This follows 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 will help deal with future recognised expenditure pressures including ageing, climate, digitalisation and other fiscal and economic challenges. Its purpose is to support Government expenditure in strategic areas that have been flagged as inevitable strains on the public finances with no limit on the potential size of this Fund.
Contributions will be made to the Future Ireland Fund until 2035 after which a decision will be made on further contributions.
The forecasted level of contributions to the Future Ireland Fund is c. €70 billion over the period, or c. €6 billion per year (0.8% of GDP). For each year from 2024 to 2035, 0.8 per cent of GDP will be invested in the Fund (c. €4.3 billion in 2024). Approximately €4.1 billion will also be transferred from the dissolution of the National Reserve Fund in 2024. With contributions and return from investments over the long-term horizon the Fund could grow to €100bn by 2035.
The Infrastructure, Climate & Nature Fund will seek to deal with the pro-cyclicality of capital spending. A reserve of funding will be established over time to provide for resources for capital spending in a future downturn to support capital expenditure through the business cycle. This will help us prevent a reoccurrence of ‘stop-start’ public capital investment that we have experienced in the past.
This would, in turn, avoid generating backlogs in capital projects due to a lack of spending during downturns. It is intended that €2 billion will be invested in this fund each year from 2024 to 2030, building a fund of up to €14 billion. That €14 billion figure equates to the average annual amount of capital expenditure under the National Development Plan over 2023-2028.
The resources of the Future Ireland Fund and the Infrastructure, Climate & Nature Fund – will amongst other uses help to support climate related initiatives over the medium and long term.
However, there is a need for additional investment to assist Ireland deal with the transition to climate neutrality as the impact of rising global temperatures as a result of climate change will affect all parts of our society.
In recognition of this, it has been agreed that a second avenue of access to the Infrastructure, Climate & Nature Fund, be developed, specifically related to the achievement of climate goals. This remains a single fund with different access routes to drawing down its resources.
Speaking today, the Minister for Finance said
“Following Government approval of the General Scheme on Budget day, I was delighted to announce the establishment of the Funds in my Budget speech. The Future Ireland Fund will provide multi-generational benefits and deliver the widest benefits to the public. It will also prevent the reliance of current expenditure on temporary or “windfall” sources of income. The Infrastructure Climate & Nature Fund will help smooth the investment cycle and avoid a ‘stop-start’ approach and help provide support for the economy in times of exceptional need and capital spending in periods of economic dislocation. I would again ask all colleagues across the House to put aside political differences and support the passage of this legislation through the House.”
