Rainy Day Fund: Our backstop is very prudent

As the Government’s National Surplus Bill, which seeks to establish a contingency reserve fund, comes before the finance committee today, Sinn Féin argues what is generally known as the Rainy Day Fund has little to recommend it.

This bill allows for up to €2bn from the Irish Strategic Investment Fund and €2.5bn of taxpayers’ money to be transferred into the fund and, according to SF, its only explicit purpose is to bail out the banks.

That assessment is simply incorrect. In fact, the stated purpose of the bill is that the fund may be used in a number of exceptional circumstances, including to “defray unforeseeable costs arising as a result of a natural or other disaster”.

It may also be used to bail out a bank in trouble but better to have the money saved to do that than not.

The fund, which is controlled by the minister, may be drawn upon to remedy or mitigate exceptional circumstances, or to prevent serious damage to the financial system of the State, or to support major structural reforms. It is a kind of backstop, an insurance policy against future shocks.

It is true to say that we have a housing crisis, our health service is in a mess and we face the challenges of Brexit and climate change. Yet the establishment of an emergency fund is a wise and prudent thing to do. Indeed, if we had such a large fund at our disposal during the financial meltdown its effects might not have been so widespread or as long lasting.