Reader's Blog: ‘Rainy day fund’ not fit for purpose, say Sinn Féin
In an editorial on March 28 you stated that Sinn Féin’s assessment of the Government’s National Surplus Bill was “simply incorrect” — ‘Rainy Day Fund; Our backstop is very prudent’.
It is worth spelling out what our assessment is.
You are correct to say that the bill would establish a contingency reserve fund of up to €8bn, but its purpose is much less clear.
It would be irresponsible for anyone to oppose a “rainy day fund” that could be used to help working people during bad times.
However, that is not what we are opposing.
Indeed, the Parliamentary Budget Office have stated that its design precludes it from being a “rainy day fund”, with Ibec opposing it altogether.
The Government’s reserve fund is only as good as the legislation that designs it.
The fund would take €2bn from our Strategic Investment Fund and €500m of taxpayers’ money each year until 2023.
Given the scale of assets, it is important they will be put to good use.
The current legislation allows it to be used in three circumstances: exceptional circumstances, bailing out the banks, and structural reforms.
The first and third are EU-specific terms, that would require sign-off by the EU Commission.
The second, to recapitalise the banks, is simply unacceptable, and a use of public money to which Sinn Féin is unashamedly opposed.
We put forward a number of amendments that would have allowed this fund to be put to good use; to boost capital investment during a downturn, investing in social and affordable housing, and funding measures to mitigate the effects of climate change and Brexit.
Regrettably, they were all called out of order.
What is left is a fund that could be used, according to the Department of Finance itself, “if one bank needed a capital injection”.
You state that such a fund would act as an insurance policy.
This would be an insurance policy for the banks without any premium paid; not a prudent insurance policy.
Sinn Féin supports fiscal buffers that can be used to save jobs and stimulate the economy during a downturn.
In fact, we brought forward amendments that would allow this fund to be used for that purpose.
Unfortunately, the fund in its current form is not fit for purpose.
