Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

In fairness, I did not interrupt anyone. I listened with respect and interest to everything, particularly the points Deputy Boyd Barrett has made. They were cogent and practical and I hope to reply to them constructively. It is important that this is a constructive debate. People on all sides of the House have welcomed the principle of the Bill, including Deputy Boyd Barrett, Deputy Higgins, Deputy Coppinger, the Sinn Féin party and Fianna Fáil. All have welcomed the principle. This is a new step that we all agree on. We all agree that this fund is important for the future of the economy. Notwithstanding the criticisms expressed - there have been many from various political points of view - the fact is that this is a major step. It is a stimulus package that we are bringing into our economy. Basically, we are bringing the money home and making it work for us and for jobs. This is about investment strategies and creating jobs. It is not a political slush fund or a fund that excludes investment from anywhere in the country. I emphasise that point strongly: this is for everyone and every business, whether small, medium or large. If a person has a good idea, he should ring up the Ireland Strategic Investment Fund. It is already in business and has already committed significant amounts of money to employment.

My speech was too long at the beginning and I wish to make some points that I did not make at the time but that were in my script.

In consultation with the relevant Departments and agencies, the National Treasury Management Agency has developed an economic impact framework, and this is a key element of the investment strategy. This framework seeks to identify targeted areas for investment which have higher potential economic and employment impacts and will also facilitate the identification of categories of investment that would be expected to assist and accelerate normalisation of capital markets in Ireland following the financial crisis.

The NTMA expects to be able to publish a preliminary assessment of the economic impact of the investments made to date in Ireland by the National Pensions Reserve Fund during the second quarter of this year. To achieve this, the agency has been developing capabilities for collating and analysing data to measure and report on the economic impact of its investments. It is clear and certain that this is the way the funding will be monitored and examined.

Of course, the investment strategy will have to be approved by the board of the NTMA when the legislation is commenced and the new arrangements are in place. It is expected that the investment strategy will facilitate the ISIF in continuing to invest in the public private partnerships included in the Government's stimulus programme agreed in July 2012 on an ongoing basis. Such investments will not crowd out private investment and may include social and environmental projects, subject to the commercial mandate. That is a key point from today's debate. It is the kernel of the points made by several Members of the Opposition. There was consensus on the issue of projects which are socially just, which make a good deal of sense and which are urgently needed. The Government agrees and acknowledges that in respect of these issues there must be a commercial mandate. How we do that? We do it by going to the marketplace, coming up with proposals and matching funds.

I will comment on social housing because several significant points were made in this regard. Recently, we published a construction strategy, the core of which is that every citizen should have access to suitable housing. That is a key policy goal of the Government. We will continue to prioritise the delivery of good-quality social housing. This will include: the return to mainstream local authority housing construction this year, a point well made by the Opposition; enhancing the role of the not-for-profit sector in the provision of social homes, an issue we all agree on; and continuing to work with NAMA, local authorities and approved housing bodies to maximise the delivery of units owned by NAMA or its debtors for social housing. We will identify the best ways to deliver social housing in the years ahead as part of the development of a comprehensive strategy for social housing. The estimate is that in the region of 5,000 new social housing units will be provided in 2014 through leasing and existing capital programmes. This includes the completion of mortgage-to-rent arrangements, the continued transfer of units owned by NAMA or its debtors, the completion of existing building and acquisition programmes and transfers under the rental accommodation scheme.

Budget 2014 contained innovative housing measures and announced an additional €30 million of investment in local authority housing. This is expected to provide a substantial number of new and refurbished homes for people on housing waiting lists. Approximately half of this investment will enable the construction of developments in areas with the highest demand for social housing.

In March, my colleague, the Minister of State with responsibility for housing and planning, Deputy Jan O'Sullivan, launched a two-year, €68 million local authority home building initiative, which will build 449 new social homes for families in need of housing. This investment represents the first return to new, mainstream local authority house building since the beginning of the financial crisis. The details of the €15 million fund to bring vacant local authority houses back into use were announced in April. This will bring 952 vacant local authority units back into beneficial use, providing both high-quality homes for people in need of housing and employment through labour-intensive activities. This year will also see the completion of a three-year, €100 million investment programme that will provide 800 units for older people, people with disabilities and the homeless. We are in the process of rolling out a new housing assistance payment, which will help to remove barriers to employment for recipients and will contribute to the creation of a higher-quality private rental sector through improved standards.

The contribution of the not-for-profit sector to the provision of social housing will be facilitated by legislation regulating the sector. The construction strategy stated that later this year we would publish a social housing strategy setting out the vision for the sector. We will introduce legislation to regulate the approved housing body, AHB, sector. The Ireland Strategic Investment Fund, ISIF, may have a role to play as long as the commercial investment is structured in a way that supports economic growth and employment. The investment must be structured in a way that does not result in its being classified as expenditure on the Government's balance sheet under Government accounting rules. Otherwise, there would be a need for compensatory expenditure cuts to be made elsewhere. The key element is to get matching funds. With those, houses can be built off the Government's balance sheet and the money goes where we want it to, namely, more and improved social housing.

The Government is focused on addressing social housing needs and I am informed that the ISIF is investigating how a suitable commercial investment in the sector could be structured. I hope this will go some way towards acknowledging the points made on all sides of the House. I assure Deputies that this element will form a key part of the debate on Committee and subsequent Stages.

I will refer to some of the comments made during this debate, albeit not necessarily in the order in which they were made. Deputy Michael McGrath, who welcomed the legislation, raised the issue of the salary structure in the National Treasury Management Agency, NTMA. Information on the NTMA's salary bands are publicly available and are published in the agency's annual report. There are significant advantages in the flexibility given to the NTMA. For example, it allowed the NTMA to recruit specialised staff to resource the National Asset Management Agency, NAMA, quickly. This was essential in order to get NAMA up and running with the necessary speed. The key point is that information on the full range of salaries and staff numbers is available and published annually. Transparency is not an issue.

The Deputy also asked about directed investments - public policy investments - in AIB and Bank of Ireland. Directed investments will remain under the direction of the Minister for Finance. When the time is right to sell them, the Minister can direct that the money be paid to the Exchequer or remain within the ISIF.

The Deputy referred to how the legislation had been announced in March 2011. In anticipation of the Bill and as had been mentioned, the National Pensions Reserve Fund, NPRF, has committed 20% of the value of the fund, amounting to €1.2 billion, to investments in small to medium-sized enterprises, SMEs, public private partnerships, PPPs, and Irish Water. We have not been standing still. NewERA has also been set up within the NTMA on a non-statutory basis and has been providing advice to the relevant Ministers. It is important that the Bill go through the proper due diligence and legal review process. However, that process has not impeded the NPRF in making investment commitments in Ireland. NewERA has made a valuable contribution since its establishment on a non-statutory basis.

Some of the €500 million invested in the metering programme has created more than 1,000 jobs. The vast majority of the people in question were previously unemployed, are new entrants into the job market or are apprentices. Initially, 15% of those working in the programme were to come from these categories, but the actual figure is in excess of 80%. It is an advantage to people who do not otherwise have employment opportunities.

Deputy Pearse Doherty stated that Sinn Féin would already have had the ISIF up and running. My points respond to that claim.

In anticipation of the establishment of the ISIF, the NPRF has committed to a number of investments in Ireland, including infrastructure, water, long-term financing for SMEs - both credit and equity - and venture capital. The NPRF has already committed €1.2 billion. Included in these investments are €375 million to three new long-term funds, which will provide equity, credit and restructuring or recovery investment for Irish SMEs; a collaboration with Silicon Valley Bank that will lead to $100 million in new lending commitments to fast-growing Irish technology, life science, cleantech, private equity and venture capital businesses over five years; a fund of more than $100 million established with the China Investment Corporation, CIC, which will make minority equity investments in fast-growing technology companies in Ireland that have a substantial presence or strategic interest in China; a financing facility of €250 million to Irish Water; standby credit facilities for the delivery of two PPP projects, the N11 and schools bundle 3, with a combined project size of €286 million; a commitment of €250 million to the Irish Infrastructure Fund, a three-way partnership between the NPRF, AMP Capital and Irish Life; a commitment of €125 million to Innovation Fund Ireland, a Government initiative led by Enterprise Ireland and the NPRF to attract leading international venture capital fund managers to Ireland and increase the availability of capital to Irish early-stage and high-growth companies; and a commitment of €81 million to local venture capital funds. In addition, the NPRF has been working closely with NewERA in respect of investment opportunities in the areas of water, energy and broadband. I can place further details on the record in this regard.

I acknowledge the serious developments raised by Deputy Deasy with regard to the high rate of unemployment in Waterford. Like others, I am deeply concerned, and it is not true to assert that the Government is not concerned about Waterford. I have knowledge of two specific matters in this regard. First, a national water service investment programme worth €1.77 billion was recently announced by the Minister, Deputy Hogan. Nineteen full A4 pages of projects, large and small, are being addressed. It is expected that between €25 million and €30 million will be spent on improving wastewater treatment facilities at a number of locations throughout County Waterford. This is more than the €20 million to be spent in my county. As such, it is not a political issue and, importantly, is being addressed across the country.

Second, and as Deputy Naughten is aware, the significant issues of boil water notices and the capital programme for water service improvement in County Roscommon have been raised repeatedly in the House. They are being addressed by the Government in areas where previous Governments did nothing for the past ten years.

I reject the point that we are not significantly investing in rural and other areas.

Regarding broadband investment, the Minister, Deputy Rabbitte, recently announced a broadband package for the entire country but particularly for the areas that would not otherwise get broadband provision from the private sector. Investment of €0.5 billion is going into the areas that do not have fibre broadband supplied to them. Those areas have been identified. I note in particular County Waterford. I will not read names of the areas into the record, but they have been published. It is untrue to say, therefore, that the Government does not have significant investment proposals for infrastructure in Waterford for both broadband and water. However, I acknowledge the issue regarding unemployment and the jobs that are under threat this very day.

It is important to get our facts right in regard to this Government. One of the key questions asked was the reason this investment had to be commercial. Deputy Tóibín expressed disappointment that the ISIF has a commercial investment mandate. The key principle is that it will leverage its resources by acting as a cornerstone investor and attract third-party co-investment. The €6.9 billion will be matched with other investment, resulting in more economic activity and employment in Ireland that could not be achieved if the ISIF was the only investor at the table. A good example would be to consider the Irish investments the NPRF has already made; I spoke about the €1.2 billion earlier. That €1.2 billion becomes €2.4 billion because of the private funding obtained.

The ISIF needs to earn a commercial return to be able to recycle its investments. As the investments mature, the money comes back in and we invest again. We are recycling. The ISIF is being established for the longer term with a view to investing in priority areas and attracting other third-party investors to those areas. While those areas will change over time, the ISIF will no longer be required in the old priority area if there is sufficient private sector capital at work, and that will make a difference. Everybody on all sides of the House acknowledges that this fund will make a difference. It was a question of the degree and the location, and the action that would be taken. We all acknowledge that things are changing. This money is now being invested in Ireland and it will have a significant influence on future job creation both nationally and regionally. I repeat that if there is a proposal to significantly invest in employment in a jointly funded operation, please God that will happen.

Deputy Murphy raised the matter of providing for future pension costs. While the need for the State to provide for social welfare and public service pensions has not abated, fostering economic activity and employment is currently our greatest priority. The ISIF is expected to have a significant impact on economic growth. By helping the economy to grow we will be in a much better position to meet pension obligations in the long term.

Deputy Murphy also spoke about the PPP arrangements that were in place for school bundling. In terms of the way the arrangement works, the Department of Education and Skills makes an annual payment, known as a unity payment, in return for the bundle of schools. The bundle of schools is built by a sponsor which, in turn, will require financing to fund the build cost. Private sector funders such as the EIB, domestic banks, international banks, the ISIF and the institutional investors provide that finance on commercial terms. In order to preserve the off-balance-sheet nature of PPPs, the ISIF can only provide a maximum of 50% of the finance. That means that the ISIF provides additionality to Government expenditure; therefore, compensating expenditure costs elsewhere to meet the EU fiscal rules do not arise.

Deputy Deasy said he could not welcome the Bill because it did not ensure balanced regional distribution. I said it was a national fund with a national focus. It does not have a legislative regional focus. The fund's mandate is to make commercial investments, but there is an investment plan. The Minister has the opportunity to examine that plan, and if regional imbalances and other issues arise, I am sure they can be addressed. That question is better addressed not by having a provision in legislation but by being very much aware of the accountability of the fund, through this Oireachtas, with regard to all these issues.

This fund will only succeed if everybody can benefit from it. If anybody has any proposals, we want to hear them regardless of where they live or the areas they represent. Examples of regional investment are schools, roads and water, which I mentioned earlier.

Deputy Ross raised concerns about ISIF investment decisions and the commercial nature of the fund. It is a commercial fund. This fund will not invest in political pet projects, and the public assets entrusted to the fund will not be frittered away. The Secretaries General of the Departments of Finance and Public Expenditure and Reform and the chief executive of the National Asset Management Agency are ex officiomembers of this board. That increases transparency, because they would not - nor would board members - be involved in political pet projects.

This is very serious business. It has never been more serious for this country in terms of helping the economy recover. I have every confidence that the combined knowledge of the members of the board, the transparency and accountability regarding all these funds, and the reporting processes and procedures will ensure that the views of the cynics in this House will not prevail and that the credibility and integrity of the board, the appointments made and the officials involved will shine through. I have no doubt it will be successful.

Another point that must be made is that no commercial body, bank or group of people would be investing in this country if it were not a commercial operation. All of those operations and business plans must be transparent and costed and must meet all the commercial criteria that apply. There is nothing but total clarity regarding the integrity of the process, and no bank, business or fund will risk an investment on a project that potentially is not commercial or is a fix, which is what seems to be implied. That will not happen. No Member on any side of this House would stand for that. I regret that people have that view, because the transparency, accountability and integrity of this process will shine as our projects succeed.

The board of the agency will be appointed by the Minister but, as noted by Deputy Ross, the investment committee members - the people who will be discussing the investment processes - are not appointed by the Minister. Two of them must be members of the board, but the remainder are appointed by the board of the NTMA with the consent of the Minister for Finance. That makes it secure from any potential direct political appointment. I have every confidence that the commercial mandate of the ISIF will be measured by its ability to attract private sector co-investors.

I should mention that the general scheme of this Bill was not presented to a departmental select committee for consideration and report thereon as required by Standing Order 123, which was adopted on 17 October 2013. This was in part because the Bill had been sent for drafting well before the Standing Order was introduced and because establishing NewERA on a statutory basis and reorienting the resources of the NPRF into the ISIF are key Government priorities.

The Minister was also conscious that there have been some changes in approach following engagement with stakeholders and the Office of the Attorney General during the drafting process, and would wish to avoid suggestions of bad faith if the published Bill differed from the general scheme referred to the select committee beforehand.

On foot of these considerations and, balancing the need to expedite passage of the Bill in view of its manifest importance to the Government's efforts to reinvigorate the economy against the demands of a very enlightened modernisation of the process for the development of legislation, the Minister reluctantly came to the view that it was more appropriate to proceed with this legislation without pre-legislative scrutiny. We have had a full Second Stage debate here and, as far as I am aware, there will be no restrictions on the Committee Stage debate.

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