Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I am glad to speak about this because there is probably no more important a subject we could discuss than strategic investment, which is the key to getting this country out of the economic mess it is in. This Bill is long overdue. The strategic investment bank the Government promised, which I presume is now this strategic investment fund, has taken a long time to come before us for this debate.

The lack of a strategic plan for investment lies at the heart of the economic crisis we had, because investment flowed to the wrong places for the wrong reasons, creating a bubble economy and leading to a disastrous crash for which we have paid a terrible price. Getting the question of strategic investment right is critical for the future of our economy, if that future is to be sustainable and if it is to avoid repeats of the sort of disastrous crisis we have just been through. I hope that with all the exciting and interesting issues that often occupy the national media, some of which are important and exciting and others less so, some attention will be paid to this very important discussion, which will set the parameters for the future sustainability of our economy.

In establishing a strategic investment fund we are starting with a much-depleted fund because of the decision of the previous Government and this Government to bail out private financial institutions and international gamblers in the financial markets. The obvious point - which has been made many times, but which I do not believe we should be allowed to forget because it will be a feature of what is going on in our economy for years to come - is that this year over €8 billion of money, which could have been in a strategic investment fund and invested in this country to create jobs, develop infrastructure and ensure a sustainable economic future for this country, is being sucked out of the country. That is a tragedy. The pot we have to engage in strategic investment is massively depleted because we will continue to pump out billions of euro for years to come to pay for the disastrous mistakes that were made in the past. Those mistakes must inform our approach to strategic investment to make sure we do not repeat them. I still believe - although I know I will not get any change from this Government on it - that we should be fighting with Europe to retain some, if not all, of that €9 billion to reinvest in our economy in strategic ways. If this Government or any other Government insists on paying back all that money, which we should not do because I do not believe we are obliged to pay it back, it should demand that it is paid out over a much longer term. It should insist that some of the money we are paying out be retained for strategic investment on the basis that we can show that investment is capable of achieving a return which would allow us pay back the money over a much longer term. I make that general introductory point. I will not dwell on it but I believe it is critical and must not be forgotten.

In terms of what this fund can do and where we should be investing strategically to create jobs and develop a sustainable economy, on the face of it, this Bill is saying the right things. We need strategic investment. It is a good approach to streamline the National Treasury Management Agency and move away from investing the national pension fund in international hedge funds that are being invested elsewhere, and to redirect the investment back into our economy, with a particular focus on job creation. All of those measures, on the face of it, are welcome, and some of the sectors of the economy mentioned by the Minister with regard to this fund and that are in the legislation, such as infrastructure, energy, telecommunications, broadband and forestry, are key areas in which we must be thinking about strategic investment, because it can generate employment and real wealth for our economy, which can help us get out of the mess we are in and develop the economy on a sustainable path into the future.

However, what worries me greatly is the repeated emphasis the Minister put in his introduction on co-partnership with private investors, public private partnerships, and allowing for further State investment in private financial institutions - that is, bailing out banks - all of which are worrying. In the case of NewERA, the Minister knows well that we are opposed to the State asset disposal programme because we believe it is the wrong way to go about making the best of our assets and resources that must be retained in public ownership and invested in to develop jobs and economic benefits for the citizens of this country rather than being given away to private interests purely to ensure a profit for those interests and, ultimately, at a loss to our economy and society. Overall, there is a worrying emphasis on what is called commercial return, which, going on past experience, is often about short-term rather than long-term, sustainable investment directed towards the good of our economy and society.

It is also important that as well as a commercial return on our investment we get a social return, and that the return is regionally balanced so that the investment is spread throughout the country and among different sectors of the economy rather than concentrated in particular regions such as Dublin. It is important that the focus is on balancing the need for a return with the social need of our citizens and the long-term needs of society as a whole. I am concerned that this is not the direction in which we are going and that the focus is more on short term commercial gain for strategic investment.

An issue that has not yet been mentioned but that lies at the heart of the economic crisis we are experiencing and needs to be a priority in terms of strategic investment for all sorts of reasons is that of housing. The manner in which NAMA, which comes under the umbrella of the NTMA, has dealt with and is dealing with this issue indicates that we are moving in the wrong direction. I and others have repeatedly and endlessly pointed out that we are experiencing a disastrous housing crisis, that rents and property prices are going through the roof, that a property bubble is rapidly developing and so on. NAMA, the biggest real estate company in the world, owned by the State and under the umbrella of the NTMA, is unloading vast amounts of property onto the market and into the hands of, to a large extent, private international investors who have no commitment to our society, its needs or our economy. They are investing in Ireland for one reason only, namely, to make money, to profit from a property sector that is beginning to again spiral out of control. A body operating under the aegis of the NTMA is handing this property over lock, stock and barrel to big international investors. The Department of Finance has put in place incentives and tax breaks to encourage these vultures on the international markets to invest in and profit from the housing and property sector while at the same time we are experiencing a massive and spiralling housing crisis, with many of our citizens unable to afford to put a roof over their heads. To me, that does not make sense.

If NAMA's job is to make a short-term gain and put private developers back in business, then that makes some sense. However, if we are thinking strategically about the long-term good of the economy, the maintenance of balance and regulation in the housing sector and, crucially, meeting the social needs of Irish citizens, what is being done makes no sense. It is setting in place the ingredients for the same disastrous mistakes to be made again. What should be done is that this property, in so far as NAMA still has it, should be put back into the hands of local authorities to house people in need and generate a long-term revenue stream for the State. Whether property is taken from NAMA or constructed, the effect would be the same - namely, people would be returned to employment, a revenue stream would be created for the Exchequer and there would be savings to the State in moneys currently paid out in rent allowance, RAS arrangements and lease arrangements with the private sector, which, if this is not done, will continue to get this revenue stream at great cost to the State. I do not understand it.

In response to our calls for a housing construction programme or housing purchase acquisition programme for local authorities, the response of the Minister of State, Deputy O'Sullivan, has been to ask where the money will come from. The money could be taken from the Strategic Investment Fund. I will provide some data showing how this would make sense, not only for the people on the housing list in need of affordable housing but for the economy in terms of the revenue that would be generated. According to the response to a parliamentary question I tabled some months ago, the cost of constructing 10,000 council houses - the cost might be slightly higher now because of the rise in inflation, although it would cost us nothing if property was transferred across from NAMA - is €1 billion. If 10,000 houses were constructed annually, the saving to the Exchequer in rent allowance payments to private landlords would be €66.2 million. Also, additional rental revenue of €50 million would be generated for the State. This means that approximately €100 million per annum would accrue for every 10,000 council houses constructed, purchased or transferred from NAMA. If 50,000 houses were to be constructed, purchased or transferred from NAMA, the saving would be €500 million, or the same amount in additional revenue to the State. In other words, if, via NAMA, construction or acquisition-----

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