Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Go raibh maith agat. Cuirim fáilte roimh an Aire Stáit agus é ag déileáil leis an mBille seo. Mar a dúradh, tá an rannóg seo, atá ag fostú 13,000 duine, iontach tábhachtach d'eacnamaíocht na tíre. Cibé leasuithe atá muid ag tabhairt isteach, tá sé tábhachtach go mbeidh siad siosmaideach agus ciallmhar dóibh siúd atá fostaithe san earnáil seo agus dóibh siúd a bheidh fostaithe ann sa todhchaí. Fosta, caithfimid cinntiú go bhfuil na rialacha ceart againn agus go bhfuil struchtúr fadtéarmach, ciallmhar ceart againn a dhéanfaidh cinnte nach mbeidh daoine fágtha thíos leis má táimid ag laghdú na rialacha atá i bhfeidhm.

The Minister of State mentioned that this is a technical Bill and he is certainly correct about that - it is specific to a particular industry. It is interesting that this Bill was not mentioned in the programme for Government and it is clear that it is not at the top of the agenda in housing estates and villages. It is an important piece of legislation but perhaps the Bill to protect mortgage holders whose mortgages are owned by vulture funds or the Bill offering redress for women who were in Magdalen laundries should have come first in the queue.

This Bill relates to the IFSC strategy paper and is a product of the IFSC Clearing House Group, which is an unhealthily influential group of officials and business interests. In this group officials from the Department of the Taoiseach, the Department of Finance, Enterprise Ireland, IDA Ireland and the Revenue Commissioners sit with financial businesses and make plans for the future. The latest minutes available from the Clearing House Group, from February 2014, note that the representative of the Irish funds industry:

highlighted an area of opportunity under the AIFMD Directive which is not currently accessible to Irish funds. If addressed it could afford greater control and certainty to institutions and investors and would provide an additional product offering to the funds industry. He requested engagement between the various stakeholders to address this gap in Ireland's offering.

Am I right to presume that the source of this comment developed this Bill? I know of many community groups and non-governmental organisations, NGOs, working with vulnerable people who would love to have such influence. The question of influence does not stop at the Bill's conception. The website of one leading establishment legal firm proudly states that it was "a contributing member of the legislative group responsible for the preparation of the ICAV Bill". It is happy to take any questions on it, apparently. At this point of scrutiny it would be healthy to have the full list of contributors to this Bill for the sake of transparency. Who drafted the Bill and which inputs were significant?

The funds industry is an important employer in the State and one which is performing well. According to the industry itself, it employs 13,000 people with net assets under management in Ireland of over $1 trillion. That figure puts next week's budget in context. Such employment brings huge benefits but a broader analysis of the impact of the funds industry in the State is needed - in areas such as tax and regulation, for example. It is important that close scrutiny be paid to a trillion-dollar industry.

My instinct is to approach some aspects of the Bill with great caution. Part 6 of this Bill allows for what could be called a relaxation of accountancy demands on these new ICAVs. I understand many in the industry find the current rules overly cumbersome and unsuitable for the industry but accounting rules have arrived at the point they are at through trial and error. Some have pointed out that the banking collapses of recent years can be traced to lax scrutiny of accounting practices and differing interpretations of rules, among other things. I urge caution and careful scrutiny of this section in particular. Similarly, the removal of the obligation to hold an annual general meeting, AGM, flies in the face of long-standing governance structures. I understand that an AGM for a fund is not likely to be as well attended or controversial as recent bank AGMs but making it an option to have no AGM, unless 10% of shareholders object, is a big step.

It has been noted that this Bill does not have the same conditions on risk diversification as other existing models and, again, I point out that there are reasons why such conditions exist.

The Bill moves the regulatory duty for ICAVs from the normal remit of the Companies Registration Office and instead will see these bodies monitored by the Central Bank. I will seek evidence that this conforms to international best practice and, crucially, that the Central Bank has the capability and resources to provide sufficient oversight. The industry informs us that 15% all funds in the EU are based in Ireland. In terms of per capita this is a very impressive return. The Bill seeks to safeguard this performance and go a step further.

Let us be clear that the Bill has two main aims: to compete with Luxembourg and to allow for greater US investment by making ICAVs eligible as "check the box" companies under US tax law. On Committee Stage I will seek greater clarification on whether these goals are worthy. Luxembourg is a very small state with an incredibly large financial sector. We must think long and hard about how much our rules will be dictated by trying to compete with such a specialist country. I will also seek greater clarification on what this will mean in real terms. What will it mean for Irish taxpayers? Given the ongoing EU investigation this should be examined closely, particularly the changes with regard to US companies. I look forward to clarification on these issues from the Minister before Committee Stage.

The Bill is technical but this does not mean it should be given a fee pass. There are questions about how such an industry-specific Bill came before us and questions as to who wrote the Bill. We must consider the benefits and disadvantages to the State and the risks to which the State is open. We must ask how sustainable a model which chases Luxembourg as a financial model can be, and whether creating law in our Parliament to avail of a provision of US tax law is a good, well-thought-out idea. I look forward to detailed examination of the Bill on Committee Stage. It needs to be teased out in detail and I look forward to engaging with the Minister and others on individual sections to get more transparency and understanding of whether they are of benefit to the State or pose risks to it in the long term.

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