Denis O'Donovan (Fianna Fail) | Oireachtas source

I welcome the Minister of State, Deputy Harris, to the House. I am speaking on behalf of my colleague, Senator Darragh O'Brien, who is our spokesman on finance. I confess that sometimes I am an expert on lots of things and master of none but I will bow to my superior experts such as Senators Barrett and Michael D'Arcy. I will make a brief contribution on behalf of Senator Darragh O'Brien and my party.

Fianna Fáil supports the Bill. Since the IFSC was established in 1987, Ireland has established itself as a significant player on the international financial stage. The creation of an Irish collective asset management vehicle is a move towards further realising the funds industry potential. In other words, it is another step in the right direction. A dilapidated swathe of the quays that scarred the city has been transformed into a thriving hub of global funds. Every day, approximately 13,000 people are employed directly and indirectly in both the IFSC in Dublin and a number of locations throughout the country. Its success has been a major boost to the entire economy, and following the financial storms of the past six years, it offers fresh opportunities for job creation and growth. The creation of the Irish collective asset management vehicle is a move towards further realising this particular industry’s potential. It is great to see it is being developed further. However, that demands renewed commitment by the Government to a strong regulatory framework and focus on the industry. In a fast-moving sector, financial innovation constantly challenges legislators and regulators to respond in order to keep pace. This Bill is a step towards enabling Irish financial services to catch up with their EU competitors with a new investment vehicle.

The legislation comes after a period of decline in the financial industry, overseen by the Government and perhaps the tail end of the previous Government. We have slipped from 10th place in the global financial index in 2008 to 70th in last month’s survey. The dramatic drop underlines the need for Ireland to diversify its offerings in a competitive marketplace and to restore our regulatory reputation. If the Government is serious about achieving the aims of its five-year strategy for the international financial services industry in this country, it must raise its game. I presume the proposed legislation is designed for that purpose.

The serious drop in our international ranking does not bode well for job creation in the sector. The scale of the industry, with some €2.7 trillion in funds and 13,000 jobs, highlights the importance of underpinning a sustainable industry. The sweep of the five-year strategy has real potential for further expansion but requires serious and consistent commitment by the Government. Taking its eye off the ball, as it has done to date, would be a missed opportunity. There is too much at stake to risk the future of the industry and the broader role it plays in the economy. I am sure many factors have led to the decline, including the financial upheavals, not alone in this country but internationally. It would be very easy to lay the entire blame at the foot of the Government or the previous Government but there are external factors at play which we must be honest and recognise.

In discussing the creation of a new financial vehicle model, it is important that we deal with the regulatory framework. The financial crisis which, unfortunately, continues to linger over the eurozone has illustrated the need for a strong regulatory system to keep market excesses in check. The fast pace of innovation is not just a competitive challenge for Ireland but also a regulatory one. The harshness of the past six years cannot be forgotten or we risk being thrown back into the market turbulence that wreaked havoc globally.

The Central Bank is at the heart of efforts to keep abreast of new fund models. That requires a mixture of legal tools and key personnel equipped to implement them. Solid regulation is vital in building a strong reputation for business to grow and to provide consistent, reliable rules to protect consumers. As the industry grows and expands with greater financial rewards available, the importance of attracting and retaining skilled personnel will become even greater. The provision of adequate resources to keep, oversee and maintain the industry is of paramount importance. The systemic risks of mobile capital to the economy demand greater vigilance than was shown before and during the financial crash. Anything less would be to flirt with future disaster. It is important to remember that a strong financial sector is an integral part of the modern economy. Used well it targets investment where it is best applied to create new jobs and stimulate economic growth. It empowers people to realise the dream of home ownership and plan their retirement with a sense of security. Enabling new models such as the ICAV outlined in the Bill creates new avenues for investment as well as strengthening Ireland’s global position. Combined with solid regulation it is a step towards sustainable recovery for this country. It is vital that we learn from the past to place financial services on a sound footing for the future. In that light, my part in Fianna Fáil is to support the Bill. I wish the Minister well.

When we deal with such issues, it is important that all sides of the House wear the green jersey. The recent election results and potential upheaval in Greece are of concern to the eurozone and the stability of the Irish economy. I am no expert, but that the euro has weakened considerably versus the dollar in the space of nine or ten months, while good for exports, has risks. Europe is not out of the woods. Ireland will play an important role, but we are a small component of the eurozone and Europe.

I wish the Minister of State and the legislation well. I hope that we will have a stronger financial sector, more jobs and a stronger economy as a result of this vehicle. Senators on all sides of the House want there to be a reduction in unemployment and a return of our well-educated emigrants. We are singing off the same hymn sheet.