Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

Needless to say, I do not choose the grouping but I will speak to each amendment separately because they merit being treated as such. In any event, if there are votes, they will be taken consecutively. From the outset, I think it is fair to say, although the Senator may choose to disagree, that there will be an element of this on which we are just going to disagree. It is okay to disagree as long as we do so agreeably. Based on the experience of ISIF and taking account of the approaches taken by other funds in other jurisdictions, it is important that there is a clear investment objective for the infrastructure, climate and nature fund. The investment policy for both funds will be to hold our investment assets of the funds on a commercial basis for the benefit of the funds so as to seek the optimal total financial return as both capital and income. Thus, the agency's mandate is to achieve a commercial return. The policy intention is to establish a financial asset for the State to deal with future liabilities.

In the case of the future Ireland fund, the intention is to build up the resources of the fund that can be used to support State expenditure from the 2040s onwards. This will allow for a period of long-term investment of the funds to deal with the future expected costs to be incurred by the State. Regarding the infrastructure, climate and nature fund, the intention here is also to build up the maximum financial return from the fund so this fund will have the maximum amount available to deal with climate change and the designated water and nature restoration issues. For the infrastructure, climate and nature fund, the investment horizon is to be much shorter, as the fund will disburse €3.15 billion from 2026 to 2030 in respect of climate and nature projects in order that we meet those goals and offset any financial penalties or concerns. This relates to the Climate Action and Low Carbon Development (Amendment) Bill put in place at the outset of this Government.

Regarding the detail of the proposed amendments, inclusion of the phrase “financially, socially and environmentally sustainable” would make it difficult for the NTMA to determine the types of investment for both funds. In any event, both funds and ISIF will be subject to environmental, social and governance, ESG, as part of the investment policy and strategy for each fund. I think the Senator will agree that we discussed this extremely clear and important definition at length on Second Stage. The requirement to consider ESG risks as part of the whole investment process is an effective way to ensure that these factors receive due prominence, which builds on the work done to date by the NTMA to be a responsible investor. When it comes to ESG work, there is a lot more to be done and I am not hiding away from that. Fundamentally, however, the tools are in place to ensure that will happen.

This gets to the crux of the fund and touches on the debate that took place on Senator Warfield’s previous amendment. We must ensure that we acknowledge that we have had large-scale windfall corporation tax returns in recent years. These are extremely welcome, but as we all know, they are likely to be very short-term. They are not sustainable. They are not something that we can bank on over the next two decades. That is why we need to use these funds to make sure we can generate equivalent funding that will be able to meet the clear societal needs of the State going forward into the next generation. We can achieve that by allowing these funds to generate a serious commercial return. This is not just a matter of using money to invest in a way that we agree with, although we absolutely will do so. We must also generate a return.

Amendment No. 8 relates to the phrase “held or invested”. The inclusion of the phrase “held or invested” is an important operational point that the NTMA needs to have when managing the fund. It will not be possible for the resource of the funds to be instantly invested inside or outside the State on receipt from the Exchequer. There needs to be flexibility with how the NTMA will manage the resource of the funds and it will be necessary that the NTMA can hold these assets as well as invest them. Given the importance of the funds being able to operate effectively and to align with the existing Ireland Strategic Investment Fund, I do not propose to accept either of the amendments.