Annual contribution of 0.8% of GDP to Future Ireland Fund 2024-2035 will protect public services for the long term.
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With annual contributions, growth in GDP and potential return from investments, the Fund has the capacity to grow to €100 billion by 2035.
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Infrastructure, Climate and Nature Fund will secure capital expenditure through the economic cycle.
The Minister for Finance, Michael McGrath T.D. and the Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D., have published the landmark Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024.
This follows the publication of the General Scheme of the Bill, on 12 October 2023, and the announcement made in Budget 2024 to establish two new funds:
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The Future Ireland Fund; and
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The Infrastructure, Climate and Nature Fund.
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 this 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 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.
Speaking today, the Minister for Finance, Michael McGrath T.D. 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.”
The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D. said:
“Following Government approval, the legislation underpinning the Future Ireland Fund and the Infrastructure, Climate and Nature Fund has been published.
The Future Ireland Fund is a long-term savings fund that will deal with future recognised expenditure pressures including ageing, climate, the digital transitions and other fiscal and economic challenges. By putting money aside now, we will support future Government expenditure to address these challenges and help to ensure that the burden of these future costs will be manageable.
The Infrastructure, Climate and Nature Fund will seek to deal with the pro-cyclicality of capital spending. A €14 billion reserve will be established over the period 2024 to 2030. The Fund will provide support for the economy in times of exceptional need, helping to smooth the investment cycle and avoid the ‘stop-start’ public capital investment that we have experienced in the past. It will also invest in the transition to a low carbon economy, with €3.15 billion being set aside specifically to invest in environmental projects that address climate change issues and nature and water quality degradation over the period 2026 to 2030.”
The Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 has now been published and is available on Oireachtas.ie.
Article Published: 11/04/2024