Wealth fund should focus on international markets, says Oireachtas committee

The Oireachtas Committee on Budgetary Oversight said the proposed wealth fund should have “strict regulation and limitations” on what it can invest in.

An Oireachtas committee has recommended that the Government create a sovereign wealth fund which would be used solely to invest excess corporation tax receipts in markets outside of Ireland.

In its report into the proposal for a sovereign wealth fund, the Oireachtas Committee on Budgetary Oversight said the proposed wealth fund should be underpinned with legislation that sets “strict regulation and limitations” on what it can invest in.

“The legislation should set out strict parameters outlining the types of investments that may be entered into with regard to the ethical, environmental, social effects, etc,” the report said.

The report also said the proposed fund should be managed by the National Treasury Management Agency (NTMA) and should be solely focused on international markets and not the domestic market.

The committee said this is because of the “potential negative consequences” associated with investing a new fund in the domestic economy and allows it to operate distinct from the ordinary fiscal budget.

The report acknowledged that even if most of the excess corporation tax receipts were saved in this fund over the coming years, the value would reach approximately €90bn which is small by international standards. For comparison, the Norwegian sovereign wealth fund currently has a value of €1.3trn.

This report comes as corporation tax receipts dropped 12.4% to €1.8bn in September compared to the same month last year. In August, receipts were down €1bn on the same period last year.

Overall, an exchequer surplus of €1.1bn was recorded to the end of last month compared to €7.9bn in the same period last year. This was due to the transfer of €4bn to the National Reserve Fund in February.

Corporation tax receipts for the year stand at €14.4bn, which is still higher than last year but significantly behind what had been anticipated.