Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank both Deputies for their contributions to the debate on the investment strategy of the future Ireland fund and their proposed amendments to section 7 of the Bill. As I understand, Deputy Nash’s proposal is to provide for the NTMA, in consultation with a member of Government, to develop proposals for investment of the resources of the fund in that sector in order to support economic activity and employment. This would be a discretionary power for the agency but would be part of the strategy. Presumably, the intention is that some of the resources of the future Ireland fund would be invested in such sectors of the domestic economy based on such analysis.

Similarly, Deputy Doherty’s amendment would require the NTMA to "have regard to the promotion of the economic development and stability of the State, across sectors including but not limited to housing, infrastructure, energy and water." Section 22 of the NTMA (Amendment) Act 2014 already provides the NTMA with a power under the part of the Act that deals with State assets and investments. When performing functions under that part of the Act, the agency is described as NewERA - the New Economy and Recovery Authority. Under that existing provision, the agency can develop proposals for investment in relation to the energy, water, telecoms or forestry sectors. This can also include any other sector in which the Minister for Finance considers it is desirable to do so in the interests of supporting economic activity and employment in consultation with the Minister for Public Expenditure, National Development Plan Delivery and Reform and the Minister whose functions relate to that sector.

Section 40(2) of the 2014 Act provides that the agency, in determining and reviewing the ISIF investment strategy, shall have regard to the agency’s functions under section 22 of the 2014 Act. This connects with the support of economic activity and employment in Ireland aspect of ISIF’s double bottom line. As part of the design of the structure of the funds, the Government agreed to keep ISIF in place.

As the Deputies know, ISIF is focused on investment in Ireland. ISIF has had a mandate since 2014 to invest on a commercial basis in Ireland to support economic activity and employment. The agency’s existing statutory powers in its capacity as NewERA with regard to the development of investment proposals in relevant sectors and the agency’s function of investing ISIF’s assets in a matter designed to support economic activity and employment will continue to apply. ISIF comprises the discretionary portfolio, valued at some €8.7 billion, and the directed portfolio, valued at €6.3 billion. In June 2022, the revised ISIF impact strategy was launched with a focus on long-term transformational investments addressing key strategic challenges facing the country across four key investment themes of climate, housing and enabling investment, scaling indigenous businesses, and food and agriculture. Investing to support balanced growth across all regions of Ireland is an important part of its strategy across the investment themes. ISIF has an ambition to invest €500 million in regional investments to further enhance the economic potential of Ireland’s regional cities. Retaining ISIF means that the State has the capacity to invest, or co-invest with others, so as to drive public and private investment in the State.

These amendments also need to be read in conjunction with section 6 of the Bill, the investment policy, which provides that:

The Agency shall hold or invest the assets of the [future Ireland] Fund on a commercial basis for the benefit of the [future Ireland] fund, so as to seek the optimal total financial return, as to both capital and income.

The agency’s mandate is to achieve a commercial return. The intention to use the resources of the future Ireland fund to invest in specific forms of economic activity would undermine the reason for the establishment of the fund. We all recognise there are significant costs arising down the line in terms of the cost of demographic change, digitalisation, decarbonisation and the other costs of the State. The policy aim is to establish a financial asset for the State to deal with such future liabilities that we know will arise. Utilising all the windfall corporation taxes means there is less provision for future liabilities. The expenditure on specific areas of economic activity would also reduce the amount of cash resources available for investment in the fund to deal with the expected costs in the years ahead.

Building a financial asset allows the State to use the proceeds of the fund to have resources available to support the Government of the day in dealing with these issues. We do not pretend that this will solve all the expenditure likely to be incurred in the State in the decades ahead but having financial assets in places will undoubtedly be of enormous assistance.

I know we will talk about housing in more detail later on. I refer to the Government’s commitment to addressing the enormous housing challenge we face and our commitment to the national development plan, which is funded. On the basis of the already very significant planned capital expenditure, the existing and well-established roles of ISIF and NewERA and given the core purpose of the Bill is to develop a financial asset that will give us a return in the years ahead, I do not propose to accept the amendments from the Deputies.