDP next year, likely to be the second-highest after Norway in advanced economies.

It has costed its proposals, including one-off items, that amount to a budget day package of €8.7bn, which compares with the total cost of €10.4bn under all the items currently planned by the Government, Mr Brady said.

He said he expected the Government’s €10.4bn package would increase further by budget day in October.

“It is appropriate to run a large surplus,” said Mr Brady. 

I guess it is what you do with the surplus is the main point of differentiation, in that we see an infrastructure fund as a priority.

He added that a sovereign wealth fund could not be relied on to meet the full pensions bill.

Ibec said that companies had recognised that recruiting staff will continue to be difficult.

Its submission reiterated “unlocking” funds in the €1.5bn National Training Fund to help firms retain staff by re-skilling, investing €650m to drive climate change proposals, injecting €710m in research, putting €307m more into universities, and using €225m to help Irish exporters.