Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I wish the Minister of State, Deputy Harris, well in steering through his first legislation as Minister of State with responsibility for the international financial services sector. I assure him that we in Fianna Fáil will support the legislation. Since the Irish Financial Services Centre was established in 1987, Ireland has established itself as a significant player in international finance. A dilapidated swathe of the quays that scarred the city of Dublin has been transformed into a thriving hub of global funds.

Every day some 13,000 people are employed directly and indirectly in both the Irish Financial Services Centre, IFSC, in Dublin and across a number of locations throughout the country. Financial services and the funds sector have a significant presence in Cork. Its success has been a major boost to the entire economy and, following the financial storms of the past six years, it offers fresh opportunities for job creation and growth.

The creation of the Irish collective asset management vehicle is a move towards further realising the industry's potential. However, this demands a renewed commitment by the Government to a strong regulatory framework and focus on the industry. In a fast moving sector, financial innovation constantly challenges legislators and regulators to respond in order to keep pace. Today's Bill is a step towards enabling Irish financial services to catch up with their EU competitors with a new investment vehicle. The legislation comes after a period of decline in the financial industry overseen by this Government. We have slipped from 10th place in the global finance index in 2008 to 70th in last month's survey. This dramatic drop underlines the need for Ireland to diversify its offerings in a competitive marketplace and restore our regulatory reputation. If the Government is serious about achieving the aims of its five year strategy for the international financial services industry in Ireland, it needs to raise the game. The serious drop in our international ranking does not bode well for job creation in the sector.

The scale of the industry, with some €2.7 trillion in funds and 13,000 jobs, highlights the importance of underpinning a sustainable industry. The sweep of the five year strategy has real potential for further expansion but requires serious and consistent commitment by the Government. If the Government takes its eyes off the ball, as it has done to date, it will miss an opportunity to renew focus on the sector and deliver the improvements required to make it more competitive. The financial services environment is now very cut-throat and competitive - ultimately it is the most mobile form of investment and things can change overnight. There is too much at stake to risk the future of the industry and the broader role it plays in our economy by being complacent. It was complacency that caused the massive drop in our international ranking in the global finance index.

In discussing the creation of a new financial vehicle model, it is important that we deal with the regulatory framework. The financial crisis, which continues to linger over the eurozone, has illustrated the need for a strong regulatory system to keep market excesses in check. The hard pace of innovation is not just a competitive challenge for Ireland, but also a regulatory one. The harsh lessons of the past six years cannot be forgotten or we risk being thrown back into the market turbulence that wreaked havoc here and globally.

The Central Bank is at the heart of efforts to keep abreast of new fund models. This requires a mixture of legal tools and key personnel equipped to implement them. Solid regulation is vital in building a strong reputation for business to grow and providing consistent, reliable rules to protect consumers. As the industry grows and expands with greater financial rewards available, the importance of attracting and retaining skilled personnel will become even greater. Adequate resources to oversee and maintain the industry are of paramount importance. The systemic risks of mobile capital to the economy demand greater vigilance than was shown before the financial crash - anything less than that is flirting with future disaster.

It is important to remember that a strong financial sector is an integral part of a modern economy, particularly a modern Irish economy. Used well, it targets investment where it is best deployed to create new jobs and stimulate economic growth. It empowers people to realise the dream of home ownership and plan their retirements with a sense of security. Enabling new models, such as the Irish collective asset management vehicle, ICAV, outlined in this Bill, creates new avenues for investment as well as strengthening Ireland's global position. Combined with solid regulation, it is a step towards sustainable recovery for this country and the financial services sector can be a key driver of that recovery. It is vital that we learn from the past to place financial services on a sound footing for the future. In this light, I welcome the Bill and its potential. I look forward to dealing with the Bill on Committee Stage and any future legislative action by the Government drawn from its five year strategy. I hope that this legislation marks a revitalised focus by the Government on this important industry.

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