Finian McGrath (Dublin North Central, Independent)

Before I go into detail on the legislation, I would like to state that Ireland was once known as the land of saints and scholars but is better known today as the land of scandals and tribunals. Politics, banking, the church, business, medicine, law and the Garda Síochána have all suffered from an erosion of public confidence in the wake of an astonishing proliferation of scandals. Moreover, Ireland has undergone rapid social, economic and political change over the past decade, which has had a profound impact on our values system. The decline in authority and influence experienced by the Catholic Church in recent years has forced many people to seek other sources for ethical and moral guidance.

At the beginning of the 21st century Ireland is a fairly prosperous country yet this creates dilemmas of its own. Difficult decisions about the distribution of resources raise awkward questions for society. How is the tension between the rights of individuals and the overall good of society to be resolved? To whom do we look for guidance? The political elite, political parties, churches, the medical and legal profession and business leaders all have had their credibility seriously tainted by damaging scandals. I raise these issues in the debate because they are all part of a modern progressive economy and society. However, we politicians should be reminded that our focus should be on the good and well-being of our society.

The Bill makes a number of changes to the existing law on investment funds, in particular it provides for a new investment vehicle, the non-UCITS common contractual funds, CCF, and will also provide for cross-investments and segregated liability for investment funds. A number of other changes to general company law are also proposed to remove existing anomalies and pave the way for the smooth transposition of certain EU directives. In addition, some minor amendments to the consumer law are proposed mainly to increase the level of maximum fines that can be imposed on parties found guilty of breaches of specific consumer legislation.

The objective of the investment fund provisions is to give the greatest flexibility to the funds industry while at the same time keeping appropriate controls in place. I know the industry is anxious to have a portfolio fund vehicle available which is as broad as possible to further improve our attractiveness as an international location for the establishment of investment fund companies and the Minister of State referred to that in his speech. As with other legislation governing collective investment schemes, the Central Bank and Financial Services Authority of Ireland will exercise regulatory control over the funds industry for the new non-UCITS CCFs. Furthermore, measures to clarify the tax treatment of the new vehicle have been included in this year's Finance Bill. I welcome these progressive developments.

The Bill proposes amendments to the Companies (Amendment) Act 1990 to provide for segregated liability and cross-investments for investment funds. On the issue of segregated liability, an investor in a particular sub-fund should be insulated from the challenges presented by this ever-changing global market place. I accept the funds industry operates in a highly competitive environment and the Government must continue to give all necessary support so the industry can prosper while at the same time offering clients the appropriate safeguards that one must have in this area.

The Companies (Amendment) Acts of 1990 and 1999 will also be amended to provide for cross-investment by investment companies and the UCITS regulations will be amended to provide for cross-investment by investment companies established by UCITS. These amendments will facilitate investment by one sub-fund into another of the same umbrella fund. This is permitted in investment funds structured as unit trusts but is not possible in investment companies as the legislation currently provides that shares purchased by an investment company must be cancelled. This means an investment company cannot purchase shares in itself and hold these for the benefit of investors in a particular sub-fund. The proposed amendments are aimed at removing this prohibition.

I welcome a number of other necessary provisions and amendments to the Companies Acts which are proposed. They arise from difficulties with the operation of existing provisions in the law, particularly on the Companies Registration Office and to facilitate operators using electronic technology. In addition, the proposed amendments address the need to clarify incomplete or incorrect cross-references in provisions contained in the Companies (Auditing and Accounting) Act 2003, which only came to light post-enactment when the relevant provisions were being considered for commencement.

The purpose of Part 4, which deals with market abuse, is to make enabling provisions that need to be enacted in primary law to ensure the smooth and effective transposition of the EU market abuse directive and three supplementary Commission directives. The market abuse directive covers insider dealing and market manipulation.

I strongly welcome section 29, which outlines penalties on conviction on indictment of certain market abuse offences. It provides for a maximum fine of €10 million and-or a maximum ten year imprisonment on conviction on indictment. Summary offences will be dealt with in the transposing regulations.

Section 31, which is positive and constructive, gives IFSRA the power to make supplementary rules to allow it fulfil its role as competent authority. These rules must be consistent with Irish market abuse law. IFSRA may also issue guidelines on the steps to be taken to comply with Irish market abuse law.

Part 5 deals with public offers of securities and amends the Companies Act 1963 in anticipation of transposition of the EU directive dealing with prospectuses to be published when securities are listed or offered to the public.

As one can see from the details of the legislation there are positive and progressive elements in this Bill, and I welcome them. On the broader issue of business and economics, many business people, particularly in small businesses, have made a major contribution to the development of this economy and I commend them. However, some people use loopholes to exploit others and they must be challenged at all stages. It is up to us as legislators to ensure our citizens are protected on these issues. It is essential that people and companies dealing with economic and investment issues have guidelines and structures. I am not trying to stymie any growth in developments. I always welcome those who come up with creative ideas for various projects and I commend their role in the development of the economy. Consumer safeguards are required at all times, however. Any society that does not ensure its economic policies are just will get nowhere. We can create all the wealth we want but the current debate is about how resources should be distributed in society. The debate on creating wealth is all but over when one compares the current situation to the dark 1980s.

I recall working in a north inner city school for many years during which time there was poverty, mass unemployment and a widespread drugs problem. An entire section of society was excluded from economic benefits. Since those years, the economy has developed but we must now discuss how to distribute the wealth we have created. Many people still feel excluded from an equitable distribution of national wealth. The majority of citizens, including working class people, have been excluded from the fruits of the State's economic growth. It is important to raise such issues which are important for everyone.

Government politicians from the main establishment parties have taken their eye off the ball. They think the war on poverty is over, but it is not. They also think the fight for industrial development in disadvantaged areas is over, but it is not. This point relates not only to urban areas because, even though I represent an inner city constituency, many rural areas are still excluded from the benefits of our economic growth. We must be creative, positive and radical in developing the economy of such regions.

Earlier today the House dealt with matters concerning Dublin Airport and Aer Lingus, and I am strongly against the privatisation of the State airline. We must also be radically creative on other issues. What is wrong with developing Knock Airport as part of a social and economic agenda to assist the west, in addition to easing congestion in many urban areas? I have raised these issues as part of a broader debate, but overall I welcome the legislation and commend it to the House.

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