Mr. Eoin Dorgan:

I will speak very briefly. I thank the committee for inviting the Department to accompany the NTMA to this discussion on possible new housing finance models. I am joined by my colleague, Mr. John Palmer, from the budgetary policy section.

I reiterate what Mr. O'Kelly said on the views of the NTMA on the State's debt levels. It is important that the State exercise caution in regard to additional borrowings. We already have a very high debt level and are vulnerable to internal and external economic shocks, as Mr. O'Kelly said. The substantial reduction in our debt costs has been very much attributable meeting our targets and over-achieving in our budgetary targets. Other factors include the ECB's monetary policy and the strong growth model within the economy.

I draw attention to the programme for a partnership Government, which commits the Government to meeting in full domestic and EU fiscal rules. This commitment has been a reassurance to financial markets, as evidenced by the recent Moody's upgrading which cited the Government's adherence to those rules. As a Department, we see that the reality is that any breach of the fiscal rules will have a negative impact on the State's borrowing costs, which will impinge on our ability to provide public services.

The programme for a partnership Government includes a number of commitments that involve the Ireland Strategic Investment Fund. The first is working with Irish banks, the European Investment Bank, industry bodies and the Central Bank to develop a new help to build funding scheme for the development of affordable housing in the private sector. The second is encouraging the delivery of housing-related enabling infrastructure in large-scale priority development areas, to which Mr. O'Kelly has already referred.

From the Department's point of view, in order for the ISIF to accomplish its core objectives and the additional objectives which the Government may set for it, it has to operate in line with its statutory mandate of generating commercial return and also having an economic impact in terms of its investments. That return ensures that the principal and the return can be reinvested in the future so it is a constantly cycling fund. Therefore, any housing sector investments in which theISIF engages have to be structured in a manner that generates a commercial return so as to meet the legal framework. That keeps it off-balance sheet which is absolutely vital given the fiscal rules and also the State's budgetary and debt position. The Department is committed to working with other bodies to examine all potential financial models and looks forward to assisting the committee in its work.