Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move:

That Dáil Éireann approves the payment by the Minister for Finance, pursuant to section 46(1) of the National Treasury Management Agency (Amendment) Act 2014, from the Central Fund to the Ireland Strategic Investment Fund of €335,272,562.50 (three-hundred and thirty-five million, two-hundred and seventy-two thousand, five-hundred and sixty-two euro and fifty cent) being the amount of the funds derived from the proceeds of the sale of the State's shareholding in Aer Lingus.

In May, the Government decided to sell the State's minority shareholding in Aer Lingus. This decision was made on the basis of it being the best means of securing and enhancing Ireland's connectivity with the rest of the world and also to help maintain a vibrant and competitive air transport sector in Ireland. The sale also served the interests of the travelling public, Aer Lingus and its employees, the tourism sector and the economy as a whole. The sale culminated with the lodgement of the €335 million proceeds with the Exchequer on 2 September last. Today, we are not here to debate the decision to sell but rather to debate how these funds will be used.

It has been the consistent policy of the Government that proceeds received from the sale of assets should be used to support and sustain economic recovery and employment creation. However, under EUROSTAT rules, the proceeds arising from the sale of the State's shareholding in Aer Lingus, representing the sale of a financial asset, will have no beneficial impact on Ireland's general Government balance and, therefore, will not provide any capacity for additional Government expenditure on a general Government balance neutral basis.

It is for this reason that the Government also decided as part of the decision in May to allocate the proceeds to a special connectivity fund, which will operate on a commercial basis and, therefore, will not constitute Government expenditure, but will facilitate the re-use of the proceeds for productive purposes under the connectivity rubric on a general Government balance neutral basis. The connectivity fund will be a sub-portfolio of the Ireland Strategic Investment Fund, ISIF. Given that the proceeds came from the sale of the State's stake in a transport asset, the fund will be dedicated to enhancing connectivity both within and for the State.

ISIF will continue to develop and refine the definition and range of investments suited to investment by the connectivity fund. A working definition for the initial stage of deployment is that connectivity assets are those that "enhance, develop or sustain the physical and virtual connectivity of Ireland as an island nation". The connectivity fund will operate on a commercial basis, providing support for commercial investment projects with a connectivity theme, such as the development of ports or airports, including access to these transport assets. It will also be open to provide support for projects that involve a wider definition of connectivity, including, for example, data connectivity such as broadband, fibre optic cables and interconnectors, and energy connectivity such as energy inter-connectors and other energy related projects. These wider connectivity requirements are becoming increasingly important elements of our core infrastructure and will be extremely important to a more balanced regional development.

The decision to set up the fund within the ISIF is a sensible one as the fund already has the appropriate governance arrangements in place. The investment criteria used to assess investment opportunities for the connectivity fund will be entirely consistent with the ISIF mandate, which is to invest on a commercial basis in a manner designed to support economic activity and employment in the State. The success of the connectivity fund will be measured by both investment returns and economic impact achieved. The connectivity fund, like the ISIF, will be a long-term fund deployment on a phased basis, driven by the investment opportunities identified, and returns are likely to accrue over the medium and longer term.

As a small and open economy, Ireland is dependent on the international market place to sell our goods and services. The connectivity fund can be used as an important tool to provide links with our international trading partners. The fund will also be used to improve regional infrastructure to promote balanced regional development.

The decision to use the proceeds from the sale of Aer Lingus for productive investment in connectivity-related projects will provide an opportunity to: enhance our regional connectivity; improve our attractiveness and competitiveness in the tourism sector; and promote investment and enhanced opportunities for growth.

Under section 46 of the National Treasury Management Agency (Amendment) Act 2014, I am empowered to bring a resolution to the Houses of the Oireachtas setting out the proposed payment to the ISIF. I urge the House to support this resolution.

See this speech in context