Sometimes we hear that the Government is over-flowing with money, with a massive surplus in the billions of euros. Other times, we hear the Government is running a deficit. Which is it? Is it raining Euros or are we in the red?

It all boils down to corporate tax revenue. In the last Budget, the Government projected a surplus of €8.4 billion this year. That is unprecedented in the history of public finances. However, this comes courtesy of massive corporate tax revenue.

We collect nearly three times as much corporate tax revenue as other EU countries. How does this happen when we have one of the lowest corporate tax rates?

Here we get into a series of wordplays. The Government describes this massive amount of corporate tax revenue as ‘windfall’. It used to be described as the ‘legal and accounting practices’ of multinationals. Then, it was described as the ‘globalisation’ activities of multi-nationals. What no one wants to mention is that much of this revenue comes from ‘tax haven-type’ activities.

Two renowned economists – Joseph Stiglitz and Thomas Picketty – recently accused the Irish Government of ‘siphoning off profits from other countries’. This is classic tax-haven activity.

However it is described, the Government claims that nearly half of the corporate tax revenue is unreliable and should be removed from the Budget – about €10 billion. When this is done, the massive surplus turns into a ‘deficit’.

Is the Government right to remove this money from the Budget? Yes. It can be considered unreliable. Most of the corporation tax receipts come from a handful of multinationals. If only a few of them changed their tax strategies, if the sectors hit a downturn, or if other countries change their tax rules, we could see this revenue fall. If we relied on this money to fund public services or social protection, and then this revenue fell, we would end up with a hole in our public finances – as experienced during the financial and property crash. We’d then be forced to increase tax revenue and/or cut public spending. That is not a risk we should be taking.

The real question is what to do with this corporate tax ‘windfall’. The Government is moving the money into two funds: a Future Ireland Fund, and an Infrastructure, Climate and Nature Fund. These are intended to support pensions and climate change investments but don’t mind the labels. In 2008, we had €25 billion in a National Pension Reserve Fund which was intended to help us meet future pension costs. It was raided to finance the bank bail-out. The fact is, the Government hasn’t really worked out what to do with the money, apart from moving it out of the budget.

What should trade unionists say about this money? It’s a lot and potentially over €30 billion over the next three years.

Ireland suffers from considerable infrastructural deficits: housing, health, public transport, education; and this doesn’t include the costs of decarbonising our economy. This is where we could invest the money.

The advantage of using the money for investment is that it is not a recurring expenditure that you have to continue spending. Once you build a metro, you don’t have to build it again. Once you build a hospital or a housing estate, it will last for decades. It is not spending that has to be repeated every year.

There are a couple of problems, though. Do we have the resources to undertake this work. For instance, we need to build tens of thousands of homes each year in addition to the Government’s housing targets. But do we have the labour to do this? A second problem is that even investment, which drives up economic activity (employment, wages, profits, consumer spending) could lead to higher inflation.

This is all the more the case given that the economy is at near full-capacity. It’s not like the recession days when there was high unemployment.

 A new investment drive to repair our infrastructural deficits needs to be accompanied by targeted policies to ensure we can actually do the work and do so without fuelling inflation.

 The ESRI gives one example of how to do this in order to expand housing construction. We could direct labour away from building office blocks, hotels and carparks by increasing taxation on their construction. This would free-up labour to build homes. There is little impact on inflation or capacity since we are re-directing labour from one activity to another.

The principle of this proposal could be applied to other areas of infrastructure – re-directing labour and capital into areas of high need. The money is there, literally in bucket-loads. Now we need the political will to use this money in a sensible manner. If we can get the policy mix right, we could transform the economy over the next decade.

Michael Taft is a researcher with SIPTU.