No need to use rainy day fund for infrastructure, says Noonan

There should be no need for the incoming taoiseach Leo Varadkar to raid the proposed "rainy day fund" to pay for infrastructure spending, the Minister for Finance Michael Noonan said in Limerick on Monday.

The minister, who is set to leave the cabinet on Wednesday following the expected appointment of Mr Varadkar as taoiseach, was speaking in the wake of the announcement by US financial services group Northern Trust that it plans to create another 400 jobs in Limerick over the next five years. This will bring the group's total workforce in the city up to 1,500.

Mr Noonan acknowledged that there was pressure on the Government to provide finance for infrastructure spending but said there should be no reason to raid the rainy day fund, which was announced in last year’s budget and is due to be established in 2019.

A report in the Sunday Business Post at the weekend said Mr Varadkar was considering scrapping the fund for a "spending splurge".

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Capital programme

When questioned about this, Mr Noonan said: "Paschal Donohoe [minister for public expenditure and reform] has already being reviewing the capital programme and I think he'll have about €5billon extra on that, without going anywhere near future plans for a rainy day fund.

“Paschal and myself also went to . . . the European Investment Bank, and we have commitments in principle for extensive additional funding, so I don’t think the new government will have to make a choice between investment in additional infrastructure and the prospect of a rainy day fund. The economy is growing fast enough and therefore there are sufficient resources to do both, and I think that’s the way it will play out.

“The idea [for the rainy day fund] was that, on an estimate going forward, we thought we’d have about a billion a year that we needn’t spend on either capital or current expenditure, from 2019 on, and we’d run it for five years and cap it at €5 million.”

Meanwhile, IDA Ireland chief executive Martin Shanahan said Northern Trust's plan to add 400 jobs in Limerick was "proof positive" that the city was a "highly attractive" location, suitable for global companies in the financial services sector.

Northern Trust is celebrating its 10th anniversary in Limerick, which operates as a a fund administration centre of excellence.

Clive Bellows, country head of Northern Trust Ireland, said the new jobs underlined its "commitment" to Ireland .

"We have seen growth in the scale and operation of our Irish business over the years and the continued expansion of our office in Limerick reflect this," he said. "We gratefully acknowledge the support of IDA Ireland and our local partners such as the University of Limerick and the Limerick Institute of Technology, where we have strong relationships, and recognise the proactive engagement we have with Irish government representatives, and the local funds industry in Ireland."