Dáil debates

Thursday, 29 May 2014

National Treasury Management Agency (Amendment) Bill 2014: Second Stage (Resumed)

 

Question again proposed: "That the Bill be now read a Second Time."

1:40 pm

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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May I share time with Deputy Boyd Barrett? I will take ten minutes.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Ten minutes each.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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I think he would have 20 minutes.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I beg the Deputy's pardon. Is that agreed? Agreed.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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The Bill gives the National Treasury Management Agency, NTMA, direct responsibility for what is left of the National Pensions Reserve Fund, NPRF. We expected this to be one of the Government's first actions in getting projects up and running. It is important that what is left of the fund delivers a return, given our pension time bomb. The critical date is 2025, which is one of the reasons the NPRF was set up in the first instance.

A substantial amount of the fund, some €20.7 billion, was pumped into the banks. Of that, only €13.3 billion will be retained, signifying a direct loss of approximately €7 billion, poking a sizable hole in the fund. We must keep sight of this fact at all times when considering the fund's function and how to use it properly as an economic stimulus, particularly in terms of job creation. One can have growth, but one can also have job-rich growth. Although I have problems with this legislation, it is important that the money be used wisely.

We do not have a good heritage of building institutions. Many of the State's institutions are carry-overs, as it were, from the time before the State's founding. Some of those we have created have not served us well. The greatest example in this regard is the HSE. As such, I have been considering who will control the NTMA. It seems that its CEO will report directly to the Minister. A board of six people, including a chair, will be appointed, but the Minister will make the decisions. It is important that the Oireachtas have meaningful oversight of and input into decisions or, at least, the scrutiny thereof.

Another issue relates to the payment of board appointees. It appears to be at the Minister's discretion, but there can be wide variations in the amounts paid to people who sit on boards. For example, board members in the National Asset Management Agency, NAMA, are paid twice as much as those who sit on the RTE authority. There must be rationalisation of this situation, as the variations are not explicable.

The NPRF was established in 2001 with a view to helping the social and private pension economies from 2025 onwards. Given that it has been decimated, however, it is important that any investment be made in a way that gives a return. The Government has advertised that €6.9 billion is available for investment, but that is not the truth, as €1.2 billion of it has been already committed, including as part of the €250 million that has been "invested" in Irish Water, an amount that has come from many different sources. In reality, there is only an approximate €4.8 billion available, and it would have been more honest to say so.

It is positive that this fund can be used to leverage financing from the European Investment Bank, EIB. I have been arguing for a different type of housing programme, one that offers people the opportunity to rent their homes for the duration of their lives instead of relying on a rental sector that is based either on local authorities or private, short-term tenures. A substantial amount of money is available from the EIB, but some of the charities cannot draw it down because they need to provide a certain level of guarantee. Their governance does not allow them to make losses. That said, houses are required and this presents an opportunity to provide a different option, one that is not exclusively for people who are financially dependent. A mixed group would prevent ghettoisation on the basis of poverty. Substantial work could be done in this regard, for example, through co-partner arrangements.

A requirement of any potential investment is to attract matching investment from an outside source. Many Deputies have been pointing out that pension funds in Ireland could be more productively used within the State. The Nevin Economic Research Institute, NERI, referred to the "multiplier effect of targeted productive investment" in terms of job creation. An impressive number of people could find work if investment was targeted correctly. This has led to a demand for the fund to be used instead of just being allowed to sit there. In this way, people could be taken off the dole and other social protection payments and start doing something that is of some value to the economy and society.

Short, medium and long-term investments are required, including in education and training. One of the so-called bundles involves a partnership with the Department of Education and Skills in the provision of schools. What return would there be from such a public-private partnership, PPP? Some PPPs have been very much to the advantage of those on the private side of the arrangements. We need only consider the shadow tolling of some toll roads. It was almost like a lottery ticket.

There was a guaranteed return because the State had to provide sufficient numbers of vehicles, even though that was not a particularly sustainable approach.

On the issue of State claims, it is a bit like David and Goliath. I hope there will be a difference in culture because I believe the State takes on issues it should not take on just because it can do so. I recall that under a previous Government, between 2004 and 2007, €20 million - I know that figure is correct because I asked a number of parliamentary questions at the time - was spent fighting parents in the courts who were seeking appropriate education for their children, when that €20 million would have provided a substantial amount of what was required. There should be an examination of the cases the State fights to determine whether they could be done in a different way that would save money, rather than always trooping down to the Four Courts to defend issues when it could make the necessary change.

I have mixed feelings about this legislation. We have been waiting a long time for it but I have concerns about the control and targeting of the investment. I have concerns about the private sector doing particularly well out of it at the expense of the State. If that happens, it will be a real problem.

1:50 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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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-----

2:00 pm

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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The Deputy is pulling figures out of the sky.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Excuse me.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Deputy Lawlor will have an opportunity to speak later.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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Deputy Boyd Barrett is pulling figures out of the sky.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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The information is from replies to parliamentary questions.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The response to a parliamentary question in regard to how much it costs to construct a council house is that it would cost approximately €100,000 to do so. That is what I am basing my calculations on. I would appreciate it if Deputy Lawlor ceased interrupting me.

This means that over ten years the scheme would pay for itself. Following that, there would be a revenue stream back to the State - money that would otherwise be going to private investors such as LoanStar and other vulture funds. In the context of the repayment of all debts to private institutions, even they would see that this guaranteed revenue back to the State. Also, the construction of social housing would put many people back to work. That is strategic investment that is sustainable, long-term and beneficial to the economy and society. I do not understand why the Government will not do that and the reason all the emphasis is on partnership with the private sector. We all know what happened to public private partnerships such as the one with Bernard McNamara in O'Devaney Gardens, Dominick Street and so on. They were a disaster. Why would we do that? It is a waste of money. It is money down the drain, it is unreliable, it does not work and it has had disastrous consequences in the past. What I have proposed is the type of scheme in which we need to invest. It would meet real social need, create employment and all that would flow from it and provide guaranteed revenue to the State.

Another area that could be examined is that of forestry. Despite the fact that we have the most favourable conditions in Europe for the growth of forests, we have spectacularly failed to meet our afforestation targets. This country was once covered by forests. Forestry is a safe investment. It generates a lot of employment and so on. I do not propose to go through all the data because we have already discussed it during several debates. Forestry provides a guaranteed number of jobs for a set amount of acreage. It is a long-term safe investment. The value of timber globally is increasing. A lot of international funds invest in forestry because it is a safe, good investment. It is also good for the environment.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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And the vulture capitalists.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I am saying that the State should be investing in it.

Through protesting and campaigning, we stopped the Government giving away Coillte's harvesting rights, yet all the emphasis is on handing over theassets to the private sector rather than on recognising where there could be strategic investment with significant potential to generate revenue and deal precisely with issues such as the pensions reserve fund. We need the reserve fund because it is a safe investment that will actually guarantee the pensions of citizens and deal with the pensions crisis that is looming for the country. What I propose presents a win-win scenario. There would be a benefit in terms of carbon credits and EU money. These are the areas we should be examining.

A matter that was recently brought to my attention — I am not an environmental expert by any means — was that of geothermal energy. My point on it may be very obvious to people from rural areas. Everything that grows, including grass and scrub, can be turned into energy. I refer to biomass. While the Government's emphasis has been on building huge industrial wind turbines, attracting all of the associated controversy and major questions, a report issued recently claims that if we were to spend on converting the Moneypoint power plant into a biomass plant one tenth of what the Government is planning to spend on turbines in partnership with big private financial interests, we would meet our targets for carbon dioxide emissions reductions. Should we not be considering this? We could grow the trees and there would be an economic benefit in terms of jobs and the environment. Revenue would be returned to us rather than go to private investors.

I do not have time to address all areas of strategic investment. I worry deeply about the emphasis the Government is placing, through this legislation, on the facilitation of profit-making by private investors and interests who will drain away our resources and the revenues that could otherwise be generated to the benefit of citizens and the economy.

2:10 pm

Photo of John DeasyJohn Deasy (Waterford, Fine Gael)
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I am sharing my time with Deputy Anthony Lawlor.

Some in the House might presume Deputy Richard Boyd Barrett and I are diametrically opposed politically. I would not dispute that to a certain extent, but I believe his point on the lack of a regional focus in this legislation is correct. There is no such focus. That two people might be diametrically opposed politically does not mean that they cannot both look at legislation and spot a flaw. There is a flaw in this legislation and the Deputy has pointed it out. I will now do so.

Usually, when a Government Deputy speaks on legislation, he starts by welcoming it. I cannot welcome this Bill because, in its current form, it has a massive problem. While the logic behind the measure is understandable, the omissions from the legislation are a problem. In other words, it actually has the potential to make matters worse economically in certain parts of the country. This is because the distribution of investment across the country is massively imbalanced and there is nothing in the legislation to counteract that growing imbalance. What is worse for me is that, after months of pointing this out on the floor of the House and at meetings of the Committee of Public Accounts and elsewhere, no one in government seems to give a damn. There are parts of the country that have seen almost no foreign direct investment or substantial State investment in the past ten or 15 years.

We now have the legislative framework for a strategic investment fund for what is to all intents and purposes a national stimulus package that might amount to €15 billion, if we are lucky. It is structured without any consideration for the fact that cities such as Waterford and other urban areas, in particular, around the country are on their knees economically. Today there will be an announcement of a further 200 job losses in the city of Waterford, to which I will allude.

The problem that obtains is actually a lot worse than one that a government does not have any money and cannot spread it around. In this case, the Government finally has some money, but it is choosing not to invest it where it is needed the most. It is fair to say that while we may be experiencing an economic recovery of sorts, we are not experiencing an evenly spread recovery across the country. Dublin has outpaced everywhere else in increasing economic activity, followed by Cork, Galway and, to a lesser extent, Limerick. Outside these urban areas, ordinary businesspeople and taxpayers generally are of the view that the Government has resigned itself to the fact that this is just the way it is. It is believed that as long as the underlying figures for the country as a whole are decent, it is acceptable. The truth is that parts of the country are still in recession or, at the very best, stagnating economically. All I have to do to confirm this is look at the CSO property figures published yesterday. Prices in Dublin rose by 3.1% in April, while there was a fall of 0.3% in prices outside the capital in the same month. It is the same old story. A few weeks ago Teagasc produced a good report on the economic strength of rural towns, the upshot of which was that rural towns had been focused on much less in national development strategies in the past decade and a half.

With regard to development strategies generally, the Government has correctly focused on regaining our international reputation by attracting outside investment. A good job has been done in that regard. The Minister for Finance has been central to this and has done a very good job. However, if we are in recovery mode, our recovery has become imbalanced, perhaps through no one's fault. Any new investment in the country has occurred exactly where it is needed least, namely, Dublin, Cork and Galway — three urban locations where 82% of foreign direct investment ended up in the past 20 years.

When I read about the NTMA-controlled National Pensions Reserve Fund, totalling €6.8 billion, being turned into a commercial investment fund to be matched by €6 billion to €7 billion in private investment, the obvious question is whether anybody considered that some of the money should have been earmarked for the areas worst affected by the recession. The answer is a resounding "No" time and again, as the Bill confirms. When I asked the Secretary General of the Department of Public Expenditure and Reform about this recently, he confirmed that there was no regional angle or perspective and that, as far as he was aware, no consideration of a regional impact. He then said something very interesting, namely, that when his Department examined Exchequer funding and PPPs, it had regard to spread from the political world in which money was allocated. My take on what he said — we all know it — is that nobody inserted regional considerations into this legislation, but, when it comes down to it, anything is possible if there is the political will. The reality is that money is spent and things happen based on the location of Ministers' constituencies. That phenomenon is alive and well under the Government. It is fair to say money is still being allocated not on the basis of need but on the basis of political influence. The Bill proves this again. As far as I can see, no account is being taken in government collectively — I know this — of where money has or has not gone in the past and where it should or should not go in the future. The Department of Finance should ascertain where the investment in State finances has occurred in the past ten or 15 years and where employment rates are at their lowest. It should consider a policy of domestic investment in the areas that need most assistance. The Government could start again with this Bill. It is effectively a stimulus package, but it is structured in such a way that 90% of the €6.8 billion in State money could end up being invested exclusively in Dublin. That could make things a lot worse for other parts of the country.

I raised this matter in the House a few weeks ago as a Topical Issue. What I received in response was patronising palaver. I have looked back at the speech made in response by the Minister of State who was here on the day. The part that was particularly galling — perhaps its authors are in the Chamber today — was the statement that "there will not be any parameters set for regional distribution." The next line was: "It must be said that no region will be excluded." It was the kind of cute, smarmy terminology that I really detested.

The Minister of State proceeded to characterise my contribution as a "gross distortion" - he said it twice, but nothing I said was a distortion. There is a massive imbalance when it comes to deciding where investment should be made in the country. The Bill amounts to the first stimulus package the country has seen in six or seven years, yet it ignores completely the obvious imbalance. Frankly, we have moved beyond whether people in the regions think there is an imbalance. They know it. Whether the Government thinks what I have said is a gross distortion is beside the point; in the local elections last Friday the people of my area registered what they thought about what I had been saying and what the Government had been doing about it. Last week there were seven Fine Gael and Labour Party councillors in Waterford city; today there is one. People in Waterford are living with the reality of the imbalance about which I am talking. If the Department is going to respond to what I have said a second time, I suggest it not use the word "gross" or "distortion", or attempt to tell me I do not know what I am talking about. It might consider that IDA Ireland has accepted that regional aid guidelines do not work and have not worked, that there is an acceptance that investment is even around the country and that Departments collectively need to consider ways to deal with this glaring economic fact.

The Bill needs to be amended. Money needs to be earmarked or set aside from the figure of €6.8 billion for the areas that need it the most. There are a lot of action plans but very little action. I am off to meet the Minister, Deputy Richard Bruton, for the second time today, with IDA Ireland. The problem with IDA Ireland is that the concept of "business as usual" is not working. There comes a time when we have to ask the question whether it ever will work with the existing personnel and approaches in the agency. The people of Waterford were not saying last Friday that the Government was not working hard enough or that they had forgotten who had caused the economic mess. All they were saying, in some respects, was: "Hello. We exist in the south east, but you have forgotten about us." They want to know what the Government intends to do next. This is emphasised by what has again happened today, with hundreds of job losses in Waterford city. This legislation, unfortunately, demonstrates they have a point. The Government needs to consider what I am saying and act. A starting point would be to amend the Bill appropriately. Money from the Strategic Investment Fund needs to be diverted to where it is needed most.

2:20 pm

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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While I do not always agree with Deputy Richard Boyd Barrett, on a certain point within this legislation, I have to agree with him. This comes from the mandate for the Strategic Investment Fund which, as the Bill states, will be to invest on a commercial basis to support economic activity and employment in Ireland. One of the key things we are lacking where I come from - we have been talking about it for many years - is housing, in particular social housing. While I disagree with Deputy Richard Boyd Barrett on from where he pulls his figures at times, I know that on the ground the people who come to my office regularly are looking to be housed.

When I discussed this issue with NAMA and the local authority a number of years ago, when it was first mooted that NAMA would make properties available to the local authorities, it was found that many of the properties in Kildare that were in NAMA were not suitable to house families, most of them being apartments. If Deputy Richard Boyd Barrett had done similar work for his own local authority area in Dún Laoghaire, he would probably have discovered the same thing, namely, only a small percentage of properties in the NAMA portfolio were suitable for families. That is the problem. What NAMA is now doing is dealing with the issue on a commercial basis, although it has also dealt with local authorities to try to transfer as many houses as possible to house those on housing lists. The Strategic Investment Fund has to look at housing as a means by which it can invest some of the billions available.

While Deputy Richard Boyd Barrett referred to one incident in which a public private partnership did not work out, many of them did. In addition, he never mentioned anything about Part V. To my mind, Part V was disgraceful legislation, brought forward by a gombeen politician, Mr. Noel Dempsey. It should never have been brought forward and has turned out to be disastrous legislation. In the past five years under it, virtually nothing has been transferred to the local authorities to house people. As a consequence, the housing lists have increased dramatically.

When I consider what has happened with the pensions fund, I have to give credit to former Minister Charlie McCreevy who set it up and had a long-term vision for where it was to be used. Unfortunately, in my naivety, when the crash occurred in 2006-07, I always believed it could be used along the lines of what had happened in the United States under the New Deal, namely, to fund social projects to get people back to work again. Instead, we threw it at the banks. I still believe we will get some money back from them. We have invested in shares in Bank of Ireland which are proving to be beneficial and also in AIB; therefore, it would be best not to sell our stake simply because it is rising but to wait a number of years. Nonetheless, I strongly believe some of the investment fund has to be used in partnership to build houses, including with the local authorities. That is why I advocate the removal of Part V of the housing Act. The money should be transferred in partnership with the local authorities to build the houses required. I have always argued that we do not just build houses, we need to build communities. I would have opted for an alternative to Part V. My view was that developers should hand over land and that councils could then decide whether it should be used for the provision of amenities, schools, recreational facilities or houses. Part V only dealt with the building of houses, whereas I would look at building communities.

I have looked at how the fund has been used heretofore and welcomed many of the investments that have taken place and how the fund has been used to leverage additional moneys. From a jobs perspective - I am a member of the relevant committee - some of the measures are innovative. I was always very much in favour of young entrepreneurs and other young people getting access and the fund has been used in that way. My view has always been to look at it in an overall, holistic way. As taxpayers, we actually provided the funding for the National Pensions Reserve Fund and we should benefit from it. There is a certain sector of society who are struggling and my point is that there should be some social inclusion provision within the legislation to cover housing.

I am concerned to ensure moneys will come back into the NTMA through the investments we have made in the banks. While people might clamour for a repayment of our debt, we should put some of the money into the Strategic Investment Fund in order that we can use it to improve the economy further. We must look at this issue on a long-term, not a short-term basis. If we only look at it on a short-term basis, we will end up paying down debt. However, over a long period, debt is written down slowly but surely. If we invest in infrastructure with the funds we will get back from the investments we have made in the banks, the long-term returns will benefit the whole community.

I strongly advocate that we put forward some amendment to this Bill that would include some kind of social provision so that it does not simply generate income back to the State. The State is made up of citizens who at this moment in time are crying out for housing, so it is important that we invest in that, because without citizens we do not have a State.

2:30 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I know Deputy Eoghan Murphy has a short period of time in which to make his contribution but an Opposition speaker is due to speak. Does Deputy Mathews mind if Deputy Murphy takes five minutes?

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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No.

Photo of Eoghan MurphyEoghan Murphy (Dublin South East, Fine Gael)
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I thank Deputy Mathews. I want to go back down to the Committee of Public Accounts so I am in a bit of a rush. I welcome this Bill. The NTMA has proved itself to be a very capable arm of the State and this should be recognised. We should look at those factors that make it so successful in how it conducts its work. They include how people are recruited, compensated and rewarded for performance in the workplace. There is possibly a lesson that can be shared with other Departments and other public bodies. Of course, there are different salary scales in the NTMA for various reasons, but it relates to the way in which it structures the pay scales, incentivises competition in the workplace and rewards achievement. People are held to account and are held responsible for their actions. It is possibly an interesting case study in respect of lessons that might be shared with other aspects of the State and how we do our work.

A strategic investment fund for the State is important, but it must be strategic and profitable and operate as the NPRF did before we funnelled it into the banks. Deputy Lawlor made an important point about recognising how important the NPRF was and the foresight involved in building up that fund. Unfortunately, that fund was mostly lost in the economic crisis because of what happened in the banking collapse. In taking the money remaining in the NPRF and creating a new fund with it, we must be strategic with those investments in the hope that we have that investment and funds should they be needed if there is another difficulty in the future, financial or otherwise. Hopefully, they will not be needed. The investments must be made on the basis of a decent financial return for the taxpayer. We are not spending this money; rather, we are investing it. We must not use it to curry favour with a particular demographic, region or interest group or for political reasons, because it would be disgraceful if we did that and a big mistake.

Many speakers have spoken about where the NTMA should invest and different ideas and proposals. Deputy Lawlor spoke about housing, which is important. One thing I wanted to touch upon is how the money is invested. I will be tabling an amendment in respect of that along the lines of the ethical investment Bill I introduced last year and in keeping with other national investment funds, most notably Norway's strategic investment fund. This fund is prohibited from making certain investments. I would like to introduce that into our new fund. There is already an ethical prohibition on the State's investing in companies that produce cluster munitions, and I would like to extend that to companies that produce nuclear weapons or nuclear weapon delivery vehicles. The NPRF has already invested €10 million in such companies, which is a disgrace. As we divest and reinvest that money, we must not reinvest in companies that do such work. This would be in keeping with our long-stated foreign policy objectives since our very first days in the UN. It is incredibly important that we are not hypocritical in how we spend taxpayers' money. If this country believes in the abolition of nuclear weapons, it is completely hypocritical for us to invest in companies that are building them. I hope this amendment will be accepted by the Minister of State when I table it. I intend to pursue it rigorously because it is important to me and to the people of this country. It should be recognised at every point that it is their money.

While we are talking about the NTMA, when we exited the bailout last year, we decided not to take a precautionary line of credit from the troika because the NTMA had built up cash reserves in the region of €20 billion, which was a smart move. It is always important that we have such contingencies in place, particularly given the continuing fragility in the international markets. However, I wonder if there is scope to take a portion of that €20 billion in cash reserves - even as little as 7% - to reinvest in the domestic economy by way of a change in the tax bands. If we were to increase the entry point to the marginal rate of tax by €10,000, it would cost the State €1.3 billion. I am not sure whether we will have that even on the current growth forecasts for this year, in keeping with the cuts that must be made this year to bring the annual deficit down. It would be a one-off payment, but such a one-off payment might prove to be the stimulus that we need, so that going into next year's growth levels it might carry over and become something more permanent. I wonder whether it has been discussed at senior level, but if not, I ask that it be considered, because the arithmetic for the next budget is tight, and from what I have heard in certain quarters, I am concerned that we may not be sticking to the current programme, which has specific parameters set out in Irish and European law. It is incredibly important that we reduce the deficit because we are legally obliged to, and for the continuing economic stability of the State. At the same time, we must find measures that might help stimulate the economy. They might not be directly in front of us in terms of the job creation that is taking place every month, which is welcome. The measure about which I spoke might be worth looking at as a one-off measure to help carry us over into next year and to more permanent changes in the tax arrangements in this country.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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I have not had an opportunity to look into this Bill in great detail. There is no point in trying to present myself as somebody who has looked into it in great detail, because I have not done so, but I will make some general observations regarding what has happened to the NPRF since the 31st Dáil was formed. In a development I viewed with alarm and regret, as I felt it was the wrong thing to do, the NPRF was raided very heftily in July 2011 to recapitalise the banks in an over-hasty and probably ill-judged view of the capitalisation requirements of the banks, the state of their financial assets and the funding of their balance sheets. The amount of money that was invested in the two pillar banks was in the order of €16 billion. It was really the capitalisation of the banks plus the contribution to the troika funding needed to start the memorandum of understanding arrangements to manage the deficit.

Hitting the NPRF at such a high level was reckless because there could have been at that point creditor capitalisation. The euro system strong-armed the Minister for Finance, the Governor of the Central Bank and the Department of Finance into essentially insisting that the socialisation of Irish-owned banks' losses could justifiably go ahead. That was wrong. Having accommodated that strategy, we have been left in the very defensive and weak position of being unable to insist on or make any progress with regard to creditor participation in the recapitalisation due to the losses.

The loss keeps being referred to as a €64 billion or €65 billion loss and capitalisation, but that amount only represents those losses that have been acknowledged in that way.

There are further losses embedded in the banks that have not been recognised and that are causing the paralysis in the two main banks and preventing them from releasing their customers, households and businesses to a normalised level of liabilities funding. Even the front page of today's edition of The Irish Timesreports on how the banks are being unreasonable in regard to restructuring to repayable amounts the legacy debts on the balance sheets of households and businesses on the basis of the incomes.

The Bill is a behemoth. I glanced through it and it attempts to section off parts of the labyrinth of arrangements and operational management of agencies that are part of the State, including the National Pensions Reserve Fund, which is heavily depleted, with approximately €6.5 billion being put into the new division with new instructions and new boards. That is fine but it presents an opportunity again to make the case supported by the evidence. There are 385,000 people still on the live register; 250,000 people have emigrated; 170,000 households are in deep mortgage distress; SME liabilities amount to €50 billion, of which €25 billion is distressed and probably incapable of being repaid; 90,000 families are on housing waiting lists; and 5,000 people are without homes. That amounts to approximately 1.5 million people and our so-called partners in Europe have not snapped out of their dream to understand it is a nightmare for these people and relief in the order of €50 billion is long overdue to this country. The promissory bonds that represent the losses of Anglo Irish Bank should be extinguished, torn up and mutualised throughout the eurozone. That can be done. It is a matter of will, insistence and fighting for our people. Another €20 billion or €25 billion at a minimum is needed for the two main banks to snap out of their paralysis and deal with their loan books in order that the loans of families and businesses representing at least 750,000 people can be worked out properly and with dignity. It will not be a free and easy ride for those families but it would put them in a position where they can just about honour their debts for the rest of their working or business lives. This needs to be done and the Government parties have an opportunity to flex their muscles and fight for our people.

Deputy Eoghan Murphy conceded that he was grateful that I allowed him to make his contribution because he was in a rush to another meeting and I understand that but there was a rush, for instance, on 9 February 2013 to liquidate IBRC without due consideration and deliberation as to what that moment could have provided in terms of another opportunity to eliminate the promissory notes and consequent promissory bonds. The Labour Party advertisements during the recent election campaign referring to €30 billion less bank debt were misleading. It is not the case. Even €20 billion less is not the case. A sum of €20 billion, which would have been the cashflow obligation over the next eight or nine years, has become a €40 billion cash flow obligation extended over 40 years. It has no business being on the backs of the citizens of Ireland.

The balance sheets of all the licensed deposit taking businesses, including banks and building societies, show without the need for a banking inquiry that at six monthly intervals between 2001 and 2008, liquidity and solvency ratios, loans to customer deposit ratios and the funding of senior secured and subordinated bonds, together with the aggregate of the credit loans advanced by the banks in Ireland, including foreign-owned banks, were six times our GDP by 2008 instead of the loan assets being three times our GDP. What were the directors of each of those institutions doing during those seven years? What were the banks' auditors doing? The financial engineering of the balance sheets went way out of control. The banks manufactured a credit bubble, which is the prerequisite for an asset price bubble. That is a pyramid or Ponzi scheme, which is bound to collapse mathematically. When it collapses, the residual is the loans to households and businesses.

The personalities on the boards of banks and running the banks have changed since 2001 and even since 2008 but we need accountability. Let us gather them together in a place that would accommodate such a revelation, for example, the basketball centre in Dublin, line them up in sections alphabetically, starting with AIB, Anglo Irish Bank and on to Bank of Ireland, Danske Bank and Ulster Bank and so on, and have the people who were in charge of directing the banks explain their balance sheets for each year. They were out of control and when the music stopped in 2008, Bank of Ireland had €61 billion in loans on its balance sheet. That funding in the form of senior secured bonds was short dated compared with some of the loans which had been extended interest-only on a roll-over basis. It was crazy stuff. Dynamite, matches and petrol come to mind.

It is not even the fault of a previous Government. The boards of directors created the credit bubble. There cannot be an asset price boom and bust without credit creation. All the customer deposits were lent but that was not good enough for the directors. They wanted more funds to make more loans and, therefore, they issued bonds. Bank of Ireland had €61 billion in loans on its balance sheet in 2008 and AIB had €42 billion in addition to all the customer loans and the interbank money it had borrowed on a three, six and 12 month roll-over basis. It was mad and it gives us the evidence for a banking inquiry. Let us have the directors of these institutions in those years before us to examine their accounts and to have them explain them. This led to 1.5 million people being affected, including 385,000 on the live register, 170,000 in deep mortgage distress, which equates to 500,000 because there are 2.7 people in each household, 90,000 on the housing waiting lists, who were squeezed out of the madness of the asset price boom and bust, and the 5,000 who have no homes to go to at all and are sleeping on the streets. They deserve to see the curtains rolled back in the basketball centre and to be given explanations. There should not be firing squads at dawn, decapitations, heads on battlements and so on but let us hear what they have to say. Not one person on those boards has been asked to explain the balance sheets, which are the evidence of the creation of the credit bubble. Is that not crazy?

Is it not crazy that the Government wants a committee of inquiry that will be politically balanced so there is Government control of it? People might feel completely at sea at present as to where to begin, until they start boning up, but I have just said where to begin. That would be the best lesson on how to avoid anything in the future.

Without the credit bubble everything else could not have happened. When one creates credit like that, and only the banks did it, one creates the conditions and climate for greed. When I read the newspapers, I read about greedy builders and developers. They could not have been greedy if the greed ingredient, which is credit, had not been created by the banks. Am I right, Deputy Ross?

2:50 pm

Photo of Shane RossShane Ross (Dublin South, Independent)
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I am sorry but I missed the last sentence.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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Given that only the Minister and three colleagues are here, and I welcome Deputy Coppinger, I might as well be talking in the garden at home.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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The Deputy is talking from the backbenches.

Photo of Peter MathewsPeter Mathews (Dublin South, Independent)
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I hope it is recorded. Perhaps the Minister would ask his colleagues on the Government benches to examine this and to start the banking inquiry along the lines I have just mentioned, because it could save a great deal of money. Let us save some money for the taxpayer and let us share with the taxpayer the truthful, fair and even-handed opening scene. Let us pull back the curtains and start from there.

The guarantee only occurred when the bubble burst. We all know what happened after that and that the lawyers had us shivering and afraid to do what was right. Instead of that they became neurotic about the law and said that historical law provides that everybody should be protected equally, including the guys who had bought in the secondary market. The bonds were originally offered in the primary market and the investors had the good sense to get out and sell the bonds to the secondary market. That is when the bonds go up and down in price. This morning, representatives of NAMA appeared before the Committee of Public Accounts to explain how they hope to reduce the exposure of the Exchequer, which is us the citizens, by accelerating the disposal of the loan portfolios they hold. They are probably right to do that at present because there is a huge amount of overloaded liquidity in the hands of hedge funds and other investment funds seeking to buy assets at lower yields than they otherwise might. They are there because the cost of holding the bonds that NAMA issued to the banks in return for the rotten loans it acquired is currently low. However, if NAMA holds onto the funding of the bonds and holds onto the assets because somebody thinks they might make a little more, given that it is a floating variable rate, the price of those bonds might rise and that could result in losses. As the yields rise on those bonds, supported by the underlying property assets, the value falls and the underlying assets fall. Perhaps NAMA is right, and I believe it is, to see if it can dispose of larger lumps of those portfolios, simply to reduce the exposure of the State and the people.

I wish the Minister well. He should simplify things wherever he can. He should not add more law. People's heads get wrecked and melt when trying to understand what is happening, so the Minister should simplify. He should recruit people who are competent, experienced and as apolitical as possible to work these things. He should not be afraid of any bad news that might be coming down the track. Instead he should face it, measure it and then deal with. He must keep things open and transparent.

I urge the Minister not to allow any of his colleagues to do what has been done on a few occasions previously. When the NAMA legislation was brought forward in October and November in 2009, it was not on the Minister's watch, but the IBRC liquidation and the promissory note issue were presented misleadingly and dishonestly, in my view. There was a golden opportunity to achieve the cancellation of what are now the promissory bonds, formerly the promissory notes. That could have been done. I am deeply disappointed on behalf of the people who elected me and all the other Members of the House at what happened and that illusory and misleading language presented something other than what it was at the time. That is not right. Honesty is the best policy.

Photo of Alan FarrellAlan Farrell (Dublin North, Fine Gael)
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As this is Deputy Coppinger's inaugural speech, I take the opportunity to congratulate her on her election.

Photo of Ruth CoppingerRuth Coppinger (Dublin West, Socialist Party)
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I thank the people of Dublin West for returning me to the Dáil to represent them, particularly the activists in the Anti-Austerity Alliance and the Socialist Party who worked so hard to have a representative in the House to bring forward some of the key concerns facing ordinary working people in Dublin West. That is the reason I have chosen to speak on this Bill today.

There are many aspects to the Bill but I will focus on section 22, in particular, which provides that the agency, in consultation with relevant Ministers, can develop proposals for investment to support economic activity and employment in energy, water, telecommunications, forestry and any other sector specified by the order. I fully support the principle of State investment in infrastructure and to create jobs. It is ironic that this runs counter to the neo-liberal philosophy that has been the mania of this Government, the previous Government and the European Union establishment over the last number of years, when the creed was privatisation and looking to the private sector to resolve all problems. The failure of that is seen in the 25 million who are unemployed throughout Europe. The Government is moving very late to invest strategically. This is a tardy and insufficient measure in the face of the mass unemployment and mass emigration from this country in the last number of years.

The Socialist Party is grateful to the officials in the Department of Finance for the briefing on the Bill which was given to my colleague, Deputy Joe Higgins. The core of the Bill is that €6.9 billion in assets from the National Pensions Reserve Fund will be given to a new body under the auspices of the National Treasury Management Agency, to be called the Ireland Strategic Investment Fund. A total of €2.4 billion is already committed elsewhere, leaving €4.5 billion to be invested. That sum of €4.5 billion is insufficient in the context of the thousands who have emigrated from this country and the thousands who are unemployed. Let us put it in perspective. This year and every year €8 billion will be paid by the State in interest on our national debt, much of which is due to the bank bailout which was dearly paid for by the Irish people. Five years ago, the National Pensions Reserve Fund had €20.7 billion in assets. This was put into the banks and in 2013 it was worth €13.3 billion. Over €7.5 billion was lost by the Irish people due to the chaos of the finance system of capitalism. That puts the amount of money dealt with by this Bill in context.

I wish to draw attention to a glaring omission. There is no specific reference in the Bill to housing, which is the most important strategic and social need in this country at present. It is conservatively estimated that 8,000 to 10,000 houses can be built for €1 billion, so 40,000 houses could potentially be built if the money referred to in this Bill was used for housing.

That may sound fanciful but it is not. In 1975, more than 8,000 local authority houses were built in a single year, to say nothing of what was built by the private sector. During the Celtic tiger boom, up to 80,000 houses a year were being built. The idea that the housing crisis cannot be resolved quickly and within a period of perhaps three years is not fanciful at all and only requires the political will to be there.

I challenge the Minister. Is this going to happen? Is any of the fund going to be used for housing? Does he accept that could happen with the Bill? I await a reply, as do the thousands who are stuck on housing waiting lists and suffering from the neglect of successive Governments. It is not something that has happened under the current regime alone, but under the previous regime also. A mother with an autistic son contacted our office yesterday to say that she is now homeless. Through the kindness of charity, she is being put up for a night in a hotel. These kinds of case are the order of the day. A man contacted us who is sleeping in the van he used to use for work. That is what people have been reduced to by the lack of housing, rack-renting and Government inaction over successive years. All public social housing was devolved to the private sector.

Housing can be facilitated in the Bill. Does the Minister agree that it is a glaring omission, given the countless stories that have come up in the last few weeks alone? If it is not an omission that is to be corrected, will the Minister agree that this is another example of the Government's absolute removal from reality? It is a removal from reality that saw the Government punished severely in the elections over the weekend. Deputy Joe Higgins and I have been approached by countless people in Dublin 15 - in Dublin West - who are suffering because of the housing crisis. They are now going to take action. I caution the Government that there will be social unrest and activity over housing if action is not taken by the regime. Many people have established housing action groups, which are seen as increasingly necessary by those on the housing waiting lists. I await eagerly the Minister's reply to the effect that housing will be included in the Bill.

3:00 pm

Photo of Alan FarrellAlan Farrell (Dublin North, Fine Gael)
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I thank Deputy Coppinger and congratulate her on her election.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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Ar an gcéad dul síos, ba mhaith liom buíochas a ghabháil leis an bhfoireann ón Roinn Airgeadais maidir leis an t-eolas breise a fuaireamar uathu inné ar an mBille seo agus an méid a bhaineann leis.

Tá an-chuid gnéithe difriúla insan Bille seo, ach nílim chun dul isteach iontu ar fad inniu. Ceann de na gnéithe is tábhachtaí atá ann ná cad atá le déanamh leis an gCúlchiste Náisiúnta Pinsean maidir leis an t-airgead atá ann a aistriú go ciste infheistíochta. Ar ndóigh, tá sin thar a bheith riachtanach. Ceann de na cúiseanna ba mhó leis an ngéarchéim dífhostaíochta agus leis na céadta mílte duine óg agus níos sine a bheith ar imirce i láthair na huaire ná an titim tubaisteach a tharla in infheistíocht phríobháideach insan tír seo agus, ag an am céanna, na ciorruithe in infheistíocht phoiblí. Chun na fadhbanna seo a réiteach, tá infheistíocht ag teastáil, go mórmhór in infreastruchtúr poiblí.

Dá bhrí sin, fáiltím i bprionsabal leis an méid go bhfuil airgead Stáit, airgead na ndaoine agus cáiníocóirí, le cur isteach in infheistíocht chun infreastruchtúr a thabhairt chun cinn agus postanna a chruthú. Mar a dúirt mo chomhghleacaí, is scanallach an rud é go bhfuil €7.4 billiún d'airgead de chuid lucht íoctha cánach sa tír seo caillte sna bainc. Cuireadh isteach figiúr millteanach mór, €20.7 billiún, cúig bliana ó shin, ach anois níl ach fágtha ach €13.3 billiún.

Feicim i Cuid 6, alt 42, den Bhille seo go bhfuil sé mar páirt den Bhille gur féidir tuilleadh airgid a chur isteach sna bainc. Faraor, níl leagan Gaeilge den Bhille againn, ach séard atá á rá ann ná gur féidir infheistíocht a dhéanamh chun teacht ó ghéarchéim doimhin in eacnamaíocht an Stáit nó chun cosc a chur le damáiste a d'fhéadfaí a dhéanamh don córas airgeadais ionas nach dtarlódh a leithéid. Is iad siúd na critéir céanna a bhí ar bun nuair a cuireadh €60 billiún d'airgead cáiníocóirí isteach sna bainc le sé bliana anuas. Níl faic sa Bhille seo a deireann conas gur féidir aon airgead nua a chuirfear isteach a shábháilt ó dul an tslí céanna agus a chuaigh an €20 billiún a cuireadh isteach cheana. Arís, d'fhéadfaí an t-airgead sin a chailliúnt.

Maidir le cúrsaí infreastruchtúir agus a leithéid, níl aon tagairt faoi leith sa Bhille don riachtanas is mó sa tír i láthair na huaire - an géarchéim agus an fulaingt uafásach atá i measc na mílte maidir le ganntanas tithíochta agus easpa fothana do dhaoine sa tír seo. I ndáiríre, ba cheart go mbeadh náire ar an Rialtas seo nár thóg na húdaráis áitiúla ach 300 nó 400 teach an bhliain seo caite ag am go bhfuil 90,000 clann ar na liostaí feithimh le haghaidh tithe poiblí. Nuair a fhéachann muid go speisialta ar an méid tithe a tógadh sna seachtóidí, nuair a bhí an tír seo níos boichte ná mar atá i láthair na huaire - an géarchéim seo san áireamh - feiceann muid sa bhliain 1972 gur thóg na húdaráis áitiúla 5,900 teach, tógadh 6,000 teach i 1973, tógadh 6,746 i 1974, agus tógadh 8,794 i 1975. An bhliain seo caite, níor tógadh ach 300 nó 400.

Nach bhfuil sé soiléir cad atá le déanamh anois maidir leis an ngéarchéim seo? Is cóir go ndéanfar togra práinneach tabhairt faoin ngéarchéim tithíochta sa tír seo. Maidir leis an 1,700 de tithe atá in úinéireacht na n-údarás áitiúla agus atá folamh i láthair na huaire, fáiltím roimh an deis atá á thabhairt do dhaoine glacadh leis na tithe sin, ach níl ansan ach sop i mbéal na gaoithe.

Dá bhrí sin, ba cheart go ndéanfadh an Rialtas, mar thogra práinneach, an t-airgead seo a chur isteach in infheistíocht leis an ngéarchéim tithíochta a réiteach agus deireadh a chur leis an fulaingt uafásach atá ar siúl mórthimpeall na tíre - le clanna i mhullach a chéile, i dtithe lena dtuismitheoirí agus lena sean-tuismitheoirí, rud scanallach i ndáiríre. Freisin, tá lánúin pósta scartha óna chéile agus teallaigh ag dul ó óstán go h-óstán. Tá seo náireach. Ansin, nuair a thagann deireadh seachtaine mór ar a dtagann ceoltóir mór nó a leithéid go Páirc an Chrócaigh, cuirtear amach as na h-óstáin iad go dtí áit éigin eile mar go bhfuil úinéirí na n-óstán ag iarraidh níos mó airgid a dhéanamh. Rud náireach é seo.

Iarraim ar an Aire Stáit, nuair a bheidh sé ag tabhairt freagra dúinn -----

3:10 pm

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Tabharfaidh mé freagra ar sin ar ball.

Photo of Joe HigginsJoe Higgins (Dublin West, Socialist Party)
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Níl sé ráite go speisialta ach de réir mar a thuigim ón mBille is ceadmhach don Stát tithe a thógaint mar thogra infheistíochta. Chuir mé ceist ar seo ar an bhfoireann ón Roinn inné agus an cheist atá agam anois ná an bhfuil an Rialtas chun a chur roimhe go speisialta cuid mhór den airgead seo a chur isteach chun an géarchéim seo a réiteach? An bhfuil sé chun iarracht a dhéanamh dul ar ais go dtí an leibhéal a bhí ann sna seachtóidí ar a laghad, agus an líon tithe a tógadh ansan a thógaint anois? Dá mba rud é go dtógfaí fiú 10,000 tithe in aghaidh na bliana, d'fhéadfadh sin laghdú lomdíreach a dhéanamh ar an mbrú uafásach atá ar an gcóras tithíochta sa tír seo. Laghdódh sé an brú atá ar chánacha agus a leithéid chomh maith. Tá daoine amach ansin atá ag fulaingt agus ag fanacht le freagra ón Rialtas. Teastaíonn uaim a chloisint ón Aire Stáit go soiléir - an bhfuil sé seo le déanamh ag an Rialtas?

Photo of Shane RossShane Ross (Dublin South, Independent)
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I congratulate Deputy Ruth Coppinger on her maiden speech and I wish her many long years in this House. I regret the fact that she is supplanting her constituency colleague, but maybe we will find another constituency for him. In light of what he said in his elegant speech in Irish, it would be a great pity if we were to lose him to a colleague for political and constituency reasons.

I listened to what Deputy Joe Higgins had to say and it consistently alarms me that I find myself, once again, more in agreement with him than with those who promote this Bill. That is not because I agree with the specifics that all the money should go into housing, which is a very direct message and somewhat restrictive, but because I am deeply suspicious of the motivation behind the Bill and I am extremely reluctant to believe the money is going to be as productive or as impartially and independently distributed as the Government parties lead us to believe.

Once upon a time, over ten years ago, Charlie McCreevy had a bright idea. The nation was booming and, partly to be prudent for the future into 2025, his idea was to set aside money for a national pension fund. It amounted to 1% of GDP. It was prudent because it was going to dampen a boom that was getting artificially large. Charlie McCreevy had many faults and flaws but he knew that, if he set the money aside in large sums, politicians - himself and his party included - would see the fund growing, set their eagle eyes on it and try to get their paws on it for political advantage. Instead of just setting up a fund, as most politicians would do, he set it in legislation that the fund could not be pillaged for political reasons and could not be used for politicians' constituencies or pet projects. He seemed to have set up, not for eternity but for over 20 years, a fund to look after the needs of pensioners from 2025. That was a sound idea with which few people disagreed at the time. He did not take in the capacity of his successors, when faced with the first possible emergency, huge political embarrassment and a national crisis, to destroy the idea.

As Deputy Peter Mathews spelled out so clearly, when the bank crisis arrived the fund was completely and utterly destroyed. Legislation was passed in the Oireachtas to allow the Government to use the fund to prop up the banks. The fund is down €7 billion or €8 billion, a figure that fluctuates a bit, varying with the price of Bank of Ireland shares, which are volatile at the moment. The fund is all but gone, with only €6.9 billion remaining.

Today, we are debating what happens to the entrails of the fund. The legislation does exactly the opposite of what Mr. McCreevy did. It enables the Government to do exactly what it likes with what is left, masked with a few pretty cosmetic restrictions. I do not like the legislation, although it has been well spun and well sold and is coated in the language of apple pie and ice cream. The fund will be used, ultimately or pretty shortly, for political purposes and nothing in the legislation stops it from being used for that purpose.

My first problem is the question of why the NTMA. The NTMA is the universally acceptable face of Irish State capitalism. It has supposedly done a fantastic job and has managed to capture most Ministers for Finance, almost all of whom sing its praises. I am not sure the myth stands up to scrutiny. Most of it comes from the NTMA and its extraordinarily well-paid spinners, some of whom are sitting for hours before the Committee of Public Accounts, from where I have come, spinning some smooth and unconvincing stories about NAMA. They have done a very good job for the NTMA and have done such a good job that the NTMA empire has expanded over the years from being a debt management agency into taking control of the State Claims Agency, the National Pensions Reserve Fund, NewERA, the NDFA, NAMA and various other bodies, according to a briefing I received from the Department of Finance.

I wonder why the NTMA has been given this all-powerful, monopolistic role in the Irish economy and why Ministers are so consistently happy to pay tribute to its success. It has had successes; there is no doubt about that. The fact that it has been able to sell Irish bonds is a success by its standards, whether by luck or not. It had success there and was good at marketing those bonds. However, anybody who believes the NTMA has been some sort of stellar performer in managing funds ought to look at some of the critical pieces written by Professor Stewart of TCD and others, who conclude that the fund management performance of the NTMA is at best middling in terms of its competitors overseas.

In its early days, the NTMA very cleverly chose a benchmark which is always exceeded. Every year, on 31 January, it comes out to an audience which is quite uncritical and not very knowledgeable, including successive Ministers for Finance. Each year, the Minister is present and nodding wisely while the NTMA says it has beaten the benchmark again, a benchmark it set itself. Therefore, let us not get too starry-eyed about what the NTMA does or let us not be too happy about the strategic investment fund going to the NTMA. Let us look at this more critically and let us not blindly say it will be okay because it is going there. The NTMA's performance is not particularly great. It is not top quartile, and this we should bear in mind.

What is going to happen to this money, this €6.9 billion? We do not know. However, we are being reassured that there are certain restrictions on its use. First, it will go to Ireland, and second, it will go into commercial projects. I do not believe these two restrictions are necessarily compatible. It will not necessarily go to the most commercial projects available if it is restricted to the home patch. This excludes so many options that it is not guaranteed to be commercial. Restricting it to Ireland may have merits; obviously the Irish economy needs that money, but that restriction certainly does not mean it will go into the optimal commercial investment.

The second restriction, which is blandly bandied around by those who support this Bill, is that the money must go into commercial projects. How in the name of God do they know the projects are commercial before they have started? What they mean is that the money will go into projects they judge to be commercial, a purely subjective judgment. When we leave decisions like this to subjectivity, we leave them open to the possibility of political interference. With the best will in the world, politicians could maintain that the projects involved are commercial, but the danger is that there could be another agenda involved. I suggest the Government, with only 18 to 24 months to go, will succumb to that danger for political purposes.

The proof of this is that the Minister has refused to allow this fund out of his political grasp or the political stranglehold in which it is held. As I see it, the general government policy on where investments go is set by the NTMA, and the most specific direction of these investments is set by the new companies investment committee. The NTMA is dominated by Government nominees. It currently has an advisory committee which is nominated by the Government, and it will now have a nine-member board which will be nominated by the Government. However, with the Government's record, there is little doubt that it will put in place people who are, at the least, safe choices, people who when the chips are down will do what they are told.

I have just come from a meeting of the Committee of Public Accounts which had NAMA before it. I am not going to be unpleasant or personal about anything, but NAMA, which is part of the NTMA family, has just got a new director. This has happened under the radar and there do not seem to have been any announcements about it. This new director appointed to an important State agency happens to have a Fine Gael pedigree second to none. That new director is also on the board of Bord Gáis. This indicates to me that the Government will not be in any way shy when it comes to making appointments to the new board of the NTMA, particularly to the investment committee, and that it will appoint its cronies and people who will send the money in the direction the Government approves.

In fairness, the investment is not directly decided by the Government, but the Minister has a veto. Therefore, it comes to the same thing, although couched in language which offers a certain protection. What I see happening here is something that always happens where politicians, elections and large amounts of money come together. What I see happening is that money will be directed in a way that will be politically advantageous. I do not see any problem with giving the money to housing projects, nor do I see the Government having any problem with that. The problem I see is that the Government will probably give it to housing if it can, but only in specific places where it is politically advantageous to do so. That is the kind of cynical operation I see at hand here. If it were not the Government's intention to direct this money to its political advantage, why did it not detach it from the NTMA and from itself and give it to a truly independent body with a real commercial mandate and direction and which is free of political interference? It could not do that because at the back of its mind it wants this cash and wants to be able to put it in a place that is important to it. The history of Irish politics demonstrates that this is what always happens. Otherwise, there would be far stricter limits and far more restricted investments.

I am not happy about this so-called commercial mandate, or the suggestion that the money must go to commercial interests.

There are many quangos that are patronised and ripped off in order to pay directors' fees to Government friends and they are called commercial semi-state bodies. Some of them are not commercial at all. CIE is known as a commercial semi-state body. It is not commercial in the sense that it makes a profit; it never makes a profit. It is subsidised to the amount of about €280 million a year. Will we be able to take some of this money and shove it into a body that is not making money because it needs it and say it is meant to be a commercial body or could be in the future? If it goes to prop up a failing State body, that should be addressed in a completely different way. "Commercial" is an abused and contaminated word. There are real dangers. I have serious doubts about setting up another jobs agency, if that is what it is meant to be, because such agencies tend to be subject to political interference and control and are not subject to commercial criteria. While I do not want to say anything irresponsible, this bond is in serious danger of becoming a political slush fund. The proof of the pudding will be in the eating, but the wording of the Bill suggests I am right. It will have a political board controlled by the Minister for Finance and in approaching a general election it will be used in a way that is not responsible and frittered away.

There is a shameful history to the origins of this money and it is shameful that so little is left. Owing to the record of the Government and its predecessor with such moneys, I would be inclined to oppose the Bill.

3:30 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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I have listened with interest to the contributions of other speakers as, unfortunately, I was otherwise engaged. I welcome the Bill, as the purpose for which it is introduced is important. Members on both sides of the House have made reference to its purpose. It goes without saying that in the past the NTMA showed that it could perform miracles with the responsibility thrust upon it, even though at times very difficult tasks were given to it.

We should mention the origins of the agency. The NTMA was originally invented to pay for the 1977 Fianna Fáil general election manifesto, which after two and a half years thrust the country into a very serious financial position. The NTMA was subsequently set up to cater for and manage that debt - to rearrange investment in such a way as to be of benefit to the economy. It did so admirably and is to be lauded for what it has done.

A number of issues now present themselves to the Government. Without doubt, at this time there is a dearth of available resources to invest in anything. I will not go back and rehearse what we have discussed before and suggest it was the fault of somebody else. I do not mind whose fault it was, nor does it matter at this stage. The Government must run the country, meet its requirements and commitments in a way that was never asked of any previous Government without money. On top of this, when the Government took office, it had an annual revenue deficit the likes of which had never been known since the foundation of the State. It is a miracle that the country did not collapse and implode entirely, with everything going down the tubes, because that is what seemed likely just two and a half years ago. A lot of work had to be done, as a result of which we arrived at the situation in which we now find ourselves.

The housing issue that has been referred to is of critical importance. It is not something that has just loomed on the horizon in the past year, two years or five years. It has been on the horizon for several years and every local authority knew there was no investment in replacement housing, as a result of which eventually the entire rental market fell into the hands of the private sector. There is nothing wrong with this, except that there is no control over the cost to the tenant or the leaseholder in any part of the country and markets determine the burden on the householder.

Reference has been made to the approximately 100,000 families on the various local authority housing lists. They are all dependent on renting houses in the private sector supported by the Department of Social Protection to the extent of €450 million per annum. That is a recurring event each year and has continued for at least ten to 15 years. Unfortunately, nobody is willing to stand up and accept responsibility for what happened over that period. What happened was that the temporary solution to the country's housing problem became the permanent solution. In other words, temporary leasing and rent support became the replacement for what used to be the building of a reasonable number of local authority houses.

I remember when most local authorities, certainly those in the greater Dublin area, built approximately 400 to 500 houses per annum and also offered local authority loans to another 400 to 500 people. That amounts to 1,000 families each year catered for by the local authority system. It was deemed to be much more effective and efficient to have the housing issue catered for by the voluntary sector, with which I have no problem. The only problem is that nothing was done in that sector either. Ironically, the voluntary sector had some considerable advantages over the local authorities. I do not know if it was through negligence, but the local authorities allowed matters to slip from their grasp. It is for them to answer, but the net result is that the people have nowhere to go. It is the most appalling problem I have ever experienced. It is not just me; I know every Member of the House is aware of this.

People have not referred to the fact that approximately 30,000 other families are also renting private property. These are families who do not qualify for local authority housing in the ordinary way because their incomes are too high. However, lo and behold, what has happened? Rents have increased - in some cases by 50% or 60% in the past 12 months. As the Acting Chairman knows, this applies throughout the greater Dublin area and into adjoining counties. In many cases, it is worse in the adjoining counties than in Dublin city. Approximately 150,000 families are now dependent entirely on the whims of the market on the extent to which their investment in housing will depend. That is wrong and very unsatisfactory.

In many instances, banks are exerting huge pressure on landlords to either increase rents or evict the tenants and replace them with people who can afford to pay. For a number of years we have been encouraged to believe we should be leasing or renting residential properties as opposed to purchasing them. The move in this direction is a colossal and fundamental mistake. Traditionally, Irish people have always wanted to own their properties. They see them as an investment in their futures or those of their families. The land war was fought over people's right to own their own place. Why was that? It was because they had for too long been moved around from pillar to post at the whim of investors, landlords or whomever else. There are many dutiful landlords throughout the country who look after their tenants very well. They are happy to have good tenants who will look after their properties and pay reasonable rents for them. Unfortunately, not all landlords fall into this category. There have been many instances in the past year in which tenants have been asked to vacate properties with 24 hours notice, which is illegal. As a result, a huge number of people have been placed in jeopardy and a great deal of hardship has been suffered by many. All of this was unnecessary.

There is a need for strategic investment which must be targeted at the areas with the greatest housing need. This investment must be made in a way which would ensure there would be no recurrence of what happened during the most recent housing bubble when the collateral for properties was used as a bargaining chip between banks and between investors and the banks. As a result, there was massive inflation across the entire housing market. Residential property in this country is much more expensive than in most other European countries, which is not good. In the past the criterion which applied for those seeking mortgages was that two and a half times the income of the main earner and the entire income of the secondary earner would be taken into consideration by the banks. That criterion fell by the wayside and the banks and local authorities brought forward a new formula. I have still not discovered the nature of that formula, but suffice it to say it represented an intricate solution to a problem which there was never any intention of solving in the first instance. As a result, many borrowed huge sums and the repayments were far in excess of their ability to meet them. In that context, they committed themselves to making repayments over a period of 40 or 50 years. Some parents have since sought to rescue their children or grandchildren from their debts and consequently doubled or redoubled their debts.

Let us consider what is required for someone to repay a mortgage of €400,000. Nobody should pretend that, even now, people are not paying such amounts for properties, although I accept that there is a difference between prices in Dublin and those which obtain elsewhere. A person who borrows in the region of €350,000 to €400,000 would need an income of approximately €120,000 in order to meet his or her repayments under the old criterion to which I referred. This level of income would certainly be required by single income households. Those who are renting also require very large incomes. It is obvious, therefore, that a greater proportion of the disposable incomes of people who are buying or renting is being spent on servicing their housing requirements. Normally, the maximum repayment should be one third of the net income of the household. In some instances the amount is almost two thirds. Owing to a lack of housing, the level repayments is likely to rise further.

I cannot understand why people continually refer to slight overheating - 1% over six months - in the market. The same comments were made when the previous property bubble was about to burst. On the news each morning it used to be stated house prices had stabilised. What was not said was they had stabilised following annual increases of up to 30% or 40%. House prices were removed from the consumer price index in 1977, which is interesting. The reason they were removed was they were affecting the rate of inflation. They contributed to inflation because, as was the case in the most recent property bubble, they rose dramatically. A means must be found whereby the cost of residential property to the consumer must be reflected in some register in order that the Government of the day might be alerted to the prevailing trend.

Deputy Shane Ross seems to believe the Government should have no input in this matter. That is ironic, particularly as the Government is always blamed for deficiencies. It is extraordinary that certain individuals are suggesting the Opposition should reap the benefit of the good vibes from issues being resolved and that the Government should accept responsibility for all that is negative. That is a new one on me. The Government should have control in this matter. The fact that previous Administrations did not exercise such control is a sad reflection on what they did when they were in power.

As stated, strategic investment in housing is critically important. For several years I have been stating such investment should be made. If it is not forthcoming, much more serious issues are going to arise in six or 12 months time. This problem is not going to go away. It is not true to say we can solve it. We cannot do so. In the 1950s the population of this jurisdiction stood at approximately 2.6 million. It has, as one would expect, increased considerably in the intervening period. If the economy is going to grow and we expect - as we do - to have full employment in the future, housing that is affordable must be provided. We should encourage those who are in a position to exert control over this matter - for example, the Government - to ensure an adequate supply of affordable housing is available on the market at all times. This would benefit two groups, namely, people who would ordinarily register their names on local authority housing lists and first-time buyers. Those in the latter category would include young gardaí and nurses. The people to whom I refer must be in a position to access good quality, affordable housing as opposed to what I, for want of a better word, would describe as the high rise "compartments" that they have been obliged to purchase in recent years.

This morning the chairperson of An Bord Pleanála stated that in the future housing would be provided in high density developments of sufficient size to accommodate families. If that proves to be the case, the outcome will be interesting. We have certainly failed in this regard up to now. Some of the houses provided in the past fell far short of meeting both people's basic requirements and the relevant accommodation standards. We are all aware of countless cases in our constituencies in which what can only be described as cramped accommodation was provided for those on local authority housing lists and those on a slightly higher income level who would normally have been expected to be able to afford to purchase homes in the ordinary way.

I believe this Bill is of considerable importance. I hope it addresses the situation and I know it is intended to address the situation. Many of us in the House have made numerous requests for something like this to be done as matter of urgency. There are various ways and means of achieving the same objective. I hope this works, but if it does not work and if we cannot achieve within a short space of time the ability to house the people in the two groups to which I have referred, then we will have a disastrous situation on our hands. It does not matter two pins who is responsible for it, because these unfortunate people will be on the roadside, for want of a better description. Many of them are on the roadside at the moment.

I mean no disrespect to the Opposition, but I have listened to Members of the Opposition making points to the Ministers sitting on this side of the House as if they were directly responsible. These things must be planned five or six years in advance. Otherwise, we have to introduce emergency measures to deal with them. We do not resolve these issues overnight. We must plan in advance, secure planning permission and go through the process. Otherwise, we can use the infrastructural deficit legislation to speed things up. One way or the other, the greatest single issue facing the country at the moment, apart from our indebtedness, is the housing crisis. I believe we have the ability to resolve it and address it in the context of this legislation and I hope we do so.

3:50 pm

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Ba mhaith liom mo bhuíochas a ghabháil le gach duine a labhair ar an mBille seo, go háirithe iad siúd a labhair as Gaeilge. Bhí sé an-mhaith Gaeilge bhinn bhlasta Chiarraí a chloisint ón Teachta Ó hUigínn. Ba mhaith liom freisin comhghairdeachas a ghlacadh leis an Teacht Ruth Coppinger as bheith tofa don Dáil agus as an chéad óráid a thug sí anseo.

Is bunphrionsabal é do a lán daoine go rachadh an t-airgead seo isteach i gruthú post. Sin an bunchloch le cur isteach chun cúrsaí eacnamaíóchta na tíre seo a fheabhsú. Níl aon dul as againn ach é seo a dhéanamh agus airgead a chur isteach aon áit in ar féidir poist a chruthú. An bunphrionsabal atá againn ná go mbeidh poist ar fáil ar fud na tíre. Níl aon treorú sa Bhille gan airgead a chur go haon áit sa tír. Mar sin, má tá tuairim ag duine ar bith in áit ar bith sa tír chun post a chruthú, níl aon chosc ar airgead a chur isteach sa togra sin. Rud tábhachtach é seo. Ní ceart d'aon duine a rá nach rachfaidh an t-airgead isteach go dúiche i gContae Phort Láirge, Contae Chiarraí nó aon chontae eile. Níl aon chosc ar airgead a chur isteach in aon chuid den tír má tá plean cruthaithe ann gur féidir a chinntiú gur commercial operation atá ann.

Labhair an Teachta Ó hUigínn as Gaeilge ar fad, ach tabharfaidh mé freagra as Béarla dó freisin. Admhaím go ndearna sé iarracht an Ghaeilge a chur ar siúl anseo. Maidir le tithíocht, níl aon dabht ach go bhfuil sé an-tábhachtach go mbeidh tithe ar fáil do muintir na hÉireann. Níl aon difear eadrainn maidir leis an gá atá ann leis an fhadhb seo a réiteach agus tithe a chur ar fáil, ach caithfidh airgead a bheith ann leis na tithe sin a thógáil. An bunphrionsabal a bhaineann leis an gciste seo ná go gcaithfidh an togra a bheith ina commercial operation agus go gcaithfidh maoiniú a bheith ar fáil ón private sector chomh maith le maoiniú ón Stát. Má tá sin ann, is féidir linn le chéile dhá oiread an t-airgead a chur isteach. In other words, we can double the money by getting private investment. With our State fund and matching funding, we could double the amount of money available. That is what is rather attractive about getting private investment into everything we do. At the least, it would double the fund. Furthermore, any money that private enterprise matches to State funding is a big boon to the economy, and that is what this fund is for.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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We could simply stop paying €9 billion in interest.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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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.

4:20 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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To what committee will the Bill be referred?

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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I presume it will be the Select Sub-Committee on Finance. Deputies who are not members of the committee may still attend. There will be no restrictions on the issues that can be raised. We want to get this right and to take on board everybody's views. We want everybody to be satisfied that there has been due diligence in relation to this legislation.

I thank Deputies for their contributions. It has been a very constructive and informed debate. I look forward to the Committee Stage debate.

Question put and agreed to.