Ibec, the Irish business group, has expressed its support for the government’s plan to inject billions of euros into a new infrastructure fund. According to Ibec, this fund will ensure the completion of much-needed capital projects, regardless of the state of the economy in the coming years. In its submission ahead of the October budget, Ibec predicts that the capital fund will reach approximately €10 billion by the end of next year, with the current €6 billion in the National Reserve Fund serving as a starting point. The proposal aims to address capacity constraints faced by employers by allocating funds specifically for key infrastructure areas such as housing, healthcare, and transport. Ibec’s executive director of lobbying and influence, Fergal O’Brien, believes that the significant tax revenues flowing into the exchequer will support this initiative.
Ibec’s proposal aligns with the thinking of Finance Minister Michael McGrath, who has also suggested the establishment of a separate savings fund or sovereign wealth fund. However, Ibec warns that other significant spending commitments, such as pensions and preparations for a net-zero economy, will require tax increases in other areas. O’Brien cautions against complacency resulting from the creation of a sovereign wealth fund, as it may not be sufficient to cover all future spending demands.
In its submission, Ibec’s chief economist Gerard Brady suggests that the government could plan to run a surplus of 4% of GDP next year, making it the second-highest among advanced economies, surpassed only by Norway. The cost of Ibec’s proposals, including one-off items, amounts to €8.7 billion, compared to the current total cost of €10.4 billion for all government-planned items. Brady expects the government’s package to increase further by the October budget. He emphasizes the importance of utilizing the surplus effectively, with a focus on the infrastructure fund as a priority. However, he notes that a sovereign wealth fund alone cannot cover the entire pensions bill.
Ibec reiterates that companies anticipate ongoing challenges in recruiting staff. The business group suggests “unlocking” funds from the €1.5 billion National Training Fund to assist companies in retaining staff through re-skilling. Additionally, Ibec proposes investing €650 million in driving climate change initiatives, injecting €710 million into research, allocating €307 million to universities, and providing €225 million in support for Irish exporters.