This follows on from 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:
•The Future Ireland Fund; and
•The Infrastructure, Climate and Nature Fund.
The Future Ireland Fund aims to address forthcoming expenditure challenges, such as aging demographics, climate change, digitalisation and other fiscal and economic obstacles. Its objective is to provide reliable and sustainable support for state spending from 2041 onwards. The fund is designed to assist in areas anticipated to place strain on public finances in the future.
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.
Between 2024 and 2035, the Fund will receive an annual investment equivalent to 0.8 percent of GDP. Additionally, around €4.1 billion will be transferred from the dissolution of the National Reserve Fund in 2024. Considering yearly contributions, GDP growth, and potential investment returns, the Fund is projected to reach €100 billion by 2035.
The Infrastructure, Climate and Nature Fund will intends to manage 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.
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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.
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. stated: "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."
