Michael McGrath (Cork South Central, Fianna Fail)
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37. To ask the Minister for Finance if he is satisfied with the level and quality of investments made to date by the Ireland Strategic Investment Fund; his views on whether the fund could play a greater role in providing investment in necessary capital infrastructure here; and if he will make a statement on the matter. [16513/17]

Michael McGrath (Cork South Central, Fianna Fail)
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This question relates to the Ireland Strategic Investment Fund, established in December 2014. I wish to establish the views of the Minister on the effectiveness of the fund thus far. We have had about two and a half years of experience with it and it has made a range of investments. It could do a lot more at a time when we are crying out for investment in the economy, in particular capital investment. I look forward to hearing the views of the Minister.

Michael Noonan (Limerick City, Fine Gael)
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The Ireland Strategic Investment Fund, ISIF, was established in December 2014. The creation of ISIF was a commitment in the last Government's programme for Government. The previous Government gave ISIF a unique double bottom line mandate to invest on a commercial basis in a manner designed to support economic activity and employment in Ireland. This mandate sought to demonstrate that the State was prepared to invest its limited investment funds in projects that would yield a commercial return, thus demonstrating its confidence in the future of the Irish economy. The intention of this investment was to leverage additional private sector investment, which I am pleased to state has been higher than expected to date.

Given ISIF's new and unique mandate as a sovereign development fund and because of the uncertainty regarding investment opportunities in Ireland, it was agreed at the time that a formal review of the ISIF investment strategy would take place after 18 months. This was to allow a sufficient period of time to elapse before considering the operations and impact of the fund. The investment strategy review which is due to be completed shortly is examining the performance and impact of ISIF. The review includes an appraisal of the success of ISIF's mandate to the end of December 2016 and requires engagement by both my Department and the Department of Public Expenditure and Reform as part of the process.

I am sure the Deputy shares my view that ISIF's double bottom line mandate represents a unique strategic opportunity for Ireland. The mandate is designed to ensure that ISIF's investment generates a return, attracts investors and recycles funds. Without wanting in any way to pre-empt the review that is currently under way, I am encouraged by the quality and impact on the Irish economy of ISIF's investments. ISIF has built up momentum already, including through its future pipeline. ISIF has already committed €2.7 billion and acts as a catalyst for other investors to invest in Irish projects. This includes a commitment of €361 million for infrastructure investment essential to the future competitiveness of the economy. In addition, ISIF's ability to attract co-investment from the private sector means that €7 billion of total investment has been committed to the end of December 2016.

Additional information not given on the floor of the House

It is apparent from the investments already in the public domain that, as envisaged at inception, ISIF is utilising its unique investment characteristics of scale, long-term perspective and flexibility to target high economic value investment in Ireland in a way that other funds cannot. ISIF has made investments in the following key economic sectors, namely, housing and construction, SME credit, venture capital and equity funds, connectivity, renewable energy, water provision, forestry and agriculture. The fact that the proceeds of ISIF investment can, unlike State spending, also be recycled to support future economic activity in Ireland illustrates the potential that the ISIF model offers and on which ISIF is currently delivering. I look forward to receiving the ISIF investment strategy review as it will be a useful opportunity to consider ISIF's work to date and the most appropriate use of the fund to help meet the forthcoming challenges that the State faces.

Michael McGrath (Cork South Central, Fianna Fail)
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At the end of 2016, the fund's global portfolio was €6.65 billion. As such, that was money not invested in Ireland. While I know the intention is to wind that down over time and to invest the funds in line with ISIF's mandate, it is nevertheless a very substantial figure. When I look at the investments to date, some of them are very good. Some of them are quite niche in nature, however, and it is clear that more mainstream investments which can meet the terms of the commercial mandate should be explored. For example, is there more we can do in relation to investment in broadband through ISIF? There are many unbuilt roads nationally which we know are to be tolled. Would they meet the terms of the commercial mandate? Similarly, a certain amount of housing has been provided in partnership with funds. Should we be doing more in that area? Public transport passengers pay fares and, as such, investments in this area can be commercial if they are properly constituted. We should be doing more across all of those areas. Having €2.7 billion committed is not the same thing as having €2.7 billion invested, as the Minister knows.

Michael Noonan (Limerick City, Fine Gael)
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We should give credit where credit is due. It is a very recently established fund, having been set up in 2014. By the end of 2016, an investment of €7 billion in total had been committed. That is the direct investment and the funds triggered by it. It is a significant chunk of money. When one compares it to the overall capital programme, €7 billion is a significant investment. As it moves on from successful investment to successful investment, the fund will attract more co-investors and the scope of investment in the kinds of projects denominated by Deputy McGrath will come into play. The fund is currently investing in housing and construction, SME credit, venture capital and equity funds, connectivity, renewable energy, water provision, forestry and agriculture. As such, ISIF has a significant portfolio. While there is always a concern to ensure that sufficient investment takes place, that is matched by a concern to ensure that scarce money is not wasted on bad investments. While there is a pool of over €6 billion available, ISIF is prudent and exercises, as it must, the double mandate.

Michael McGrath (Cork South Central, Fianna Fail)
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There is no question that ISIF must be prudent, but I highlight again the fact that it has €6.6 billion invested overseas. Gradually, that will be wound down and invested in Ireland. While it is an important feature of the fund that it leverages private sector investment, the key challenges we face as a country are in housing, broadband, the road network and public transport where the fund has not done a great deal in terms of its portfolio. ISIF goes after a lot of niche investments, leveraging the private sector. I would like to see more mainstream investments which are visible and which enhance the productive capacity of the economy. Many of these areas of investment can meet the terms of the commercial mandate. I look forward to the investment strategy review and I would appreciate it if the Minister would bear the points I have made in mind when he considers and addresses it.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy's submission is very reasonable. However, infrastructural investment is divided between social investment and investment in economic infrastructure and it is difficult to be certain of an income stream from the former whether it is schools, health centres, etc. It is also the case that while there is potential in some economic investment such as tolling certain roads, there is no potential in other stretches of road to generate a return. The public private model has worked to some extent. ISIF has made significant progress and I am sure it is aware of this debate today. It is certainly progressive in its thinking and anxious to do more but it is also aware that it has to act prudently and within the mandate.