Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

Establishing the strategic investment fund is a key component of the medium-term economic strategy published in conjunction with our exit from the EU-IMF programme. The stated objective of the plan is clear. It is to return the economy to full employment by 2020. The strategy recognises that an essential ingredient of economic success in job creation is the availability of financing and capital to allow existing companies to grow and new innovative companies to be formed. In the medium-term economic strategy, we have set out our ambition to develop a more diversified, competitive and responsive infrastructure which can finance growth across the economy. As the economy grows and demand increases, it is essential that well priced financing is available to support businesses to grow and develop. Developing alternative sources of finance for infrastructure projects and businesses across all sectors of the economy, including agriculture, construction and technology, is essential.

Building on the programme for Government commitment and the medium-term economic strategy, drafting of the National Treasury Management Agency (amendment) Bill is at a very advanced stage. Amongst other things, the Bill will establish the Ireland strategic investment fund, or ISIF, to make €6.8 billion from the National Pensions Reserve Fund available for commercial investment in Ireland to foster economic growth and employment. The National Pensions Reserve Fund was originally established to make investments globally with a view to pre-funding social welfare and public service pensions. While the need to provide for social welfare and public service pension obligations has not abated, fostering economic growth and employment is currently a greater priority. By creating jobs and growing the economy, the State will be in a better position to meet its long-term pension obligations. The legislation to establish the fund will be published shortly and I hope to see it become law by the middle of the year.

The fund will have a broad mandate to make commercial investment decisions that support economic activity and employment. While supporting economic growth and employment is clearly the end goal, the commercial nature of ISIF is an important part of its mandate for two reasons: it will magnify the impact of the resources of the fund by making it attractive to third party investors and it will allow ISIF to recycle its investments over time so as to be able to invest in new strategic priorities for the State.

The mandate for the fund will be set out in legislation and the NTMA will periodically consult with the Minister for Finance on ISIF's investment strategy and take into account the views of the Minister so the strategy is consistent with Government policy. The investment mandate will encompass a number of principles. It will be expected to earn a commercial rate of return and it will be designed to support the productive capacity of the economy. The investments should be capable of aligning the interests of various State actors, in particular with regard to energy, water and telecommunications. It will also have regard to Government policy and objectives, including sectoral policy, in making decisions on investments, and the investments should not have negative implications for the general Government balance or general Government debt.

An investment committee will be established which will have discretion to make investment, disposal and asset management decisions for all investments of ISIF, within the parameters and the investment strategy set out by the NTMA board, subject to the mandate of ISIF and having regard to Government policy objectives.

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