Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State, Deputy Harris, on his first day or the first few hours of being elevated to that status. It is great to have him in the House and he is welcome indeed.

It is great to have him here.

My first impression from looking through the explanatory memorandum and from the Minister's speech is the emphasis on the strategic investment fund corporate governance. Is this the type of jargon that got us into trouble in 2008? How about efficient investment projects or the ability to appraise investments and publish the results? We have had an appalling banking system, which was aided and abetted by appalling public policy failures in both the Department of Finance and in the Central Bank. I do not know if we have remedied any of those yet or what recommendations the banking inquiry will make on them. A greater level of economic expertise than we had is required in the banks, the Department and the Central Bank. They imploded and did serious damage to this country, from which we are now trying to recover. We are raiding a pension fund for an investment which we find will give us no return until 2025 - section 47 provides that there will be no payments to the Exchequer before 2025. Earlier we had a debate about a bankrupt pension fund of an airport company owning €750 million, so we must get our act together in respect of these investments. Calling it "strategic" just introduces one to the problem, rather than solving it.

I agree with Senator Hayden about the legal costs unit. It appears to operate quite well as it is, so I do not know why it is necessary to change the way it is organised. With regard to governance, the Minister referred to negotiating market competitive salaries for the agency. When it was run from within the Department of Finance at Civil Service competitive salaries the country was solvent. In the case of market competitive salaries, I hope there are no people in these agencies earning multiples of what the Taoiseach earns. I said that earlier when the Minister, Deputy Noonan, was here. That is a daft, artificial commercial market because of the way we rescued the banks. If we could have rescued the banks and got rid of most of the management, then we would see what their market salaries were. They bankrupted the country and their banks and they were not paid market competitive salaries. There should be a serious penalty against people who conducted themselves in that manner.

The Minister mentioned that the National Development Finance Agency was established in 2003. It was therefore in place when the worst excesses of what happened between then and 2008 were occurring. What was it doing at the time? Did it not see what was happening to this country? I am also a sceptic about public-private partnerships. The former Minister for Transport, Tourism and Sport, Deputy Varadkar, told us the ones for roads would be a drain on the Exchequer all of the time. I liked some risk sharing in these projects but we appear to have signed up to a large number of projects, particularly the two toll roads between Dublin and Navan and Cavan, which will never raise enough money for the taxpayer. We were outsmarted by people doing the calculations on the other side.

There is also the allied problem of accountancy firms that prepared books for Irish banks which proved to be fictitious when we bought the banks. The smallest bank bailout proved to be one of the largest bank bailouts. We require a great deal more financial expertise than we have in that area.

The Minister said that the agency is more like a Government Department than a State agency. I am not sure that is the answer. Some Government Departments ran this country on a solvent and conservative basis for many years and some State agencies did not. The Minister said the agency may provide financial and commercial advisory functions to other bodies, if requested by the Minister with responsibility for that body. The expertise is required right across the public capital programme. When one looks at our debt to GDP ratio, which is one of the world's highest, about one third of it was due to the banks. Most of the rest was dud capital projects. We called it infrastructure. Transport 21 was to cost €35 billion, but there was not an ounce of economics in it when it was published. They were simply campaigns to spend loads of money.

There is no stimulus effect in a small open economy. The Irish Fiscal Advisory Council has said that. We signed up for free trade a long time ago and one creates the stimulus in countries from which people buy the imports. In fact, the Minister, Deputy Noonan, on a previous occasion in the House, said that we must forget about the multiplier because it really does not exist anymore in the Irish economy. We need good projects rather than relying on multipliers.

The Minister said, "The intention is to make funding available across the board, for infrastructure, SMEs, whatever." That is a casual type of statement. It should be for good projects that are analysed, tested and assessed as to whether they are worthwhile. I hope the investment committee will be able to do that. The Bill carries over from the National Pensions Reserve Fund Act 2009 the power of the Minister to direct that the fund be used to recapitalise the banks. The Minister said, "This is being done as a pragmatic precautionary measure." That would cause an immense reaction. People have had it up to here with the way the banks have conducted themselves. Indeed, I welcome what the Minister, Deputy Noonan, was doing earlier in his visit here to try to bypass that with the strategic bank. Apart from investing in property, and that is damaging the economy, I do not envisage the Irish banks being able to invest in small and medium enterprises.

With regard to the PPS numbers and the NTMA, that is controversial. In fact, the controversy this morning is their use by Irish Water.

Interest rates have never been so low. What is holding back the development of the economy is the immense weight of debt we have. Much of that debt was incurred by ill-advised capital investments in the past. I recall when myself and Joe Durcan, a fellow economist, did a lecture series in the Institute of Public Administration for local authority members. The view was that, in terms of appraisal of expenditure, anything would get through if it was called "capital". Capital will leave one with large debts and if there are no assets, one's debts gets larger and larger. Therefore, we must assess the entire public capital programme. I believe the Comptroller and Auditor General should be involved, as I said to the Minister, Deputy Noonan, earlier, because he knows the mistakes we have made previously. It is his job to research them and he should be involved in this. I will propose, in page 29 of the Bill, to involve him in giving guidance on how we spend the money.

I must apologise to the Minister. The deadline for tabling amendments was before we heard him speak, so if he finds that some of the amendments relate to items he has already dealt with in his contribution, it was due to the timetable and is not a reflection on what he said to us. On Committee Stage we will do our best to assist him in what is a very important exercise, and we will support him in that regard.